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South African lemon juice exports face American anti-dumping duties


South African lemon juice exports face American anti-dumping duties

South African lemon juice exports face American anti-dumping duties

On December 30, 2021, the United States International Trade Commission (USITC or I.T.C.) received a request from Ventura Coastal LLC, an American firm, to undertake an investigation under the US Tariff Act of 1930 regarding the imposition of antidumping duties (AD duties) on lemon juice imported from Brazil and South Africa.[1] Ventura had asked the ITC for a 128.61 percent anti-dumping duty on exports of lemon juice from South Africa and 555.22 percent against Brazilian lemon juice.

The USITC is an agency of the United States federal government that advises the US legislative and executive branches on matters of trade. It investigates the impact of imports on U.S. industries, and directs actions against unfair trade practices, such as subsidies, dumping, intellectual property infringements, and copyright infringement.[2]

On 11 February this year the USITC determined that there is a reasonable indication that an American industry is materially injured by reason of imports of lemon juice from Brazil and South Africa that are allegedly sold at less than fair value. As a result of the Commission’s affirmative determinations, the U.S. Department of Commerce will continue its investigations of imports of lemon juice from Brazil and South Africa, with its preliminary antidumping duty determinations due on or about June 8, 2022.[3] South African and Brazilian firms have received questioners from the USITC, on sales, costs, and the pricing of their products.

Governments of member states of the World Trade Organisation (WTO) may impose AD duties on foreign imports when they are “dumped” – sold at below cost – in their domestic markets. Dumping by firms is considered an unfair trade practice. AD duties are imposed to protect local businesses and markets from unfair trade practices. The US has previously imposed tariffs on imports of lemon juice from Argentina and Mexico.

Dumping involves private firm behaviour and is, in general, a situation of international price discrimination, where the price of a product when sold in the importing country is less than the price of that product in the market of the exporting country. Dumping is defined in the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade (GATT) (the Anti-Dumping Agreement) as the introduction of a product into the commerce of another country at less than its normal value. The normal value is generally the price of the product at issue, in the ordinary course of trade, when destined for consumption in the exporting country market.

Under Article VI of GATT 1994, and the Anti-Dumping Agreement, WTO Members can impose anti-dumping measures, if, after investigation in accordance with the Agreement, a determination is made (a) that dumping is occurring, (b) that the domestic industry producing the like product in the importing country is suffering material injury, and (c) that there is a causal link between the two. There are detailed rules for the initiation and conduct of investigations, the imposition of measures, and the duration and review of measures.[4]

If the US authorities impose an AD duty on South African lemon juice, it will make this product more expensive in the US but will not prevent it from being exported. South African exporters will probably look for alternative markets. It has been said that this may suppress prices and even raise the prospect of anti-dumping actions in other markets. The search for new markets will also happen at a time of post Ukraine disruption in global trade.

The 2021 overall citrus produce, according to the Citrus Growers Association of Southern Africa, broke all season records, with an estimated 158.7 million cartons, 130 million cartons exported in 2019, followed by 146 million cartons in 2020. Key markets for SA citrus include China, India, the Philippines, Japan, Vietnam, and the EU. But the US is the biggest aggregate market: R165m worth was exported from SA to the US in 2021, up 61% from R102m in 2018.[5] In 2020, South Africa shipped a record amount of over 77 000 tons of citrus to the United States, 68% more than in 2019.[6]

There is an interesting technical side to the investigation now being undertaken in respect of South African lemon juice exports to the US. South African farmers export citrus duty-free to the United States under the African Growth and Opportunity Act (AGOA), a non-reciprocal preferential trade programme of the US for sub-Saharan African countries.[7] AGOA was enacted on 18 May 2000 as Public Law 106 of the 200th Congress. It has since been renewed to 2025. This legislation significantly enhances market access to the US for qualifying Sub-Saharan African (SSA) countries. Qualification for AGOA preferences is based on a set of conditions, each country must be working to improve its rule of law, human rights, and respect for core labour standards.[8]

Dumping involves private firm behaviour. It can happen even under a non-reciprocal preferential trade arrangement such as AGOA. The report on the investigation by the US authorities will make interesting reading since it will presumably clarify important questions about the relationship between AGOA and the rules of the WTO. In November 2015 the WTO’s Goods Council approved a request from the United States for the extension of a waiver regarding AGOA. The waiver was subsequently approved by the WTO’s General Council and means that the AGOA preferences are exempted from the most favoured nation (MFN) and non-discrimination provisions under Articles I and XIII of the GATT.[9]

Article VI of GATT 1994 authorises the imposition of a specific AD duty on imports from a particular source, in excess of bound rates, in cases where dumping causes or threatens injury to a domestic industry, or materially retards the establishment of a domestic industry. If an AD duty is imposed on South African lemon juice exports, it will be a specific duty, presumably calculated on an MFN basis, and the only one levied on this product. Under AGOA no import tariffs are levied on lemon juice imported from South Africa.

[1] https://www.usitc.gov/3590.htm

[2] https://en.wikipedia.org/wiki/United_States_International_Trade_Commission

[3] The Commission’s public report (Inv. Nos. 731-TA-1578-1579 (Preliminary), USITC Publication 5284, February 2022) will contain the views of the Commission and information developed during the investigations. The report will be available after March 15, 2022; and may be accessed on the USITC website at: https://www.usitc.gov/commission_publications_library.

[4] https://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm

[5] Food Business Africa | Sour outcome for SA lemon juice exporters as US flags anti-dumping possibilities

[6] https://agoa.info/news/article/15821-united-states-opens-new-ports-to-south-african-citrus-exports.html

[7] Ibid.

[8] https://agoa.info/about-agoa.html

[9] https://www.wto.org/english/news_e/news15_e/good_10nov15_e.htm

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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