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The US has given South Africa 60 days to remove barriers to US meat exports. Failure to do so could result in South Africa losing African Growth and Opportunity Act (AGOA) benefits for agricultural products. Kevin Lovell, CEO of the South African Poultry Association, talked to ThePoultrySite's Glenneis Kriel about the South African side of the story.
There are many takes on why the US is threatening to withdraw African Growth and Opportunity Act (AGOA) benefits for South African agricultural produce.
These range from discontent over South Africa's involvement with Russia and China through its relationship with BRIC countries (Brazil, Russia, India and China); to unhappiness over South Africa's plan to cap foreign ownership in security companies.
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Read the background to this story in our article: South Africa's Benefits Suspended After Failure to Import US Chicken
Kevin Lovell, CEO of the South African Poultry Association, however thinks that the real reason for this out-of-cycle review is that the US is using AGOA to negotiate better market access for its poultry, pork and beef.
Mr Lovell pointed out that there's been a clash between the countries since South Africa's AGOA status came up for review earlier this year.
South Africa wanted a longer period before its next renewal, while the US wanted initially to 'graduate' South Africa from AGOA and to renew AGOA for a shorter period. The US also from the start threatened that South Africa might lose its benefits, if it didn't remove anti-dumping duties on US poultry.
These duties were initiated on bone-in chicken portions that were often exported to South Africa at prices that undercut South African prices. The anti-dumping duties resulted in the US paying a 9.40 Rand per kilogram anti-dumping duty as well as a 37 per cent normal import duty on bone-in chicken.
At first, the US demanded to export 125,000 tons of brown meat to South Africa duty-free. South African producers initially agreed to accept 45,000 tons, but the two parties later agreed on 65,000 tons.
"We knew it would hurt our industry, but realised that we had to come to an agreement for the greater good of South Africa," Mr Lovell said.
South Africa's AGOA status is however still under threat in spite of the agreement.
Mr Lovell said that this was because the US then also started to demand other trade concessions relating to sanitary and phytosanitary measures.
"The poultry agreement was complicated because of the outbreak of highly pathogenic avian influenza (HPAI) late last year in the US, which resulted in South Africa banning poultry imports from America. The US was disgruntled by the fact that South Africa imposed a blanket national ban," Mr Lovell said.
The United States is demanding that a regionalised ban be implemented, so that the country would still be able to export meat to South Africa from regions that are disease free.
Mr Lovell explained that South Africa was imposing such stringent regulations concerning HPAI, because the country's chicken industry has up until now been clean of the disease and the ostrich industry has been free of the disease for a few years and it couldn't afford an outbreak.
The unhappiness over pork exports stems from health and safety regulations related to porcine reproductive and respiratory syndrome (PRRS), pseudorabies and trichinae from entering the country.
Mr Lovell explained that South Africa was one of the few countries in the world where PRRS disease has been eliminated. Countries that export pork to South Africa are therefore required to cut the meat in a specific way and to remove the lymph nodes.
"We are importing pork from various other countries, such as Canada, and they don't have any problems in achieving our standards. So I don't know why it is a problem for America," Mr Lovell said.
As far as beef is concerned, the US wants South Africa to change standards concerning Mad Cow Disease (spongiform encephalopathy). South Africa has banned beef imports from the US since an outbreak there of mad cow disease in 2003.
The US has been trying to renegotiate market access for its entire range of beef since 2013 when its made cow disease status was changed to negligible. The ban also affected pet food, resulting in the US losing a large portion of the pet food market in South Africa.
Mr Lovell said that South Africa has proposed a revised veterinary certificate which will allow beef imports from the US so this concern should be resolved quite soon.
Mr Lovell said that he could not understand why the US was so set on changing these health and safety standards now, as most of them have been applicable for years.
"Perhaps it is because of the global economic slow down. Perhaps America is trying to grow its economy and create jobs through meat exports. Or perhaps they simply feel that they are now in a position to make these demands."
Mr Lovell pointed out that South Africa has not lost its AGOA status yet. The country has time until January to reach an agreement concerning the issues that are bothering the US about meat exports to South Africa.
He said it would be difficult to estimate the impact that a loss of AGOA status for agricultural products could have on South Africa, as it would not result in South Africa losing market access to the US, but simply that South Africa might have to pay import duties on these products.
"South Africa in effect might lose its competitive edge for these products," Mr Lovell said.
So far the main South African agricultural industries benefiting from AGOA, were the citrus industry valued at $60 million a year, the macadamia nuts industry worth $43 million in 2014 and the wine industry, worth $33 million in 2014.
Mr Lovell however pointed out that it was dangerous to build whole industries on AGOA, as it was a concession and not a trade agreement. Hence, industries are aware that the concession could be taken away from them at any time.
He said that negotiations between the two countries were also complicated by procedures that need to be followed.
"In these negotiations it often happens that industry role-players from the different countries agree on new terms, but that it then has to go through various government or legal procedures before it can be implemented," he said.
