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Poultry dispute threatens South African trade with US

Poultry dispute threatens South African trade with US
Johannesburg, South Africa
Published date:
Sunday, 13 September 2015

What came first, the chicken or the trade dispute?

The two have blurred together for U.S. negotiators holding $1 billion in South African exports hostage over Pretoria’s hesitation to allow American chicken farmers access to Africa’s most developed economy.

Trade officials from the two countries are meeting Monday in an attempt to assuage South Africa’s fears over an avian influenza outbreak in 15 states that has prompted the country to delay an earlier agreement to accept 65,000 tons of annual duty-free U.S. poultry imports.

Without those imports, the U.S. has signalled its willingness to exclude South Africa from parts of the African Growth and Opportunity Act, a trade framework that gives about 40 African countries tariff-free access to the U.S. market.

“I am concerned that we are not seeing enough progress and that market barriers persist,” said U.S. Sen. Chris Coons (D, Del.), who has been involved in the negotiations. “Congress has made clear that the United States should not allow other countries to enjoy trade benefits under AGOA while actively undermining our trading interests.”

chris coons 640px 

 Sen. Chris Coons


A U.S. official close to the negotiations said unless progress is made, South Africa’s car and citrus exports could bear the brunt of U.S. retaliation as the U.S. could suspend both those industries from AGOA, thereby subjecting them to tariffs and duties.

“There is a growing impatience with South Africa,” said the U.S. official. “They have been given chance after chance, frankly.”

The impact of an exclusion could add extra pressure to South Africa’s slowing economy, already struggling with tumbling commodity prices and a slowdown in China, a key trading partner. In 2014, the top U.S. import from South Africa was light motor vehicles valued at $1.3 billion. Additionally, the U.S. imported $41 million of oranges in 2014. A U.S. Department of Agriculture report noted that citrus exports from the Western Cape region in South Africa to the U.S. support 22,000 jobs that would likely be affected by a U.S. action.

A spokesperson at the Department of Trade and Industry in South Africa didn’t immediately return calls or emails seeking comment.

The fight over fowl began in 2000 when South Africa levied antidumping tariffs on U.S. poultry exports, choking off the flow of American poultry into the country, said U.S. exporters.

South Africa represents a small slice of U.S. poultry exports world-wide, valued at $5.5 billion, but U.S. exporters say they have missed out on supplying South African poultry consumption, which has grown 70% since 2000, according to the USDA. The U.S. only supplies about 3% of the country’s $340 million in annual poultry imports.

“We are upset not only [because] we’ve been blocked out of that market but it’s also the approach they have taken," said Michael Brown, the president of the National Chicken Council.

Industry experts say the South African poultry industry enjoys outsize political protection from the country’s government and is already under pressure from Brazilian and European exporters.

Joshua Meltzer, a fellow at the Brookings Institution, said protectionism of the type South Africa has attempted seldom work if the industry is inefficient. Ordinary citizens suffer because they end up paying for the higher costs, he said.

U.S. experts see the tussle over chicken as a litmus test in an important African market.

“We hope that countries are realizing that the AGOA lifeline will have an end date at some point,“ said Scott Eisner, vice president of African affairs at the U.S. Chamber of Commerce. “Those countries need to start thinking long and hard about how they enter into a robust trading relationship with the United States.”

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