IT IS CLEAR that former South African ambassador Malcolm Ferguson does not understand the laws of international trade as his claim that South Africa’s use of antidumping duties to deal with the US’s dumping of surplus bone-in chicken portions contravene World Trade Organisation (WTO) rules is incorrect, (Time for a reality check of what is at stake in Agoa talks, Business Report, May 28).
He states that in general, WTO rules only allow for the imposition of antidumping duties where export prices are below those in the exporter’s home market, which he claims is clearly not the case here.
What he fails to mention is that the WTO antidumping agreement also makes provision for the use of the cost of production methodology to determine whether dumping has occurred.
This methodology is applied where there are no sales of these products in the ordinary course of trade in the exporter’s domestic market, or where because of a particular market situation, sales in the exporter’s domestic market do not allow for a proper comparison.
This is definitely the case in this instance, as the products which the US dumps in South Africa – brown meat bone-in chicken portions – are not sold in the ordinary course of trade in that country.
This is because of the US market preference for white meat over brown. In determining the cost of production of the US producers, South Africa’s trade authority, the International Trade Administration Commission, applied the WTO permissible weighted cost methodology.
The WTO panel, when deciding on China’s antidumping and countervailing duties on broiler products from the US, found the weighted cost methodology was not inherently unreasonable.
Ferguson’s claim, therefore, that WTO rules do not support our antidumping duties is incorrect.
He also wrongly links a normal tariff – also known as a most favoured nation tariff – with an antidumping duty.
Antidumping duties deal with unfair trade, whereas most favoured nation duties deal with fair trade issues.
The most favoured nation duties imposed on poultry products by South Africa apply to all WTO member states, except for those that are part of the Southern African Customs Union or have concluded free trade agreements with this country.
These treaties include the trade, development and co-operation agreement (TDCA) and the Southern African Development Community treaty. Ferguson is incorrect in saying the most favoured nation duty is imposed on the EU, as in terms of the TDCA between the EU and South Africa, no ordinary duties are payable.
The US itself has imposed the most favoured nation duty on imports of bone-in portions of 17.6 USc/kg.
While Ferguson claims antidumping duties are unfair, the very purpose of these duties is to address unfair trade! Importantly, the US has never referred the matter for dispute resolution to the WTO, as it is perfectly entitled to do.
Also, US producers have not reviewed the decision of South Africa’s trade authorities to impose antidumping duties in South African courts, as they are similarly entitled to do.
South Africa’s trade authorities have conducted two reviews of the antidumping duties since they were imposed in 2000. US producers were given the opportunity to participate in these investigations, yet chose not to be a cooperating party.
The US poultry industry appears to have political support and that support has resulted in the US using the African Growth and Opportunity Act (Agoa) renewal negotiations in an attempt to have the antidumping duties removed.
The US is trying to convert Agoa – a non-reciprocal trade measure – into a reciprocal trade measure, something that is contrary to the existing terms of the waiver granted by the WTO for Agoa.
The largest beneficiary of Agoa is the South African motor car industry while the poultry industry, on the other hand, does not benefit at all.
In spite of this, the South African Poultry Association nevertheless offered to reduce the level of antidumping duties to facilitate Agoa’s renewal, despite the significant harm the industry will suffer in doing so.
The level of exports that benefits from Agoa is around $1.7 billion (R20.6bn) – not $3bn as claimed. This makes up about 21 percent of our exports to the US last year, at least 70 percent of which benefits motor car exports.
The balance of our trade with the US is covered by another measure known as the generalised system of preferences (17 percent), and the rest at the normal most favoured nation rates.
Kevin Lovell
CHIEF EXECUTIVE, The South African Poultry Association