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South African guidelines on use of agricultural safeguard provisions under the EU trade agreement

August 14, 2013

According to the South African International Trade Administration Commission (ITAC), the EU has declined in relative importance both as an export destination and import source for South Africa over the past decade, despite the EUSouth Africa Trade Development and Cooperation Agreement (TDCA). However, for agricultural trade, the EU has remained South Africas main export destination and source of agricultural imports and these imports, in particular chicken cuts, are increasing their relative market share.

Indeed, a review of Eurostat data posted on the ECs DG Agriculture website shows that the South African market is increasingly important to EU food and agricultural product exporters, with exports to South Africa growing 2.5 times as fast as the growth in overall EU food and agricultural product exports since 2002. Food and agricultural products have increased their share of total EU exports to South Africa from 3.2 to 5.5%, while South Africas food and agricultural trade surplus with the EU has fallen from 1,378 million in 2002 to 567 million in 2011.

Recently published ITAC guidelines note that under Article 16 of the TDCA, either party can take provisional measures against imports if these cause or threaten to cause a serious disturbance to the markets in the other Party. This provision is less stringent than WTO safeguard provisions, but requires causality to be demonstrated between the increased imports and serious disturbance in the domestic market.

While ultimately any remedial measures have to be considered by the TDCA Cooperation Council, ITACs draft guidelines on the application of Article 16 state that a provisional safeguard duty may be applied, which will stay in place until such time as a decision has been reached by the Council; in the absence of a solution, the matter must be referred for arbitration. Excerpts from the guidelines can be found in a commentary published by Engineeringnews.com.

According to the analysis from TRALAC, appropriate action under Article 16 could include the suspension of concessions or obligations, quantitative import restrictions, duty increases to Most-Favoured-Nation levels or any other measure. However, in order to invoke Article 16 the South African government needs to have a prima facie case demonstrating that imports from the EU are causing or threatening to cause serious disturbance to the South African market.

TRALAC observes that the publication by ITAC of the draft guidelines suggests that the South African government is willing to fully explore the scope of safeguard provisions and the extent of the wide discretionary powers of the Council in finding appropriate solutions for any given case.

Currently, the final text of specific agricultural safeguard provisions in the SADCEU Economic Partnership Agreement (EPA) negotiations remains unresolved.