ITAC just corrected their provisional anti-dumping duties on bone-in chicken. Again.

In February 2021, ITAC initiated an anti-dumping investigation into bone-in chicken from Brazil, Denmark, Ireland, Poland and Spain. You read about the details here.

On 17 December ITAC imposed provisional duties on bone-in chicken from these 5 countries. But they got the scope wrong and imposed duties where it was not applicable. This blog post will tell you about the provisional duties and the errors made. We told ITAC about their error and to their credit, they swiftly corrected it on 31 December 2021 (backdated to 17 December). This error was about including products in the duty calculation which were out of scope.

The applicant argues that bone-in chicken should be considered as a single unit, rather than each cut separately. ITAC however have opted to look at wings separately from drumsticks, for example. It may seem obvious to you that a wing and a drumstick are not interchangeable, but this is less obvious when it’s convenient. Ironically, it was SAPA who first requested the split in the tariff codes, to separate out each cut, and who now so eagerly want this split removed.

Then we received the calculations ITAC did to arrive at the provisional duties and there were errors. Again. On 11 February 2022, ITAC published another round of corrections as per the table below.

ExporterCountryIncorrect dutyCorrected dutyDifference
HK ScanDenmark39%16.9%-22.1%
UVE SASpain4%3%-1%
Grupo VallSpain26%25%-1%

Someone recently said “Given the commission’s meticulous approach it cannot be accused of a superficial investigation or of failing to consider counter-arguments to its decisions.” Whilst I have no doubt that ITAC is doing its best, this is a particularly complicated case and already 2 very large errors have been made, resulting in significantly higher duties being imposed than should have been. There is no reason to think that other errors could not have been made.

This case should be terminated. Not only do we have the errors, but there was never evidence of material injury, a cardinal requirement before duties can be imposed. If there is no injury, then it is impossible for injury to caused by dumping, but let’s indulge the issue of causality for a moment.

Causality is a slippery concept at the best of times, but in this case its actually quite clear. The majority of the imports in the investigation period came from the USA and those imports are much cheaper than the countries under investigation. It is not disputed that the imports from the USA are sold at dumped prices into South Africa (up to a maximum volume). SAPA may not like it, but they were in Paris with the DTI (as it was then known), USAPEEC (SAPA’s American equivalent) and the US government when this arrangement was agreed to. If you want to attribute injury to imports, it would have to be attributed to imports from the USA.

ITAC acknowledge this but then try to wriggle out and say that the smaller, more expensive imports from this investigation remain a problem large enough to impose (incorrect) anti-dumping duties on. This is nonsense. Everyone knows it’s nonsense, but I suspect no one knows how to walk back from this awkward moment.

Astral and RCL (the 2 largest producers) are seeing their share price fly at the moment. Never a good sign of distress in an industry.

You might for a moment lose consciousness and think this is a victimless crime. Duties go up. Jobs are saved. All is good. But as duties rise, so do chicken prices. If you doubt that, pop into a butchery at a taxi rank and ask the customers if they have noticed a rise in price. The reason SAPA wants the duties is to be able to push up their prices, not to give discounts to the most needy.

A short history of protectionism in the chicken industry

If you read newspapers you will see an endless stream of articles talking about how much more protection the local chicken producers need. Here are some highlights of one of South Africa’s most protected industries. Now decide if these duties are justified.

1999Anti-dumping duties requested on frozen bone-in chicken from the USA. Anti-dumping duties were imposed. They remain in place, although now at higher levels than when they were imposed.
2011Anti-dumping duties requested on boneless chicken and whole birds from Brazil (this failed due to a WTO challenge)
2013Anti-dumping application on frozen bone-in chicken from Germany, the Netherlands and the UK. Anti-dumping duties are imposed.
2013Normal duty increase request on everything with feathers. Duties are increased.
2016Department of Agriculture changes the veterinary certificate requirements with the explicit intent of protecting the domestic industry.
2016Anti-dumping duties rebated on 69 000 tons of bone-in chicken from the USA. Although unhappy, SAPA signed off on this concession.
2016Agricultural safeguard requested on bone-in chicken from the EU. Safeguard duties imposed. Ironically this lead to a dispute with the EU which is currently being arbitrated.
2017Request for chicken to be designated so that all government departments and SOE's have to buy only local chicken. Treasury rejected the request.
2018Another normal duty increase requested and granted on chicken. In the case of bone-in, the duties now move from 37% to 62%.
2020Request to extend the anti-dumping duties on bone-in chicken from Germany, the Netherlands and the UK. These are extended, but again there are errors in the calculation and ITAC lose their calculations. Not kidding. So they can't be checked.
2021Anti-dumping duties requested on bone-in chicken from Brazil, Denmark, Ireland, Poland and Spain. This case. 2 large errors are made (so far)
2022Another request has been made for chicken to be designated, so that government can only buy locally produced chicken. These don't get published for comment, so we will find out when a decision has been made.

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