Building capacity to help Africa trade better

South African Poultry Association files an Application for setting aside AGOA


South African Poultry Association files an Application for setting aside AGOA

South African Poultry Association files an Application for setting aside AGOA

How do private parties involved in intra-African trade protect their rights and interests which may flow from the application of trade agreements? They do not, as a rule, enjoy standing before international courts. When affected by foreign measures which violate trade agreements, they can request “diplomatic protection”[1] from their governments of nationality; if the states involved are parties to the agreement in question. If granted (it is not a right) their state of nationality can act on their behalf. This may include litigation against the foreign government in an international forum with jurisdiction over the matter, as happens in the World Trade Organization (WTO).

Advanced regional integration arrangements (e.g. the EU) allow private parties to bring their own claims, provided local remedies have been exhausted. Some African Regional Economic Communities (RECs) also grant private parties locus standi before regional courts. This is possible in COMESA, ECOWAS and the EAC. SADC used to have the same arrangement. However, its Tribunal was abolished in 2011 after it had ruled against Zimbabwe for expropriating private land without compensation. SADC is without a Tribunal.[2]

Private entities can approach national authorities in foreign jurisdictions and request relief. If unsuccessful, they can pursue judicial remedies (there are, of course, “informal” avenues too) and, if available, bring a claim in a domestic or regional court. For the latter, local remedies must first be exhausted. In our part of the world Governments do not litigate against each other over trade issues and private parties do not invoke regional trade agreements before REC courts.[3] The only such case known to us is the Polytol decision of the COMESA Court of Justice (CCJ).[4] Polytol first approached the courts of Mauritius for an order to enforce a lower tariff on goods imported under COMESA rules. Its application was turned down on a technical point; that the relevant COMESA legal instrument, although binding on Mauritius, had not been incorporated into Mauritian municipal law. Polytol succeeded before the CCJ.

Private parties can, if they have standing, bring applications in domestic courts for due process and administrative law remedies available under the law of the land or the national constitution. They may e.g. apply for the setting aside of executive decisions regarding trade permits, import or export restrictions etc. Trade agreements do not form the basis of such domestic applications.[5]

Trade remedies (involving anti-dumping, countervailing or safeguard measures) fall in a category of their own. Private parties enjoy (as stipulated by WTO rules) due process rights when national investigating authorities undertake trade remedy investigations or impose such remedies. This includes the right of judicial review in local courts.

The South African Poultry Association (Sapa)[6] has now come up with a rather novel, albeit ambitious, legal strategy. It has filed an application in the Gauteng Division of the High Court of South Africa seeking an order instructing the SA Minister of Trade and Industry to, in effect, set aside the implementation of the African Growth and Opportunity Act (AGOA) in South Africa. SAPA wants local Anti-Dumping (AD) duties on US poultry imports (suspended by Pretoria when AGOA was renewed in 2015 and this became a condition for SA’s continued benefits under AGOA[7]) to be re-imposed. It argues this to be the inevitable response to President Trump’s recently announced tariffs on steel and aluminium.[8] If this application succeeds, the special quota allowing 65 000 tons of US chicken into South Africa annually, and without AD duties, will end.[9]

The South African Minister of Trade and Industry, not surprisingly, opposes the SAPA application.[10] The unilateral suspension of AGOA by a beneficiary country (which may be a first ever) on behalf of one local industry will be extraordinary. It will affect the rights of other SA exporters benefitting from quota-free-duty-free AGOA allowances. South Africa’s exports under AGOA present a very diversified profile, including clothing products, motor vehicles and components, agricultural products and many more.

President Trump’s decision to impose tariffs on steel and aluminium exports to the US is not connected to AGOA. He justified his decision as necessary to protect US national security, invoking Art XXI GATT. Practically all exporters of steel and aluminium (China in particular) are affected.[11] SAPA, nevertheless, links its application to this US measure. The US tariffs affect South African steel and aluminium exporters, but they are not supporting the SAPA application. Nor is any other local industry.[12]

What is the legal basis for the SAPA application? Its founding affidavit claims it is acting in its own and the public interest.[13] Remedies under South African Administrative Law are invoked but essentially the argument goes as follows: As a result of negotiations to ensure that SA would continue to qualify for AGOA benefits, the SA Government, in December 2015,[14] agreed to implement the AGOA Rebate. It provides for the temporary rebate of the then existing AD duty on poultry imported from the US, applicable to an annual quota of 65 000 metric tonnes. The AGOA Rebate provides that it “shall be suspended if any benefits that South Africa enjoyed under AGOA… are suspended…”

SAPA now argues that, as a result of the new tariffs on steel and aluminium announced by the Trump administration, the AGOA Rebate must immediately be suspended. The AD duty on American poultry imports must again be imposed. The SA Government, it argues, has no discretion in the matter.[15] SAPA contends that the local AGOA Rebate is of a quid pro quo nature and… “it is… apparent that the US is not abiding by the quid pro quo intention underlying the AGOA Rebate”.[16]

This application raises several legal and factual (in addition to innovative reasoning) issues. AGOA is not an international agreement. It is a unilateral scheme granting preferential treatment to goods from sub-Saharan African nations and is based on US legislation. When the SA Government in December 2015 issued the AGOA Rebate, it took a deliberate policy decision. There is no quid pro quo which the US has accepted. Countries benefitting from AGOA cannot set conditions which the US Government must comply with. AGOA is, in fact, not a negotiated arrangement. And it is not entirely clear that, under WTO law, AD duties can be imposed (without an investigation) in the manner requested by SAPA.

Does SAPA have standing to challenge this policy decision and to have it set aside on the basis that the SA Government has “no discretion” in the matter? SAPA seems to argue that it does; under the Promotion of Administrative Justice Act (PAJA). The Courts will tell us whether this is indeed the case.

The judicial review requested here has “judicial overreach” and separation of powers implications. Judicial overreach occurs when a court of law acts beyond its judicial mandate and interferes in areas which fall under the executive or legislative branches of government. It is true that South African Courts have, since the adoption of the new, supreme Constitution, issued rulings which have expanded the boundaries of judicial review. This does not mean that separation of powers has no constitutional parameters or function. The doctrine of separation of powers remains a foundational feature of the South African constitutional order. The boundaries might need some clarification… and the SAPA application may provide the opportunity for the South African Courts to do so.

[1] Diplomatic protection denotes the process by which a state asserts a claim against another state because one of its nationals has been treated by the latter in violation of international law.

[2] See an earlier tralac Discussion: https://www.tralac.org/discussions/article/12165-a-new-land-expropriation-compensation-case-against-zimbabwe-under-the-sadc-finance-and-investment-protocol.html

[3] Such cases usually involve applications by officials working for regional secretariats or human rights issues.

[4] Polytol Paints & Adhesives Manufacturers Co. Ltd (Applicant) versus The Republic of Mauritius (Respondent), CCJ Case No 1 of 2012.

[5] Note, however, Art 144 of the Namibian Constitution: Unless otherwise provided by this Constitution or Act of Parliament, the general rules of public international law and international agreements binding upon Namibia under this Constitution shall form part of the law of Namibia. There has not yet been a judgement on the meaning of this provision in the context of trade agreements.

[6] The Founding Affidavit refers to SAPA as a South African organization that represents the interests of the South African poultry industry in general.

[7] American poultry producers lobbied successfully to make that a condition for renewing South Africa’s AGOA benefits.

[8] In March 2018 President Trump announced a 25% tariff on steel imports and 10% on aluminium. See the tralac Working Paper by Eckart Naumann: https://www.tralac.org/publications/article/13008-trump-s-steel-and-aluminium-tariff-action-putting-america-first.html

[9] https://www.fin24.com/Economy/rob-davies-must-squash-r10kg-us-chicken-imports-20180831

[10] https://www.fin24.com/Economy/we-will-all-be-losers-if-we-lose-agoa-parly-hears-20180913

[11] See the tralacBlog: https://www.tralac.org/blog/article/13196-trump-s-trade-war-are-the-brakes-failing.html

[12] SAPA has 2 “membership organizations”, the Egg Organization and the Broiler Organization.

[13] Par 8.4.3 Founding Affidavit.

[14] The US undertook a review of AGOA at that time.

[15] Paras 25 and 26 Founding Affidavit.

[16] Par 29 Founding Affidavit.

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

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