Read to the end, as there are 2 important chicken sector developments this week
Number 1: Update to the update on the anti-dumping duties on chicken
The decisions taken in this strange anti-dumping investigation are getting stranger by the minute. You would recall from our last blog (chicken-anti-dumping-duties-approved-but-imposition-suspended) , on 1 August 2022, that the International Trade Administration Commission (ITAC) published a Notice of Conclusion of the Investigation into Frozen Bone-in Chicken Pieces originating from the EU and Brazil, and that the ITAC investigation report was not available.
Then a few days later on 5 August 2022, an amendment notice was published, and the report became available. The amended notice unfortunately did not shed light on how long the duties will be suspended but rather added to the confusion.
The gazette now states
The Minister, therefore, decided to suspend the imposition of the anti-dumping duties for a period of twelve (12) months or a shorter period of time depending on the prevailing circumstances at the time. Should circumstances in the 12 months time warrant the extension of the implementation date, the Minister will undertake timeous consultations with the affected parties before doing so. The five (5) year period that the anti-dumping duties may stay in place before the duties lapsed if a sunset review is not initiated, will be counted from the publication date of the notice of 1 August 2022.
Like we said before, there is no reason to believe the price of chicken will drop. For now, the imposition of the anti-dumping duties are suspended for a year or maybe less or maybe more (depending on the Minister’s discretion). However, there is still a 62% duty on bone-in chicken, which is not going anywhere for now.
Only time will tell when the anti-dumping duties will be imposed, but at least now we have the report and know what duties to expect. The Minister has confirmed that if he decides to extend the moratorium on the imposition of the duties, he will take comment from interested parties first.
Want to know more? Get in touch with us at info@xa.co.za
Number 2: The outcome of the EU – SACU dispute over the safeguard duties on bone-in chicken from the EU
This was the first time the EU triggered a bilateral dispute settlement mechanism under one of its EPAs, so that’s quite exciting. A bilateral safeguard duty is a safeguard built into a trade agreement to avoid harm being caused to the importing country because of a sudden, large, unexpected surge in imports due to the implementation of a trade agreement. Baked into the EPA is also the option of using an agricultural safeguard, but unlike the bilateral safeguard the agricultural safeguard doesn’t require the reason for the surge to be connected to the implementation of the agreement, but only that the surge happens on a predefined list of agricultural products.
When the original safeguard application was brought in early 2016, the EPA was not yet implemented and so the action had been brought as an agricultural safeguard under its predecessor, the Trade, Development and Cooperation Agreement (TDCA). Bone-in chicken was on the list of reserved products which could be subject to an agricultural safeguard if it was triggered. When the EPA replaced the TDCA in October 2016, bone-in chicken was removed from the agricultural safeguard list. We don’t know why, but given that this was a negotiation, presumably South Africa and the rest of SACU consented to this removal. This meant that the agricultural safeguard could not transition from the one agreement to the other, so ITAC changed it into a bilateral safeguard. But none of the criteria were met to make this change. Import volumes were falling quite dramatically after the implementation of the EPA, making compliance with the most fundamental requirement of the bilateral safeguard instrument impossible. Nevertheless, undeterred by any of this, SACU moved forward and imposed safeguard duties against the EU.
Here is some history to the situation that resulted in the arbitration panel ruling in favour of the EU, on 3 August 2022, in a bilateral dispute with the Southern African Customs Union (SACU) under the EU-Southern African Development Community Economic Partnership Agreement (EU-SADC EPA).
| February 2016 | Agricultural safeguard investigation initiates against bone-in chicken from the EU |
|---|---|
| October 2016 | EPA replaces the TDCA |
| September 2018 | SACU adopted a safeguard measure on frozen chicken cuts from the EU, in the form of increased import duties. |
| June 2019 | The EU requested consultations with SACU on these safeguard measures. The EU argued that SACU did not comply with the requirements for such measures under the EU-SADC EPA and this amounted to illegal duties. |
| September 2019 | Consultations were held between the EU and SACU. |
| April 2020 | The EU requested the establishment of a bilateral dispute resolution panel. |
| November 2021 | The arbitration panel was established and started working. |
According to the European Commission:
The panel found that the safeguard measure was not proportionate and went beyond what was needed to remedy or prevent any serious injury. The ruling sets a strong precedent for the imposition of similar safeguards under the EU SADC agreement in the future.
The safeguard measure expired earlier this year in March 2022, so no immediate action is required from SACU to implement the ruling. We are still waiting for the publication of a non-confidential version of the final report and will post an update when we have it.
Want to know more? Get in touch with us at info@xa.co.za