Bags of feed at the Rossgro agribusiness firm in South Africa. Credit: Friday Phiri/IPS

By Friday Phiri
MPUMALANGA, South Africa, Jul 6 2017 (IPS)

The United States and Europe’s preference for white meat is hurting Africa’s poultry industry, says Luc Smalle, manager at the agro firm Rossgro in South Africa’s Mpumalanga area.

With 3000 Ha of maize and 1000 Ha of soya, as well as 1,500 heads of beef cattle, Rossgro mills its own feed, which also caters for millions of chickens housed in 40 environmentally controlled houses.Africa’s young, dynamic population has the potential to lead an economic revival in the region, backed by targeted long- and short-term reforms in key areas.

But Smalle is uncertain about the future of the poultry business, not only in South Africa but the whole continent.

He recalled how the US and Europe exported millions of tonnes of chicken meat to the then Soviet Union (now Russia). Historically, Russia was the major importer of America’s dark meat. According to available data, in 2009 alone, Russia is said to have doled out 800 million dollars for 1.6 billion pounds of U.S. leg quarters.

But in 2014, Russian President Vladimir Putin banned U.S. chicken from Russian shores, allegedly because it was treated with ‘unsafe’ antimicrobial chlorine. The ban remains in place, although some say it’s more about politics than public health.

Either way, according to Smalle, the ban “has led America and Europe to look for alternative markets to dump brown meat because most of the First World eats white meat, so they are dumping chicken in the third world, especially Africa. We should stand together and work with our governments to stop imports or put high tariffs so that they can’t dump it anymore.”

In a chicken, white meat refers to the breast and wings while legs and thighs are considered red/dark meat. The nutritional difference is fat content. White meat is a leaner source of protein, with a lower fat content, while dark meat contains higher levels of fat, hence the developed world preference for white meat on health grounds.

Smalle believes this state of affairs is hurting African poultry industry competitiveness where the average cost of raising a chicken is far much higher than in the developed world. He says most African farmers rely on bank loans from banks while their European and American counterparts are heavily subsidised by their governments.

“It’s going to kill the whole poultry industry in Africa if nothing is done to reverse the trend; they have subsidies which the African farmer does not have,” Smalle told IPS, citing the South African poultry industry, where he says a third of the workers have lost their jobs because firms have been pushed out of business.

Under free market economics, Smalle’s arguments might seem out of order. But the latest Africa Competitiveness Report 2017 jointly issued by the African Development Bank, World Bank and World Economic Forum seems to support the continent’s argument.

The report warns that without urgent action to address stagnating levels of competitiveness, Africa’s economies will not create enough jobs for young people entering the job market, adding that if current policies remain unchanged, fewer than one-quarter of the 450 million new jobs needed in the next 20 years will be created.

The biennial report comes at a time when growth in most of the region’s economies has been slowing despite a decade of sustained growth, and is likely to stagnate further in the absence of improvements in the core conditions for competitiveness.

Compounding the challenge to Africa’s leaders is a rapidly expanding population, which is set to add 450 million more to the labour force over the next two decades. Under current policies, only an estimated 100 million jobs will be created during this period.

Africa’s young, dynamic population does, however, possess the potential to lead an economic revival in the region, backed by targeted long- and short-term reforms in key areas, the report finds.

“To meet the aspirations of their growing youth populations, African governments are well-advised to enact polices that improve levels of productivity and the business environment for trade and investment,” says the World Bank Group’s Klaus Tilmes, Director of the Trade & Competitiveness Global Practice, which contributed to the report.

“The World Bank Group is helping governments and the private sector across Africa to take the steps necessary to build strong economies and accelerate job creation in order to benefit from the potential demographic dividend.”

Some of the bottlenecks and solutions include strengthening institutions, which experts believe is a pre-condition to enable faster and more effective policy implementation; improved infrastructure to enable greater levels of trade and business growth; greater adoption of technology and support to developing value-chain links to extractive sectors to encourage diversification and value addition.

The World Economic Forum’s Richard Samans, Head of the Centre for the Global Agenda and Member of the Managing Board, believes that “removing the hurdles that prevent Africa from fulfilling its competitiveness potential is the first step required to achieve more sustained economic progress and shared prosperity.”

The Africa Competitiveness report was released in May during the 27th World Economic Forum on Africa in Durban, South Africa, attended by more than 1,000 participants under the theme “Achieving Inclusive Growth through Responsive and Responsible Leadership.”

The report combines data from the Forum’s Global Competitiveness Index (GCI) with studies on employment policies and city competitiveness.

By Roberto Azevêdo
GENEVA, Oct 15 2014 (IPS)

Regional trade agreements have grown very rapidly in recent years, and today the World Trade Organisation (WTO) has been notified that 253 are in force.

Clearly RTAs are not a new phenomenon.

In fact they pre-date the multilateral system because, in a sense, they were the seeds which grew into the General Agreement on Tariffs and Trade. Created in 1947, GATT was replaced in 1994 by the WTO.

WTO Director-General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

GATT was effectively a multilateralisation of the network of reciprocal trade agreements that countries had been pursuing for some years previously, so the system as we know it today has its roots in these agreements.

But of course things have changed in recent years. These agreements are not only more numerous, they are becoming increasingly complex.

While over 80 percent of RTAs notified are bilateral agreements, we are seeing more and more large regional agreements.

And we are seeing more agreements between countries in different regions, rather than between neighbours. This is very different from the pattern we saw during the GATT years.

In addition we see many more developing countries negotiating RTAs today.

This proliferation of agreements, each with their own sets of rules, has been dubbed a “spaghetti bowl” ­and I would certainly agree that we are seeing a significant increase in the level of complexity inside the agreements and in their relations with each other.

Most RTAs today make deeper and more extensive commitments, and have moved beyond commitments only in the sphere of market access for goods.“Although these initiatives [regional trade agreements] show that WTO members continue to liberalise trade, fragmentation of the trading system cannot be a substitute for the benefits of negotiating one set of rules for all”

A question which requires further consideration is how RTA provisions can be complementary to the multilateral trading system.

For some issues such as market access for goods and services, most RTAs grant their partners a higher level of market access than that available through the WTO.

For other issues, the picture is less straightforward.

Take, for example, RTA provisions on anti-dumping rules. In general, RTAs do not appear to have gone much further beyond where we are in the WTO today. Meanwhile, for issues such as investment, which is touched on by some RTAs, there are no WTO rules.

Another trend that has been noted in the past few years is negotiations that could potentially bring together a number of existing RTAs in so-called “mega-regional” negotiations.

While the trend to negotiate new RTAs continues, liberalising trade bilaterally or regionally is only a part of the picture.

As I have said many times,­ these initiatives are important for the multilateral trading system ­ but they cannot substitute it.

To start with, there are many big issues which can only be tackled in an efficient manner in the multilateral context through the WTO.

Trade facilitation was negotiated successfully in the WTO because it makes no economic sense to cut red tape or simplify trade procedures at the border for one or two countries. If you do it for
one country, in practical terms you do it for everyone.

Financial or telecommunication regulations cannot be efficiently liberalised for just one trade partner ­ so it is best to negotiate services trade-offs globally in the WTO. Nor can farming or fisheries subsides be tackled in bilateral deals.

Disciplines on trade remedies, such as the application of anti-dumping or countervailing duties, cannot significantly go beyond WTO rules.

The simple fact is that very few of the big challenges facing world trade today can be solved outside the global system. They are global problems demanding global solutions.

Another important aspect, leaving aside the content of the agreements, is their geographical scope. RTAs tend to exclude the smallest and most vulnerable countries. That is a major source of concern.

And, as our economies become more interconnected across borders and regions, RTAs do not – and probably cannot ­– fully address the gains from trade that can be obtained through global value chains.

Indeed, the strict, product-specific rules of origin that often accompany RTAs may actually be detrimental to value chains and therefore exclusionary for some. The smaller the country, the smaller the company, the smaller the trader, the bigger the likelihood that it will be excluded.

There is also concern that by creating different sets of rules and regulations, RTAs may be burdensome for traders and business. This is the point of complexity that is a concern for many.

Finally, although these initiatives show that WTO members continue to liberalise trade, fragmentation of the trading system cannot be a substitute for the benefits of negotiating one set of rules for all.

Ideally, this is where we should be putting our focus.

But in order to ensure this, one thing we clearly need to do is to deliver on what we agreed during the WTO word trade negotiations in Bali in December last year.

We are now halfway through an intensive consultation period to resolve the current impasse on this ­but, as things stand today, at this point in time we do not have a solution.

While this situation persists, I think the risk of disengagement increases exponentially. And this point is underlined by the proliferation of these other approaches.

For the sake of the multilateral system, and all those who stand to benefit from it, I think we have to find a solution to our current problems and put our work here at the WTO back on track. And we have to do it quickly. Time is not on our side. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

Excerpt:

South African Trade and Industry Minister Rob Davies speaking at the World Economic Forum. Credit: World Economic Forum/CC-BY-SA-2.0

By John Fraser
JOHANNESBURG, Jan 12 2013 (IPS)

As the five members of the BRICS group of emerging economies – Brazil, Russia, India, China and South Africa – tighten ranks and seek to expand their global influence, the inevitable trade spats have begun.

A decision last month by South African Trade and Industry Minister Rob Davies to pursue a general tariff increase on chicken imports in response to concerns that Brazil is “dumping” the product could also hit Argentina, a leading trade expert here has warned.

Duane Newman, director of the Johannesburg-based Cova Advisory, explained that Argentina and Brazil, both of which export significant quantities of chicken to South Africa, are the main countries without free trade agreements with Pretoria to protect them from the planned tariff hike.

“There could be some unintended consequences from Minister Davies’ decision not to target just Brazil with anti-dumping duties, but to raise the tariffs,” explained Newman.

Report reveals systematic ‘dumping’

An investigation of the chicken trade between the two countries from 2008 to 2010, conducted by the International Trade Administration Commission (ITAC), confirmed allegations that Brazil was dumping whole chickens and boneless cuts of chicken on the South African market.

The ITAC’s findings made a strong case for Pretoria to slap ‘anti-dumping’ duties on the South American nation.

According to the ITAC’s report, anti-dumping duties can be imposed when there is a price difference between sales in a producer’s own market and prices charged on exports, when there is material injury to producers in the importing country and when there is a causal link between the imports and the damage.

Duane Newman, director of the Johannesburg-based Cova Advisory. Credit: John Fraser/IPS

The report found that with regard to whole chickens, price undercutting by Brazil caused material injury to South African producers, a loss of market share and a loss of potential growth.

Similarly for boneless chicken cuts, the report found evidence of price undercutting, suppression of South African producers’ ability to increase their prices, and a drop in sales volume, output, market share and growth.

The investigtion found that between 2008 and 2010 whole chickens from Brazil accounted for 36 percent to 44 percent of South African imports, while boneless cuts took between 94 percent and 97 percent of the South African import market.

According to Francois Dubbelman of the specialist trade consultancy F.C Dubbelman & Associates, who acts as advisor to the South African Poultry Association, “At that stage Brazil was the largest exporter to the Southern African Customs Union (SACU) of these chicken products, causing SACU producers injury.”

“Thus the industry received no relief against the unfair trade from Brazil for at least five years – although ITAC found there had been dumping and material injury,” he added.

South Africa’s response

In January 2012, South Africa slapped provisional payments of between six and 62 percent on chicken imports from Brazil but failed to take the next step of imposing targeted anti-dumping duties on Brazil, shifting instead to a general imposition of higher tariffs on all chicken imports.

Newman called the decision a “rare” one, adding, “It will be interesting to understand the detailed reasons for the minister’s decision as it seems as if he is disagreeing with ITAC.”

Newman noted that the increase in general duties on chicken to up to 82 percent from the current 27 percent “will impact all imports of chicken, apart from (trading partners) with which South Africa has a preferential trade agreement like the European Union (EU), the European Free Trade Association (EFTA) and the Southern African Development Community (SADC).”

He said the countries that would be caught by the tariff increases include Brazil, Argentina and some Asian nations. There are existing anti-dumping duties against chicken imports from the United States into South Africa.

Some experts believe that Davies’ decision came in response to Brazil’s June 2012 complaint to the World Trade Organisation (WTO) about the provisional payments imposed by South Africa.

Had Davies opted to convert those provisional payments into anti-dumping duties, experts say, Brazil would have pursued its challenge through the WTO.

But Dubbelman dismissed this theory, arguing, “Countries go on a regular basis to the WTO with disputes. Brazil is known to follow that avenue on a regular basis, whether it has a foot to stand on or not.”

A more likley explanation, he said, is that Davies’ decision to spare Brazil from individual anti-dumping duties – announced in a letter to the ITAC on Dec. 21 –  was a strategic one, in keeping with the two countries’ joint membership in BRICS.

According to Dubbelman, Davies justified his actions on the basis of increased chicken imports from several countries, claiming that South African producers require a comprehensive response to deal with the intensified competition.

But South Africa’s shadow Trade and Industry Minister Wilmot James told the Business Day newspaper of Johannesburg that Minister Davies’ chosen strategy will not do enough to support South African chicken farmers.

“Instead of fighting the Brazilians for dumping chicken in our local and highly competitive market, Mr. Davies chose the soft and blunt option of hiding behind general tariffs without providing compelling factual reasons for his actions,” according to James.

Dubbelman warned that the real challenges facing South African poultry producers will remain unless some action can be taken against the EU.

He predicted that Davies will not impose as high a duty as the 82 percent that is currently allowed under international trade rules.

While some options cannot be pursued because of the trade agreement between Brussels and Pretoria, he added, there are provisions for so-called safeguard measures to be imposed on chicken imports from Europe, and he urged the minister to explore this possibility.

(END)