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by Council on Foreign Relations / Guest Blogger for John Campbell

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Categories: Uncategorised

by Council on Foreign Relations / Guest Blogger for John Campbell

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Chicken Tax Strains US-South Africa Relationship

Senator Coons’ concerns are twofold: the tax hampers U.S. poultry exports, one of Delaware’s staple industries. Additionally, the tax is considered unfair given that South Africa receives trade benefits under the African Growth and Opportunity Act (AGOA), a non-reciprocal trade program that allows sub-Saharan countries party to the agreement to export approved products to the United States untaxed. As a member of AGOA since 2000, South Africa has benefited from untaxed exports to the United States for products such as luxury automobiles and wine.

Despite the grumblings among members of Congress, South Africa has been reluctant to remove the poultry tax. In part, the South African government claims that removing the tax would undermine local producers as U.S. poultry is cheaper than South African poultry. Additionally, South African officials have found justification in the World Trade Organization’s protectionist “anti-dumping” laws, which permit countries to impose levies on a product if it is introduced into a market at less than normal value. South Africa is protecting its local economy not just from cheaper U.S. poultry, but also poultry imports from the Netherlands, Germany, and the United Kingdom as well. Though the chicken tax is intended to protect the local poultry industry, it has unintended consequences. It raises prices because local suppliers do not provide enough poultry to meet local demand.

Available: http://blogs.cfr.org/campbell/2015/03/05/chicken-tax-strains-u-s-south-africa-relationship/ 

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