Minister of Trade and Industry Rob Davies has assured an audience in Washington that a settlement on the contentious ‘chicken issue’ is on the horizon.

“Our industries are engaging on this issue and we are of a view that a settlement will be reached soon. While I’m in Washington I will also be meeting with Senators Chris Coons and Johnny Isakson, who continue to advocate for an amicable solution on the chicken issue,” Davies said at a media briefing in Washington.

The two influential US senators Isakson and Coons, who represent chicken-producing states, have threatened to block South Africa from the lucrative African Growth and Opportunity Act (Agoa) trade agreement if Pretoria fails to lift import duties on cheaper cuts of chicken.

Chicken wars

Davies said the Agoa agreement generated enormous goodwill for the US on the continent and if renewed more can still be done.

“The attitude of the South African government remains one of constructive engagement on all the concerns raised by the US constituencies, including on the chicken issue,” he said.

“Our Deputy President Cyril Ramaphosa has also indicated to US Vice-President Joe Biden, during a teleconference call on April 13 2015, that SA is serious about reaching an agreement to grant some market access for US chicken bone-in (brown meat) cuts, and remains committed to the process.”

In the US white chicken meat (chicken breasts) fetches a premium price due to market demand. Brown meat, or bone-in chicken, is a surplus product which allows the US to enter the SA market with cheaper prices.

South Africa has imposed anti-dumping tariffs of above 100% since 2000 on certain products derived from the chicken carcass.

US position ‘unacceptable’

In an exclusive interview with Fin24 in March on the current state of negotiations, South African Poultry Association CEO Kevin Lovell said that the US position is “both unreasonable and unacceptable”.

“Effectively, they want to remove the third-largest producer from our market in volume terms. As our market is closed and is not growing – if it was we would have increased production – extra imports mean that the local industry shrinks,” he said.

A week later, at the end of March, 13 US senators signed off a letter to Davies voicing their concern that the South African poultry industry was taking a hard line on its most recent offer to the US poultry industry.

Davies described Agoa as a two-way agreement with mutual benefits for both the US and Africa.

“We are of the view that Agoa played a role in promoting bilateral trade and investment among South Africa, the United States, and sub-Saharan Africa. The benefits of Agoa are two way and that is why it is important to renew the programme for all eligible countries with South Africa included as a beneficiary country,” he said at the briefing.

Agoa benefits

• Total two-way trade between South Africa and the United States increased from R56.7bn in 2001 to R141bn in 2014. Bilateral trade recovered beyond the pre-crisis figure of R127bn in 2008 (which declined to R83bn 2009).  

• South Africa’s exports to the US grew from R30bn in 2001 to R69.8bn in 2014. Similarly, US exports to South Africa grew from R26.6bn to R71bn in 2014. Both exports and imports have recovered to beyond their pre-crisis levels.

• South Africa’s top exports to the US were vehicles and associated transport equipment (representing 27% of total SA exports to the US), precious metals (23%), base metals (11%), mineral products (9%), and chemical or allied industries (16%). These sectors jointly accounted for about 86% of South Africa’s total exports to the US in 2014. However, metal and mineral exports accounted for 43% of total South African exports to USA.

• Top US exports to South Africa were machinery and mechanical appliances; vehicles, vessels and aircraft; chemical products; plastics and optical and medical equipment.

• Sub-Saharan Africa Agoa exports increased from $12.4bn in 2000 to the highest peak of $79.7bn in 2008. However, in 2012 exports declined to $43bn and again to $34bn in 2013. This is largely due to a significant decline in oil exports.