TRALAC - Trade Law Centre

Chicken tax strains US-South Africa relationship

Thursday, 05 March 2015 Published: | Nathaniel Glidden

Source: Council on Foreign Relations Blog

For the past fifteen years, South Africa has been taxing poultry imports from the United States. This chicken tax has not been popular among representatives in the U.S. Congress.

Senator Chris Coons of Delaware has been particularly vocal, and his opposition was again reported on in a New York Times article two weeks ago.

Senator Coons’ concerns are twofold: the tax hampers U.S. poultry exports, one of Delaware’s staple industries. Additionally, the tax is considered unfair given that South Africa receives trade benefits under the African Growth and Opportunity Act (AGOA), a non-reciprocal trade program that allows sub-Saharan countries party to the agreement to export approved products to the United States untaxed. As a member of AGOA since 2000, South Africa has benefited from untaxed exports to the United States for products such as luxury automobiles and wine.

Despite the grumblings among members of Congress, South Africa has been reluctant to remove the poultry tax.  In part, the South African government claims that removing the tax would undermine local producers as U.S. poultry is cheaper than South African poultry. Additionally, South African officials have found justification in the World Trade Organization’s protectionist “anti-dumping” laws, which permit countries to impose levies on a product if it is introduced into a market at less than normal value. South Africa is protecting its local economy not just from cheaper U.S. poultry, but also poultry imports from the Netherlands, Germany, and the United Kingdom as well. Though the chicken tax is intended to protect the local poultry industry, it has unintended consequences. It raises prices because local suppliers do not provide enough poultry to meet local demand.

Though in accordance with the World Trade Organization’s protectionist “anti-dumping” law, South Africa’s chicken tax, which can be as much as 82 percent of the value of poultry imported, has become a thorn in the United States’ side. Senator Coons has gone so far as to recommend that the United States discontinue its AGOA partnership with South Africa. AGOA expires this year and will be up for reauthorization in September. As South Africa faces a projected growth rate of a meager two percent, it is in its interest to re-sign AGOA in order to maintain its export revenue stream. What remains to be seen is whether Senator Coons’ efforts will sway the Obama administration, which is in favor of re-signing the agreement with South Africa. If Coons succeeds, the U.S.-South Africa bilateral relationship along with South Africa’s trade benefits and economic opportunities may change for the worse.

This is a guest post by Nathaniel Glidden, intern for the Council on Foreign Relations Africa Studies program. He is currently pursuing a Master’s in International Affairs with concentrations in Development and Cities & Social Justice at The New School. Sourced from the Council on Foreign Relations Blog page. 

View related news articles

'The renewal: US-Africa relationship'

'The renewal: US-Africa relationship'

In his first allocution to African leaders at the virtual African Union Summit in February, recently elected United States President, Joe Biden, reiterated his administration’s commitment to rebuilding partnerships with Africa and re-engaging with international institutions such as the African Union. Biden set out his foreign policy priorities, pointing towards...

13 April, 2021
SA president to meet with US Chamber of Commerce over investment

SA president to meet with US Chamber of Commerce over investment

President Cyril Ramaphosa will participate in a virtual business and investment roundtable on Tuesday (10 November) with representatives from three major business organisations from the United States. The organisations are the Business Council for International Understanding (BCIU), the Corporate Council on Africa (CCA), and the US Chamber of Commerce. “The president...

10 November, 2020
Opinion: 'Trump vs. Biden: This is how it could impact South African agriculture'

Opinion: 'Trump vs. Biden: This is how it could impact South African agriculture'

As the race for the White House continues, agriculture leaders say a win for Democrat Joe Biden will strengthen and fast-track trade relations between South Africa and the United States. Currently, the race between pres. Donald Trump and Biden hinges on tight races in battleground states. Trump has already falsely claimed victory while Biden called for patience and every...

05 November, 2020
Will the US presidential elections impact South Africa’s economic recovery?

Will the US presidential elections impact South Africa’s economic recovery?

With over 6.29million recorded cases worldwide and over 380,00 deaths, its safe to say the COVID-19 pandemic has shaken the globe as we know it. Although Africa has, for the most part, managed to avoid an exponential spread of the disease, the overall recovery of the country and more specifically South Africa, hangs in the balance due to a number of...

27 July, 2020
'South Africa must get ready for an inevitable loosening of trade ties with the US'

'South Africa must get ready for an inevitable loosening of trade ties with the US'

In six months’ time the world’s gaze will be trained on what is gearing up to be a contentious and hotly contested presidential election in the US. Irrespective of who emerges victorious between the incumbent President Donald Trump and the Democratic nominee Joe Biden South Africa needs to start thinking about what it stands to lose – or gain – from the new...

02 June, 2020
Former US negotiator: US-Kenya deal could spur regional value chains

Former US negotiator: US-Kenya deal could spur regional value chains

A trade deal with the U.S. could help both Kenya and its neighbors in the East African Community by fostering the development of regional value chains, a former U.S. trade official tells Inside U.S. Trade. “I think it’d be really fascinating as we go forward with this U.S.-Kenya FTA to see what’s going to be possible not just for Kenya but for other African countries...

10 February, 2020