TRALAC - Trade Law Centre

South Africa: 'New threat to AGOA benefits'

Sunday, 02 October 2016

Source: ENCA / ANN (South Africa)

The United States poultry industry has warned that South Africa could once again lose its trade free access for many exports to the market if South African poultry and pork producers get a court injunction to block US chicken imports.

US Poultry and Egg Export Council (Usapeec) president James Sumner said that if the South African Poultry Association (Sapa) and SA Pork Producers Organisation (Sappo) won their court case “it probably would – and should – trigger another out-of-cycle review under Agoa”.

The African Growth and Opportunity Act (Agoa) is the US law which allows eligible African countries to export many products to the US duty-free. It has been particularly beneficial to South African automobile, wine, and fruit exporters.

But South Africa nearly lost its key Agoa benefits last year as a result of an “out-of-cycle” review triggered by US poultry, pork, and beef producers who complained that South Africa was violating Agoa by blocking imports of their products.

South Africa eventually negotiated its continued participation in Agoa by lifting 15-year-old anti-dumping duties for a quota of 65,000 tons of chicken parts a year and also lifted health restrictions which continued to block poultry, pork, and beef imports.

But Sapa and Sappo have now appealed the lifting of the health restrictions on imported US poultry and pork. Sappo CEO Simon Streicher has been quoted in South African media saying his organisation was not convinced the US was doing enough to prevent its pork bringing porcine reproductive and respiratory syndrome (PRRS) into the country.

Streicher told The Poultry Site that South Africa was one of only a few countries in the world where PRRS had been eliminated and Sappo was wary of allowing it back in. He said about 500kg of US pork shoulders had already been blocked since the concession was made because of PRRS concerns.

Sapa is appealing against concessions by the government concerning the standard salmonella protocol for testing imported products, because of the risk of people getting sick if contaminated poultry enters the country.

Sapa CEO Kevin Lovell said Sapa and Sappo’s appeals should not have a negative impact on the Agoa agreement, as it was not an attack on agreed quotas. “All we want is for the United States to follow the same protocols as any other country.”

However, Sumner was convinced that if Sapa and Sappo won their court appeals South Africa’s Agoa participation would once again be challenged. He also acknowledged that because of various problems, the US had so far only met about 10 percent of the 65,000 tons quota and was likely to fall far short of it by the end of the year.

Another major obstacle has been that two major supermarket chains, Pick ‘n Pay and Checkers, have decided not to import US poultry. Jim Wayt managing director of Intervision Foods, one of the US companies exporting poultry to SA, said he was convinced that this was because the supermarkets were trying to avoid public perception of health problems rather than because of any real health concerns.

“If we get a level playing field, rather than a Lovell playing field, we will be able to compete,” he quipped, punning on the name of Sapa CEO Kevin Lovell, who has been the chief opponent of US poultry imports.

Sumner also expressed confidence that the US would eventually be able to meet its quota once it had made the necessary contacts and got back into the market from which it had been excluded for 17 years.

The US could benefit from a possible imposition of tariffs on poultry imports from the European Union (EU), which now enter the South African market tariff-free under the EU-SA free trade agreement. Wayt said he was expecting the South African trade authorities to make a determination on this on 21 October. The protection which SAPA is seeking for what is says has been a surge of EU poultry imports is a 13.4 percent safeguard duty.

One of the major US complaints has been that it is not only competing with South African poultry producers but also with EU producers who had a huge price advantage.

Sumner noted that even after the prohibitive anti-dumping duties on US poultry imports had been lifted for the 65,000 tons a year quota, US poultry producers were still paying normal duties of 37 percent versus zero for the EU.

“If South African poultry producers can’t compete with us after that duty, coming on top of our landed transport costs – South Africa is not next door to the US – then its not surprising chicken is so expensive in South Africa,” he said.

He also announced that the World Poultry Foundation would be coming to South Africa soon to discuss proposals for a programme to help and train disadvantaged South Africans to enter the poultry industry. Usapeec is funding that programme.

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