Namibia Economist, 10 February 2017
By Freeman Ngulu
The poultry trade between South Africa and Namibia is not clearly defined, leading to confusion regarding the actual origin of many chicken products imported into the Southern African Customs Union (SACU). This surfaced after SACU announced a 13.9% tax on chicken of EU origin.
South Africa is the largest importer of poultry into Namibia. But whether specifically chicken products originated in South Africa itself, Brazil, the United States or the European Union, is often not clear and such imports into Namibia are not scrutinized.
Maria Immanuel, Trade Analyst at the Namibia Trade Forum (NTF) said that over 60% of Namib Poultry Industry’s (NIP) production of frozen bone-in portions and local retailers’ importation of Individually Quick Frozen (IQF) chicken will be affected by the temporary tax safeguard.
Namib Poultry is the only significant local commercial poultry producer. It has not been able to fully supply the local demand for chicken. This has resulted in Infant Industry Protection measures not being enforced but quantitative poultry restrictions have continued nonetheless.
NPI supplies about 1200 tonnes of chicken to the domestic market and the deficit is imported. Current import restrictions on the poultry industry allows Namibian retailers to import a maximum of 1500 tonnes of chicken products per month. Namibia’s poultry consumption is estimated to be approximately 3000 tonnes per month.
Trade experts say the link between the dumping of poultry products from Brazil into Namibia via South Africa and the inability to establish clear rules or origin, is contributing to the so-called chicken war which is raging between South African producers and importers.
The current stand-off has a major impact on the Namibian producer given that local chicken prices are a factor of South African production costs. The NTF’s trade flow tracer study to separate how much of imported chicken comes from which source is said to focus more on the price impact on the consumer and retailer than on the local cost of production.
A researcher at Tralac, the South African trade research organisation, Willemien Viljoen’s comments on the state of the poultry industry and the trade remedies being sought to protect the local market suggest addressing structural problems and the lack of competitiveness of the local industry which has been cited as the actual contributing factor to the struggling regional domestic industry.
According to Viljoen, there is discontent among poultry producers and lawmakers in South Africa as the producers requested safeguard measures. However, for poultry imports from the EU, the current SADC EPA agreement is governing trade, and under this dispensation, restrictive import tariffs on poultry are not allowed unless an import imbalance threatens the existence of domestic producers. In what measure this applies to poultry imports from other jurisdictions, is not clear adding to the confusion around SA producers’ demand for some form of protection.
After almost two years of investigation, the South African International Trade Administration Commission (ITAC) and the Minister of Trade and Industry in South Africa approved the 13.9% import tax on poultry of EU origin, after it was found that EU imports pose a serious threat to South African producers.
What this means according to the Namibia Trade Forum is that a safeguard measure applied as a tariff acts as a trade remedy between countries that have a preferential trade arrangement between them.
Such a safeguard measure as negotiated in the SADC EU EPA could be applied to normalise or offset a real or potential imbalance. This agreement came into force in October 2016.
Referring to the impact of trade agreements in general, the World Trade Organization’s Director General, Roberto Azevêdo stated that trade is very high on the political agenda at the moment. “I recognize the concerns about globalization – and the need to respond. The net positive effect of trade means nothing if you’ve lost your job. “So we need better domestic policies to support people and get them back to work. But attacking trade won’t help here,” he said.