South Africa loses game of chicken in renewal of US trade agreement
Issued on: Modified:
South Africa’s "chicken war" with the US has been resolved, removing a barrier to the renewal of a key trade agreement. Restrictions on US poultry imports to South Africa had threatened South Africa’s inclusion in the extension of the African Growth and Opportunity Act (AGOA) which enables African countries to import certain products to the US duty-free.
“We had a discussion on a quota of poultry products that would enter South Africa and essentially this will consolidate and fortify South Africa’s position in the African Growth and Opportunity Act,” South Africa’s Minister of Trade and Industry Rob Davies told RFI in an interview at the South African embassy in Paris on Saturday.
The chicken war resulted from accusations that US poultry producers had been dumping cheap chicken into the South African marketplace, hurting domestic producers who could not compete on cost.
Pretoria slapped anti-dumping charges on US chicken exports to protect its own chicken farmers. However, the American poultry industry lobbied hard to have South Africa’s tariffs lifted and called into question the favourable treatment other South African export products receive through AGOA.
The agreement on a quota system for US poultry paves the way for the renewal of AGOA but is likely to threaten South Africa’s domestic chicken producers.
“It will place the United States as a very prominent importer,” said Minister Davies. “It will not just be that it will replace other imports, it will have an impact on local production."
The compromise reached between the two countries removes any obstruction to South Africa’s inclusion in AGOA as the agreement comes up for renewal later this year.
Since its inception 15 years ago, AGOA has given a boost to the South African economy and in 2014 it banked more than 1.7 billion dollars of export revenue as a result of the agreement. Considering the impact of AGOA across sub-Saharan Africa, South Africa benefits from up to 75 per cent of non-oil US imports under the agreement.
“I think by solving this matter we’ve put the relationship back on a more cordial and productive footing,” said Davies, following negotiations that took place in Paris.
“It’s important to say that the South African Poultry Association, which had nothing to gain, came to the party and was a participant in this negotiation and played a patriotic role in terms of looking to the bigger national interest and making a concession,” he added.
In light of the concession made by South African poultry producers, there will be initiatives to try to manage the fallout from the likely reduction in sales of domestic chicken products.
“There will be a package to support small black companies in the import of the US product and its packaging and further processing in our country,” the minister said. “We have been talking more generally about other components of a developmental package which we have to work through, which would include training of people in our poultry industry in the United States.”
The US Senate has already agreed to extend the AGOA agreement. The finer details will be debated by Congress with a renewal of the agreement expected by September.