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Nature’s Garden (Pty) Ltd has filed an application to increase the rate of customs duty on “Mixtures of frozen Vegetables” classifiable under tariff subheading 0710.90 from 10% to 37% (the bound rate). Natures Garden submitted that low-cost imports originating from China and the  EU are undercutting the prices of others products in the SACU and placing the SACU industry in distress.

A normal duty increase would not impact the duties on products exported from the EU, as the Economic Partnership Agreement (EPA), prevents duties on products out of the EU increasing. In order to address this, Nature’s Garden has also requested bilateral safeguard duty, under Article 34 of the EPA. Almost 90% of all imports of mixed frozen vegetables are imported from Belgium and China, so leaving out the EU would drive volumes away from China to European producers. We have not yet had sight of the safeguard application, but to have any chance of success, the implementation of the EPA needs to be the reason for the safeguard duty to be imposed and this looks unlikely to be the case.

The recent safeguard duties imposed on European chicken under this same provision may be encouraging more such applications, but this comes with political risk. The EU remains our largest trading partner and unlike China, purchase a greater ratio of value-added products. This relationship really matters and aggressively pursuing protectionist policies against Europe can very easily backfire.

The application is still at the pre-initiation stage meaning the investigation has not formally kicked off. The Commission has to decide if there is merit in launching the investigation. At this point, interested parties have an opportunity to identify obvious errors in the application to stop it from initiating.

For more information, contact Sidera’s Team:

Source: Donald MacKay, Sidera South Africa 

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