On Friday 5 April 2013 the International Trade Commission of South Africa (ITAC) published draft guidelines for safeguard applications against EU agricultural imports. These guidelines are meant to provide guidance on Article 16 of the SA EU Trade Development and Cooperation Agreement (TDCA) which deals specifically with safeguards for agricultural products.

The TDCA provides for a specific and special agricultural safeguard in addition to a general safeguard (Article 24) applicable to all other products covered by the TDCA.

Typically a safeguard is a trade remedy which is a temporary measure which the domestic industry can use to protect itself from a sudden surge of imports. Typically safeguards do not take the form of an increase in the tariff applicable to a product, but takes the form of a quota (or quantitative restriction). Thus a quota on the amount of products allowed to be imported into a country will be imposed. As soon as the quota has been reached, no further imports of that product will be allowed into the territory of the country making use of the safeguard measure. However, the investigating officials may decide to increase the customs duty applicable to the product in question, usually to the level to attain the same result as a quota. Safeguards may only be used to prevent or remedy serious injury or to facilitate the adjustment to increased competition for the domestic industry due to further trade liberalisation. It is vital to prove that the surge in imports is responsible for the serious injury or threat thereof and that no other market forces are at play. Due to the nature for which safeguard measures are normally used, the application procedure is more expedient than anti-dumping duties and countervailing measure. However the time period for which a safeguard measure may be used is also shorter, namely four years although this may be increased for further periods. However, where a safeguard measure is imposed for longer than a year, the investigating officials will normally impose conditions for its liberalisation during the period for which it is imposed.

Although SA has a legal framework which allows for the imposition of safeguard measures (as outlined above), it has not been of much help to the agricultural industry. This is mainly due to two reasons. Firstly the TDCA set up a different method in terms of which safeguards will work for agricultural trade between SA and the EU. As there has been no local guidance on how this will work, the agricultural industry has not taken advantage of this method of protection. Secondly, traditionally it is required that there must be sudden surge of imports. In the context of the TDCA this won't necessarily be the case as tariff liberalisation occurred gradually and as such no surge would be present. However the text of Article 16 of the TDCA does not require a surge or sudden surge, it merely requires that imports of products originating in the EU causes or threatens to cause a serious disturbance to the markets in SA. It is thus possible to apply for a safeguard measure if the domestic agricultural industry suffers injury as a result of imports from the EU.

There has been much criticism levied against the TDCA as it is not a balanced agreement in that SA ?liberalised' more than it should have, compared to the liberalisation of the EU. This is especially true in the agricultural sector, where we maintain lower duties than the EU on products which are important to both parties and where we also face other non-tariff barriers in the EU. The South African agricultural sector thus struggles to compete locally with imports from the EU, whilst it also struggles to export due to the higher tariffs and non-tariff barriers faced in the EU. There has indeed been a feeling that SA should try and claw back some of the concessions it made in the TDCA. The proposed draft guidelines seems to be a step in that direction, signalling to the South African agricultural sector (in line with the text of the past and current Industrial Policy Action Plan), that SA is willing to assist the agricultural sector against EU imports which may cause harm to the domestic industry (perhaps in many cases as a result of the TDCA).

To read Rian's quotations in a Business Day article on the draft safeguard guidelines, kindly click here.

Rian Geldenhuys
© Trade Law Chambers 2013