Tariff issue is not that simple, argues FairPlay

Some interesting suggestions for increasing South Africa’s trade with the United States were raised during a FairPlay trade webinar.

The webinar, hosted by FairPlay founder Francois Baird, focused on the future of the Africa Growth and Opportunity Act (AGOA) and its benefits for African countries. It also branched out into President Trump’s trade and tariff policies, and how things might change after 2028.

Two international experts said that, in addition to direct contacts with the US government, there were ways that South Africa could make its case in the US capital and in various US states.

South Africa should make more use of its embassy in Washington to showcase South African goods, said Prof Diana Furchtgott-Roth an adjunct economics professor at both the George Washington University in Washington DC and University of the Free State in Bloemfontein.

“Your embassy can be used as a tool of trade promotion, as other embassies are,” she said.

“Have a big party where you display your delicious chicken, your wonderful citrus.”

Trade expert Andrew Hale said the South African government, and individual South African industries, should consider hiring lobbyists to promote their issues to the US government, and to increase trade with some of the 50 US states.

Hale said that, while trade was regulated at a US government level, countries were increasingly establishing offices in individual US states, engaging in bilateral negotiations with them and establishing memorandums of understanding. This could end up with the state encouraging the US government to have more harmonious relations with that country.

Prof Diana Furchtgott-Roth added South Africa should not only seek to sell to US states, but it should also see what those states wanted to sell to South Africa. This could include minerals, manufactured products or medical equipment. A trade relationship, she said, “goes two ways”.

Food for thought for Roelf Meyer, South Africa’s new ambassador to Washington. And perhaps two additions to his guest list?

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A private United States business body advocating stronger trade ties with Africa has called for an extension of “at least 10 years” of the Africa Growth and Opportunity Act (AGOA) trade preference legislation.

The last AGOA 10-year extension expired in 2025. This month, the Trump administration renewed it until the end of 2028. The US legislation gives qualifying African countries duty-free access to US markets, but its benefits have largely been negated by the Trump administration’s series of worldwide tariffs.

The US-based Corporate Council on Africa (CCA) said in a statement that the two-year extension was welcome, and “provides an important measure of certainty for businesses, investors, workers and governments across the United States and Africa”. However, a longer time period was needed.

AGOA had delivered two-way benefits since its inception, supporting American companies, workers, and consumers while advancing economic growth and diversification across Africa. 

“In recent months, CCA has intensified its advocacy and engagement around AGOA’s renewal, including briefing the African Union and members of the African diplomatic corps, meeting with African Ministers of Trade, consulting with key U.S. Government officials in the Administration, and engaging Members of Congress and congressional staff across party lines.

“While this two-year extension is an important and welcome step, CCA will continue to advocate for a longer-term renewal and modernization of AGOA, specifically, a reauthorisation of at least 10 years to provide the certainty businesses need to make long-term investment decisions, build supply chains, create jobs, and expand commercial relationships across the continent,” the council said.

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The European Union (EU) has suspended imports of Brazilian beef, poultry and other animal products until Brazil demonstrates that complies with EU rules on antibiotic use in livestock farming.

The French news channel RFI said the measure covers a range of Brazilian exports, including poultry, beef, eggs, honey and animal casings intended for human consumption.

The European Commission maintains Brazil has not yet provided sufficient guarantees that its exports meet EU standards designed to prevent the misuse of antibiotics in livestock. Brazil was added in May to an EU list of countries considered not to be meeting the bloc’s rules on antimicrobial use in livestock.

RFI said that, following an audit of Brazil’s poultry and honey sectors, Brazilian poultry exports to the EU could “resume within weeks”. Approval for beef exports was expected to take longer.

“Brazil is an important partner for the EU and we are working closely, constructively and positively with Brazilian authorities to ensure their compliancewith these requirements,” an EU spokesperson said.

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FairPlay’s Francois Baird has hit back at suggestions for reviews of all tariffs on imported poultry, both anti-dumping duties and general import tariffs.

“Every country in the world uses tariffs to create a level, competitive playing field,” he said in an article in Business Day.

Baird also noted that removing tariffs would not make chicken cheaper for South African consumers.

“Imported chicken sells at, or just below, the local price and not at its landed cost because the importers use the local price as their reference price. Importers buy low, sell high and pocket fat profits by driving South African producers out of business.”

Baird was responding to suggestions in a Business Day article from David Wolpert, a former CEO of the Association of Meat Importers and Exporters (AMIE). Writing in his personal capacity from retirement in Australia, Wolpert said there was a danger that tariff protections could remain in place after import duties had achieved their objective.

“Protection may sometimes be necessary to help an industry reach a competitive position. The danger arises when protection gradually becomes regarded as permanent,” he said.

As AMIE has done, Wolpert questioned the continuation of general import tariffs on poultry. These tariffs, which are separate from and in addition to anti-dumping duties, include a 62% tariff on imports of bone-in chicken such as leg quarters.

Wolpert also raised the issue of anti-dumping duties, a corrective measure applied under World Trade Organisation (WTO) rules to counter imports at unfairly low prices. While supporting “legitimate” anti-dumping duties, Wolpert suggested there should be an additional question in future renewal applications: what has changed since the previous application.

“How much more competitive has the domestic industry become, and what measurable benefit is the South African consumer receiving?”

Baid said that South Africa’s poultry farmers had excelled, despite multiple challenges. 

“They ensure a constant supply of the second most affordable chicken in the world, to South Africans in South Africa.”

Challenges faced by South African poultry producers included unreliable, expensive electricity and water, a tattered transport infrastructure, a R9 billion bird flu culling blow, for which the SA government still refuses to compensate chicken farmers despite requirements to do so, and the Covid pandemic.

Baird said the quickest way to cut the price of chicken for low-income consumers would be to scrap the 15% VAT on chicken. 

“Remove the tax and the price falls immediately.”

FairPlay had been campaigning for VAT-free chicken since 2018. Producers and importers already supported the proposal. 

“Cheaper chicken means more volume, more production and more jobs, feed, processing and distribution. Phase 2 of the master plan seeks increased affordability for low-income households. Zero-rating will deliver it tomorrow if implemented,” Baird contented.

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Chicken importers get things wrong, repeatedly. And their mouthpiece, ChickenFacts, can be a little short on facts.

In their latest attack on FairPlay over the retention of general tariffs on chicken imports, ChickenFacts went into a long argument about the impact on poultry producers of the 2022 bird flu outbreak. 

Fact: That outbreak was, in fact, in 2023. 

Then they claim that FairPlay’s arguments for tariffs show a disregard for poor consumers, because a decade of tariffs has kept chicken prices high.

Fact: Tariffs have enabled South African producers to recover from a flood of dumped chicken, to invest in expanded capacity and to use economies of scale to provide South African consumers with the second-cheapest chicken in the world.

Fact: South African poultry producers have supplied the country with affordable meat protein for decades.

Fact: The tariffs are necessary to protect the South African poultry industry against unfair competition.

Fact: Foreign poultry producers are heavily subsidised, directly or indirectly. South African producers enjoy no subsidies.

Fact: Importers’ professed concern for poor people is contradicted by the fact that they don’t pass on low import prices to consumers – instead imported chicken is sold at market prices and importers make fat profits.

Importers argue, with seeming logic, that a country producing cheap chicken should not be afraid of imports.

Fact: The general tariffs are in place because South Africa’s trade regulator, ITAC, has recognised the facts outlined above. It has recommended tariffs because chicken imports were harming the local industry’s profitability by price suppression – producers cannot raise prices when input costs rise, and without profitability they cannot invest, expand and create jobs.

Fact: Removing the general tariffs, as advocated by chicken importers, would harm the local industry, threaten its profitability and reduce or eliminate its capacity to create jobs.

Fact: It is importers who would benefit most from the removal of tariffs, not consumers. That is why they argue so loudly that tariffs must go.

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South Africa’s Competition Commission is blaming the country’s retailers for recent chicken price increases.

Retail prices of individually quick frozen (IQF) chicken pieces had increased in June, while producer prices had remained stable, the commission said in its latest Cost of Living Report. The popular IQF packs constitute a large portion of the South African retail market.

“The Commission has previously highlighted concerns with the increasing prices of IQF chicken at the retail level despite stable producer prices and we remain concerned that this trend is recurring again in the more recent months,” it said.

“Individually Quick Frozen (IQF) chicken remains one of the most affordable and widely consumed sources of animal protein in South Africa, making it an essential component of household food expenditure, particularly among lower income consumers. 

“Its affordability, convenience and versatility have contributed to strong and sustained demand, positioning IQF chicken as a key substitute for higher-priced meat products during periods of economic pressure. 

“Given its prominence in household consumption, movements in IQF chicken prices have important implications for food affordability and consumer welfare,” the commission stated.

While the commission criticised retailers over higher IQF prices, it praised them for keeping egg prices down. 

“The higher producer prices from April onwards have not been passed on to end consumers suggesting that retailers have been absorbing these costs,” it said.

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