Johannesburg - South Africa raised tariffs on chicken imports yesterday to protect local producers in a move that is likely to anger its trading partners.
The average 8.75 percentage points hike announced yesterday by Trade and Industry Minister Rob Davies is targeted mainly at Brazil, the biggest supplier of chicken imports, although Thailand, Israel, Australia and Canada also feature.
While the US was once a major source of imported chickens on the local market, South Africa has maintained anti-dumping duties against US chickens for more than 10 years, reducing the role of US producers in the local market.
The EU will not be affected by the tariff increases, according to the Trade Law Centre, because it has a free-trade agreement with South Africa.
Davies said the level of tariff increases struck “an appropriate balance in limiting the price-raising effects on poor households while ensuring that domestic producers are placed on an improved competitive footing as compared to their foreign counterparts”. He had also taken into account the needs of chicken importers.
However, local consumers will pay more for chicken – an important source of protein.
Moreover, the decision runs counter to South Africa’s desire to strengthen links with its Brics partners: Brazil, Russia, India and China.
And the continuation of anti-dumping duties would seem to undermine South Africa’s attempts to extend its benefits from trade with the US under the African Growth and Opportunities Act (Agoa), which is due to expire in 2015.
Davies visited the US last month, lobbying for the extension of Agoa and for South Africa’s continued inclusion in trade under the provisions of the act. Between January and July, South Africa sold goods worth R40.6 billion to the US, most of them under Agoa and other preferential arrangements. Imports totalled R35.5bn in the same period.
The US embassy did not respond to a request for comment.
Brazil’s agricultural attaché in Pretoria, Gilmar Henz, said the higher tariffs were preferable to anti-dumping actions.
These actions can be brought against countries when prices for a product are “unfairly low”. But whether prices are unfair is always up for debate.
Henz noted that Brazil did not subsidise its chicken sector, which was competitive because of its “integrated production system”. He added that Brazil was the world’s number one chicken exporter.
Critics of protection argue that South Africa has lessons to learn from Brazil and should look to ways to make South Africa’s relatively high-cost chicken producers more competitive. Among the issues identified is the cost of fertiliser – and therefore feedstock – and the anti-competitive nature of the fertiliser industry.
The move by Davies, which is part of his developmental strategy, comes at a time when the dangers of protectionism are high on the global agenda, including that of the Group of 20 (G20), which met in St Petersburg last month.
Trade barriers erected after the 1929 Wall Street crash turned a global recession into the Great Depression, which lasted 10 years.
South Africa is not the only country to press ahead with additional protection. A report published last month on the EU website noted that, as of the end of August, G20 members had implemented a total of 1 527 beggar-thy-neighbour measures since they adopted their standstill on protectionism in November 2008. - Business Report