It’s been a long and winding road for the U.S. and South Africa over the issue of poultry, one that may even cause the U.S. to exclude South Africa from the African Growth and Opportunity Act (AGOA), a trade deal between the U.S. and 40 African nations.

On November 5, U.S. President Barack Obama issued a letter to South Africa, saying the U.S. would suspend duty-free treatment of South African agricultural goods exported to the U.S. should South Africa fail to address what the U.S. government saw as barriers to American products.

Obama handed South Africa an ultimatum

“I am taking this step because South Africa continues to impose several longstanding barriers to U.S. trade, including barriers affecting certain U.S. agricultural exports, and thus I have determined that South Africa is not making continual progress toward the elimination of barriers to United States trade and investment as required by Section 104 of AGOA,” he said in the letter, published on the White House’s official web site.

Simply put, if South Africa does not remove the anti-dumping duties it put on U.S. poultry exporters for flooding the market, the country will be excluded from the trade deal.

One commentator asserted that this was a marked digression from previous practice.

Cyril Prinsloo, a researcher at the South African Institute of International Affair’s Economic Diplomacy Program, noted that “The suspension of AGOA preferences to sub-Saharan African countries in the past depended on their commitment to democratic principles and respect for basic human and workers’ rights.”

Obama gave South Africa 60 days to resolve all the issues surrounding the AGOA conditions.

Preserving duty-free access to a top trade market

South Africa has responded, successfully negotiating a veterinary trade agreement that would restrict exported American chicken to poultry which had only been raised in states which did not experience a bird flu outbreak in the past year.

In 2014, 21 U.S. states reported incidences of bird flu, which has concerned South Africans.

Losing duty-free access to the U.S. market would have repercussions beyond the poultry industry.

Though the U.S. is no longer the country’s top trade partner – that post has been held by China since 2014 – it is South Africa’s third largest trade partner, with South Africa exporting more than US$8 billion in 2014.

South African critics of the trade arrangement argue that South African chicken farmers stand to lose from the influx of American-bred poultry.

But there are important reasons why South Africa benefits from being a part of this trade agreement, for reasons that are not related to poultry.

Protecting non-poultry farmers

AGOA inclusion has provided a boon for firms producing other agricultural producers, such as wine, nuts, and avocados.

The opportunity to actively participate in a globally competitive market, unhindered by trade barriers, is an important one for South Africa.

Participating in mature markets presents a bevy of benefits for South African firms, increasing their efficiency, strengthening their marketing, and honing their market research skills.

South African agricultural producers also get a major stamp of approval when their products are allowed into U.S. markets. It sets off a trigger effect, encouraging other developed economies to import similar goods from South Africa.

As it stands, it appears U.S.-bred poultry will be allowed into the South African market early next year.

It remains unlikely that the U.S. will exclude South Africa, sub-Saharan Africa’s second-largest economy after Nigeria, from the AGOA.

But South Africa will have to make substantial progress in meeting U.S. demands and dismantling what the U.S. sees as trade barriers to ensure it’s not left out in the cold.

Do you think the U.S.’s demands on South Africa are fair and warranted?

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A long-running trade dispute between the United States and Mexico over the American sugar market has been resolved by the U.S. International Trade Commission (U.S. ITC), which ruled in late October that Mexican imports of the commodity had hurt U.S. sugar producers.

Though the two states had reached an agreement in December 2014 to reduce Mexican imports of raw sugar to the U.S., the American Sugar Alliance – which represents the interests of American sugar farmers and producers – kept up the pressure for an independent investigation to determine whether Mexican exports counted as “dumping”.

Harmful drop in sugar prices attributed to Mexican imports

The alliance pointed to a significant drop in sugar prices, which fell by more than US 40 cents per pound, as a reason for the investigation.

The U.S. ITC found in favor of U.S. sugar producers, saying that the American industry is “materially injured” by Mexican sugar imports.

The full report from the trade body will be available soon.

The decision will impact sugar producers in 10 U.S. states which produce sugar beet, and four states which produce sugar cane.

Mexican imports account for a significant proportion of the U.S. sugar market. According to the U.S. Department of Agriculture, U.S. sugar producers are expected to produce 8.8 million tons this year, of which 5.1 million tons will be beet sugar, and 3.7 million tons will be cane sugar.

The U.S. is also expected to import 3.4 million tons of sugar, of which 1.5 million tons will be imported from Mexico.

In 2013, total U.S. sugar production amounted to 8.5 million tons. Imported sugar amounted to 3.6 million tons, 2.1 million tons of which were imported from Mexico.

Opinion split on ITC ruling

One U.S. legislator from Louisiana wholeheartedly supported the decision.

The “unanimous ITC decision confirms what we already know – Mexico’s sugar industry has been cheating on our agreements for some time, hurting sugar producers across South Louisiana,

Representative Charles Boustany said in an Oct. 20 statement.

“If other countries want to sell in the U.S. market, they need to play by the rules.”

The Sugar Alliance insists that it is open to free trade, as long as all participants compete fairly.

The ruling “helps accomplish that goal by upholding the governments’ agreement and addressing the unfair trade practices that were injuring American farmers, workers, and taxpayers,” spokesman Phillip Hayes said in the statement.

Not everyone in the U.S. is thrilled with the ITC decision, however. The Sweetener Users Association – which represents the interests of companies who use sugar in their products – said the ruling is a ‘missed opportunity’.

Sugar policy reform badly needed according to SUA

“The idea that domestic producers were suffering at a time when they made record profits is confounding,” the SUA said in an Oct. 20 statement.

“What is clear, however, is that the temporary decline in U.S. sugar prices in the 2012/13 and 2013/14 crop year was attributable to the United States’ failed sugar policy, excess supply in the combined U.S.-Mexican sugar sector, and the normal working of commodity markets – not by imports from Mexico.”

The sugar policy criticized by the SUA was first implemented in 1981 with the Farm Bill, and rests on a combination of price supports, tariff-rate quotas, and a domestic marketing allotment overseen by the U.S. Department of Agriculture.

These measures are used to keep the price of sugar artificially high.

The SUA vowed to step up its efforts to knock down the sugar program in a bid to lower prices for its members.

The SUA said in the statement:

Changes made to the sugar program in the 2008 farm bill caused U.S. sugar prices to soar well above the already high world price between 2009 and 2012,”

“SUA and sugar-using industry representatives will redouble our efforts to work with Congress to enact meaningful sugar program reform.”

Do you think this ruling will benefit sugar production in the U.S.? Or is it the U.S. sugar policy that needs to be updated?

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Newly elected Prime Minister Justin Trudeau made a litany of campaign promises to Canadian voters over the course of his election campaign, one of them being to improve relations with Canada’s southern neighbor.

Relations between Canada and the U.S. had grown testy under the outgoing Harper regime, largely due to differences in opinion over the XL Keystone pipeline.

Harper was insistent on the project, going so far as to call it a ‘no-brainer,’ while U.S. President Barack Obama was lukewarm on the project, before officially rejecting the project in early November.

But now that Trudeau has assumed his new role, he will first have to contend with a long-burning trade issue between the two countries: that of softwood lumber.

Softwood lumber trade put a sliver in US-Canada relations

Disputes over the softwood lumber trade – which applies to wood originating from conifers, about 80% of the global lumber industry – have plagued bilateral relations between the two states since the 1980s, and have most recently been addressed by the 2006 agreement.

Under this agreement, which was scheduled to expire in 2012 until being extended for another two years, the U.S. agreed to lift antidumping duties so long as lumber prices remained above a certain level.

Canada was responsible for enforcing lumber restrictions, while provincial governments were expected to make reforms to remove any form of subsidies on the good.

The 2006 agreement expired Oct. 12.

Reuters reported,

A Canadian group representing the industry is calling for a simple extension of the 2006 deal, while U.S. industry representatives are calling for changes to the agreement.

“The 2006 agreement is now outdated,” Reuters quoted U.S. Lumber Coalition chairman Charlie Thomas on Oct. 26.

“If Canada continues to stay away from the negotiating table, the U.S. industry will eventually have no choice but to use our rights under U.S. trade laws to offset the unfair advantages provided to the Canadian industry.”

The U.S. is impatient for an update to the dated agreement

A report from the Canada West Foundation, a nonpartisan think tank, argues that U.S. market share of lumber is unlikely to decrease under the current agreement.

The foundation points to the fact that the U.S. timber supply outstrips the Canadian supply, and underlines that this decrease in supply has already hit the industry in British Columbia, where the industry is largest.

Since 2005, the report contends, 24 mills have shut down; of these, 21 remain shuttered. U.S. production of timber continues to increase, Canada West stated.

BC timber exports to the U.S. amount to C$3 billion, annually, while critics argue that the U.S. desperately needs Canadian timber for its housing needs.

Canada West expects another court battle before the World Trade Organization for the issue to be resolved, once again.

B.C. paper industry also under fire from the U.S.

A smaller trade dispute, also affecting British Columbia firms, is coming to light.

Two companies, Catalyst Paper and Irving Paper, have been on the receiving end of high duties of up to 19% from the U.S. over the export of its specialty paper.

U.S. customs officials maintain that Canadian companies are subsidized and are “dumping” the product in the U.S., where producers of the same product cannot afford to sell at equally cut-rate prices.

The duties were fixed after the U.S. Department of Commerce followed up on a complaint made in February 2014 by a U.S. group representing the paper industry.

The department investigated two Canadian firms, Hawkesbury Paper and Resolute Paper, before making its decision.

Catalyst told the Vancouver Sun that it has had to pay C$1.3 million to the U.S. Treasury Department for shipping 17,000 tonnes of its products. Catalyst expects to pay more once another ruling from the Treasury Department is made.

Do you think these issues will quickly be resolved under the new Canadian government? What do you think a new lumber agreement will look like?

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