Poultry producers triumph in EU dispute

Poultry producers in the SA Customs Union (SACU) have triumphed in an arbitration case which rejected a European Union bid to overturn safeguard duties on imported chicken.

The EU disagreed, pointing to parts of the ruling that were in its favour, and claimed that it had won.

The duties, imposed to counter rapidly rising import volumes of bone-in chicken, started as interim duties in 2016. Final safeguard duties were imposed in September 2018, starting at 35.3%, and reducing to 30% in March 2019, 25% in March 2020, and 15% in March 2021. They fell away entirely in March 2022.

The EU appealed against the duties, and the dispute was referred to the SACU arbitration panel. If the EU had won, all of the duties paid over five years might have had to have been refunded. Instead, the panel rejected most of the EU claims, including the request for a refund, and ruled that no further action was required by SACU countries.

The arbitration ruling was a “landmark victory” for local poultry producers, according to Dawie Maree, head of agriculture information and marketing at First National Bank.

Maree told Farmers Weekly that the poultry industries in SACU countries, of which the South African industry was the largest by far, could have been in a much better economic position were it not for the increased imports from the EU.

“This now paves the way for more of these arbitration cases in future, and may be a signal to SACU’s trading partners that the customs union was committed to protect its members from prejudicial trade,” he said.

In a statement, SACU executive secretary Paulina Elago noted this is the first arbitration for SACU member states as a collective under an international trade agreement (the Economic Partnership Agreement between SACU and the EU) and the first dispute relating to a safeguarding regime present in this type of international economic instrument.

“It is, therefore, a monumental achievement for SACU to have successfully defended its rights and decisions taken in compliance with the EU-SADC EPA. The panel’s emphasis on the developmental nature of the EPAs and its consideration of this fundamental objective in its analysis of the dispute provides legal certainty in the application of the EU-SADC EPA going forward,” Elago added.

However, the EU Commission noted that the panel had found the safeguard duties went beyond what was needed to remedy or prevent serious injury to the local industry and were therefore not in line with the EPA agreement.

It said the Commission would “remain vigilant to ensure that the EU industry is not subjected to any further unjustified restrictions in the future”.

Is the EU snatching victory from the jaws of defeat?