Photo: REUTERS
Photo: REUTERS

SOUTH Africa is running out of time to conclude a disputed anti-dumping investigation into Brazilian chicken imports, which local producers see as crucial to protect jobs.

The International Trade Administration Commission of South Africa (Itac) imposed interim anti-dumping duties of between 6% and 63% on frozen whole chickens and boneless cuts from Brazil in February after it found proof of “injurious dumping” in the local market in 2010.

The interim duties lapsed in August after Trade and Industry Minister Rob Davies referred a decision on final duties back to Itac for review. Dumping takes place when products are sold at below the cost of production and local producers suffer as a result.

Brazil, which laid a complaint against South Africa at the World Trade Organisation (WTO) over the interim duties, is set to dispute any final duties that may be imposed. It has cited a list of legal and procedural concerns around Itac’s investigation and its determination of dumping, injury and the causal link between dumping and damages suffered. Local importers have also raised concerns about the statistics and prices used by Itac to determine dumping and have instituted legal proceedings at the North Gauteng High Court.

The commission has until December 24 to make a final decision on the duties and get it approved and gazetted by Davies and imposed by the South Africa Revenue Service. Should the deadline be missed, a new complaint will have to be laid and Itac will have to start a new investigation. Itac said the investigation was still under way and was “expected to be finalised by the end of 2012”.

Several role players said South Africa had a slim chance of winning a dispute at the WTO over the anti-dumping duties.

“There is a whole list of things that Itac got wrong. They looked at retail prices of three products in one supermarket in Brazil on a specific day to get an average retail price instead of the ex-factory price. There’s a dispute about the accuracy of the import statistics they used, and the way they determined damage to the local industry, not to mention a number of legal problems. Chicken is Brazil’s biggest export product and they will not let this slide,” said Gustav Brink, associate director at XA International Trade Advisors.

Kevin Lovell, CEO of the South African Poultry Association, which laid the original complaint, said the association was investigating dumping from a number of other countries.

“We will lay complaints when we find any evidence of unfair trade,” said Mr Lovell.

Local producers say rising imports have led to high stock levels, which has led to reduced prices at a time when they are faced with increasing feed and electricity costs.

Alleged dumped imports of whole birds from Brazil jumped from 3,280 tons in 2008 to 12,955 tons in 2010, according to Itac, while alleged dumping of boneless chicken pieces increased from 16,599 tons in 2008 to 25,358 tons in 2010. This has caused harm to local producers through price undercutting, lost market share and reduced growth, Itac said.

US poultry producers have already started lobbying their government to join Brazil in any action at the WTO against South Africa, as it considers anti-dumping duties South Africa has imposed on certain US chicken products invalid.

Though South Africa is a small export market for Brazil — the world’s biggest poultry producer — it is forced to protect its reputation as South African duties may encourage other countries to also impose anti-dumping duties, the expert said.

Gilmar Henz, the agricultural attaché at the Brazilian embassy in Pretoria, said the Brazilian Poultry Association did not see “any possibility” of dumping in South Africa and would like the matter to be resolved on a bilateral basis. The dispute was discussed by Mr Davies and his Brazilian counterpart, Fernando Pimental, during Mr Davies’s visit to Brasilia last week.

The chicken dispute is the latest in a list of disputes over trade in agricultural products between the two countries. Brazil may also take South Africa to the WTO to force the lifting of a ban on pork imports.

The ban was imposed after an outbreak of foot and mouth disease in 2005. “South Africa is the last country to still impose restrictions on Brazilian pork because of that outbreak,” said Mr Henz.

South Africa is expected to retain the ban until Brazil lifts some restrictions on wine imports, which make it difficult for local producers to compete in the Brazilian market. Mr Henz said all exporters to Brazil faced the same challenges and it did not discriminate against South Africa.

“The government is aware of the need to simplify the processes and is working on it,” he said.

* This article was first published in Sunday Times: Business Times