Background to the chicken rebate

In 2015 South Africa’s ongoing participation in the African Growth and Opportunity Act (AGOA) was at risk on 2 fronts. The first was that a significant group of Americans felt that South Africa really didn’t match the idea of the kind of country the USA wanted to assist with AGOA. South Africa completely dominates AGOA (particularly our automotive industry) and there was some risk that AGOA would not renew. But beyond that, the USA has been angling for quite a long tie time to have a free trade agreement with South Africa, conceptually similar to the Economic Partnership Agreement with the EU. AGOA is an American piece of legislation which gives preferential access to the USA market, without reciprocal market access into the relevant African country, where as a trade agreement would see benefits flow is both directions.

South Africa maintains a positive trade balance with the USA (we export more to American than they export to SA) and the USA wanted better access. One of the key issues which became a sticking point was the Americans wanting South Africa to suspend the anti-dumping duty on American chicken. South African refused but a compromise was eventually struck at 65 000 tons of American bone-in chicken allowed into South Africa without paying the R9.20 per kg anti-dumping duty. This was implemented in April 2016 and since then American chicken has started moving back into the country.

How the rebate of anti-dumping duty works

The mechanism used to allow importers to not pay the anti-dumping duty is a rebate (item 460.03) coupled with a permit. In summary, companies wishing to import would approach the Department of Agriculture Forestry and Fisheries (DAFF) to have a portion of the quota allocated to them. Once this quota has been allocated, they then take that quota to the International Trade Administration Commission (ITAC) who then issues a permit allowing the beneficiary to import bone-in chicken without paying the anti-dumping duty. The importer would then use this permit at the time of clearing the goods through Customs.

The entitlement to a benefit is created when ITAC issues the permit and is realised when the importer clears the goods through SARS and does not have to pay the duty. The process is governed by a set of guidelines published by ITAC. The original guidelines however have required some refinement and ITAC have now published a draft set of new guidelines for comment.

If you import or wish to import chicken, then understanding these guidelines is absolutely crucial.

 

Interested parties have until 21 December 2018 to respond. 

If you require assistance in preparing your response, please contact us on info@xa.co.za

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