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EU must stop fowl play over dumping

‘Predictably, the EU pretends the local industry’s objections to the dumping are about ‘imports’ and protectionism,’ writes Francois Baird

EU chicken producers have been dumping their products in SA and harming the local industry, but the EU is determined not to admit it.


This is clear from the EU’s repeatedly evasive statements about the effect of chicken dumping on SA. There has not been one straight answer in the series of statements the EU delegation in SA has made. since October 2016.


There has been no admission that what they have been doing has plunged the local chicken industry into crisis, which has cost thousands of jobs and threatens many thousands more if dumping continues.


There has also been no promise to stop this practice and no undertaking to support those rendered jobless by heartless EU actions. All there has been are half-truths and misleading statements designed to hide the facts.


When the FairPlay antidumping movement planned its social support summit to co-ordinate support for retrenched workers and affected families and communities on August 2, one of the first invitations was extended to EU ambassador Marcus Cornaro.


The invitation was declined, and instead, the EU delegation issued another statement to mark the occasion, claiming it remained committed to SA’s economic transformation and job creation. The elephant in the room was sidestepped.


Dumping happens when countries export goods below the cost of production or below the normal selling price in their home country. This predatory practice is frowned upon and is considered immoral, if not illegal.


Local producers, however efficient (and South African producers are very efficient, as has ironically been proved by EU-based research) cannot compete and start cutting back, eventually having no option but to shut down.


The EU has become a serial evader on the issue of chicken dumping and the latest statement is no exception. It does not deny that dumping is happening. It has no option but to concede that dumping has occurred in the past because three countries — Germany, the Netherlands and the UK — were subjected to antidumping measures in 2015 after being found guilty.


But despite huge volumes of EU imports, peaking in 2016, the EU will not concede that the practice has continued. It merely claims there is no proof. If dumping were really taking place, the EU says, then local producers and the South African Poultry Association (Sapa) would surely have lodged a complaint and applied for antidumping remedies.


The EU knows the complexity of the World Trade Organisation (WTO) rules related to dumping. It knows that at the time of the successful antidumping application, nine countries were allowed to export to SA. Three countries were found guilty and the other six escaped stricture because their export volumes were below the minimum amount required to lay a complaint under the WTO rules.


Then there is the grossly misleading statement about the massive EU subsidies, which give EU producers a huge advantage, particularly against farmers in developing countries


The EU knows that Sapa stated in April 2017 that further action would be taken against EU countries dumping bone-in leg quarters in SA.


EU consumers prefer chicken breasts and wings, and the left-over dark meat is dumped in foreign markets – often sent in frozen bulk, without a specific end consumer in mind. It is these dumped leg quarters, 80% of which came from the EU in 2016, that have precipitated the crisis in the local industry.


“We will, in due course, launch actions against all those EU countries who fall within the WTO thresholds, all of whom are dumpers of dark meat,” the Sapa statement said.


So much for the EU insinuation that there is nothing to complain about.


Then there is the grossly misleading statement about the massive EU subsidies, which give EU producers a huge advantage, particularly against farmers in developing countries. Billions and billions of euros are spent on direct and indirect producer subsidies, which are the single largest item in the EU budget. Yet the EU statement ignores this and points instead to the fact that the EU stopped export subsidies in 2013.


This might be true, but it’s also irrelevant in today’s subsidy debate.


Predictably, the EU pretends the local industry’s objections are about “imports” and protectionism. Competition is healthy in any market. South African producers do not need protection against fairly priced imports. What must be stopped is dumping, against which no producer can compete. If the EU acted out its stance, it would not make it so difficult for other countries to export goods to the EU.


Putting a stop to dumping, from the EU — or anywhere else — is required urgently if the South African chicken industry and the thousands of people whose jobs depend on it are not to suffer further constriction. EU efforts to help open its markets for South African chicken exports are welcome, as is its continued support for investment, economic transformation and development in SA. However, its prescriptions for the revival of the local chicken industry ignore the cause of the crisis.


The South African chicken industry needs to grow. It can only do so if it is not threatened by dumped imports. The EU’s professions of concern for the South African industry would be a little more convincing if it would admit its role in the industry’s decline and the thousands of jobs that have been lost because of dumping.


• Baird is founder of FairPlay.
First published in Business Day