| The bill includes a new provision establishing an out-of-cycle review mechanism |
The Security Industry Association (SIA) commends the U.S. Senate for approving the bipartisan measure reauthorising the African Growth and Opportunity Act (AGOA), S. 1267, on May 14. In addition to extending the Act, which expires Sept. 30, the bill includes a new provision establishing an out-of-cycle review mechanism to ensure compliance with fair trade practices required of Sub-Saharan countries receiving export preferences under AGOA.
Forced localisation
Over the past year, SIA urged the committees drafting the AGOA extension to address the Private Security Industry Regulation Amendment Act (PSIRA) under consideration by the South African Government. PSIRA contains a provision, inserted at the last minute during parliamentary consideration, which requires foreign-owned security companies, including technology firms, to sell at least 51 percent of their South African businesses to South Africans, in what is often referred to as a “forced localisation” measure. A surprise to many observers, the provision was included despite the fact that such companies are already required to exclusively employ South African citizens within the country.
Protective measures
The review mechanism in the Senate passed bill allows firms to petition the U.S. Trade Representative (USTR) to investigate actions they believe may violate AGOA eligibility criteria. If found in violation, the USTR would be authorised to limit benefits or suspend the country from AGOA participation. Additionally, in an unprecedented move, the bill singles out a country for immediate review, requiring South Africa to undergo a six-month review beginning within 30 days of enactment.
“The inclusion of this enhanced oversight provision in the Senate passed bill will lead to a more reciprocal and balanced trade relationship with beneficiary countries, most notably South Africa, the largest beneficiary of AGOA preferences by far,” said Jake Parker, SIA director of government relations.
"The inclusion of this enhanced oversight provision in the Senate passed bill will lead to a more reciprocal and balanced trade relationship with beneficiary countries, most notably South Africa," says Jake Parker, SIA |
PSIRA Act
It is important to note that the out-of-cycle review mechanism is not an additional eligibility requirement, but rather a provision to ensure compliance with AGOA, Parker said. Under the existing agreement, such a review could only occur at the end of AGOA’s five-year cycle, making it difficult to hold beneficiaries accountable to their commitments.
The PSIRA Act is awaiting the South African president’s signature to pass it into law. The South African industry organisations, business, trade and law exports that oppose the foreign ownership limitation clause have called for South African President Jacob Zuma to send the PSIRA Act back to Parliament for the removal of the offending section on expropriation.
“If the South African Parliament does not remove the discriminatory clause from the PSIRA Act, it is highly likely such an issue would be raised as a matter of concern during the South Africa review required under the AGOA reauthorisation moving through Congress,” Parker said.
SIA calls on the House of Representatives to expeditiously act on AGOA reauthorisation.