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South African guidelines on use of agricultural safeguard provisions under the EU trade agreement

05 August 2013

According to the South African International Trade Administration Commission (ITAC), the EU has declined in relative importance both as an export destination and import source for South Africa over the past decade, despite the EU–South Africa Trade Development and Cooperation Agreement (TDCA). However, “for agricultural trade, the EU has remained South Africa’s main export destination and source of agricultural imports and these imports, in particular chicken cuts, are increasing their relative market share.”

Indeed, a review of Eurostat data posted on the EC’s DG Agriculture website shows that the South African market is increasingly important to EU food and agricultural product exporters, with exports to South Africa growing 2.5 times as fast as the growth in overall EU food and agricultural product exports since 2002. Food and agricultural products have increased their share of total EU exports to South Africa from 3.2 to 5.5%, while South Africa’s food and agricultural trade surplus with the EU has fallen from €1,378 million in 2002 to €567 million in 2011.

Recently published ITAC guidelines note that under Article 16 of the TDCA, either party can take provisional measures against imports if these “cause or threaten to cause a serious disturbance to the markets in the other Party”. This provision is less stringent than WTO safeguard provisions, but requires “causality” to be demonstrated “between the increased imports and serious disturbance in the domestic market”.

While ultimately any remedial measures have to be considered by the TDCA Cooperation Council, ITAC’s draft guidelines on the application of Article 16 state that “a provisional safeguard duty” may be applied, which “will stay in place until such time as a decision has been reached” by the Council; “in the absence of a solution, the matter must be referred for arbitration.” Excerpts from the guidelines can be found in a commentary published by Engineeringnews.com.

According to the analysis from TRALAC, appropriate action under Article 16 “could include the suspension of concessions or obligations, quantitative import restrictions, duty increases to Most-Favoured-Nation levels or any other measure”. However, in order to invoke Article 16 the South African government “needs to have a prima facie case demonstrating that imports from the EU are causing or threatening to cause serious disturbance to the South African market”.

TRALAC observes that the publication by ITAC of the draft guidelines suggests that the South African government is willing to fully explore the scope of safeguard provisions and the extent of “the wide discretionary powers of the Council in finding appropriate solutions for any given case”.

Currently, the final text of specific agricultural safeguard provisions in the SADC–EU Economic Partnership Agreement (EPA) negotiations remains unresolved.

Editorial comment

The ITAC guidelines need to be seen in the context of observations by the South Africa Poultry Association that proposals to raise tariffs on poultry imports within bound tariff ceilings would not deal with the rapid rise in imports of poultry parts from the EU (see Agritrade article ‘ Poultry policy debate in SACU intensifies’, 1 July 2013). Clearly a solution needs to be found to the surge in imports of EU poultry parts if tariff protection for the South African poultry sector is to be applied in a non-discriminatory manner, and hence not give rise to conflicts with other trading partners.

The interpretation of the application of Article 16 in the agricultural sector is likely to carry implications for the ongoing negotiation of a specific agricultural safeguard clause in the SADC–EU EPA. The EC is likely to be reluctant to make any concessions that would inhibit the development of EU food and agricultural exports.

The outcome of the SADC–EU EPA negotiations on the agricultural safeguard clause could potentially carry implications across the ACP, given the important role that the EU plays in the agricultural import profile of many ACP countries.

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