Has Minister Patel forgotten tariff restructuring?

Overhauling the tariff structure was an important part of the poultry master plan, agreed by government, poultry producers and chicken importers in 2019. More than four years later, it seems to be very low down on the government’s priority list.

The objective would be to curb illegal trade by tightening up tariff codes and structures to prevent chicken imports being wrongly labelled in order to avoid or lessen import duties and taxes. Unfairly low priced imports do not benefit consumers, as the chicken sells at market-related retail prices.

A tariff restructure would complement the imposition of anti-dumping duties, which prevent the import of chicken pieces at prices below cost or below what the meat is sold for in the producer country.

Despite the government’s undertaking in the master plan to take “decisive action” against illegal chicken imports, it took more than year before anything happened about tariff restructuring. It was not until March 2021 that Trade, Industry and Competition Minister Ebrahim Patel ordered an investigation into the various possibilities set out in the master plan.

The investigation was undertaken by the trade regulator, the International Trade Administration Commission (ITAC) and would have been completed by the end of 2021.

Since then, absolutely nothing. Minister Patel has not told us what ITAC recommended, or which if any of the recommendations he plans to implement. The report may be gathering dust in a forgotten storeroom.

There were important elements in the master plan undertaking, all of which were included in Minister Patel’s directive to ITAC and all of which are still needed. They include:

  • Reducing the import tariff codes from the current eight digits to six or seven digits, tightening up the structure to combat under-declaration or mis-declaration of imports.
  • Considering the introduction of specific monetary tariffs (i.e. R/kg) in place of or in addition to the existing percentage-based tariffs.
  • Considering introducing a reference or floor price for chicken imports. This would raise unfairly low import prices to a realistic international production price level, and would be an additional measure against the under-declaration of imports.

In combination, they would greatly assist the poultry industry’s battle to replace unfair trade with fair competition. The industry is struggling, in large part because of government-related infrastructure failures, and it needs all the support it can get.

Why is the government looking the other way?