From the Archives: Poultry industry is trade-talk pawn of South African government, says analyst

Publisher's note: This article was originally published on Examiner.com on May 5, 2015. The Examiner.com publishing platform was discontinued July 1, 2016, and its web site was scheduled to go dark on or about July 10, 2016.  I am republishing this piece in an effort to preserve it and all my other contributions to Examiner.com since April 6, 2010. It is reposted here without most of the internal links that were in the original.

Poultry industry is trade-talk pawn of South African government, says analyst

In the run-up to the recent introduction of bills in the U.S. Congress to reauthorize the African Growth and Opportunity Act (AGOA), which has broad bipartisan support because of the benefits gained by both African and American economies, there was a minor glitch owing to objections in South Africa to potential sales of U.S. poultry products in that country.

According to Kevin Lovell, CEO of the South African Poultry Association, the dispute stems from the United States “not selling chicken at the right price. They’re trading unfairly by dumping their chicken in our market. And that makes competition impossible for us to compete fairly.”

Senators Chris Coons (D-Delaware) and Johnny Isakson (R-Georgia), who represent major poultry-producing states, disagreed with Lovell and obtained a provision in the AGOA renewal bill (sponsored by Senate Finance Committee chairman Orrin Hatch) that requires a 30-day review of poultry policy in South Africa.

"It's not fair for them to continue to get” AGOA benefits, said Coons, ranking member of the Senate Africa subcommittee, “when they aren't playing fair with American exports.”

In a press release, Isakson stated that he and his colleagues “believe passionately in AGOA’s value and support its long-term renewal, but believe it unfair and inappropriate that the country that benefits from the law the most — South Africa — continues to maintain unreasonable tariffs on American poultry.”

Playing Chicken
One South African analyst sees something bigger at stake in the dispute.

After a presentation about South Africa's economy at the Cato Institute in Washington on May 4, the CEO of the South African Institute of Race Relations, Frans Cronje, suggested that this “playing chicken (literally)” represents a significant and troubling trend within South Africa's policy making circles.

In an interview with the Charlottesville Libertarian Examiner, Cronje -- author of A Time Traveller's Guide to Our Next Ten Years (2014) -- explained that “South Africa is recording a trade deficit with every major region and country in the world except the United States and non-energy Africa, and that's only because of the generosity of AGOA.”

In the AGOA negotiations, he said, what we saw “was the chicken producers being used as a pawn by South Africa's Department of Trade and Industry.”

That is because, Cronje explained, “within the Communist left that has such influence over policy formulation in South Africa now, there is a drive to limit the influence and exposure of Western countries in the South African economy, even if that comes at the price of growth.”

From his point of view, “the chicken producers have been used as a pawn in this respect, to create stumbling blocks” that work to the advantage of left-wing factions within the South African government.

“Should South Africa see the benefits it draws from AGOA being limited, the chicken farmers can always be blamed by government as having caused this,” he said.

At the same time, “the government will accept that situation because it gives them one thing they don't have at the moment, which is a high-level excuse to explain our weak economic performance. They can say, 'Well, look at how the West is starting to treat us.'”

'Carcass' of economy
The attitude showed toward the United States in the AGOA negotiations has precedents, he noted.

The hostility that South Africa has “displayed on AGOA,” Cronje said, “is the same hostility we showed eighteen months ago in unilaterally canceling bilateral investment treaties with fifteen European countries.”

The result of that decision, he explained, is that “if that investment continues, South Africa will welcome it, but it's going to be on the terms and conditions set by the left of the South African government. Should the investment leave, to put it quite directly, the leftists will prefer to have absolute control over the carcass of the South African economy than to progressively lose control over a high-growth economy.”

The House Ways and Means Committee has approved H.R. 1891, the AGOA Extension and Enhancement Act of 2015, and the Senate Finance Committee has approved a companion bill, S. 1009. Both bills are expected to come to a vote on the floor of the House and Senate in June.

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Original URL: http://www.examiner.com/article/poultry-industry-is-trade-talk-pawn-of-south-african-government-says-analyst