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Jun 22, 2012

A game of chicken as Brazil takes South Africa to the WTO

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Brazil has taken South Africa to the World Trade Organisation (WTO) over tariffs imposed by the latter on Brazilian chicken. The action was initiated at the WTO head office in Geneva on Thursday. This is the first time Brazil has taken action regarding trade with one of its Brics (Brazil, Russia, India, China and South Africa) partner countries.

Some six months ago, South Africa imposed extra tariffs ranging from 46.6% to 62.9% (depending on the exporting company concerned) on whole chicken and chicken breast imports from Brazil, alleging that the Brazilian suppliers were dumping their products on the South African market. These tariffs were in addition to pre-existing tariffs of 5% on whole chickens and 27% on chicken breasts.

The Brazilian Ministry of Development has estimated that the South African measures are costing the Brazilian economy $70-million a year.

Brazilian chicken producers deny they are dumping products on the South African market and maintain that they are no threat to the South African industry. According to the Brazilian Chicken Producers and Exporters Association (acronymed to Ubabef in Portuguese), while Brazil accounted for 73% of South Africa’s chicken imports, Brazilian chicken represented only 15% of the chicken consumed in South Africa.

The WTO processes will start with an invitation to South Africa to discussions, which Pretoria must respond to within ten days. Thereafter, the two countries will meet at the WTO, in Geneva, during July. If the two countries cannot resolve their differences within 60 days, Brazil’s complaint will be referred to a WTO dispute resolution panel.

The Brazilians are confident that they can prove they are not dumping in the South African market. Both the Brazilian Embassy in Geneva and Ubabef are convinced that the dispute will be settled through negotiation, and not need to be sent to a panel.

The Brazilian Foreign Ministry does not believe that this action will damage the country’s relations with South Africa. The complaint to the WTO is seen by the Brazilians as an apolitical “technical case”.

Brazil is the biggest exporter of chickens and chicken meat in the world and its industry is targeting emerging countries to grow its market.

Edited by: Creamer Media Reporter
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