Friday, July 19, 2024

Masisi’s vegetable protectionist policy threatens trade war  

President Mokgweetsi Masisi’s embargo on vegetable imports was supposed to be the answer to Botswana’s food security problems.

Eight months since the ban the policy has become so fraught that Batswana are complaining about empty shelves and unaffordable vegetable prices. And now the policy is casting an even more foreboding spectre – a trade war with South Africa.

Vegetable imports embargo watchers were this week weighing the possibility that South Africa may impose an embargo on Botswana imports or worse, following tit for tat protectionist rhetoric from captains of South Africa’s agricultural industry.

Agri SA has started a campaign to pressure the South African government into a retaliatory import embargo against Botswana. The South African apex agricultural body is also proposing that South Africa should withhold payments to Botswana from the SACU Common Revenue Pool until proceeds from the SACU Common Revenue Pool account for about 30% of Botswana’s national budget.

Agric SA is responding to Botswana’s decision by the Botswana government to close borders to some vegetables and fruits from South Africa.

Agri SA Executive Director Christo van der Rheede has written a letter to South Africa’s Minister of Agriculture, Land Reform and Rural Development Thoko Didiza and Minister of Trade, Industry and Competition Ebrahim Patel complaining that Botswana is violating some of the trade agreements between the two countries by closing borders to some vegetable and fruits exports from South Africa. 

Agri SA, is a federation of agricultural organizations which consists of provincial, commodity and corporate members in South Africa.

In his response to an emailed questionnaire from Sunday Standard, van der Rheede said, “as the apex spokes body for organized agriculture in South Africa, Agri SA has written a letter to request the intervention of the Ministries of Agriculture and Trade and Industry in the matter of the BELN (Botswana eSwatini, Lesotho, Namibia) countries taking unilateral action, in a manner contrary to both the SACU Agreement (2002), the GATT (1994) and to the WTO’s Agreement on Agriculture,” he said.

But van der Rheede stated that of late, “several of our commodity groups have approached us having found to their dismay that the supplies of their products, notably into Botswana and Namibia, have been blocked at the border.

“This is perplexing given that by nature a customs union only has a common external trade border with a free flow of goods within the union.

“These countries have cited a need to protect local production as the motivation for these border closures, and misused sections of the SACU Agreement to this end, notably with regard to infant industry protection, including using this to justify protecting long established industries,” van der Rheede told Sunday Standard.

He said they have noted that while Botswana and Namibia close their borders to vegetables from South Africa, “they remain happy to send their like products back into South Africa, and at predatory prices to boot.”  Van der Rheede argued that this predatory pricing is facilitated by disparities in wage rates for agricultural workers in Botswana and Namibia countries relative to South Africa, “where they pay considerably less to their farm workers. For example, in the vegetable sector South Africa has a minimum wage of R23,19 per hour while the comparative rate in Botswana is 3.8 Pula (equivalent to R5.04) per hour and that of Namibia is R12.23 per hour (current rates as no minimum wage exists).

“In one case (tomatoes) this BELN cost advantage has seen 13% of South Africa’s supply to local produce markets being displaced. We have also noted that South Africa has been infested with the phytosanitary problem of the pest Tuta Absoluta, the pest having been introduced into South Africa from Botswana,” he said.

He added that no remedial action has been taken by South Africa against Botswana in this regard. “The SACU agreement must thus be upheld at all times and countries not adhering to it, must be sanctioned for being in breach of the agreement,” the Agric SA boss said.

Van der Rheede slammed the intention by Botswana not to reduce the number of products that are protected through unilateral border closures, but in fact, to expand that list. He says this speaks against the law and the spirit of the SACU Agreement.

”Historically we have noted an innate lack of political will on the part of South Africa to pressure the BELN States to comply with the SACU Agreement. Our first choice would be that such compliance is ensured, and failing this, we would like to see South Africa reciprocate the gesture and close South Africa’s borders to vegetable products emanating from the BELN States. We are further of the view that given the ‘lame duck’ status of the SACU Agreement – such as the collapse of the review of the Agreement and an inability to operationalise the annex on unfair trade practices – that the South African fiscus should halt payments to non-compliant BELN States from the Common Revenue Pool until such time as these countries open their borders,” said van der Rheede.

He said the latest measures taken by South Africa’s neighbouring SACU Member States Botswana and Namibia resulting in the closure of their borders for South African vegetables, including tomatoes amount to a violation of the fundamental principle in favour of the free movement of goods within the Southern African Customs Union (SACU).

“One of the eight objectives of the SACU Agreement is for the Agreement to facilitate the cross-border movement of goods between Member States of the Customs Union. This objective finds expression in the fundamental principle prohibiting the use of quantitative restrictions within SACU,” he said.

He said preventing vegetable exports from South Africa from entering the area of Botswana and Namibia is nothing less than an extreme application of a quantitative restriction in the sense that no produce are allowed to enter those countries.

Van der Rheede says the agreement is very clear in its wording that the movement of goods grown or produced in the Customs Union shall be free of quantitative restrictions.

“This principle is qualified by the proviso ‘except as provided elsewhere in this Agreement’. The proviso is very specific in its application: unless there are clear exceptions to the fundamental principle in favour of the free movement of goods, the principle will stand,” he said.

He said it was necessary therefore to engage the text of the Agreement in order to see what those possible exceptions to this principle are: First possible exception: Article 18 (Free movement of Domestic Products); a Member State is allowed to impose restrictions on imports in accordance with national laws and regulations for protection under seven1 clearly defined circumstances.

Van der Rheede says the restriction on imports of fresh vegetables produced in South Africa does not fall within any of the seven circumstances described.

“So clearly this exception is not applicable. Second possible exception: Article 25 (Import and Export Prohibitions and Restrictions) A Member State is allowed under this exception to prohibit or restrict the importation into its area of any goods,” he said. He argued that; “The recognition of this right can be exercised for economic, social, cultural or other reasons as may be agreed upon by the Council of SACU.”

He says the only “limitation imposed by the Agreement that prevents this exception from watering down the fundamental principle to the point of inutility is the proviso that no such restriction or prohibition on imports of goods grown or produced in the area of the Customs Union may be done for the purpose of protecting its own industry producing such goods.”

Van der Rheede says the prohibition imposed by Botswana and Namibia on the importation of vegetables grown and produced in South Africa is clearly aimed at protecting and growing its own industry, in a manner inconsistent with this Article. Hence, this exception is not applicable.

“Third possible exception: Article 25 (Import and Export Prohibitions and Restrictions). No provision in the Agreement shall suspend or supersede any law within a Member State which prohibits or restricts the importation of goods into its area,” he said. Van der Rheede observed that as with the previous possible exception “under (b), this sweeping exception is subject to the same proviso that no such prohibition or restriction on the importation of goods is available to a Member State for the purpose of protecting its own industry producing such goods. Again, the measures taken by Botswana and Namibia are unquestionably aimed at protecting their own vegetable industries in a manner inconsistent with this Article.”

He says therefore this exception is also not applicable. “ Fourth possible exception: Article 26 (Protection of Infant Industries). The only reason for mentioning this possible exception is because it is so often raised as an excuse to impose restrictions on imports in order to provide protection for import-competing industries claimed to be of infant status,” he said.  However, van der Rheede noted, this exception is unavailable to Botswana and Namibia as far as border closures are concerned for the simple reason that Article 26 only allows for the imposition of a duty on imports and not a quantitative restriction. Hence, this apparent exception is also not applicable.

“Fifth possible exception: Article 29 (Arrangements for Regulating the Marketing of Agricultural Products). A Member State is allowed to impose regulations for the marketing of agricultural products within its area,’ he said.

Van der Rheede revealed that no attempt is made in the Agreement to define marketing arrangements.

“There are clear conditions stipulated with regard to these marketing arrangements: The first of which is that such arrangements shall not discriminate against similar commodities produced elsewhere in the Customs Area,” he said. Secondly, van der Rheede said, there is a clear obligation on the Member State imposing the measure(s) to cooperate with a Member State affected by such arrangement on a basis to be mutually agreed upon.

“Thirdly, every marketing arrangement shall be subject to a negotiated sunset clause outlining its conditions and period; and finally, no marketing arrangement shall restrict the free trade of agricultural products between Member States,” said van der Rheede. However, he further observed, this latter condition appears to be qualified. Apparently, a marketing measure imposed by a Member State may interfere with the free flow of agricultural products where the measure is applied for purposes of emergent agriculture and related agro-industries or for any other purpose.

“Importantly however, in both instances there must be agreement between the Member States on the basis of consensus. Hence, any marketing arrangement imposed by Botswana and Namibia with respect to vegetables (if this is indeed applicable) may not hinder the free flow of those vegetables from South Africa unless with the consent of South Africa,” he argued. He says if such consent is lacking, Botswana and Namibia cannot rely on this exception to prevent South African vegetables from entering these countries.

“Sixth possible exception: Article 30 (Sanitary and Phyto-Sanitary (SPS) Measures). The Agreement reserves the right of each Member State to apply SPS measures to protect the health of its human, animal or plant population,” he said.  Van der Rheede said neither Botswana nor Namibia have invoked any SPS concern as a basis for closing their borders for imports of vegetables from South Africa. Therefore, this exception is also not applicable.

“From the overview of the relevant legal provisions of the SACU Agreement under the present circumstances none of the possible exceptions to the fundamental principle calling for the unrestricted cross border trade in goods between Member States in SACU is available to Botswana or Namibia,” he said. He added that; “ Even if these countries are preventing the importation of vegetables produced in South Africa based on a marketing arrangement in place, they can only do so with the consent of Member States, including South Africa.”

Asked for comments Botswana’s Ministry of Trade and Industry spokesperson Moreri Moesi said Agri SA is a structure in The Republic of South Africa that has established mechanisms of interaction with the South African Government.

“It is therefore not appropriate for us to comment on their consultations and discussions,” he said.

On reports that Agric SA accuses Botswana of violating some SACU agreements by closing borders to vegetables and fruits from South Africa, Moesi said: “Import restrictions are widely imposed by many if not all SACU countries in line with provisions of Articles 25, 26 and 29 of the 2002 SACU Agreement. Botswana is committed to all its obligations under different trade agreements that we are part of, and cannot deliberately violate any of its commitments.”


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