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SA slaps huge import tax on EU chicken legs

Johannesburg - The South African government on Thursday slapped a “safeguard duty” of 13.9% on frozen chicken legs imported from the European Union (EU) to help the ailing local industry, despite a pending challenge by the EU and local poultry importers.

The provisional import duty which will apply until July 3 next year was announced in a Government Gazette notice signed by Tom Moyane, Commissioner of the SA Revenue Service.

It was the outcome of appeals by local poultry producers that their industry is being destroyed by a surge of cheap EU imports. Until the safeguard duty was imposed, there were no import duties on EU poultry imports, under free trade agreements between the EU and South Africa.

In November South Africa’s International Trade Administration Commission (Itac) investigated the complaints of the local poultry producers and recommended the 13.9% safeguard duty to Trade and Industry Minister Rob Davies.

Davies accepted the recommendation and informed the EU and South African poultry importers on November 15 that the duty would be imposed.

Challenging the decision

However the EU and the local importers said then they would be challenging the decision on technical grounds. 

They argued that Itac had recommended the safeguard duty under Article 16 of the Trade, Development and Cooperation Agreement (TDCA), the free trade agreement between South Africa and the EU which entered into force in 2000.

But the EU and the local importers pointed out that Article 16 of the TDCA was repealed on October 10 when the new Economic Partnership Agreement (EPA) between the EU on the one side and South Africa and other regional countries on the other side, came into force.

“Article 34 of the EPA now provides for the possibility of imposing a safeguard duty, which however needs to be justified on the basis of injury caused by trade which has occurred under the EPA,” said a source. “As the EPA has just come into effect it would be difficult to make such a case, at least for the time being.”

Safeguard duty - superfluous?

However officials have also pointed out that the 13.9% safeguard duty may in any case prove to be superfluous at present as a widespread outbreak of deadly, highly pathogenic avian influenza in several EU countries has virtually stopped all EU poultry imports into South Africa anyway.

The South African Department of Trade and Industry (dti) said in a statement last week that because of the avian 'flu outbreak it had stopped poultry imports from  EU member states, Denmark, France, Germany, Hungary, the Netherlands and Poland – as well as from non-EU state Israel.

This avian ‘flu outbreak will come as a welcome reprieve for the South African poultry industry which has been complaining ever more loudly that it is being driven out of business by cheap imports.

The dti said in its statement that the government was working with the local poultry industry to address its challenges.

It noted that in 2013, the import duty on a number of poultry products had been increased significantly. The current import duties for chicken imports from countries like Brazil and the United States were now 82% for whole birds, 31% for carcasses, 12% for  boneless cuts, 30% for offal and 37% for “bone-in” portions (mainly legs).

Past anti-dumping measures

Although these duties did not apply to EU imports, the dti recalled that in 2015 it had imposed anti-dumping measures ranging from 3.86% to 73.33% on frozen bone-in chicken pieces from Germany, the Netherlands and the United Kingdom.

It also noted the safeguard investigation which Itac had launched - but without adding that Davies had accepted Itac’s recommendation for the 13.9% safeguard duty.

And it said the dti and the Department of Agriculture, Forestry and Fisheries (DAFF) were “continuously working on opening new markets for our poultry exports".

Recently new markets in the Middle East have been opened and present a further opportunity for export to the domestic poultry industry in South Africa.

“Furthermore, the dti is in the process of considering the designation of domestic poultry products for purposes of public procurement.”

It added that a national committee had been established by the dti that included DAFF and the local industry “that will consider all the challenges experienced by the domestic poultry industry and develop a comprehensive strategy to address these challenges in a holistic and sustainable manner.”

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