Trade giant wants chicken market
The European Union (EU) Commission, under the Southern African
Development Community Economic Partnership Agreement (SADC EPA), has declared a
dispute with the Southern African Customs Union (SACU) after the union made use
of a safety valve in the agreement and imposed safeguard duties on frozen
bone-in chicken portions imported into South Africa from Europe.
The safeguard duty amounts to 35.3% on the imports and
was imposed on 28 September last year. This, however, follows a provisional
safeguard duty of 13.9% imposed for 200 days and set up through the Trade,
Development and Cooperation Agreement (TDCA) following bilateral talks between
South Africa and the EU. The TDCA established preferential trade agreements
between the EU and South Africa.
The South African Poultry Association (SAPA) had
lodged the application “on behalf of SACU” in February 2015.
With the advent of the EPA, the TDCA’s article 16,
which deals with agricultural safeguards in bilateral trade between the EU and
South Africa, had effectively been repealed.
According to the EU, “the safeguard measure started
under the TDCA should not have been continued under the EPA and a new
investigation with a different reference period in accordance with a new legal
basis should have been launched after the start of the provisional application
of the EPA on 10 October 2016.”
In the July Trade and Law Centre (Tralac) trade brief,
Gerhard Erasmus writes that “the matter has a complicated history which
predates the SADC EPA. It is the scene of a protracted battle by SAPA against
all chicken imports, in which countries such as Brazil, are also targeted.”
Erasmus continues by saying that even though the TDCA
came to an end, the matter remained on the agenda of South Africa’s
International Trade Administration Commission (ITAC) and in November 2016,
after EPA was provisionally applied, ITAC recommended the 13.9% safeguard duty
which was officially imposed on 15 December 2016.
The measure was approved by the South African trade
minister Rob Davies.
According to documents seen by Business7, following
the gazetting of the new 200-day duties, interested parties were invited to
During August, ITAC decided that there was sufficient
information to indicate there was an increase in chicken imports from the EU
and the SACU industry is “experiencing a threat of disturbance and/or serious
injury in the market”.
It was agreed to impose a final safeguard measure of
35.3% which would be scaled down in three phases to 0% by March 2020.
Essential facts letters were sent out in August 2017
in this regard. It received comments from interested parties and during
September, ITAC told Davies that the provisions for safeguards under the
bilateral TDCA (applicable to South Africa) had effectively been replaced by
article 34 of the EPA (applicable to SACU and Mozambique) but added that there
was no need to question the validity of its investigation as to the impact of
chicken imports from the EU.
The commission eventually found that there was “sufficient
information to justify that the matter be raised in the Trade and Development
Committee” of SACU.
Under the EPA, SACU is seen as a unit, a legal entity
and one that takes decisions by consensus. Moreover, the SACU Tariff Board
“shall make recommendations on changes of customs, anti-dumping and safeguard
duties from outside the common customs area”. The Council of Ministers shall
make decisions and direct policy under SACU, with decisions taken under
consensus. The Joint Council of the SADC EPA implements the tenets of the
agreement and is assisted by the Trade and Development Committee.
All of these bodies are in place at SACU, save for the critical Tariff
Although all the paperwork is in place and the annex has been adopted,
the board never become operational.
Some experts question how safeguard measures could have been implemented
“by SACU” without a tariff board which is tasked with this, and a well-placed
source within SACU told Business7 that “South Africa refuses to discuss
the matter and because all decisions must be made by consensus; our hands are
South Africa’s poultry industry is certainly buckling under the strain
of Brazilian imports. SAPA’s fourth-quarter Key Market Signals in the Broiler
Industry for 2018 shows that Brazilian imports made up 59.4% of all imports
while the EU accounted for 18% and the US, 13.8%.
However, the EU, in its application for a formal consultation dated 14
June this year, writes that “the safeguard measure only had the effect of
replacing EU imports with imports from other countries including the US and
According to Anton Faul of the Namibia Agricultural Trade Forum, the
effect of the safeguard measures for exports from the EU to South Africa only
had the effect of creating an “artificial vacuum”.
“Production takes a while to catch up and as less chicken is coming in
from the EU, this gap was filled by Brazil.”
Import companies in South Africa, and the sub-region, have been doing
According to Pieter van Niekerk, commercial manager at Namib Mills, meat
importers seek the cheapest source of imports.
“Their businesses are built on countries who are willing to dump and
they need relatively little capital to distribute their imported products as
opposed to the costs of setting up an entire industrial chain.
Burden of proof
Importers want to import, thus, they will not necessarily support
initiatives which protect the local industry,” he said.
Erasmus writes that the EU seeks, in its complaint, not only the burden
of proof, but also how investigations should be conducted and the causality
requirement of safeguard measures, among other things.
He is of the view that the policy considerations behind this dispute do
not only include SAPA regularly lobbying ITAC for support measures, as they did
in November last year against Brazilian imports, but Brexit is also a
Should a no-deal Brexit take place, there will be roughly a million
tonnes of poultry meat, part of the mutual trade between the EU27 and the UK,
available and markets need to be sourced for this product.
Whether or not the EU wins in this dispute will have no real impact on
Namibia. The country sees imports, even though there are restrictions, and in
2018, around 5 000 tonnes of chicken was in the country on the market,
unaccounted for. SAPA is currently engaged in the Windhoek High Court to have
import restrictions to Namibia set aside, yet they seek protection for their
own industry, starting off with a bilateral agreement which was ‘transferred’
to SACU, which has no tariff board.
For Namibia’s poultry industry to grow and thrive, experts agree that
two things must happen.
Firstly, the court matter, now dragging on since 2014 must be resolved
to allow for closure and investment into the industry and secondly, cabinet’s
March 2019 directive that all government agencies and ministries must procure
locally, must be fully enforced, something that is not happening.