10:42 am
24 October 2016

Is President Obama’s Chicken War With South Africa Worth It?

When it comes to US poultry, President Obama is picking the wrong fight – he should be working to improve the sector, not export our pathology.

The US and South Africa have been engaged in a slow-burn chicken war for years. US exporters have been frustrated by restrictions that South Africa has put on US poultry. It was a significant issue in negotiations around the renewal of the African trade preferences bill – the African Growth and Opportunities Act (AGOA) – in the US Congress, with some “chicken-hawks” threatening to drop South Africa from the benefits of US trade preferences. Under pressure, the South African poultry industry negotiated a deal with the US industry to accept 650,000 tons of US poultry exports, and South Africa was included in the AGOA renewal. It seemed the problem was solved.

But there have been delays. And as a result, President Obama dropped a bomb last week by notifying Congress that he would dump South Africa from the US trade preferences program in 60 days.

It’s a pretty heavy-handed tactic, and it reveals the ugly, raw truth about US trade policy: even our trade programs meant to assist developing countries are often thinly-veiled efforts to promote US commercial interests. It’s worth remembering that South Africa is not a rich country. It has a per-capita income about one-quarter that of the United States, and despite what the images of its modern cities might tell you, it remains one of the most unequal countries in the world. Thus, economically, South Africa is quite fragile and is currently experiencing massive protests and turmoil.

Dumping South Africa from agricultural preference under AGOA could have significant economic consequences. A quick review shows that South Africa exports $1.5-2 billion annually to the US under the AGOA program. And while the biggest chunks are automobiles and minerals, agricultural exports make up about $150 million annually, including wine, nuts and citrus.

According to South Africa’s Daily Maverick:

“Overall, Americans bought $250 million worth of South Africa agricultural products last year. Since the first opening of the AGOA window, South African auto exports have grown from virtually nothing in 2000, to around $2 billion per year. Similarly, in citrus exports, AGOA’s duty free access has allowed South Africa to compete against Mexico in the American market, and establish an important base in the immense US market for such products.”

But this fight isn’t just about South African workers.

What allows the US to dump poultry into the South African market has as much to do with domestic policies as foreign ones. In this case, lack of protection of US poultry workers allows the US poultry industry to exploit them as they churn out more and more chicken for both US and global markets – essentially subsidizing the industry with cheap US labor so they can continue their dumping practices in places like South Africa.

With the AGOA threat, President Obama is associating himself with the US poultry industry that puts 250,000 US workers’ lives on the line every day. The human cost of poultry is too high in the US, and Oxfam has launched a campaign to call for change – a change that will improve working conditions, salaries, compensation for injuries and basic dignity in the sector from their current disastrous state.

Bullying South Africa might be politically easier than actually tackling the problems in the US poultry industry, but it’s very unlikely to have much impact on the US industry itself. What’s at stake is 65,000 tons of chicken per year, which is less than 5% of US poultry exports(about 3 million tons) and less than 1% of US poultry production (about 18 million tons) annually. Makes you wonder: is this really worth it?

Even if the goal is to help the US poultry industry, the truth is there are much bigger fish to go after than South Africa. Take McDonalds, for example.

Despite claiming otherwise, the US Trade Representative (USTR) rarely has development and reducing poverty as a priority objective. AGOA was meant to help African countries climb the economic ladder by increasing exports to the US. In this example, it’s clear that AGOA is being used as a cudgel to break open markets for US interests. And in this case, the USTR and President Obama have taken up with a pretty dirty industry. The US poultry sector needs to clean up its act and treat workers better before they deserve the advocacy of the White House.