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Cape Town – The US senate finance committee has passed an amendment which aims to hold South Africa accountable within the African Growth and Opportunity Act (Agoa) trade pact as the two countries struggle to reach a settlement on poultry tonnage.
In a statement to Fin24, US senator Johnny Isakson expressed his satisfaction that the “legislation contains provisions that would allow the US Trade Representative to be responsive and flexible in its approach to addressing areas of concern by conducting out-of-cycle reviews and when necessary, having the authority to suspend, limit or withdraw benefits for any beneficiary country not in eligibility compliance.”
READ: US amendment turns up heat in 'chicken war' with SA
Said Isakson: “I believe passionately in Agoa’s value and support its long-term renewal, but I believe it unfair and inappropriate that the country that benefits from the law the most - South Africa - continues to maintain unreasonable tariffs on American poultry.”
Isakson is an influential senator from Georgia who has threatened to block the renewal of Agoa, which has major benefits for participating African countries and South Africa in particular.
Isakson and Senator Chris Coons, who hails from the state of Delaware, are the co-chairs of the Senate Chicken Caucus. Both their states have large poultry industries and are big exporters of poultry. The poultry industry annually contributes over $15.1bn to the Georgia economy, including farmers, processing and allied industries.
READ: US demands greater access to SA poultry market
Out-of-cycle review
South Africa has imposed anti-dumping tariffs of above 100% since 2000 on certain products derived from the chicken carcass. SA’s rationale for imposing duties is the fact that due to the local market, all cuts of the chicken are valued equally.
In the US white meat - more commonly known as chicken breasts - fetches a premium price due to market demands. Brown meat, known as bone-in chicken, is a surplus product which allows the US to enter the SA market with cheaper prices.
The South African Poultry Association has entered negotiations on the premise that an unrestricted influx of US poultry undermines the SA market and will essentially “remove the third largest producer from our market in volume terms,” the association's CEO Kevin Lovell told Fin24 in an exclusive interview in March.
READ: Q&A: SA poultry responds to US senator
According to Isakson, “the duties are based on a pricing system that values all parts of the chicken the same, which is neither accurate nor commonly accepted”.
The bipartisan amendment would require the president to conduct an out-of-cycle review of South Africa within 30 days of enactment of Agoa.
Lovell told Fin24 that out-of-cycle reviews will usher in three changes to the Agoa agreement: an Agoa country can be reviewed every six months; if an individual US exporter is unhappy with an Agoa country, the US trade representative is obliged to investigate; and the US demands the right to the best tariffs comparable to trade agreements with other countries.
