EU imports ‘hurt SA agro-processing firms’

29/03/2013 12:00 - 460 Views

SOUTH African agro-processing firms are struggling to compete against imports from the European Union (EU) that enter the local market duty-free because of the trade and co-operation agreement South Africa has with the EU, International Trade Administration Commission (Itac) chief commissioner Siyabulela Tsengiwe said on Wednesday.

In terms of the agreement, about 85% of goods from the EU come into South Africa duty-free and about 80% of South African goods entering the EU do so.

Olive oil imports were cited by industry sources as having a negative effect on local producers.

The existence of the EU-South Africa trade agreement, which was fully implemented last year, means tariffs cannot be increased. The only remedies available to the commission to combat the trend was to use antidumping or countervailing duties, or other safeguards allowed by the World Trade Organisation, but these were difficult to apply because of stringent requirements, he said in a briefing to Parliament’s portfolio committee on economic development.

For example, to prove that dumping was taking place, an applicant for tariffs would have to show a disparity between the export and local prices, prove that an injury had been suffered and that this injury was the direct result of the dumping.

Countervailing duties were a direct attack on government subsidies and involved delicate questions of trade policy, while the standards for safeguards were also high, as applicants had to show a sudden unforeseen surge in imports which harms local industry.

Mr Tsengiwe said applicants struggled to meet the standards.

This view was shared by Trade Law Chambers director Rian Geldenhuys, who said the agreement was not an unequivocal success. South African negotiators had not been aware at the time of certain pitfalls, had not insisted on the inclusion of certain claw-back provisions and had not been closely attuned to business interests.

It was problematic, he said, that South Africa’s agro-processed goods were subject to higher tariff barriers in the EU than vice versa.

Itac senior manager of trade remedies Carina Janse van Vuuren said South Africa’s membership of the Southern African Customs Union (Sacu) added to the difficulty of using remedial instruments as these had to be negotiated with the other member countries namely Botswana, Lesotho, Namibia and Swaziland.

Another problem was that South Africa could not impose duties on its own borders, as there were no border controls with Sacu members which shared a common external tariff and allowed the free movement of goods between them.

Mr Tsengiwe said the way decisions on tariffs were taken would change once the Sacu tariff board and Itac counterparts in other member countries were established.

Itac investigates the appropriateness or otherwise of tariffs and makes recommendations to Trade and Industry Minister Rob Davies, who makes a ruling after consultation with Sacu members. This sets the external tariff.

However, once the institutions were established, Itac’s recommendations would be submitted to the Sacu commission and then to the Sacu tariff board, which would make a recommendation to the Sacu Council of Ministers.

Mr Tsengiwe warned of a possible "gridlock" in decision-making and longer time frames, with possible negative consequences for domestic producers. He said 90% of the gross domestic product of Sacu industries was produced in South Africa. This would mean that the Sacu tariff board once operational would preside over South African tariff investigations.

The committee heard that South Africa had launched 222 antidumping investigations between 1995 and 2010 compared with 613 by India, 442 by the US, 414 by the EU, 277 by Argentina and 212 by Australia.

28 March 2013, 06:44

By Linda Ensor

Source: bdlive.co.za