The United States and South Africa are involved in a conflict that is risking the stability of trade relationships between them. President Barrack Obama has threatened to withdraw duty-free status for South African agricultural commodities within 2 months if it does not abolish several trade barriers it has imposed against the U.S (Rampton and Hughes par. 1). The duty-free status is part of a program that the U.S. implemented to help African exporters conduct trade.
We will write a custom Article on The United States and South Africa’s Trade Row specifically for you
301 certified writers online
South Africa has imposed poultry imports from the United States because of a bird flu outbreak that occurred last year (Rampton and Hughes par. 2). The ban has made it worse for American traders because of an ongoing heavy-duty policy on certain poultry products. The United States Trade Representative Michael Froman has said that it is important for South Africa to abolish the barriers for better trade relationships between the two countries (Rampton and Hughes par. 4).
Failure to revoke the barriers will put South Africa at risk of losing its membership in the African Growth and Eligibility Act (AGOA) trade program. One of the criteria for AGOA membership is the eradication of trade barriers to U.S trade and investment (Rampton and Hughes par. 6). AGOA members enjoy duty-free access to commodities to countries in the sub-Saharan region. The president of the National Chicken Council has supported the sentiments presented by Froman.
He argues that the U.S. should not give preferences to nations that treat it unfairly by imposing trade barriers. South Africa benefits from trading with the U.S. For example, it exported agricultural products worth $176 million last year (Rampton and Hughes par. 8). If the ban is implemented, the export of many products will be affected and the country will incur great losses.
Significance in a global setting
International trade is one of the most important pillars of the global economy. Trade between countries facilitates the exchange of goods and services, foreign exchange creates employment, and enhances international relations. Trade barriers between countries prevent them from utilizing their resources in a manner that gives them a competitive advantage and numerous market opportunities. South Africa risks losing significantly if it fails to revoke the trade barriers it has sanctioned against the United States. It is estimated that South Africa exports about $250 million worth of agricultural products to the United States annually.
Trade relationships with the U.S are valuable opportunities that allow South Africa to earn foreign exchange through the export of its products, exploitation of market opportunities, and reduce costs of conducting trade. Besides, it allows the country to compete effectively with other countries that export similar products to the U.S. Revoking the trade barriers is a strategy that can benefit South Africa greatly and provide an opportunity for competitive advantage with countries outside the sub-Saharan region that export similar agricultural products to the United States. The conflict will affect international trade significantly and international relations between the two countries.
Rampton, Roberta, and Krista Hughes. United States to punish South Africa over Farm Export Impasse. 2015. Web.