SUNS  4326 Wednesday 18 November 1998

Cape Town, Nov 16 (Panos/Grant Luke) -- South African labour unions are mounting national protest campaigns against controversial trade negotiations with the European Union which, they fear, will do little to help South African tomato growers already at risk from Europe's trade policies.

The negotiations are aimed at setting up a Free Trade Agreement (FTA) between the two markets. It is being conducted on the fringes of renegotiations on the Lome Convention -- a huge trade and aid pact between the 15-member EU and the 71 ACP nations -- which runs out in the year 2000.

The FTA seeks to eventually phase out import duties. But South African unions say that in the meanwhile Europe is maintaining high duties on South African products while flooding the market with heavily-subsidised European goods.

According to a research paper prepared for Action Southern Africa (ACTSA), a London-based nongovernmental organisation which campaigns on issues relevant to the region, canned tomato is one product which has been hit hard by protectionist measures embodied in a European Common Agricultural Policy (CAP).

CAP, one of the cornerstones of EU policies for over 30 years, has long been criticised for hindering development.

A briefing document by the Institute for Development Studies in Sussex, says: "By protecting Europe's high-cost farmers, and preventing developing countries with agricultural potential from
exploiting their comparative advantage, it distorts global production and acts as a disincentive to agricultural development in poor countries."

The ACTSA paper, written by Gottfried Wellmer and titled 'SADC Agricultural Trade with the EU in the Post Lome Future', says that developing countries are coming under pressure from the EU to make any future trade arrangement consistent with CAP. SADC -- the Southern African Development Community -- is a regional governmental organisation of 12 member-states.

"This singularly fails to address the issue of the impact of EU agricultural subsidies and administered price schemes for agricultural products on the third country markets. Failure to
address the issue will certainly generate severe disruptions in important agricultural sub-sectors," he adds.

South Africa is the largest supplier of canned fruit and vegetables to the EU, with more than 50 percent of its exports destined for Europe.

Some 150,000 tonnes of tomatoes are canned every year in South Africa, providing full employment to some 3,000 people -- mainly women -- and seasonal employment to a further 4,000, according to the research paper.

The research paper says tomato canning forms the core activity of a number of small vegetable canneries and is an important product for some of the larger fruit and vegetable canning operations.

But it is suffering a double blow of lost subsidies and Europe's high import taxes.

In common with many developing countries, South Africa has cut its agricultural subsidies because of domestic financial constraints and under pressure from the World Trade Organisation.

But European canners continue to enjoy substantial official assistance. In 1996, the EU spent about 655 million European Currency Units ($551 million) on subsidies to its fruit and vegetable producers, with more than half of it going to tomato producers.

The ACTSA paper estimates that an amount of 284 million ECU ($239 million) is being spent annually by the EU in support of its domestic tomato canning industry.

Another major problem the industry faces is Europe's high import tariffs on canned products. Europe charges 23 percent duty on canned pears, compared to the Untied State's 16 percent, Japan's 14 percent and South Africa's five percent.

In January the South African government increased its import duty on European canned tomatoes from 23 to 30 percent in a bid to stem the flood of cheap imports from Europe. But this has had little
effect, according to Fanie Buys, chairman of the South African Fruit and Vegetable Canners Association.

"Because of high subsidies, the European producers still seem to be able to beat the tariffs," Buys said.

Taken together, this means that jobs in South African canning industry are under threat -- European canned tomatoes entering the South African market are priced way below even the production cost
of domestic canned tomatoes.

According to a South African supermarket survey, imported Italian canned tomatoes are at least five US cents cheaper than the local product in a 410 gram can.

The direct result of the lop-sided trading arrangement is that the share of South African exports to Europe has fallen from 65 to 60 percent in the last three years.

Langeberg Foods, the country's largest food processing company, has been forced to close its principal canning plant, situated in the Western Cape province. The closure of the Paarl factory will leave some 2,500 people out of work. The firm also announced that it was withdrawing from the EU market.

Some labour analysts say this is just the beginnings of a crisis. At least 5,000 other jobs in the industry are currently under threat and related sectors -- such as can production and sugar
processing -- also stand to suffer.
So far labour unions have responded by marching to the parliament and European embassies in Cape Town. Led by the Food and Allied Workers Union (FAWU), the workers are protesting the EU's attempts to "re-colonise our country" through unfair trade practices.

FAWU official William Thomas visited Europe year this year to campaign among sympathetic labour organisations in Britain, Germany and the Netherlands.

Thomas says further action is being planned and the campaign to pressure the EU to include more South African products in the trade deal will gather momentum as other local African unions and
organisations join the campaign.

South Africa was forced to look for trade deals after being denied access to the trade chapter of the Lome Convention which gives preferential trade access to the European market.

Although South Africa is allowed to be a voting member of the Convention, it cannot benefit from these preferential trade provisions on account of its more developed economy.

A trade analyst, who asked not to be named, said South Africa had more to gain from a preferential trade agreement with Europe, as enjoyed by the other 70 countries under Lome, than a free trade
agreement.