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January 25, 2016

U.S. to suspend duty-free benefits on South African agricultural products

Last week, President Obama issued a proclamation to suspend the duty-free treatment afforded to South African agricultural products under the African Growth and Opportunity Act (AGOA), effective March 15, 2016.  The president notified Congress and South African President Jacob Zuma in November of his intention to suspend the benefits due to South Africa’s lack of progress in eliminating barriers affecting U.S. agricultural exports.  The president’s proclamation also modified the Harmonized Tariff Schedule of the United States to reflect the suspension once it becomes effective.

Under the AGOA, eligible sub-Saharan African countries are permitted to export certain products to the U.S. duty-free.  Section 104 of the AGOA authorizes the president to designate certain countries as eligible beneficiary countries, and to terminate the designations of countries not making continual progress toward, among other things, eliminating barriers to U.S. trade and investment.  The president determined, however, that “suspending the application of duty-free treatment to certain goods would be more effective in promoting compliance by South Africa” than terminating its designation as a beneficiary sub-Saharan African country.

While South Africa has received duty-free treatment from the U.S. on its agricultural products, it has for a number of years blocked U.S. poultry, pork, and beef from entering South African markets.  The president may consider revoking the proclamation should South Africa make substantial progress in these areas before the effective date of the suspension or reinstate the benefits if such progress is made after the effective date.