Tag Archive | AGOA

US schedules AGOA trade checkups

Feature article sent to clients 10 March….. 

AGOA trade agreement qualified…….. 

For the first time in the case of all African countries, theusa sa logo AGOA trade rules under the agreement for South Africa will be subject to a regular “out of cycle review” by the US. Normally any such agreement holds for ten years without review but the US wishes to check regularly that in South Africa the “quid pro quo” is being adhered to.

Parliament has been the scene for a number of briefings both on trade and international relations in the last two weeks and AGOA has been top of the list.

Also to emerge is the fact that one of the driving factors behind South Africa’s insistence on partnering with Brazil, Russia, India, China to form the BRICS trading bloc appears to be a fear of become totally reliant on trade agreements with any one country and particularly USA, in the case of the AGOA agreement.

This is despite the fact that the EU remains South Africa’s main trading partner, followed by the US.

The full monty

nomaindia mfekethoIn a briefing to the Portfolio Committee on International Relations a full team appeared from the Department of International Relations (DIRCO) headed by Deputy Minister Noamindia Mefeketu, together with Dave Malcomson, Chief Director of Regional Organisations; Ms Yoliswa Maya, Deputy Director General, Americas, Europe and the Caribbean; and Mr Arnold Lyle, Counsellor for DIRCO on the USA on agreements with BRICS, China and Pacific Rim countries.

In attendance for some of the time was Minister of International Relations, Maite Nkoana-Matshabane and a broad picture emerged of South Africa’s international trade policy, particularly with reference to the AGOA and how South Africa arrived at what most consider a favourable outcome.

Too many strings

Nkoana MatshabaneMinister Nkoana-Matshabane prefaced the meeting by saying the developing world had been borrowers from the IMF and the World Bank with conditions attached to loans “so stringent that they would never be able to develop.” South Africa, she believed, “was part of a progressive movement to find alternative funding sources and different trading partners.”

Relationships with the USA have emerged time and time again and, when pushed at the end of the briefing, the Minister, when asked by Opposition members in the case of the AGOA who needed it most, she replied “Perhaps SA needed the trade with the US more than they needed SA’s trade”. However, she was insistent that the country needed at the same time to find other trading partners to avoid being pressurized.

“If the AGOA had lapsed it might have been terrible at first with the job losses and we would have gone through some very bad times. But we would have overcome this. As a result of this event, we have learnt that the threat in terms of our own priorities will always exist”, the Minister said. “South Africa must now see itself as the priority and therefore look for other opportunities”, she concluded.

Going the BRICS route

Starting with a briefing on BRICS, DIRCO’s Dave Malcomson said the BRICS agreementdave malcomson backed up
the African Union programme for “continental infrastructure programmes” and from a domestic dimension, “all participants faced similar developmental challenges which needed infrastructure build programmes.”

The New Development Bank (NDB) had been launched with headquarters in Shanghai for the moment, subject to Contingent Reserve Arrangement (CRA) funding which South Africa had contributed to, the CRA funding being referred to in Minister Gordhan’s Budget presentation. He asked parliamentarians to note that despite a bad start with all BRICS countries experiencing lower growth, the combined GDP of BRICS was “likely to exceed that of the US by 2020, if not sooner”.

The NDB was expected to approve its first projects in April 2016. Malcomson referred to a “Host Country Agreement” between SA and the NDB which would be finalised soon. He also said that in place was an equal shareholding agreement with other BRICS countries in the NDB.

There was also to be a board of governors for policy issues; a governance board of directors; and the NDB would have initially 100 positions – the first presidency being from India; the CEO coming from China; the CFO (ex-Minister Nene?…ed.) being from South Africa; and with Brazil handling the position of risk CEO.

Sino summit

On Chinese relationships, following a successful summit staged in Johannesburg by South Africa in December last year with 48 heads of state attending, the Forum on China-Africa Cooperation (FOCAC) established a line for R60bn for development in Africa. Trade discussions between SA and China were extensively being built upon, said DIRCO’s Arnold Lyle.

iora logoAs far Indian Ocean Rim Association (IORA) was concerned, this was heavily linked to Operation Phakisa and the development of oceanic trade possibilities. IORA was focused on fisheries and aquaculture; renewable ocean energy; seaport and shipping development; seabed exploration and minerals, marine biotechnology and research and development. Tourism was also included.

IORA was primarily led by India, Australia, Indonesia and South Africa, with countries such as the UAE also involved. South Africa would lead IORA for 2017- 2019, strategic objectives being the “blue economy” and maritime peace and security sustainable development. There were considerable synergies, Malcomson said, and he quoted skills training of artisans in ship building as an example.

In answer to questions, he said the main difference between FOCAC and BRICS was that FOCAC was focused as a unit on the African continent whereas in the case of BRICS, South Africa was the representative for the African continent.

AGOA specifically

motor vehicle plantMeanwhile, the importance of AGOA was still evident and emphasised when a summation of was made to MPs by Yoliswa Maya of DIRCO. She pointed to the fact that the AGOA created over 62,000 jobs in SA and 100,000 jobs in the US. In 2014, 21% of SA’s exports to the US were exported under AGOA whilst 16% was under the EU’s “Generalised Scheme of Preferences” (GSP), which allows developing country exporters to pay sometimes less or sometimes no duties on their exports to the EU.

SA’s exports classified as purely under the AGOA amounted to $1.75bn whilst the country exported over R23bn worth of vehicles to the US in 2014, which supported some 30 000 jobs in Port Elizabeth and the Gauteng Province. SA also exported agricultural products to the US worth $175m, which represented 2.1% of SA’s total exports to the US. For the period January to November 2015, SA enjoyed a trade surplus of R2.3bn. Ms Maya did not compare figures with the EU or individual EU countries.


Responses from the Chairperson of the International Relations Committee Moses Masango and othermoses masango 2 ANC MPs seemed to be “playing to the gallery” of Ministers throughout the meeting. At one point Chair Masango said that the ANC-led government and the DIRCO team should be congratulated for making the BRICS and NDP bank “a reality” bearing in mind that, in his opinion, the International Monetary Fund and the World Bank mainly funded infrastructure projects “to keep colonialism alive in Africa”.

This seemed to reflect a growing belief amongst ANC members that the USA was interfering in SA political affairs and Masango remarked that “like the Roman and the British Empires, the American Empire hoped to achieve the same economically”. He said the question had to be asked what China, India and the US actually wanted in Africa. He said that South Africa had to be cautious.

The standard of debate was uplifted when the implications for SA were elaborated upon by Ms Maya of DIRCO when she said as far as the AGOA agreement was concerned, President Barack Obama issued a notice of suspension on the 11 January 2016 and a deadline of 15 March 2016 was set for imports of US poultry to be duty free into otherwise duty free access for South African agricultural products was to happen.

The rest of the story was well known, she said, and chicken products were about the go into the retail trade with meat products still to arrive. President Obama’s concurrence appeared to be a formality.

Between the lines

However, Deputy Minister Mfeketu said the US was “increasingly advocating for a post-AGOA trade relationship with Africa as a whole on a Free Trade Agreement basis” and US trade representatives were to submit a report to the US Congress in June 2016 regarding future trade relationships between Africa and the US.

The Deputy Minister said that South Africa was not short of poultry, had not asked for it and said the US appeared to have decided that if conditions were not met regarding poultry and certain meats, any other benefits would cease.

Other responses

Santos Kalyan of the DA said DIRCO were in fact saying that “that the US was beating SA with a big stick”. However, she pointed out that the Minister of Trade and Industry, Mr Rob Davies, had signed the

courtesy iol

courtesy iol

agreement and therefore South Africa had entered into the agreement willingly in its own overall interests.

She asked DIRCO whether in their view the US was having problems with South Africa’s trade policies and international policies. Ms Maya admitted that the US was also in disagreement with Private Security Industry Bill and Intellectual Property Bills and said that the US also “had some problems with BBBEE”.

Mr D Bergman (DA said “ The truth of the matter was that if SA lost the AGOA because of this issue then SA would lose out.” Deputy Minister Mfeketu conceded that DIRCO agreed that South Africa needed to trade with the US more than the other way around. She repeated the fact that South Africa had accordingly to look for other opportunities.

Free trade agreements

DIRCO concluded that during a meeting of the African Ministers of Trade at the Africa-US AGOAFlorizelleLiser Conference in August last year, Department of Trade and Industry (DTI) had indicated that SA is not ready to enter into a Free Trade Agreement (FTA) yet with the USA and will consult with business and labour before formulating. Already the Assistant US Trade Representative for Africa, Ms Florizelle Liser, has visited SA to consult with the DTI and various other stakeholders on this view.

Previous articles on category subject
Plenty in the way of AGOA agreement – ParlyReportSA
EU and AGOA still important to SA, says govt – ParlyReportSA
AGOA : Parliament this week 3 Nov 2015 – ParlyReportSA
Private Security Industry Bill comes closer – ParlyReportSA
SACU trade split is EU bullying, says Minister Davies – ParlyReport

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Plenty in the way of AGOA agreement

Sorting out AGOA agreement by Jan….

Sent to clients 17 Dec…. During a briefing to Parliament, it became evident once again that the SA Cabinet perceives the renewal of the AGOA agreement in the overall context of trade being attached in the future to a development price. The briefing was by DDG Kgabo Mahoai of the Department of International Relations and Cooperation (DIRCO).
Kgabo Mahoai

Whilst the advantages of a signed AGOA agreement to South Africa were great without doubt, Mahoai said, it had to be considered within the overall context of trade between Africa and the rest of the world. He was at pains to express that this was not just South Africa’s view.

AU plans for Africa

The overall African Union theme being developed by African states was clearly confirmed by DIRCO in that as a generalised policy, investment by international companies to gain access to poorer African zones had to be accompanied by reportable programmes of contributions to skills development, education, and small business and towards the upliftment of the African continent in general.   A price, he said, had to be attached for access to the African market.

Hence the Black Industrialists Investment Programme, devised by Department of Trade and Industry (DTI), they said, and whilst US President Barack Obama had given South Africa 60 days until January 4 to show it is meeting the requirements of AGOA before the US imposes normal tariffs on South African agricultural products, the two matters of development and trade were inter-dependent, whatever US senators might feel.

In the background

However, the whole issue is complicated by a third issue, say critics of DTI’s slowness in finalising AGOA, by the passage of the Private Security Industry Bill, held back by President Zuma and appearing to be compounded by national intelligence issues according to MPs. DIRCO said they could not discuss this but it was evident from questioning by MPs that this was “the elephant in the room” when it came to general US-SA trade relationships.

chickenWhilst the debate on AGOA has been complicated by US senators over anti dumping duties that South Africa had imposed on US chicken wings and drumsticks in 2000 – the argument then extending to meat and pork products – the stakes are high since the agricultural section of AGOA (which could be this isolated from AGOA and lose its duty-free status) involves some additional R140m of exports in wine, citrus and nuts, in addition to meat and poultry.

Kick back…

Senior SA MPs across party lines have observed that the position for DTI has also recently radically altered in that drought has seen the necessity to import cheap chicken as a substitute in the absence of red meat to poorer and lower income groups. This has adversely affected the SA position in negotiations.

No doubt, this is the dilemma facing DTI, Minister Rob Davies, having recently stated that “everything had been done which was possible to meet US requirements on certifications issues but did not wish to intervene in matters relating to ongoing veterinarian discussions between the two countries.”

In other words, previous arguments that the “US was bullying smaller countries into trade agreements advantageous to the US” might now have been negated by an additional need for chicken on the local market. Whilst meat is preferred in the average African household, chicken is a relatively cheaper substitute and acceptable, especially chicken wings and drum sticks, the drought in SA having changed the “quid pro quo”.

DTI at the front

DIRCO in their briefing said that they did not wish to make statements to MPs on “DTI territorial areas” but they were assisting where possible to ensure that the AGOA agreement was satisfactorily concluded in all aspects. Also the US, DIRCO was sure, were meeting all “developmental requirements” on general US-SA relationships, both here in the commercial world and on an inter-governmental basis.

DDG Kgabo Mahoai felt confident, he concluded, that AGOA was to be renewed in all aspects despite further late “anti-SA lobbying by some US senators attempting to resuscitate pressure on President Obama.”

Inside job

At this point, the meeting was disrupted by unruly NEHAWU protesters who blew vuvuzelas and sangnehawu freedom songs, disallowing any further debate. Chairperson, Eddie Makue (ANC), wisely concluded the meeting, objecting to protester’s that the disruption was illegal in terms of national law to interrupt parliamentary business. A good number of the NEHAWU demonstrators were in fact parliamentary staff and had full knowledge where meetings were taking place in the parliamentary precinct.

This was a sad conclusion to an intelligent meeting.

Other articles in this category or as background
EU and AGOA still important to SA, says govt – ParlyReportSA
AGOA : Parliament this week 3 Nov 2015 – ParlyReportSA

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AGOA : Parliament this week 3 Nov 2015




AGOA : What and who to believe….

Reported to clients 5 November……On June 10 2015, a meeting took place in Parliament between the Department of Trade and Industry (DTI) and the Portfolio Committee on Trade and Industry, chaired by Ms. Joanna Fubbs, during which DTI was reporting back on its progress with B-BBEE.

The meeting was interrupted by the appearance of Faizel Ismail, the special SA Trade Ambassador to thefaisel ismail AGOA talks, who dramatically made an announcement with the Chair’s agreement despite nothing on the agenda, to all members of the Committee. To sum up the statement he said that the negotiations on the AGOA trade agreement could be considered a success. There was considerable joy amongst MPs generally.

Then on September 8, Lionel October, Director General of the Department of Trade and Industry (DTI), surely “Mr. Big” when it comes to knowledge of trade relationships and policy with other countries, made the following rather obtuse statement to the PC on Trade and Industry when asked for the current position with regard to the AGOA.

He answered, “As for SA’s US relationship, no one relationship would save SA. The US has decided to re-industrialise with an emphasis on energy development in Africa after a previous emphasis on the service industry. The AGOA had been reviewed, and meat trade issues needed to be resolved but in general the AGOA had grown in its relationships.”

What this was supposed to mean was difficult to interpret. But then discussions were on-going at the time between SA representatives and the US congress over poultry, meat and pork issues and relationships were admittedly difficult. Dumping by the US was the accusation. Lack of certification of SA exports was the reply. Most were downcast.

The context

The occasion for DG October’s remark was DTI’s presentation of its annual report to Parliament, with Minister Rob Davies present, and it was in answer to an Opposition member on the subject. It was apparent to all at the time that the AGOA had not been mentioned as one of the “achievements” of DTI for the year 2014/5 and the first quarter of the present year. That’s as close as Parliament can get to being up-to-date.

Then newspapers announced that South Africa’s inclusion had been agreed to by Congress and the AGOA Bill had been sent to President Obama for signature. The poultry and meat issue had been resolved apparently.

lionel october 3Everybody relaxed and Lionel October told Parliament in a further PC Trade and Industry meeting, this time on the Protection of Investment Bill, that indeed the Bill had indeed gone for signature and all was done and dusted.

Reverse gear

The we heard from the media, not DTI, that everything is held up again after DTI had admitted under pressure that they had failed to meet a poultry declaration deadline under the AGOA. A war of words started on whose fault that was, DTI claiming that the fault was mutual between the US and South Africa.

In the meanwhile we had put the AGOA behind us, the focus having shifted in the meanwhile to watching the Portfolio Committees of Police and awaiting the return of Private Security Industry Bill, President Zuma staying “mum” on the subject and the Cabinet saying nothing in their regular statements from GCIS.

Clearly the preamble to the AGOA agreement had fallen foul with the US Constitution finding this particular Bill objectionable in terms of international obligations on expropriation, presumably connecting AGOA to US investments in the security sector industry where US owned interests stood to lose control of their investments in South Africa. This time it was the US media reporting, not the negotiating parties.

Just recently, Ms. Joanna Fubbs, chairperson of the Trade and Industry Committee, refused Oppositionjoan fubbs members the right to discuss the issue of the Private Security Industry Bill in her Committee, stating that the subject matter was the domain of another Committee. The subject at the time was the Protection of Investment Bill, now passed at committee level, and whether this Bill would contribute further to poor US relationships, as was apparent with the Security Industry Bill already.

 Passing the cushion

But that was not the full truth. The PC Committee on Police, as far as we can establish, has never discussed in depth the implications of the Private Security Industry Bill as far as the AGOA is concerned. Meanwhile President Zuma, who had the Bill and still has, must be perfectly aware of the implications as must the whole Cabinet, since it is not just the poultry industry that is affected but the security industry, the automotive industry and a whole lot more.

This is especially in the light of the fact that, according to reports, this Bill has been mentioned in Congress in front of the SA Ambassador called to Congress to answer on the subject. Nobody knows therefore, if Parliament will again verbalise on the Bill because nobody will come clean on why the Private Security Industry Bill is stuck where it is in the Presidential office.

 AGOA vs Security Bill

Is AGOA on the altar of ideology, one must ask therefore.

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courtesy iol

During a very recent briefing to the PC on Trade and Industry on AGOA progress, Minister Davies told parliamentarians that everything “was in the hands of veterinarians, both on the US side and in South Africa, both parties taking the issues of animal disease and sickness very seriously“. He continued, “It has been more than we dare do in DTI to interfere or intervene in this process. It is supposed to be an independent process. Avian ‘flu in the US is a repeating disease but, however, all is now resolved from an SA perspective.”

The Minister added, “Furthermore on our side we, the Department of Agriculture and Fisheries and their veterinarians have written to the US side to say we are ready to implement all conditions so President Obama can sign. All the deals are done in both the US and SA industries and we just await the US response”, he concluded with Faizel Ismail present.

Dave MacPherson (DA) pointed to the fact that the whole of AGOA would be torpedoed anyway if the Private Security Industry Bill were to go through. Minister Davies responded that the Private Security had not come up once in the AGOA talks with the US. “Too much of this has been a media debate”, he said.

Under pressure

Consequently Minister Davies is fully aware the situation but dealing with the issues as if they were not connected, which could be considered slightly disingenuous. It is known that Minister Davies very much wants the AGOA deal signed but Oppositions members conclude, when asked, that they also cannot think of a single reason for pushing through the Private Security Industry Bill if it is at the expense of the AGOA and growth.

Unless it can be put down to disharmony within the Cabinet or intransigence on the part of the Minister of Police, they say.

As for the future of the AGOA then, for the moment don’t hold your breath but rather cross your fingers that Cabinet as a whole will come out of its ideological bubble, if this is the case.

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Private Security Industry Bill comes closer

Motive for Private Security Bill unclear…..

adt securityAs of this date, the Private Security Industry Bill still remains for signature by President Zuma passing it into law, having had the contentious clause that South Africans must own at least 49% of shareholding of any security companies, as proscribed in the original Bill passed by Parliament, increased to 51%.

However, from statements made by senior officials in the department of police and the minister himself it seems quite possible that government will push the law through despite the stated objections of security  industry associations and the possibility of the industry taking government to court on the matter.

The Bill introduced two years by minister Nathi Mathethwa, then a protégé of president Zuma but now reduced to the post of minister of arts and culture, posed the reasons for a controlling number of 51% being the result of the possibility of national security breaches by foreigners in South Africans affairs. This has never been defined.

Ek is die Suid-Afrikaanse

Such a matter was stated by the local security industry as being absurd since most South African management, local shareholders and certainly the majority of employees were South Africans anyway. In can only be assumed that the government thinks their are “plants” by foreign countries working in the industry, or alternatively, the reasons given by the state are a cover for some other motive, as of yet not clear.

Immediately the Bill was tabled, opposition members in Parliament pointed out that such a law would place SA not only in violation of international trade agreements but place the country in jeopardy of renewal of AGOA by the United States, of valuable export trading advantage to South Africa.

Particularly, South Africa is in danger of violating GATT agreements, but the minister of police has responded with the names of other countries discounting international agreements on the issue of local ownership control.

In a rush to close Parliament for the May elections last year, the Private Security Industry Bill, with other Bills, was hammered through Parliament using every possible ANC vote but, however with the 51% clause reduced to 49%.  This has now been reversed.

Trade and Industry unconcerned

Unless the Bill is returned to Parliament unsigned, a course, which would seemingly make the new police minister Nkosinathi Nhleko unhappy, and with minister of trade and industry (DTI), Rob Davies, appearing ambivalent on the whole issue, all would seem set for a suicidal dive into unknown international trading waters as far as obligations are concerned.

This is despite a trade delegation visit to the US on the subject. Recent statements by US congressmen and a joint letter addressed by them to SA on other possible violations of GATT by the DTI, particularly on poultry import issues threatening AGOA, are all being played down by cabinet ministers.

 American Chamber of Commerce in SA have pointed to the difficulty, not only with B-BBEE but with this proposal, the difficulty US/SA companies operating in South Africa have with their head offices in parting with ownership of their companies.

The police minister says that he “finds that South Africa will meet its trade obligations under GATT and the action will not threaten AGOA” – an unusual statement for a minister of police, whilst DTI itself, or the minister of trade and industry, still seem have their heads well below the water line.

Under the skin

Eventually, it will emerge what it that is so worrying to the department of police about companies like ADT, Tyco, Securitas, Chubb and the many Japanese, Korean and British companies involved in the manufacture and supply of security equipment….. all at the risk of disinvestment or, worse, maybe an imagined xenophobic wish for these countries not to employ ex-pats or immigrants from other parts of Africa. 

Other articles in this category or as background

No moves on new Private Security Industry law – ParlyReportSA

Private Security Industry Bill gets through Parliament – ParlyReportSA

DA’s Crucial Infrastructure Bill tabled on security – ParlyReportSA

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EU and AGOA still important to SA, says govt

portsharboursWhite Paper on AGOA and EU trade still applies….

In describing both the need to continue trade in terms of the African Growth and Opportunity Act (AGOA) and the importance of trade with the EU, the department of international relations and co-operation (DIRCO) said clearly some new terminology had been necessary to add to what was basically a 2012 document, the White Paper on Foreign Relations,.

DIRCO was briefing parliamentarians in the international and foreign relations portfolio committee on South Africa’s updated foreign trade policy.

New Bill from International Relations expected

New trading policies needed to be entrenched in the wording, they said, in what was clearly a roundabout way of introducing the idea of new legislation to establish a South African Council on International Relations and beef up the Consultative Forum on International Relations.

DIRCO officials talked at length on how BRICS had changed the scenario of South African foreign relations. However, positioning with the western trading world since the White Paper was first published had not changed much for South Africa, they said.    DIRCO expressed the need for continued good trade relations with the EU, which officials said was still an enormous contributor to overall trade relations with SA. They added that there remained an important need for AGOA to stay in place with the USA to beef up export figures.

Ubuntu the answer

The key concept behind all South African foreign relations was the concept of the “diplomacy of ubuntu”, they said, describing this as a policy of “collaboration, cooperation and partnership rather than conflict and competition”.

When asked by MPs as to whether DIRCO had considered the competitive nature of Nigeria and whether South Africa should really be the leader on the continent, DIRCO officials explained that South Africa’s stance was to “collaborate not compete” and this ethic applied to all relationships, particularly as far as trade was concerned. This was part of the “ubuntu” philosophy, they said.

On key foreign policies, the usual pattern as described in the White Paper were emphasized on the quest for “unity and economic, political and social renewal of Africa” but a number of times the expression “South-South solidarity” did emerge in answers.

Shift in partners

Emphasis was laid on the development of the South African Development Partnership Agency (SADPA) to pursue bilateral co-operation with international partners in support of African development but again it was noted the growth of BRICS in prominence in international affairs and the shift in global economic centre of gravity from North-West to South and East.

South Africa, DIRCO officials told parliamentarians would continue to support the development of larger markets in South Africa but Asia had become of increasing importance to South Africa, in fact Africa as a whole, with China and India increasing their global influence.

As far as the Middle East was concerned, the Levant was mentioned as providing excellent export opportunities but the area remained important in order to access sovereign wealth funds to finance infrastructure.

USA stays globally dominant

DIRCO finally acknowledged that the USA and Canada will remain dominant global and regional political and economic players with significant potential for tourism. DIRCO was conscious however of its own internal changes and policy directions on labour and civil society and incorporated this into their diplomatic training academy courses, which all appointments overseas were enrolled into.

Little could be drawn from DIRCO by MPs present on SADC, Zimbabwe and AU relationships, other than DIRCO intended stepping up its AU relationships, again with the principle of “ubuntu” at the forefront.

DIRCO said the updated 2012 White Paper on Foreign Relations is available on request.

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