Big fight with South Africa’s largest trade partner set in stone

Following meetings with the World Trade Organisation’s (WTO) dispute settlement body, South Africa is set for a major fight for access to the European Union (EU) market for its citrus fruit exports.

The challenges stem from South Africa’s disagreement with EU measures taken against its exports to combat the incidence of Citrus Black Spot, a fungal disease, and the spread of the false codling moth, which damages the fruit.

South Africa called the restrictions “unscientific and discriminatory” and maintains that citrus black spots cause blemishes on the fruit skin but don’t affect its quality.

Following South Africa’s renewed request to the Geneva-based trade authority’s dispute-settlement body in June, the European Commission spokesperson for trade and agriculture, Olof Gill, announced the establishment of a panel to address two citrus cases regarding measures on importing citrus fruit from the country.

Sunday Times reported that the panels for both cases were established during the Dispute Settlement Body’s meeting on July 26, 2024.

The next steps involve the composition of the panels, for which the WTO Secretariat will propose three panellists for each panel.

The EU and South Africa must agree on the panellists’ selection. If an agreement cannot be reached, either party may ask the WTO director-general to appoint the, said Gill.

Additionally, other WTO members interested in this matter have the right to request to participate as third parties in one or both of the disputes.

The spokesperson for the Ministry of Trade, Industry, and Competition, Yamkela Fanisi, stated that the government is confident in its case.

He said that even if the country has to use appeal mechanisms in the event of an unfavourable decision, South Africa believes in the strength of its case.

He added that it should also be noted that the WTO Dispute Settlement Understanding provides for the adversely affected party in a WTO ruling to appeal the outcome.

Leon Marais, associate director of GDP Global and an independent trade compliance adviser, mentioned that such disputes take a long time to finalise and could take up to one year.

He suggested that the long-running citrus dispute could be resolved next year if all goes well.

The first regular Cabinet meeting of the seventh administration, held at the Union Buildings in Pretoria at the beginning of August, discussed the measures the European Union (EU) imposed on the export of South Africa’s citrus products to the EU.

It highlighted that while not a ban, it would result in significant costs for the South African citrus industry, which is estimated at R2 billion per year.

Minister in The Presidency, Khumbudzo Ntshavheni, said South Africa is the world’s second-largest exporter of citrus, and 33% of the country’s citrus exports are destined for the EU market.

While not a ban, Ntshavheni said the measures imposed by the EU result in significant costs for the SA citrus industry.

“South Africa’s industry provides direct employment for over 140,000 people in rural South Africa, thus supporting over 1.5 million people.

“The EU has decided to impose the stringent measures against South Africa whilst not requiring the same from countries with similar situations such as Israel,” Ntshavheni said.

The first dispute dates back to July 2022, with the Citrus Growers Association of Southern Africa last year saying that it would cost the industry over R500 million in lost exports as it couldn’t access enough specialised refrigerated containers in time to get the fruit to the European market.

“The industry cannot afford the almost R2 billion that is needed to comply with the EU’s trade-restrictive regulations,” Thoko Didiza, South Africa’s agriculture minister, said in the statement.

Justin Chadwick, the CEO of the Citrus Growers Association, said in the statement that the industry has the potential to expand to earn an additional R20 billion in exports a year and create 100,000 more jobs.

However, he added that it wouldn’t happen if the EU restrictions were maintained. South Africa exports about $1.8 billion of citrus a year. Its biggest competitor is Spain. 

Overall, South Africa exported about $2.5 billion (R45 billion) of agricultural products to the EU last year and $13.2 billion (R240 billion) to all destinations.

Additionally, Citrus growers in South Africa, the world’s biggest exporter of fruit after Spain, spend about R3.7 billion ($203 million) annually to comply with the EU’s measures.

“South Africa already has an effective world-class risk management system that ensures safe citrus exports,” the nation said.

“Emerging citrus growers are especially hit hard with significant implications for livelihoods and jobs.” 

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