- African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/At heart of US-South African trade dispute, a serious game of international chicken

At heart of US-South African trade dispute, a serious game of international chicken

At heart of US-South African trade dispute, a serious game of international chicken
Mr. Postles has farmed chickens for decades and sees foreign markets as an essential tool in expanding the industry. (Credit Matt Roth / The New York Times)
Published date:
Tuesday, 17 February 2015
Jennifer Steinhauser

The 40,000 chickens — a few short weeks from becoming Valu-Paks at the supermarket — scratched their way toward the rows of water drips, eager for a little midday sip. Eyeing an open door, one bird made a vague attempt to wander away, before it was gently returned to the brood.

Such prancing poultry rests at the center of a major trade dispute between the United States and South Africa, with large economic stakes, especially in states like Delaware, the birthplace of the American chicken industry.

For decades, in addition to chemicals (think DuPont) and corporate registrations, the state has been known for three other C’s: cards, cars and chickens. The car business has imploded, as manufacturers have closed operations. The card business — credit cards, that is — is humming.

The last C, chickens, accounts for only about 3 percent of the state’s jobs, but it is big where it is needed most, in the Delmarva Peninsula with Maryland and Virginia. Indeed, Sussex County is the nation’s biggest producer of meat chicken, and the future of this business rests in large part overseas, especially for the savory dark meat that is disfavored here but enjoyed abroad.

“There are more and more people in the world,” said Charles Postles, who has raised chickens here for decades and, like most people in the poultry business, sees foreign markets as an essential tool in expanding the trade. “And chickens are an economic form of protein.”

But one of the industry’s potentially most lucrative importers, South Africa, has been placing tariffs on American chickens for years, essentially shutting them out, frustrating farmers, trade officials and members of Congress from the unfortunately named Chicken Caucus.

“There are 14,000 people in my state whose lives depend on chicken,” said Senator Chris Coons, Democrat of Delaware. “Chicken here is not just a product; it’s a way of life.”

American officials, led by Mr. Coons and Senator Johnny Isakson, Republican of Georgia, a huge chicken-producing state, are now threatening South Africa’s continued inclusion in a trade partnership that has been particularly beneficial for that nation.

If South Africa continues to shun the chickens of America to protect its own, officials say, then perhaps that nation should be removed from the trade agreement that allows it to send its wines, luxury automobiles and other goods here.

“You want unlimited access to American market to sell autos, yet you won’t let my state send its biggest agriculture export into your country?” fumed Mr. Coons, who has long been involved in African affairs.

The dispute over chickens comes just as President Obama is pushing an aggressive trade agenda in Congress. But for some lawmakers the rejection of American chicken is emblematic of other disputes, and evidence that trade agreements often do not live up to their billing for the United States.

“Members of Congress are fed up with this,” said Representative Rosa DeLauro, Democrat of Connecticut.

The African Growth and Opportunity Act, a trade deal providing duty-free treatment for some products from sub-Saharan Africa, was first passed in 2000 to help bring that impoverished region into the international economy. That was the same year South Africa — which accounts for the majority of American imports under the trade deal and which exports billions of dollars in goods to America — began to impose large duties on chickens, which officials here believe is a trade violation. South Africa contends that the United States is trying to “dump” chicken on its market below the cost of production.

For several years, questions have been raised about the need for the inclusion of South Africa, a member of the Group of 20 largest industrial economies with a booming middle class.

Chicken producers have been pressing the White House on the issue, and lawmakers are considering dropping South Africa from the trade deal, which is scheduled to expire this year if not extended, unless the country relents. Mr. Coons, Mr. Isakson and others have met with South African trade officials to issue their not-so-veiled threats.

“What is important is that we convince South Africa that we have that capability and they believe it,” Mr. Isakson said. “We have a full-court press on poultry.”

Sidwell Medupe, a spokesman for South Africa’s Department of Trade and Industry, said that while the two nations continued to haggle over fowl, his country’s position is that it should be renewed in the trade agreement, “without any new and onerous eligibility criteria.”

The Obama administration would like to see the agreement renewed sooner rather than later, but officials concede that the chicken issue is greatly complicating the process. The two sides remain far apart, according to trade officials and industry executives here.

While several Southern states produce more chicken than Delaware, the chicken industry is responsible for a very large portion of the state’s farm income, according to trade associations.

According to local lore, the chicken business began here in 1923 when a woman named Cecile Steele ordered 50 chicks for egg-laying purposes, but accidentally received 500. The brood eventually became a clutch of birds weighing about 2.5 pounds apiece. Sticking with the industry she created, she grew her numbers to 10,000 by 1926.

The broiler industry has been nourished by the peninsula’s mild climate and sandy soil, both hospitable to chicken raising, and the local chicken knowledge developed over years by many small farmers with tiny but productive egg-laying farms. Farmers here raise chickens for some of the nation’s biggest names in the industry, like Perdue, Tyson and Mountaire.

While rising feed costs and environmental regulations took a toll on the business in the late 1990s, chickens are on the upswing again, said Mr. Postles, who raises 120,000 chickens several times a year. Foreign markets — which make up about 20 percent of the nation’s business now — are one reason.

“We keep growing people,” Mr. Postles said. “And we have a way of wanting to eat.”

Read related news articles

South Africa walks a tightrope on US relations

South Africa has been conducting a high-wire act in its relations with the United States (US). It is maintaining friendships with Washington’s enemies like Russia, Iran and China while trying to avoid disrupting its economic relations with America. Tensions came closer than ever to breaking point this month as the US House of Representatives’ Committee on Foreign Affairs passed the US-South Africa Bilateral Relations...

28 March 2024

Remarks by Deputy Treasury Secretary Adeyemo on the US-South Africa economic relationship

As Prepared for Delivery in Johannesburg, South Africa Thank you for the warm welcome. I want to express my gratitude to Consul General Spera and the American Chamber of Commerce for hosting me. I am honored to be joined today by South African Entrepreneurs that are building companies to unlock the economic potential of their country.  I owe my own presence here today to the inspiration I drew from South Africa. In the middle of the...

13 March 2024

South African president Ramaphosa meets with US congressional delegation

South African President Cyril Ramaphosa today, 21 February 2024, received for a visit from a bipartisan congressional delegation from the United States of America, in Tuynhuys, Cape Town. The delegation is visiting South Africa at the invitation of the Aspen Institute. The President and the US congressional delegation discussed the importance of the relationship between South Africa and the US, which manifests in strong economic,...

21 February 2024

US congress receives Bill to review South Africa relations

A bill has been submitted to the United States congress calling for a full review of the country’s bilateral relationship with South Africa following the International Court of Justice ruling that found it plausible that Israel has committed acts of genocide against Gaza. The bipartisan bill which was introduced by US Republican congressman John James and Democratic Party congressman Jared Moskowitz this week could threaten South...

09 February 2024

Fitch research unit expects better AGOA deal for South Africa

Fitch’s research arm, BMI, believes SA has done enough to get improved trade terms under the African Growth & Opportunity Act (Agoa), which it expects to be extended and modified before its expiry in September 2025. But it warns that the deal might be stillborn if Donald Trump is elected US president. The research think-tank said in a note it assigns a 65% probability that Agoa will not only be renewed but modified to the benefit of...

09 January 2024

South Africa: BLSA CEO calls for more companies to leverage AGOA opportunities

Many more South African companies could benefit from the African Growth and Opportunity Act (AGOA), which gives eligible countries access to US markets free of tariff barriers, business organisation BusinessLeadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter. Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led...

20 November 2023

US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa

President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...

09 November 2023

US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility

Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa. That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in...

07 November 2023

AGOA benefits extend beyond trade [incl. VIDEO of Friday's opening session]

Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa. “AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods...

06 November 2023

South Africa pins its hopes on an early 2024 US Congress renewal of AGOA

South Africa’s government is hoping that the process to renew the African Growth and Opportunity Act (Agoa) by the US Congress will be concluded by early 2024, ensuring that more than 20 African countries continue to have duty-free access to the world’s largest economy.   This is the first time that the South African government has given a timeline for when it hopes the US Congress might extend Agoa, which has been renewed twice...

05 November 2023

SA trade minister Patel expresses confidence at media briefing about South Africa’s continued inclusion in AGOA

Ahead of South Africa hosting the US-AfricaTrade and Economic Cooperation Forum – also called the AGOA Forum – from November 2 to 4, Trade, Industry and Competition Minister Ebrahim Patel on October 26 briefed the media on the state of readiness for the forum, expressing confidence that the South African government’s relations with the US were strong. Various South African stakeholders have been motivating for...

26 October 2023

You are here: Home/News/Article/At heart of US-South African trade dispute, a serious game of international chicken