TRALAC - Trade Law Centre

Level playing fields and no bullying are needed

Monday, 13 April 2015 Published: | Miles Dally

Source: Business Report (South Africa)

There have been various opinions and views in the media regarding the current process of the review and proposed renewal of the African Growth and Opportunities Act (Agoa).

We believe that many misconceptions have been created in the minds of the public and as the largest poultry producer in South Africa and a major employer in the country, we would like to clarify the actual position to dispel some of these misconceptions. We note the following:

- Agoa is important and we support its renewal. It is, however, a unilateral trade agreement and does give the balance of power to the US.

- We do not oppose imports into South Africa, but we do oppose dumping. Dumping is a practice whereby one country sells a product to a foreign country at a lower price than it sells that same product in its own country or at less than the cost of production for products with limited demand, which is what applies here.

It is usually done when that product is in surplus in the home country and they don’t want to damage their own market by selling this product at the low prices they sell it to other countries for.

Dumping is not allowed in terms of international trade in any country in the world and hence the International Trade Administration Commission of South Africa imposes duties on such products when they are sold in this manner. It is regarded as being unfair trade.

- The anti-dumping duty imposed on US chicken coming into South Africa was imposed only on leg quarters and not on other chicken products or whole chicken. Leg quarters are in surplus and unwanted in the US since breast meat and wings are the preferred cuts in this wealthy nation.

So it is incorrect to speak inclusively of anti-dumping tariffs on chicken when it is only in respect of one product line. The US have always been welcome to export whole chickens to South Africa without any anti-dumping duty.

- The South African delegation discussing the chicken dumping issue with the US at the current Agoa negotiations offered the US negotiators an opportunity to export completely duty free to South Africa, as long as it was the whole chicken.

This would have ensured fair trade, since all parts of the chicken, not just those the Americans don’t want, would have been exported. The US rejected this despite it obviously being the fair way to trade.

 Viability

- The practice of dumping is a threat to the viability of the South African poultry industry and has already resulted in many smaller producers going out of business.

A threat to the viability of the poultry industry is a threat to food security in general, because the soya and grain markets need a strong local poultry industry to ensure their sustainability and growth as poultry is the biggest user of soya and the second biggest user of South African maize.

Apart from the threat to food security, the additional threat is to employment as the total number of direct and indirect jobs which would be put in jeopardy should these industries fail is in the region of 126 000.

- The US is demanding that they be allowed to export to South Africa. South Africa is not allowed to export to the US because of avian influenza (AI) in our ostriches. We have never had notifiable AI in our chickens. The US also has AI but are seeking a dispensation to export from those states where they do not have AI.

- The US could have, at any time in the past 15 years, motivated a remedy to the World Trade Organisation if it felt that the anti-dumping duties currently in place were inappropriate.

This would have been normal practice and is the correct way for any country to address an international trade issue they feel is wrong. They have not done so.

We believe that the US is effectively holding South Africa to ransom by threatening not to renew Agoa unless we allow them to behave inappropriately.

We are not seeking special treatment but merely that the playing fields are levelled and that we do not allow our country to be bullied into giving dispensations which will harm our economy and which present a real threat to long term food and job security.

 

* Miles Dally is the Chief Executive Officer of RCL Foods, SA’s largest chicken producer.

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