South Africa-Brazil Frozen Chicken Trade Dispute

Last updated

In 2012, South Africa imposed anti-dumping duties on Brazilian imports of frozen poultry products. Brazil brought its case to the World Trade Organization, and South Africa chose to impose a general tariff on chicken imports, rather than anti-dumping duties against Brazilian importers.

Contents

Origins of the dispute

In June 2011, the Southern African Poultry Association (SAPA) filed a complaint with the International Trade Administration Commission (ITAC) of South Africa about the alleged dumping of Brazilian frozen chicken products in the Southern African Customs Union (SACU) countries, Botswana, Lesotho, Namibia and South Africa. [1] ITAC launched its investigation in June 2011. [2] After examining the relevant data in the South African market between 2008 and 2010, the ITAC imposed provisional anti-dumping duties of between 6% and 63% in January 2012, following an investigation that concluded that three major Brazilian exporters sold chicken products at prices below their domestic market cost. [1]

The ITAC concluded that SACU chicken suffered material injury due to price undercutting, lower profit margins, reduced market share, lower revenue growth and under-utilization of production capacity. [1] The Commission's report estimates the dumping margin for whole frozen chickens at 63 percent and 47 percent for boneless cuts. [3]

The Brazilian Poultry Association (UBABEF) argued that the duties were put in place to protect the inefficient South African poultry industry, and that higher costs would be passed onto consumers, approximately US$70 million per year. [3]

Brazil made informal attempts to resolve the dispute, such as by proposing a trade-off between Brazilian chicken and South African wine, which the South Africans rejected. [1]

Case Brought Before WTO

On 21 June 2012, Brazil requested consultations with South Africa in the WTO regarding the imposition of anti-dumping duties on Brazilian chicken, formally beginning the WTO's dispute resolution process. [4] Brazil argued that South Africa acted on incomplete information, and that their initiation and conduct of the investigation were inconsistent with South Africa's obligations under the General Agreement on Tariffs and Trade and the Anti-Dumping Agreement. [2] [4]

In particular, Brazil took issue with the determination of injury, South Africa's definition of domestic industry, the evidence used and the process of investigation, asserting that ITAC failed to produce positive evidence for injury and questioned the methodology of the investigation as flawed. [2]

Brazil said the South African Poultry Association had "grossly overstated" statistics on chicken imports and cited SA's "uncooperativeness" and "unreasonable attitude" as reasons to raise the dispute with the WTO. [5]

Resolution

After negotiation with the Brazilian government, South African trade and industry minister Rob Davies declined to implement the ITAC recommendations. He acknowledged the stiff competition that South African producers faced from Brazil, but said that there was need for a more “comprehensive strategy” that dealt with all poultry exporters to South Africa, to the dismay of the SAPA. [6]

Instead of definitive anti-dumping duties, South Africa chose to impose import tariffs of up to 82% (up from 27%) on all poultry products originating from countries from which South Africa has no preferential trade arrangements, on the basis that the domestic industry was affected by all chicken imports, not only those from Brazil. [1]

Davies acknowledged the need to protect South African producers, but said that the antidumping duties had failed to have the desired effect, and that a general tariff increase would likely be more effective. [7]

Reaction and aftermath

The South African Poultry Association was dissatisfied with this result, taking the position that to be effective, a general tariff would have to be imposed on all frozen chicken imports. [8] [9] However, this is not possible because of the EU-South African Trade and Development Cooperation Agreement, which states that no tariffs may be applied by South Africa to goods originating from the EU. [8]

Between January 2012 and May 2013, SAPA reported 5,000 job losses and the closure of five small-to-medium poultry farms, citing increased foreign competition. [8]

SAPA estimated that ZAR 3.5 billion (US$390 million) worth of "unrealistically priced" chicken entered the South African market in 2012 alone, equivalent to approximately 5 million chickens per week, [8] [9] and that 20,000 jobs would be created if these chickens were produced domestically. [9]

The South African Food and Allied Workers’ Union (FAWU) supported SAPA's calls for increased government intervention. [10] In April 2013, protestors marched to Parliament to hand a memorandum to the Department of Trade of Industry to place stricter import tariffs on poultry imports from Brazil in order to protect 40,000 jobs in the sector. [10]

Association of Meat Importers and Exporters CEO David Wolpert said that the removal of import duties would be beneficial to the South African consumers, as it would keep prices at “reasonable levels”. [5]

See also

Related Research Articles

The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its preamble, its purpose was the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis."

A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and policy that taxes foreign products to encourage or safeguard domestic industry. Protective tariffs are among the most widely used instruments of protectionism, along with import quotas and export quotas and other non-tariff barriers to trade.

Dumping, in economics, is a kind of injuring pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price below the normal price with an injuring effect. The objective of dumping is to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product. Trade treaties might include mechanisms to alleviate problems related to dumping, such as countervailing duty penalties and anti-dumping statutes.

<span class="mw-page-title-main">Canada–United States softwood lumber dispute</span> Trade dispute between Canada and the United States

The Canada–U.S. softwood lumber dispute is one of the largest and most enduring trade disputes between both nations. This conflict arose in 1982 and its effects are still seen today. British Columbia, the major Canadian exporter of softwood lumber to the United States, was most affected, reporting losses of 9,494 direct and indirect jobs between 2004 and 2009.

<span class="mw-page-title-main">Export</span> Goods produced in one country that are sold to another country

An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an exporter; the foreign buyers is an importer. Services that figure in international trade include financial, accounting and other professional services, tourism, education as well as intellectual property rights.

<span class="mw-page-title-main">Trade war</span> Economic conflict using tariffs or other trade barriers

A trade war is an economic conflict often resulting from extreme protectionism in which states raise or create tariffs or other trade barriers against each other in response to trade barriers created by the other party. If tariffs are the exclusive mechanism, then such conflicts are known as customs wars, toll wars, or tariff wars; as a reprisal, the latter state may also increase the tariffs. Trade war arises only if the competitive protection between states is of the same type and it is not valid in case of dumping exports. Increased protection causes both nations' output compositions to move towards their autarky position. Minor trade disagreements are often called trade disputes when the war metaphor is hyperbolic.

<span class="mw-page-title-main">Non-tariff barriers to trade</span> Type of trade barriers

Non-tariff barriers to trade are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs.

<span class="mw-page-title-main">Southern African Customs Union</span> Customs union of five countries in Southern Africa

The Southern African Customs Union (SACU) is a customs union among five countries of Southern Africa: Botswana, Eswatini, Lesotho, Namibia and South Africa. Its headquarters are in the Namibian capital, Windhoek. It was established in 1910.

<span class="mw-page-title-main">Export subsidy</span> Government policy to encourage export

Export subsidy is a government policy to encourage export of goods and discourage sale of goods on the domestic market through direct payments, low-cost loans, tax relief for exporters, or government-financed international advertising. An export subsidy reduces the price paid by foreign importers, which means domestic consumers pay more than foreign consumers. The World Trade Organization (WTO) prohibits most subsidies directly linked to the volume of exports, except for LDCs. Incentives are given by the government of a country to exporters to encourage export of goods.

This is a timeline of the World Trade Organization (WTO).

Country of origin labeling (COOL) is a requirement signed into American law under Title X of the Farm Security and Rural Investment Act of 2002, codified at 7 U.S.C. § 1638a as Notice of country of origin. This law had required retailers to provide country-of-origin labeling for fresh beef, pork, and lamb. The program exempted processed meats. The United States Congress passed an expansion of the COOL requirements on September 29, 2008, to include more food items such as fresh fruits, nuts and vegetables. Regulations were implemented on August 1, 2008, August 31, 2008, and May 24, 2013. The 2016 Consolidated Appropriations Act is the latest amendment to the Agricultural Marketing Act of 1946. This act forms the basis of the current COOL requirements.

The Brazil–United States cotton dispute was a World Trade Organization dispute settlement case (DS267) on the issue of unfair subsidies on cotton. In 2002, Brazil—a major cotton export competitor—expressed its growing concerns about United States cotton subsidies by initiating a WTO dispute settlement case against certain features of the U.S. cotton program. On March 18, 2003, a Panel was established to adjudicate the dispute. Argentina, Canada, China, Chinese Taipei, the European Communities, India, Pakistan, and Venezuela participated as third parties. Focusing on six specific claims relating to US payment programmes, Brazil argued that the US had failed to abide by its commitments in the Uruguay Round Agreement on Agriculture (AoA) and the Agreement on Subsidies and Countervailing Measures (SCM). On September 8, 2004, a WTO dispute settlement (DS) panel ruled against the United States on several key issues in case.

<span class="mw-page-title-main">Chicken tax</span> American tariff on light trucks

The Chicken Tax is a 25 percent tariff on light trucks imposed in 1964 by the United States under President Lyndon B. Johnson in response to tariffs placed by France and West Germany on importation of U.S. chicken. The period from 1961 to 1964 of tensions and negotiations surrounding the issue was known as the "Chicken War", taking place at the height of Cold War politics.

<span class="mw-page-title-main">United States–China Relations Act of 2000</span>

The U.S.–China Relations Act of 2000 is an Act of the United States Congress that granted China permanent normal trade relations (NTR) status when China becomes a full member of the World Trade Organization (WTO), ending annual review and approval of NTR. It was signed into law on October 10, 2000, by United States President Bill Clinton. The Act also establishes a Congressional-Executive Commission to ensure that China complies with internationally recognized human rights laws, meets labor standards and allows religious freedom, and establishes a task force to prohibit the importation of Chinese products that were made in forced labor camps or prisons. The Act also includes so-called "anti-dumping" measures designed to prevent an influx of inexpensive Chinese goods into the United States that might hurt American industries making the same goods. It allows new duties and restrictions on Chinese imports that "threaten to cause market disruption to the U.S. producers of a like or directly competitive product."

<span class="mw-page-title-main">Foreign trade of South Africa</span>

Since the end of apartheid, foreign trade in South Africa has increased, following the lifting of several sanctions and boycotts which were imposed as a means of ending apartheid.

<span class="mw-page-title-main">Garlic production in China</span>

Garlic production in China is significant to the worldwide garlic industry, as China provides 80% of the total world production and is the leading exporter. Following China, other significant garlic producers include India and Bangladesh (1%). As of 2019, China produced 23 million tonnes annually.

Korea — Anti-Dumping Duties on Imports of Certain Paper from Indonesia or Korea — Certain Paper or WT/DS312 is a dispute between Indonesia on April 7, 2010 forwarded to the World Trade Organization and South Korea over Indonesian paper imports. South Korea accused Indonesia of "dumping" paper export, and forced some Indonesian paper producers to pay a higher tariff. On June 4, 2004 Indonesia requested that South Korea hold bilateral consultations. However, a bilateral consultation on July 7, 2004 failed to reach an agreement.

Anti-Dumping Measures on Biodiesel by the European Union is a WTO Dispute Settlement case. Argentina and Indonesia were the two biggest exporters of biodiesel to the European Union. Together, they were responsible for about 90% or 2.5mn tonnes of the biodiesel imports of the European Union in 2012. But by mid-2012, the European Union accused Argentina and Indonesia of dumping their biodiesel in the European Union, meaning that they were both selling their biodiesel under the price of the home market and implemented anti-dumping tariffs on biodiesel from the two countries, effectively halting flows.

On August 29, 2013, an antidumping case involving South Korea began at the World Trade Organization over U.S. tariffs imposed on imported washing machines. South Korea exports around US$800 million–1 billion worth of washing machines to the United States per year. The machines are made in Mexico and South Korea. South Korea was notified by the WTO for consultations with the United States on anti-dumping and countervailing measures on South Korean "residential washers" by the US Department of Commerce. The case was brought by Whirlpool Corporation, one of the world's biggest appliance makers.

<span class="mw-page-title-main">Trade Agreement between Southern African Customs Union and European Free Trade Association</span>

The Trade Agreement between Southern African Customs Union (SACU) and European Free Trade Association (EFTA) is a Free trade agreement signed by both parties in 2006 in Höfn, Iceland and entered into force on 1 May 2008. It involves 9 countries: 4 are members of EFTA and 5 are members of SACU. The goal of the agreement is to deepen the relations between parties, provide favorable conditions for trade, and encourage economic integration and social development in SACU member states with support from EFTA.

References

  1. 1 2 3 4 5 "South African trade: Too chicken to definitively challenge Brazilian poultry imports?". www.consultancyafrica.com. Retrieved 2015-04-27.
  2. 1 2 3 Cronjé, JB. "Brazil files WTO dispute against South Africa - tralac trade law centre". www.tralac.org. Retrieved 2015-04-27.
  3. 1 2 "Brazil vows to take South Africa poultry dispute to WTO". International Centre for Trade and Sustainable Development. Retrieved 2015-04-27.
  4. 1 2 "South Africa — Anti-Dumping Duties on Frozen Meat of Fowls from Brazil". World Trade Organization. Retrieved 2015-04-27.
  5. 1 2 "No SA Action on 'Dumped' Chickens". The Poultry Site. Retrieved 2015-04-27.
  6. ↑ Gumede, William (2013-09-26). Tafelberg Short: South Africa in BRICS: Salvation or ruination?. Tafelberg. ISBN   9780624066781 . Retrieved 2015-04-27.
  7. ↑ "South Africa defuses WTO poultry dispute with Brazil". agritrade. 18 February 2013. Retrieved 2015-04-27.
  8. 1 2 3 4 "South Africa defuses WTO poultry dispute with Brazil". agritrade.cta.int. Retrieved 2015-04-27.
  9. 1 2 3 "SA poultry producers unmoved by Davies' tariff plan". Business Day Live. Retrieved 2015-04-27.
  10. 1 2 "South Africa's dispute with Brazil over chicken imports worsens - Xinhua | English.news.cn". news.xinhuanet.com. Retrieved 2015-04-27.[ dead link ]
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.