TRALAC - Trade Law Centre

South Africa: Local poultry chief says US asking SA to shrink its economy

Monday, 23 March 2015 Published: | Ellis Mnyandu

Source: Business Report (Independent Newspapers)

A proposal from the US poultry industry aimed at resolving the ongoing impasse over their poultry imports into South Africa is tantamount to asking the country to shrink its economy, according to the South African Poultry Association (Sapa).

Sapa chief executive Kevin Lovell said the industry body would shortly be responding to the latest offer by its US counterpart, the USA Poultry and Egg Export Council (Usapeec), as the two wrestle with how to resolve a trade dispute that threatens to end South Africa’s participation in the African Growth and Opportunity Act (Agoa) trade scheme.

Lovell said the industry body would also be repeating its invitation to continue discussions with Usapeec and the National Chicken Council of the US in South Africa.

He dismissed claims that Sapa was holding up efforts to resolve the trade dispute.

“As the duties are lawfully in place the best solution for the dispute is that the two industries find some reasonable compromise,” said Lovell. “We have been twice to the USA, they have yet to come here, and it is time for some sunshine discussions.”

According to Lovell, the current US offer would remove the equivalent of the third-largest producer from the South African market. “That is both unreasonable and unacceptable,” he told Business Report.

Timelines

He said Sapa had tried to get a clear understanding of the timelines involved in order to work within the requisite schedule to try to reach a resolution, but no one had been able to be very specific.

“We have explained to our counterparts that the sooner they can be reasonable the sooner we can agree to a concession for once we have agreed and reduced our agreement to writing we will have to make an application to the International Trade Administration Commission (Itac) to put our agreement into effect,” said Lovell.

He said the parties could not privately bypass a lawful trade instrument that was in place and Itac needed to allow interested parties to comment on what the two industries might find acceptable.

“Where the two industries differ widely is that the US industry seems to care little for our market realities,” said Lovell, adding that principal among these was that the South African poultry industry could not increase exports to the US because of sanitary and phytosanitary issues, and whose basis, he said, was ”spurious”.

“So an increase in imports means a reduction in local production,” he said, adding that the prime dispute was about an unfair trade corrective instrument – the anti-dumping duty.

“For as long as the Americans dump we will defend our right to be protected from unfair trade.

“We are prepared to be harmed for the greater good of South Africa, but there are limits to the level of harm we can countenance,” said Lovell.

“The Americans wish the world to believe that in the process of cutting up a whole chicken the cost (per kg) of some of the parts increase (breast meat) and others decrease (dark meat). That is clearly not logical.”

He denied that US poultry imports were shut off from the South Africa market.

“The anti-dumping duties apply to only one tariff line, so the rest of the poultry import market (about 250 000 tons per annum) is freely available to them and the part for which the anti-dumping duties apply (about 150 000 tons) is also available as the principle of an anti-dumping duty is that it is corrective, not punitive, ie it levels the playing field so that the two parties can compete equally and fairly.”

Lovell said the US government had not contested the validity of the South African duties at the World Trade Organisation (WTO). The rule of law, he said, allowed that these duties be considered lawful until shown otherwise.

“Their real problem is that the US poultry industry is not a real exporter but rather a surplus disposer – removing surpluses their own people do not want to eat and finding poorer people in the developing world who are attracted to the unnaturally low prices of these products,” Lovell said.

He said the US approach thus far was akin to asking South Africa to make a choice “as to how we would like to shrink our economy – chicken or cars”.

“Are jobs in agriculture worth less than jobs in the motor industry?” Lovell asked. “One should not forget that we traded with the US before Agoa and we will still be trading with the US after Agoa ends whenever that might be. Since Agoa is a unilateral agreement they can cancel it at any time which is not very good for long-term investment planning,” he said.

 

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