Discussions

The Battle over Safeguards on Poultry Imports from the EU continues

The Battle over Safeguards on Poultry Imports from the EU continues

07 Sep 2017

Gerhard Erasmus, tralac Associate and Willemien Viljoen, tralac Researcher discuss the ongoing safeguard investigation into South Africa’s imposition of a safeguard duty on poultry imports from the EU

On 28 August 2017, South Africa’s Association of Meat Importers and Exporters (AMIE) announced that it has instituted a legal challenge against the South African Poultry Association (SAPA) and the South African Minister of Trade and Industry with regard to an ongoing safeguard investigation on bone-in chicken imported from the European Union (EU).[1] It is seeking an order to review and set aside a decision by the International Trade Administration Commission (ITAC) to continue an investigation relating to the imposition of a 13.9% safeguard duty on bone-in chicken imports from Europe[2].

As reported, the application by AMIE involves rather technical arguments about the relationship between successive trade agreements. SAPA had lodged the relevant safeguard application some time ago, when the Trade, Development and Cooperation Agreement (TDCA) still governed trade between South Africa and the EU. At the time, it was the only agreement dealing with trade in goods between the EU and South Africa. This agreement has since been replaced by the SADC-EU Economic Partnership Agreement (EPA); which provisionally entered into force in October 2016. The Parties have, in addition, provided for a regime to ensure a seamless transition.[3]

The safeguard investigation under discussion was launched under the TDCA but still ongoing at the time when the new EPA entered provisionally into force in October 2016. “AMIE contends that a decision by the minister during December 2016 directing ITAC to continue with the investigation, historically initiated under the old TDCA in circumstances where it was subsequently repealed and replaced with the new EPA, to be unlawful.”[4] The importers contend that the Minister should have stopped the TDCA process when the EPA came into effect; to be started afresh under the safeguard procedures of the subsequent agreement. The media reports do not explain why the Minister was under such an obligation and what exactly his duties were. What would happen, if the claim succeeds, is a long delay, which will benefit the applicants. The aim seems to be an outcome under which the safeguard investigation must start de novo. If the application against the Minister succeeds, SAPA will have to bring a new application.

The relationship between the EU-SADC EPA and the TDCA is governed by the provisions of Protocol 4 of the EPA.[5] This Protocol repeals, from the date of entry into force of the EU-SADC EPA, the TDCA provisions on Trade and Trade-Related Issues, including the corresponding annexes and Protocols of the TDCA.[6] (Safeguard measures fall under the repealed provisions.) The dispute settlement mechanism established under Article 104 of the TDCA shall no longer be available to the TDCA Parties for disputes relating to the application or interpretation of the repealed provisions. In case of provisional application of this EPA, the application of TDCA Articles to be repealed, shall be suspended.[7]

It is important to explain the two regimes for the application of the EU-SADC EPA; provisional application and final application when the Agreement has entered into force. Entry into force of the EU-SADC EPA requires ratification by all the Parties. In the case of the EU this involves a drawn-out process in which all 28 EU member states must have completed their domestic ratification procedures.[8] In order to prevent the long delay which this will cause, Article 113(3) of the EU-SADC EPA provides for provisional application. It reads: Pending entry into force of this Agreement, the EU and the SADC EPA States agree to apply the provisions of this Agreement which fall within their respective competences (“provisional application”). This may be effected either by provisional application, where possible, or by ratification of this Agreement.

The present position is that the EU-SADC EPA is in effect since October 2016.[9] As stated in Article 113(8): If pending the entry into force of this Agreement, the Parties decide to apply it provisionally, all references in this Agreement to the date of entry into force shall be deemed to refer to the date such provisional application takes effect. Provisional application is what the Parties have opted for. The required instruments have been exchanged.

How will a local court deal with the claim that the wrong international agreement has been used in a safeguard investigation undertaken by one of the Parties to successive trade agreements? The exact arguments employed by the applicant (the Association of Meat Importers and Exporters) are now known, but a distinction should be drawn between the remedies available to another aggrieved State Party, and those which private entities can invoke. The former is to be decided as an inter-state dispute. The latter involves a claim by a private entity brought in a domestic court. In this instance, a court order is sought to set aside national executive action taken in respect of transitional arrangements between successive trade agreements. The validity of ITAC’s ongoing safeguard investigation is contested; on the basis of an argument that the investigation had to be discontinued and started afresh as a result of the provisional entry into force of the EU-SADC EPA.

The validity of executive action involves, broadly speaking, compliance with the relevant constitutional and administrative law requirements. The AMIE application will presumably contain such additional arguments. A claim, by a private party, that executive action is invalid because transitional arrangements in successive trade agreements have been wrongly interpreted, takes arguments about rationality and respect for the rules on the intra vires exercise of powers, into new territory. The validity of these agreements is not at stake. The South African Constitution, in addition, stipulates that an international agreement must first be enacted into law by national legislation before it becomes part of the law of the land.[10]

We will follow this matter with keen interest. Perhaps we will see a bold development of municipal law in respect of a rather complicated trade arrangement and its effect on private rights.

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[1] Fin24. http://www.fin24.com/Economy/another-chicken-war-looms-in-south-africa-20170827

[2] ITAC. 14 August 2017. Investigation into safeguard measures in terms of Article 34(2) of the EPA on frozen bone-in portions of fowls of the species Gallus Domesticus originating in or imported from the European Union: essential facts letter. See

https://www.tralac/org/images/Discussions/14082017-Final-essential-facts-letter-ITAC-safeguard-measures-b.pdf

[3] For the text of the EU-SADC EPA see Government Gazette No. 40356 No. R.1290 of 2016/10/21.

[4] See Footnote 1, Ibid.

[5] Article 111 of the EU-SADC EPA.

[6] Article 31 of the TDCA (Maritime transport) remains applicable in relations between the Parties to the TDCA.

[7] Art 2, Protocol 4.

[8] Art 113(1): This Agreement shall be signed, ratified or approved in accordance with the applicable constitutional or internal rules and procedures of each Party.

[9] This Agreement shall be applied provisionally between the EU and a SADC EPA state ten days after either the receipt of notification of provisional application from the EU or of ratification or provisional application from that SADC EPA state, whichever is the later. Article 113 (4) EU-SADC EPA.

[10] Section 231 South African Constitution.