Increased poultry tariffs may result in US backlash
The National Treasury said in the Government Gazette on Friday that the government had increased tariffs on frozen bone-in chicken pieces to 62percent, up from 37percent for imports from all nations, excluding the EU and members of the Southern African Development Community.
Levies for frozen boneless chicken cuts were increased to 42percent, up from 12percent. The industry had applied for tariffs of 82percent under both categories of products.
Local producers supply about 70percent of consumption in South Africa, and the new tariffs would apply to more than 30percent of all imported chicken.
However, the higher tariffs could backfire. South Africa benefits from the African Growth and Opportunity Act (Agoa), which grants qualifying countries duty-free access to US markets for thousands of goods. In return, the US is able to export a maximum of 6000 tons of frozen bone-in chicken portions for free to South Africa.
According to Bloomberg, Robert Mearkle, a spokesperson for the US Embassy in Pretoria, said: “The US government is deeply disappointed with South Africa's decision to raise the already high tariff rates on imported poultry to a substantially higher level.”
He said ensuring that US poultry exports continued to have fair access to the South African market was critical.
The measure was welcomed by South African Poultry Association (Sapa) and the FairPlay Movement as industry-saving, as large-scale dumping of poultry in South Africa has crippled the sector and decimated thousands of jobs.
The tariffs form part of the recently negotiated Poultry Sector Master Plan, which will also see a R1.5billion expansion programme to support and rebuild the struggling sector.
Izaak Breitenbach, a general manager of Sapa’s Broiler Organisation, said: “We believe the tariffs granted by Minister (of Trade and Industry) Ebrahim Patel after a comprehensive process of consultation are a step in the right direction.”
However, Breitenbach warned: “The reaction of exporting countries may very well negate the desired impact of these tariffs should they merely reprice surplus products and only time will tell if the new tariffs work as intended.”
The chief executive of the Association of Meat Importers and Exporters, Paul Matthew, expressed the concern that if US President Donald Trump pulled the Agoa agreement, it would lead to job losses in the motor industry, “but time will tell”.
“Let us look at this in six months and wait for the main producers to put out their annual financials.”
Matthew said: “As an association, we would like to review the international trade administration commission (Itac) report and view how the calculations were made and what Itac recommended to dti. These new tariffs will have a huge impact on our importing industry, which could see companies closing doors, which will lead to job losses.”
Francois Baird, the founder of the FairPlay Movement, said the higher tariffs on chicken imports from Brazil might reduce importers’ profits, but it remained to be seen whether they would stem the tide of dumped chicken swamping South Africa.
“To succeed, these new tariffs on chicken imported from Brazil as well as earlier higher duties on chicken imports from the EU, must prove to be sufficient to halt the surge of predatory imports and prevent further job losses, mostly in impoverished rural areas,” Baird said.