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WTO Tackles Trade Dispute Between US, SA

by 5m Editor
27 November 2009, at 9:02am

GLOBAL - The United States is angry that South Africa has extended a tariff on imports of frozen chicken pieces from the US.

At the World Trade Organisation (WTO), the United States is demanding answers from South Africa regarding 'illegal' anti-dumping tariffs of up to 6.96 rand (ZAR) per kilo imposed on frozen chicken portions from the US.

Fin 24 reports that, although proponents say that tariffs are necessary to preserve thousands of jobs in the local industry, critics say that the American and global chicken markets have significantly changed since the investigations into the tariffs started in 1999, and that South African consumers are therefore being disadvantaged by the maintenance of the 'unfair' tariffs.

Anti-dumping tariffs of ZAR2.24 to ZAR6.96 are levied on frozen and deboned chicken portions from the US. In addition, there is an import duty of ZAR2.20 per kilo.

Furthermore, South Africa's International Trade Administration Commission (Itac) allegedly failed to comply with legal requirements when the 'sunset' tariff was introduced in 2006. In terms of WTO regulations, anti-dumping tariffs are set for five years. After that, countries can introduce a sunset tariff for a further period, usually another five years.

The US's legal argument relates to an appeal court decision in 2007 on how long and anti-dumping tariff should apply before a sunset re-evaluation may be initiated. But there is still uncertainty as to whether this court order, which related to a paper manufacturer, also applies to dumping tariffs in other industries.

But Kevin Lovell, chief executive of the Southern African Poultry Association, reckons the US is trying to use a technical point in law to set aside a valid dictum.

He says told Fin 24 that protection is accorded only to those chicken portions dumped by the US, and not to all of its produce. There is no restriction on commodities lawfully imported from the US.

Mr Lovell believes that removal of the protection would lead to the loss of billions of rands and several thousand jobs.