TRALAC - Trade Law Centre

South Africa's trade union federation COSATU says "AGOA should remain non-conditional and preference based"

Wednesday, 22 April 2015

Source: COSATU

The Congress of South African Trade Unions (COSATU) has noted a huge media interest in the USA’s Africa Growth Opportunity Act (AGOA) and poultry.

AGOA is a unilateral preferential agreement in the form of zero tariff exports to the US in favour of eligible African countries and is due to be renewed in September 2015. SA is an eligible country under AGOA.

Currently the US poultry imports are subject of antidumping (AD) duties in addition to normal tariffs that apply to all imports except those countries that have trade agreements with SA such the European Union.

The current antidumping duty on US chicken imports(chicken portions and offal) was imposed in 2000 and is currently 940c/kg.

This duty has resulted in an effective blockade on US imports of chicken portions such as frozen legs, thighs and wings.

Unlike EU imports which are faced with zero tariffs in SA because of the FTA (Economic partnership Agreement), USA imports are subject to tariffs and additional anti-dumping duties.

In order to resolve this matter an import quota that will have the effect of waiving the said AD duties on certain number of chicken imports has been proposed and the negotiations are still in progress.

AGOA has contributed in making African exports competitive because of the zero tariffs that grant eligible countries an advantage over non-AGOA countries except those that have free trade agreements with the US.

As a result SA has exported value-added-products such as BMW 3 series, Mercedes Benz-c class, citrus, and aluminium and chemical products.

This has contributed in increasing non- mineral exports even though SA exports are still dominated by raw or semi beneficiated minerals.

AGOA is not different from traditional aid which tends to create dependency on behalf of beneficiaries.

The US markets is one of the few lucrative market and it may be difficult for exporters to switch over to other markets without risks of job losses should AGOA be removed.

The poultry anti-dumping issue has been raised as an issue standing between SA and the AGOA. However, this is just a symbolic issue as there are deep-seated problems with US government’s interpretation of AGOA.

The US has continued to maintain non-tariff barriers on AGOA imports with the result that many AGOA countries continue to export a few products and mainly in the energy sector.

Furthermore, the US is concerned that SA has imposed policy restrictions on US trade and investment such as the Private Security Industry Regulation Amendment Bill, which is an internal security matter and is expecting SA to reciprocate on the benefits of duty free market access under AGOA.

COSATU congratulate the DTI in ensuring that AGOA is retained even though for a short duration of 10 years and not 15 years as requested by the SA government and to ensure that poultry issue does not hold hostage the renewal and inclusion of SA in AGOA.

The USA has attempted to use AGOA to extract concessions and bully SA into agreeing to further liberalise her market.

This is unfortunate as AGOA is meant to be a non-reciprocal agreement which does not require eligible countries to liberalise their trade.

The US is incorrect in comparing itself with the EU market access under the Economic Partnership agreement. The EPA’s were entered into by African countries under the threat of withdrawal of preferential tariffs and it was not voluntarily agreed to by African countries.

Certain commentators have argued that SA should let go of her poultry sector in exchange for AGOA.

It is important as emphasised by comrade DR Rob Davies that both AGOA and poultry are important and that AGOA should not be traded off for poultry. Hence the DTI mission which included a labour constituency to Washington to canvass for SA’s inclusion in AGOA without conditions.

The poultry AD issue should not be a precondition to SA’s inclusion in the AGOA as SA has a right under the WTO and local laws to impose AD duties on dumped goods.

Poultry remains one of the few sectors which requires low skill and has low sunk costs.

Whilst COSATU is opposed to further liberalisation of the trade, a compromise in the form of import quotas based on what the US was importing before the imposition of antidumping duties plus growth factor should be commended.

The imports would still be subject of tariffs and SA would still have a right to impose the AD duties on any excess.

COSATU urge government to maintain and increase further protection to the sector and to preserve jobs.

SA has a right under the WTO to impose antidumping duties on dumped imports. The imports of US chicken portions are dumped into SA as these are sold at lower prices and are likely to kill domestic producers and processors and jobs. In the USA there is little market for chicken thighs and legs as US consumers prefer the white meat (breast) and legs and wings are exported below their costs of production.

ITAC has imposed tariffs on poultry imports from Germany, the UK and the Netherlands.

The US has imposed antidumping duties on SA steel exports. COSATU wish that any agreement on chicken import quota would be phased over a certain period and will not result in jobs losses.

Should there be job losses these workers should be allowed to import the chickens that are the subject of the quotas sell them in competition to existing importers.

COSATU condemn the USA demands that SA should give up protection of the poultry sector and should reduce its tariffs with the US in order to place USA producers at level playing field with EU companies which enjoy reduced and zero tariffs under the EPA FTA.

Firstly, if the US is concerned about poultry it should take the matter to the WTO court and it should request negotiation of an FTA rather than using AGOA to illegally extract concessions.

The USA demands to force AGOA countries to choose between AGOA and their domestic needs are unwarranted.

It is too early to speculate on whether SA would be subject of conditions under the new AGOA, as the process of finalizing the law is underway in the US Congress.

Issued by COSATU
For more information contact:
Mpheane Lepaku
COSATU Trade Policy Co-ordinator
Mobile: +27 82 340 6701
E-Mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

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