The double-edged sword of anti-dumping duties

JOHANNESBURG - Revised anti-dumping duties for chicken imported from the Netherlands, Germany and the UK may contribute to job creation in South Africa, the South African Poultry Association (SAPA) said on Monday.

Anti-dumping duty, in the business world, refers to a tax or penalty that is imposed on lower-than-normal priced imports to increase their price in the country importing the product. It is a regulatory measure used to protect local industries from what is considered unfair competition.

According to reports on Friday, the International Trade Administration Commission of SA (Itac) imposed provisional duties of between 22% and 73% on frozen, chicken portions from the three countries.

On Monday, eNCA.com spoke to SAPA CEO Kevin Lovell who said: "We are happy with the decision Itac took."  He said if South Africa produced the products generally imported instead of purchasing from abroad, "about 23,000 jobs" could be created in South Africa.

However, the job creation prospects did not mean thatprices for local chicken products would decrease. In fact, Lovell said the cost of chicken products could "slightly go up by 10 -11 %."

“There is (no such thing) as cheap food," he said.      

Economist Azar Jamine told eNCA.com on Monday that anti-dumping duties might affect other businesses negatively.  “Superficially, it helps the local poultry industry to create jobs, but reduces people's ability to spend,” Jamine said.

He added that any price increase would diminish consumers' spending power and this might lead to job losses in other local markets.

“The government should look at the overall picture before imposing these type of regulations. It is not clear if the jobs created in the poultry industry may outweigh jobs lost in other industries."

July 7, 2014

Source: enca