South Africa rejects anti-dumping duties on Brazilian chicken: the story continues
JB Cronjé, tralac Researcher, discusses the latest on the anti-dumping duties on Brazilian chicken
In June last year, Brazil initiated a dispute against South Africa at the World Trade Organization (WTO) following South Africa’s imposition of provisional anti-dumping duties on frozen chicken originating in or imported from Brazil. It requested consultations with the South African government to reach an amicable solution and has since then not requested adjudication by a panel. South Africa and Brazil are close political allies; both are BRICS members. It is the fourth dispute of its kind brought to the WTO against South Africa’s application of anti-dumping measures. None of them has advanced to a panel stage.
Subsequently, the South African Government decided not to impose definitive anti-dumping duties on the imported products. South Africa’s International Trade and Administration Commission (Itac) is responsible for customs tariff investigations, trade remedies, and import and export controls in the Southern African Customs Union (SACU). The Commission had in terms of the country’s Anti-Dumping Regulations a period of 18 months after initiation (ending in December 2012) in which to finalise its investigation. Government is believed to favour a general tariff increase on these imported products as the applied tariff is lower than the bound tariff rate. However, a government notice for the review of the applied customs tariff rate has not yet been issued. Once formally informed of Itac’s decision not to impose definitive anti-dumping duties, the applicant in this case, South African Poultry Association, may decide to take the decision on judicial review before it explores the alternative option of applying for a tariff increase.
South Africa adopted a strategic tariff policy in terms of its Trade Policy and Strategy Framework in which tariffs are used as an instrument of industrial policy, and therefore decided on a sector-by-sector basis, dictated by the needs and constraints of sector strategies. It serves as an invitation for certain industries to apply for selective tariff increases on products on a case-by-case basis. According to recent newspaper reports, the South African Department of Trade and Industry encourages companies in strategic industries to apply for tariff increases to protect them from cheap imported products. Industries that are identified as strategic in the department’s Industrial Policy Action Plan (IPAP) includes metal fabrication, capital equipment and transport equipment; green and energy-saving industries; agro-processing; automotives, components, medium and heavy commercial vehicles; plastics, pharmaceuticals and chemicals; clothing, textiles, footwear and leather; biofuels; forestry, paper, pulp and furniture; and business process servicing. The IPAP identifies sets of policies such as procurement, industrial financing, competition and regulation, skills development and innovation, and trade measures including tariffs, enforcement and standards, quality assurance and metrology measures to strengthen the productive side of the economy.
According to its semi-annual report on anti-dumping actions to the WTO in August last year, South Africa had no fewer than 31 definitive anti-dumping measures in force; 7 under review and 5 under investigation. Apart from these anti-dumping applications and in line with this policy position Itac received many applications for tariff increases on products used or produced in several of these strategic industries such as textile fabrics; glass, paper and plastic products; frozen half shelled mussels; and an increase in the domestic dollar based reference price for wheat over the past year. It also finalised investigations on some of the aforementioned and other applications and recommended tariff increases on products such as processed tomatoes, stainless steel sinks and uncooked pasta. It seems the department is prepared to use the trade policies at hand to increase tariffs on imported products which threaten local manufactures or where the applied tariff is below the bound rate allowed by the WTO.