South Africa has agreed to resume imports of 65,000 tonnes of chicken per year from the U.S. after repeated delays and a threat by U.S. President Barack Obama to suspend AGOA trade benefits, StLouisPostDispatch reports.
Under the agreement, the U.S. will become one of the top poultry exporters to South Africa — if the two countries actually manage to get past the U.S. poultry exports impasse that resulted in Obama’s ultimatum.
Demand is growing for chicken in South Africa and prices are increasing, TheEconomist reports. It’s the cheapest meat in the country and main source of protein for poor South Africans.
From peri-peri slathered drumsticks to “walkie talkies” — a dish of chicken heads and feet popular in townships — South Africans eat about 1.8 million tonnes of chicken a year.
A weak rand sent chicken prices soaring by 13 percent over the past two years, TheEconomist said. Prices could go higher with the drought devastating South African agriculture and forcing up the price of chicken-feed grain.
“All of this makes the South African government’s slowness in resolving a trade impasse with America over imports of chicken…all the more baffling,” according to an opinion piece in TheEconomist.
The latest agreement is part of the African Growth and Opportunity Act (AGOA), a U.S. program that gives African exporters duty free status for many goods sold in the U.S. including agricultural products. South Africa exported $1.7 billion-worth of goods to the U.S. in 2014 under AGOA.
Recently, South Africa blocked chicken imports from the U.S. citing concerns that an outbreak of avian flu in the U.S. — which killed nearly 50 million birds — could jeopardize the health of animals and humans.
South Africa imposes anti-dumping duties on certain chicken products.
U.S. producers say South Africa benefits from duty free access to the U.S. market but they must face high duties and other non-tariff barriers to South Africa trade, according to TheEconomist.
The U.S. threatened to suspend trade benefits for South African farm products earlier this month in retaliation against the clamp down on poultry imports, prompting the “veterinary trade protocol” for chicken, according to StLouisPostDispatch.
“The chicken protocol shows we are moving in the right direction,” said Sidwell Medupe, spokesman for South Africa’s Department of Trade and Industry, in a Reuters interview. Outstanding issues will be finalized by Dec.31, Medupe said.
Signing the veterinary trade protocol was one of the key missing elements in the impasse, Reuters reports.
“We think we are going to conclude everything well before the expiry of a deadline which they said would result in the termination of agriculture exports,” said South African Trade and Industry Minister Rob Davies.
Obama renewed AGOA in June. South Africa was included in the renewal on condition it eliminated barriers to U.S. trade and investment. Critics in Congress argued that South Africa’s economy is now rich and mature enough not to need the benefits that AGOA gives.
South Africa promised to end the punitive anti-dumping duties on U.S. chicken and allow imports of 65,000 tonnes a year. By comparison, Brazil exported 170,000 tonnes of chicken to South Africa in the first eight months of 2015.
South Africa blamed veterinarians for missing an Oct. 15 deadline.
Many members of the governing African National Congress see Obama’s ultimatum as “bullying,” TheEconomist reports. It’s a “blatant attempt at extortion,” said Tony Ehrenreich, an organiser with the Congress of South African Trade Unions, an ANC alliance partner.
#1 Macroeconomic Newsletter For Black America
"*" indicates required fields