PRESENTATION TO THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES THEME: tariffs and subsidies in agriculture, forestry and fisheries - PowerPoint PPT Presentation

Loading...

PPT – PRESENTATION TO THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES THEME: tariffs and subsidies in agriculture, forestry and fisheries PowerPoint presentation | free to download - id: 710df6-MzAzZ



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

PRESENTATION TO THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES THEME: tariffs and subsidies in agriculture, forestry and fisheries

Description:

presentation to the portfolio committee on agriculture, forestry and fisheries theme: tariffs and subsidies in agriculture, forestry and fisheries billy morokolo – PowerPoint PPT presentation

Number of Views:99
Avg rating:3.0/5.0

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: PRESENTATION TO THE PORTFOLIO COMMITTEE ON AGRICULTURE, FORESTRY AND FISHERIES THEME: tariffs and subsidies in agriculture, forestry and fisheries


1
PRESENTATION TO THE PORTFOLIO COMMITTEE ON
AGRICULTURE, FORESTRY AND FISHERIES THEME
tariffs and subsidies in agriculture, forestry
and fisheries
  • BILLY MOROKOLO
  • DIRECTOR MARKETING AND PART TIME COMMISSIONER AT
    THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION
    (ITAC)
  • 18 SEPTEMBER 2012

2
CONTENTS
  • LEGAL BASIS FOR TARIFF ADMINISTRATION IN SOUTH
    AFRICAN CUSTOMS UNION (SACU)
  • INTERNATIONAL TRADE COMMITMENTS
  • INTERNATIONAL TRADE POLICY LANDSCAPE
  • REWIND BACK TO 1994 URUGUAY ROUNDAGREEMENT ON
    AGRICULTURE
  • SOUTH AFRICAN AGRICULTURAL TARIFFS BOUND AND
    APPLIED
  • SOUTH AFRICAN AGRICULTURAL IMPORTS 2010
  • PRODUCER SUPPORT ESTIMATE (PSE) BY COUNTRY
    SUBSIDIES
  • FAST FORWARD TO 2000 RSA/EU TDCA TRADE
    DEVELOPMENT COOPERATION AGREEMENT
  • INDUSTRY COMMENTS ON TARIFF LEVELS
  • DAFFs TAKE ON THE TARIFF LANDSCAPE
  • WALKING THE TIGHTROPE
  • SUMMARY AND CONCLUSIONS

3
LEGAL BASIS FOR TARIFF ADMINISTRATION IN SACU
  • THE INTERNATIONAL TRADE ADMINISTRATION ITAC
    ACT. Act No. 71, 2002
  • The object of the Act is to foster economic
    growth and
  • development in order to raise incomes and promote
  • investment and employment in the Republic and
    within the
  • Common Customs Area by establishing an efficient
    and
  • effective system for the Administration of
    international
  • trade subject to this Act and the SACU agreement
  • The object is achieved through the implementation
    of the following measures
  • Customs tariffs focus of the presentation
  • Import and export control,
  • Administration of Trade Remedies such as
  • Anti-Dumping DA recently applied to dumped
    whole chicken and chicken portions from Brazil
  • Countervailing CV and
  • Special Safeguards SSG.

4
INTERNATIONAL TRADE COMMITMENTS IMPACTING ON
TARIFF POLICY ADMINISTRATION IN SACU
  • South Africa has formal trade agreements with a
    number of countries and
  • economic blocks.
  • These trade agreements are aimed at improving
    market access to specific
  • countries and usually includes the lowering
    of customs duties and other
  • impediments to trade.
  • The following trade agreements are currently in
    place
  • SACU This is a customs union and no duties
    apply.
  • SADC SOUTHERN AFRICAN DEVELOPMENT
    COMMUNITYFree Trade Agreement, all tariffs at
    0
  • EU EUROPEAN UNIUON (27 member states) Free
    Trade Agreement, most tariffs at zero, except
    sensitive products such as wheat, sugar, maize,
    dairy and meat.
  • 96 of imports from the EU are currently duty
    free with very little chance of increasing those
    tariffs.
  • EFTA European Free Trade Agreement, most
    tariffs at zero.

5
INTERNATIONAL TRADE POLICY LANDSCAPE
  • The TDCA included a standstill provision. This
    provision prevented tariffs from being increased
    beyond the basic rate that was agreed at the
    start of the negotiations for the TDCA in 1996.
  • Certain tariff lines, including maize, wheat and
    sugar that are subject to a tariff formula and
    are excluded from the standstill up to a certain
    limit.
  • In general, South Africa has a fairly open market
    and approximately 40 of agricultural imports
    from all destinations enter the country duty
    free.
  • South Africa has 996 agricultural tariff lines,
    of these, 396 currently carry a 0 duty.
  • At the beginning of 2012 when the final stage of
    the TDCA is implemented, the number of lines at
    zero duty with regard to the EC EUROPEAN
    COMMUNITY will be 881.
  • The lines subject to a formula duty (maize, wheat
    and sugar) are currently also at zero

6
REWIND BACK TO 1994 URUGUAY ROUNDAGREEMENT ON
AGRICULTURE URAA
  • URAA codified and disciplined border measures and
    all trade distorting domestic measures to
    establish a fair market oriented agricultural
    trading system
  • Nearly all quantitative import restrictions were
    converted into tariffs Amendment of Marketing
    of Agriculture Products Act, No 47 of 1996 a
    response to URAA.
  • During process of conversion, aim was to maintain
    same level of protection as was the case under
    import control
  • All agricultural tariffs were bound and SAs
    applied rates for agricultural products were set
    at levels well below bound rates i.to. WTO WORLD
    TRADE ORGANIZATION commitments,
  • Comparatively, SA still has a relatively low
    level of tariff protection on agriculture,
  • The SA average tariff on imports is 9 while 17
    at the OECD Organization for Economic
    Cooperation and Development and 14 in non-OECD,
  • Import tariffs are in the main lower than what
    South African agricultural products experience in
    the export markets (export tariffs)

7
SOUTH AFRICAN AGRICULTURAL TARIFFS BOUND AND
APPLIED, 2004 Average () per Harmonized System
HS Chapter
39.70
av
av
9.40
8
South African Agricultural Imports 2010
FTAs EU, SADC, EFTA Envisaged FTA Comesa,
EAC Preferential Agreement Mercusor
9
PRODUCER SUPPORT ESTIMATE (PSE) BY COUNTRY, EU
AND OECD AVERAGES
  • The calculated support is expressed as a
    percentage of gross farm receipts,
  • Following are examples of PSE extracted from a
    report published by the OECD in 2006
  • EU 34
  • OECD 31
  • JAPAN 58
  • US 20
  • CHINA 6
  • SA 5 (mainly border measures or tariff
    protection).
  • The percentage indicates the extent of policy
    intervention by the state in the sector and
    contribute about 10 depression in world prices
    of commodities mainly due to subsidies,
  • Level of global support is gradually rendering
    unsubsidized production unsustainable and
    unprofitable,

10
FAST FORWARD TO 2000 RSA/EU TDCA
  • South Africa signed an FTA with the EU RSA/EU
    TDCA that removed policy space that was in our
    schedules.
  • most tariffs will be zero this year with the
    exception of sensitive products such as wheat,
    sugar, maize, dairy and meat.
  • But sensitive products also have limits beyond
    which tariffs cannot increase (a bit of policy
    space to increase tariffs exist) standstill
    clause- examples
  • Dairy R5/kg
  • Wheat 50 ad valorem
  • Meat 50 ad valorem,
  • Sugar 105 ad valorem
  • WHERE IS THE TARIFF POLICY SPACE AGAINST CHEAP
    IMPORTS?
  • Policy space generally tight and reduced by TDCA,
    EFTA, SADC commitments and WTO bound rates,
  • Need to renegotaite the new standstill provision
    in the TDCA Economic Partnership Agreement to
    remove upper technical limit.

On specific duties, effective protection eroded
over time as prices increased
11
INDUSTRY COMMENTS ON TARIFF LEVELS
  • Industry arguments against improved access for
    the EU includes the
  • following
  • EU producers are subsidized.
  • Applied rates are generally low and the EU is
    already a big player on our market such as in
    dairy products powder milk and cheese
  • Protection offered by specific duties is
    generally very low as duties do not keep trend
    with price and cost increases See graph below
  • The TDCA was asymmetrically in favour of the EU
    and must be rectified.
  • Policy space consideration for the conversion of
    specific duties to ad valorem to preserve
    protection over time

12
Selected Dairy Products Ad Valorem Equivalents
Tariffs Product Bound Applied Milk Powder
96 R4.50/kg Whey Powder 96 R4.50/kg Butter 7
9 R5.00/kg Cheese 95 R5.00/kg
Standstill Clause TDCA As applied
13
DAFFs TAKE ON THE TARIFF LANDSCAPE
  • DAFFs tariff policy approach proposal to dti and
    ITAC was informed by the Sector Plan need for a
    clear and equitable tariff policy dispensation to
    address trade distortions at international
    markets caused by a range ofsubsidies that
    unfairly compete with our unsubsidized products,
  • Took note that SA liberalized trade and
    deregulated markets faster while the multilateral
    trading rule system established to reduce
    distortions got stuck in slow movement WTO
    impasse on agriculture,
  • Realization that tariff dispensation as applied
    may not be sufficient to encourage expanded
    domestic production of some agricultural
    products,
  • That agriculture still remains an exception in
    the multilateral trading rules system. Much
    higher distortions are tolerated compared to the
    industrial sectors and therefore the sector
    deserves differentiated treatment

14
DAFFs TAKE ON THE TARIFF LANDSCAPE
  • That the tariff dispensation then considered
    market price disadvantage and did not broadly
    consider other factors such as subsidies govt.
    support into the agric sector as well as overall
    fragility of the sector.
  • Noted that the application of tariff policy was
    generic across sectors and did not take into
    consideration the special socioeconomic
    importance of the sector,
  • DAFF supported by sector players argued for a
    differentiated tariff policy framework to take
    into account the special features of the sector
    food security, rural development, absorption of
    low skilled labor, high labor absorption rate per
    Rm invested than any other sector, source of raw
    material for downstream agro-processing, etc
  • The case by case argument for flexibility in the
    application of tariff policy on agricultural
    products is incorporated in the National
    Industrial Policy Framework NIPF and applied by
    ITAC,

15
DAFFs TAKE ON THE TARIFF LANDSCAPE
  • DAFF and NAMC are now playing an advisory role on
    all tariff applications for agric, forestry and
    fisheries products,
  • Implementation of policies and instruments such
    as a tariff policy must take a strategic approach
    and generate wider impact on the broader
    agricultural development,
  • Application of tariffs must be geared towards
    achieving certain long term outcomes such as
    industry growth, competitiveness, jobs, exports,
    etc and be linked to development policies and
    programs and not be implemented in isolation
  • Noted that the importance of the sector must be
    seen to be broader than its contribution to Gross
    Domestic Product GDP importance always
    downplayed.

16
WALKING THE TIGHTROPE
  • Applications for tariff increase by primary
    producers always generate a negative reaction
    from downstream players within same value chain,
  • Tariff increases on imported raw agric products
    have a potential to increase food prices
    negative welfare effects in the face of high
    global food prices,
  • Low tariffs on primary products have an effect of
    discouraging expansion of domestic production
    crowd out primary producers dairy industry an
    example.
  • Applications for tariff reduction always met with
    negative reaction from primary producers within
    same value chain,
  • Given the above scenario, ITAC is expected to
    perform a balancing act to straddle the two
    divides farmers on one side and downstream
    industry and consumers on the other side.
  • An industry based approach to tariff setting
    looking at the broader interests of the entire
    industry value chain is essential though a
    challenge.

17
SUMMARY AND CONCLUSIONS
  • ITAC operates under a prescribed legal framework
    (ACT) and within the bounds on Free Trade
    Agreements that SA signed implements what has
    been negotiated and agreed to,
  • The sector to use tariff policy as a strategy to
    derive certain socioeconomic such outcomes such
    as increasing production and competitiveness,
    ensuring food security, profitability,
    sustainability, contribution to rural
    development, etc rather than a narrow focus on
    protection,
  • Urged to also use Government policies such as New
    Growth Path NGP, Industrial Policy Action Plan
    IPAP, NIPF as a basis for arguments,
  • Tariff setting is like walking on a tightrope
    attempting to balance two countervailing forces,
  • Note that in the long run, the world might move
    into a FTA as such tariffs may no longer be an
    effective tool to address distortions in global
    trade,
  • Available policy space is tight but could
    consider conversion of specific duties to ad
    valorem as well as the renegotiation of the
    standstill clause.
  • Tariffs not only available tools AD, CV, SSG
    though complex to use for now.

18
BRIEF ON THE CHICKEN IMPORTS FROM BRAZIL
  • In February 2011, the South African Poultry
    Association SAPA submitted an application to
    ITAC alleging dumped chickens from Brazil,
  • A full scale investigation on the application was
    initiated in June 2011
  • In January 2012 and based on evidence, the
    dumping allegation was confirmed and ITAC
    recommended the imposition of preliminary dumping
    duties of 62.93 and 46.95 on whole birds and
    boneless cuts imported from Brazil provisional
    for 6 months to allow parties to resolve
    disputes,
  • In June 2012, the Government of Brazil requested
    consultations with the Government of South Africa
    to try to resolve the matter,
  • Consultation took place in July 2012 in Geneva,
  • During the consultative meeting, Brazil raised
    issues on information used to arrive at the
    dumping decision, material injury, as well as
    procedure followed,
  • The outcome of the bilateral was referred to
    Minister Rob Davis who then referred the matter
    back to ITAC,
  • ITAC will relook at the issues raised by Brazil
    and correct where appropriate and resubmit its
    findings,
  • Currently, the provisional anti-dumping duties
    have lapsed.

19
  • THANK YOU
About PowerShow.com