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Europe, SA say ‘cheese’ after dispute over export subsidies

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Thursday, 31 January 2013

Europe, SA say ‘cheese’ after dispute over export subsidies

THE tit-for-tat cheese disagreement between South Africa and the European Union (EU) — which tried to subsidise exports of gouda, cheddar and processed cheese in contravention of a deal with South Africa — has been resolved.
The dispute has plagued implementation of the South Africa-EU trade and development co-operation agreement signed in November 1999.
After customs officials detected the subsidies, South Africa imposed tariff duties and quotas on the EU’s cheese — also in contravention of the agreement.
Parliament’s trade and industry committee ratified another agreement on Tuesday 29 January, which put an end to these tit-for-tat measures. After "extensive" bilateral discussions, the EU made a commitment to cease its subsidisation of cheese exports to South Africa and, in turn, South Africa committed to remove the tariff duties. This will result in a R76m reduction of customs duty and a R10m reduction in VAT collections over a 12-month period
The dispute over preferential market access for European cheese into South Africa had been a source of tension since the coming into force of the trade agreement in May 2004. The agreement prohibited the use of what department director-general Lionel October said were "very generous" export subsidies for EU cheese, which was already subsidised in terms of its Common Agricultural Policy.
The EU reneged on this clause of the agreement and, to protect its industry, South Africa responded by imposing duties on all EU cheese imports that were not accompanied by a declaration confirming that the product had not received export subsidies.
Another source of concern to South Africa was that some cheese lines that it wanted to export to the EU were included on the region’s list of "excluded" products, which could not to be liberalised.
The Trade, Development and Co-operation Agreement has established a free trade area that covers 90% of bilateral trade between the EU and South Africa.

Source: bdlive.co.za