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Can SA trust the EU’s commitment to fair trade?

Business Day | 4 February 2021

Can SA trust the EU’s commitment to fair trade?

By Paul Dillon

The EU has emphasised once again its commitment to fair trade. One of SA’s new year hopes would be that it lives up to this commitment in 2021. For some in SA, and particularly its poultry industry, the EU has a history of saying one thing and doing something completely different.

The latest commitment came in a speech on January 20 by the president of the European Council, Charles Michel, welcoming the inauguration of Joe Biden as US president. Addressing the European parliament, he highlighted “fair trade” as one of five priorities in future relations between the EU and the US.

The emphasis on trade being fair is critically important to SA. The EU is Africa’s biggest trading partner, accounting for more than a third of Africa’s trade in goods worth some €248bn, and the EU currently has trade agreements in place with some 37 African nations. Official development assistance to Africa in 2016 by EU member states amounted to €22.66bn.

These huge sums of money indicate that a co-operation and partnership approach between the EU and Africa is mutually beneficial, and the rewards are potentially great, including sustainable jobs, prosperity, equal opportunity, market access, mutual respect and booming trade.

But big pictures can serve to deceive. The story on the ground is the one that affects the daily lives of ordinary people as they go about the business of trying to make a living. Trying to get jobs, house their families, generate business and work opportunities in their local communities, and to do so in an atmosphere of opportunity and hope.

And here we have a persistent, pernicious problem. It’s called dumping and when it comes to poultry, it threatens one of SA’s key strategic agricultural industries employing about 110,000 people directly and indirectly. Dumping undermines the entire relationship between SA and the EU.

If not stopped, dumping will not just wipe out an entire industry, it will destroy SA’s capacity to guarantee food security for its citizens. Dumping is an existential threat to SA — it’s as serious as that.

The SA government recognises the threat and has responded to it with the creation of the Poultry Sector Master Plan. This is a coherent strategy that if fully implemented will counter the threat of dumping, bring stability to a distressed industry and generate opportunities for growth, job creation and new export market development.

It’s interesting to observe how the EU, a culprit of dumping in SA, fights to protect itself against dumping at all costs. In four years of negotiations with Britain over its departure from the EU, the latter insisted resolutely that a post-Brexit trade deal must result in what it called a “level playing field”. They wanted rules and standards to ensure businesses in Britain or the EU could not gain unfair advantage. In other words, the EU was insisting on fair competition in any future trade deal and protecting itself against predatory trade and dumping.

There is a great irony in this. All too often SA is condemned by the EU, Brazil and others for implementing necessary trade defence measures against unfair competition yet at the same time these same places fight tooth and nail to protect their interests from unfair competition.

Last May, the EU set this out in a Trade Defence report. The then EU commissioner for trade, Phil Hogan, said: “A strong and effective trade defence is of key importance to protect our companies and jobs against unfair trading practices and to ensure diversity of supply. Making sure our companies operate in fair market conditions will be even more crucial in times of post-corona crisis recovery. While imports offer more choice at a competitive price for our consumers and businesses, we need to make sure they come to Europe on fair terms, not dumped or subsidised, and that they do not make us overdependent.”

SA can agree fully with those policy sentiments; it is equally determined to ensure imports come to SA on fair terms and are not dumped or subsidised. It is equally opposed to unfair trade, including from the EU.

When the EU’s trade defence legislation was introduced in 2017, the then commissioner for trade, Cecilia Malmstrom, said: “The EU is open for business. But we must also protect our industry from unfair competition from imports, particularly from countries whose economies are significantly distorted owing to state interference.”

In October, new EU trade commissioner referred to the EU’s “tool box to combat unfair trade.” The EU would appear to have one rule for the 27 member states with its trade defence policies and instruments, including its “tool box” and quite another set of expectations when it comes to its behaviour towards SA.

Two EU countries — Germany and the Netherlands — and a former member, the UK, have since 2015 been subject to antidumping duties on chicken imported into SA. The local chicken industry says it has evidence of dumping by a further four EU states, and expects to launch an application for antidumping duties in the near future.

The EU’s economic partnership agreements, which have resulted in floods of chicken imports that have crippled local industries in Africa and elsewhere, may also flout its own rules. Concord, the European confederation for relief and development, made up of member organisations representing more than 2,600 nongovernmental organisations, pointed out in 2020 that policy coherence for development (PCD) is a legal obligation for all EU Institutions. This means the EU cannot implement policies that may have a negative effect on partner countries as it could undermine development, the organisation said.

Trading partnerships are not just about economies, they are about people, real people. Meaningful trading partnerships put the right emphasis on the importance of building societies, adding to their strengths, not seeking out their weaknesses and exploiting them. Meaningful and lasting relationships must be built on trust and a rules-based system that provides a common framework for doing business and building relationships.

We cannot continue to live in a duplicitous world of predatory trade, a world of EU trade defence “toolboxes” and importer “war chests”. None of this is for the good or benefit of the citizens of our collective nations. It is time to change, and to bring that change into 2021.

 source: Business Day