Emily Carter
The European Union (EU) has been accused of dumping cheap chicken meat in South Africa, which is allegedly destroying the local poultry industry. In international trade, dumping is the act of exporting a product to a foreign market at a price lower than what is charged in the home market. In this case, it is chicken leg quarters being exported cheaply by the EU into South Africa. This has led to a flood of imports and the local poultry sector is on the brink of collapse with at least 5,000 jobs being lost. While the EU has dismissed these claims, South Africa has imposed anti-dumping duties and tariffs to protect its local industry. However, some believe that these measures are not enough and that South Africa should ban EU chicken meat dumping altogether.
| Characteristics | Values |
|---|---|
| Definition of dumping | Exporting a product to a foreign market at a price lower than what is charged in the home market |
| Reason for EU dumping | Surplus of chicken parts like thighs and drumsticks that don't sell as quickly in developed countries |
| EU countries involved | Germany, the Netherlands, the UK, Denmark, Ireland, Poland, Spain, Brazil, and the US |
| South African government actions | Imposed anti-dumping duties, safeguard tariffs, and avian flu restrictions |
| Impact on South Africa | Loss of jobs in the poultry industry, threat to local producers and small-scale farmers |
| Industry response | Calls for additional tariffs and a complete ban on EU chicken imports |
| EU response | Dismissal of claims, citing low volume of imports and other factors like lack of competition and drought |
| Other affected countries | Cameroon, Senegal, Ghana |
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What You'll Learn
The impact of the EU's chicken dumping on South Africa's poultry industry
Chicken dumping refers to the act of exporting chicken to a foreign market at a lower price than what is charged in the home market. In the case of the EU and South Africa, due to a preference for chicken breasts and wings in developed countries, there is a surplus of other chicken parts, like thighs and drumsticks, which are considered waste products. European companies, therefore, look to export this excess to other markets, and South Africa is one of the few countries left that accept these imports.
The impact of this practice has been devastating for South Africa's poultry industry, with claims that it is unable to compete with the influx of cheap chicken. In response, South Africa has imposed anti-dumping duties and tariffs on EU chicken imports, with some calling for additional tariffs of up to 40%. However, the effectiveness of these measures has been questioned, and the industry continues to call for increased protection from the government.
While the EU has dismissed claims that their chicken imports are responsible for the crisis, the situation in South Africa mirrors that of other African countries, such as Cameroon, Senegal, and Ghana, which have also suffered due to the EU's chicken dumping practices. The impact on these countries has included job losses, reduced capacity in the poultry industry, and even contributing to migration to Europe.
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The EU's defence of their chicken dumping practices
The EU has denied accusations of dumping cheap chicken in South Africa, instead blaming the South African poultry industry for its own failures. The EU Ambassador Marco Cornaro has called the accusations a "distortion", arguing that the EU trade policy is not the origin of the South African chicken industry's woes. He claims that a lack of competition, rising feed prices due to drought, increasing electricity costs, and injecting brine are the actual causes of the industry's problems. Cornaro also highlights that EU exports account for less than 7% of total South African chicken consumption, with EU imports of "dark meat" making up only 14% of the local market consumption.
The EU has also emphasised that it is South Africa's biggest trading partner, and the dispute over chicken dumping could negatively impact their economic partnership agreement (EPA). The EU has increased its budget for finding new market opportunities for poultry producers, particularly in the context of the UK's departure from the EU.
Some local players in South Africa have argued that the problem is not structural and that South African poultry producers are more competitive than their EU counterparts. They suggest that imposing technical trade barriers, similar to those faced by South Africa in exporting to the EU, could be a solution. For example, South Africa has imposed long-term bans on chicken imports due to cases of Avian flu in South African ostriches.
While the EU has denied dumping chicken in South Africa at below-cost prices, it is important to note that consumers in Europe prefer white poultry meat, resulting in a surplus of chicken thighs and drumsticks. EU poultry producers seek to export this excess to other markets, and South Africa, without sufficient protective measures in place, has become a target for these exports.
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South Africa's anti-dumping measures
South Africa has been facing issues with the dumping of cheap chicken meat by the EU. In international trade, dumping is the act of exporting a product to a foreign market at a price lower than what is charged in the home market. In this case, it is chicken leg quarters being exported cheaply into South Africa. This is because, in developed countries, chicken breasts and wings are more desirable among consumers as they are perceived as healthier, leading to a surplus of other chicken parts like thighs and drumsticks.
To tackle this issue, South Africa has imposed anti-dumping measures in the form of duties and tariffs. In December 2015, the International Trade Administration Commission of South Africa (ITAC) imposed a provisional "safeguard duty" of 13.9% on frozen bone-in chicken from the EU. This followed anti-dumping tariffs ranging from 3.86% to 73.33% on some chicken from Germany, the Netherlands, and the UK. In 2016, SPS bans were introduced to block imports of poultry meat from most EU exporting member states. In 2018, a safeguard duty of 35.3% was imposed on EU products.
In December 2021, ITAC announced that sufficient information was found indicating that dumping is taking place and causing harm to the local industry. As a result, anti-dumping duties were imposed on imports from Brazil and four European Union countries: Denmark, Ireland, Poland, and Spain. From January 2022 to June 2022, anti-dumping duties were imposed on all nine countries that regularly exported bone-in chicken portions to South Africa, including the US, Brazil, and several European countries. These duties are provisional and will expire on June 14, 2022, with ITAC announcing the final anti-dumping duties afterward.
The impact of these anti-dumping measures has been mixed. Some local industry players argue that the measures are not enough to protect South Africa's chicken industry. Kevin Lovell, chairperson of the South African Poultry Association (SAPA), warned that a lot of companies in the industry are closing down due to competition from cheap imports. SAPA has called for a stop to the imports, alleging that they have led to job losses and harmed the local market. However, Viccy Baker, founder of Red Gekko's Retail Price Watch, believes that the price of frozen chicken has remained stable despite food inflation due to cheaper imports. She argues that without tariffs, prices would remain stable.
In conclusion, South Africa has implemented anti-dumping measures in the form of duties and tariffs to address the issue of cheap chicken meat dumping by the EU. While these measures have provided some protection to the local industry, there are calls for stronger action to safeguard South African chicken producers and jobs.
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The effectiveness of South Africa's anti-dumping measures
South Africa has a long history of using trade remedies, including anti-dumping measures. In fact, South Africa is one of the earliest users of trade remedies in the world, with the first mentions of anti-dumping actions found in the Customs Tariff Act of 1914. The country was a prolific user of anti-dumping measures in the period between 1921 and 1947, with over 90 anti-dumping and countervailing investigations undertaken.
However, the use of anti-dumping measures decreased in the 1970s and 1980s due to the protection provided by high tariff barriers and import surcharges. In 1978, the Minister of Trade and Industry removed all existing anti-dumping duties, as it was believed that the high tariffs in place were sufficient to protect domestic companies.
More recently, South Africa has faced the issue of EU chicken meat dumping, where the EU exports chicken leg quarters to South Africa at prices lower than what is charged in the EU market. This has led to calls for anti-dumping measures to protect the local industry. In response, the International Trade Administration Commission of South Africa (ITAC) imposed a provisional "safeguard duty" of 13.9% on frozen bone-in-chicken from the EU, in addition to anti-dumping tariffs ranging from 3.86% to 73.33% on chicken imports from Germany, the Netherlands, and the UK.
The effectiveness of these anti-dumping measures is a matter of debate. Some argue that these tariffs are not enough to protect the local industry, with the Food and Allied Workers Union calling for additional tariffs of up to 40%. On the other hand, some believe that the cheaper imports have helped maintain stable prices for consumers, and that tariffs may not be necessary.
To further assess the effectiveness of South Africa's anti-dumping measures, it is important to consider the procedural requirements and compatibility with World Trade Organisation (WTO) obligations. A critical analysis by Omphemetse S. Sibanda in 2020 concluded that South Africa's anti-dumping law and practice are largely WTO-compliant, particularly on issues of initiation, investigation, and prosecution of anti-dumping complaints. However, some authors argue that there are areas of incompatibility, including the calculation of the constructed export price and the determination of material injury.
Overall, while South Africa has a long history of using anti-dumping measures, the effectiveness of the recent measures against EU chicken meat dumping is still uncertain. The impact on the local industry and consumers, as well as the compatibility with international trade obligations, are important factors to consider when evaluating the effectiveness of South Africa's anti-dumping measures.
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The impact of the EU's chicken dumping on South African consumers
Impact on Prices
Proponents of the EU's chicken dumping argue that it has helped maintain stable prices for consumers. Viccy Baker, founder of Red Gekko's Retail Price Watch, believes that the price of frozen chicken has remained stable despite food inflation due to cheaper imports from the EU. Without tariffs, she predicts that prices would remain stable.
Impact on the Local Industry
However, critics argue that chicken dumping by the EU is destroying South Africa's local poultry industry. Kevin Lovell, chairperson of the South African Poultry Association (SAPA), highlighted that EU imports are sold at half the industry's standard price, making it difficult for local producers to compete. This has led to job losses and companies closing down within the industry. SAPA's CEO, Kevin Lovell, warned that for every 10,000 tonnes of imported chicken, up to 1,000 jobs could be lost.
Job Losses and Social Impact
The impact of job losses in the poultry industry extends beyond just those directly employed in the sector. In the context of high unemployment rates in rural areas, the devastation caused by dumped imports can be significant. This was evident in Ghana, where poultry farmers and entrepreneurs sold their shops and migrated to Europe due to their inability to compete with the dumped chicken.
Trade Barriers and Tariffs
To protect the local industry, South Africa has imposed anti-dumping duties, tariffs, and technical trade barriers. In December 2021, the International Trade Administration Commission of South Africa (ITAC) found sufficient evidence of dumping and imposed anti-dumping duties. Additionally, South Africa has imposed tariffs of up to 40% on frozen chicken imports from the EU. However, some local players argue that these measures may not be enough to safeguard the industry.
In summary, the EU's chicken dumping has had mixed effects on South African consumers. While it may have contributed to stable prices in the short term, it has also negatively impacted the local poultry industry, resulting in job losses and social consequences. South Africa has implemented various measures to protect its industry, including anti-dumping duties and tariffs, but the effectiveness of these actions is still being evaluated.
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Frequently asked questions
In international trade, dumping is the act of exporting a product to a foreign market at a price lower than what is charged in the home market. In the case of the EU and South Africa, the EU is exporting chicken leg quarters to South Africa at a much lower price than what is charged in the EU.
Consumers in the EU prefer white poultry meat, so there is little to no market for chicken thighs and legs. As a result, EU poultry producers are left with surplus chicken parts that are essentially waste products. Instead of disposing of them, they export them to other markets, including South Africa.
Chicken meat dumping has been linked to job losses in South Africa's poultry industry. For example, the country's largest poultry producer, Rainbow Chicken Limited, laid off about 20% of its workforce in 2017. Additionally, there are concerns that dumping is destroying the local poultry industry and making it difficult for local producers to compete.
South Africa has taken several measures to address the issue, including imposing anti-dumping duties, safeguard tariffs, and technical trade barriers on EU chicken imports. In 2017, the Food and Allied Workers Union called for additional tariffs of up to 40%. Protests have also been held by executives, union workers, and employees of South Africa's chicken industry, demanding an end to chicken meat dumping.
