WASHINGTON, March 18, 2015 – Sen. Johnny Isakson, R-Ga., says the U.S. and South Africa may be close to making a deal that would ease South Africa’s tariffs on U.S. chicken and pave the way for that country’s continued inclusion in a trade agreement that provides favorable treatment for exports to the U.S. from sub-Saharan Africa.
Isakson and Sen. Chris Coons, D-Del., who represent two huge poultry producing states, have been leading the fight to get South Africa to remove its tariffs against U.S. chicken imports, which in some cases can reach as high as 82 percent. Their chief weapon has been a threat to exclude South Africa from the African Growth and Opportunity Act (AGOA), which was first enacted 15 years ago and expires in September.
AGOA allows sub-Saharan countries party to the agreement to export approved products to the U.S. untaxed. Sen. Chuck Grassley, R-Iowa, said South Africa has been the chief beneficiary of the agreement, with $3.6 billion in annual exports to the U.S. The biggest shipments are in wine, citrus goods and luxury automobile parts.
“We’re close to making a deal,” Isakson said in an interview last week following a negotiating session in Washington that included South Africa’s ambassador to the U.S. and representatives from both countries’ poultry industries. “Coons and I are not letting up until it’s done. It’s been long overdue for the American poultry industry.”
South Africa claims its “chicken tax” is justified to prevent the U.S. from “dumping” its poultry exports on the country’s market at prices below the cost of production, harming the domestic industry. U.S. producers deny any dumping is taking place and argue that the U.S. industry is just more efficient than South Africa’s.
Grassley is also pushing for an end to the high South African tariffs.
“We can’t allow countries to block our exports for reasons not based on science,” Grassley said in a weekly conference call. “In other words, we don’t want Uncle Sam to be Uncle Sucker.”
South African Trade and Industry Minister Rob Davies said late last week that the South African Poultry Association had made a revised offer to the U.S industry at the meetings in Washington. This included a development component of empowerment and training for South African poultry producers. Davies told the South African “Business Report” the government is looking for an agreement that takes into account the realities of South Africa as well as its broader interests in AGOA.
“We continue to be optimistic,” he added.
Isakson also expressed optimism, but warned, in so many words, not to count your chickens before they’re hatched.
“I sold houses for 33 years,” he said in an interview on Capitol Hill. “I learned you never make a deal ‘til you feel both sides won a little bit.”
Georgia, the top U.S. producer of chicken meat, and Delaware, a state where chickens outnumber people by about 200 to one, would both benefit from the elimination of South Africa’s poultry tax on imports. The U.S. is expected to export about 7.4 billion pounds of chicken meat this year, or about 19 percent of total production.
In the year 2000, before exports dried up, the U.S. was shipping about 55,000 metric tons (121 million pounds) of chicken to South Africa annually.
“With the growth of the middle class (in South Africa) over the last 15 years, coupled with the increased efficiency and economies of scale the U.S. chicken industry has achieved since then, we think it would be much higher than that in 2015,” Tom Super, a spokesman for the National Chicken Council, said. Super described the recent talks in Washington as “productive.”
“In terms of negotiations, the issues have been outlined and they are narrowing,” he said.
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