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Open Letter: AMSA and safeguard duties

Open Letter: AMSA and safeguard duties

This open letter is a rebuttal of ITAC's response (click here to read) to our initial open letter to them (click here to read)

Mr Siyabulela Tsengiwe
Chief Commissioner
International Trade Administration Commission of South Africa (ITAC)

Dear Sir

We are in receipt of your response dated 21 August 2017.

You have provided us with the reasons for ITAC’s conclusion which resulted in a finding of the safeguard duties being 'in public interest', which I deal with below.

We remind you of our request for an explanation for the Commission's Report not complying with legal standards as required by Article 3 of the World Trade Organisation's (WTO) Agreement on Safeguards. We also requested you to explain why a second 'essential facts letter' was not issued stating your intention that the 'not in public interest' finding will be reversed to the duties being 'in public interest', thereby denying the Industry an opportunity to respond. This Agreement clearly stipulates that the ‘competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all issues of fact and law’.

With regards to the reason for the reversal of the Public Interest Clause, you state that an agreement was reached between AMSA and the Government on fair pricing. We, however, wish to point out to you that this agreement was already in place before the first 'essential facts letter' was issued on 19 January 2017, which declared the duties 'not to be in public interest'. To the downstream it simply makes no sense that you changed your view on this matter, namely safeguards 'not in the public interest', to being 'in the public interest', relying on the same facts. 

An agreement with the re-rollers is also cited as a reason for your change of mind. To this date, and definitely at the time of issuing your latest finding, namely that the duties 'are in public interest', there is no agreement with all the re-rollers. 

As further justification for your change of mind, from safeguards 'not in public interest' to it being 'in public interest', you state that the Commission has initiated investigations to increase rates on finished products. Since this has also been an ongoing process which was initiated long before the first finding - namely that the safeguards 'are not in the public interest’ - was issued, this finding does not make sense. 

In your response you state that you were influenced by the fact that the quantum of twelve percent would not have a cost-rising effect on the downstream. We, however, wish to point out to you that we were made aware of the fact that, in the case of a role player in the Aluminium Industry, who requested a five percent increase in duties only, ITAC’s findings was that the five percent will indeed have a cost-rising effect. We agree with the fact that safeguards will have a cost-rising effect, but this causes us to be even more confused by your completely contradictory finding in respect of the Steel Industry.

We are of the view that, in light of the above, the honorable response would be to revert to the original ‘essential facts letter’, namely ‘that the safeguard duties are not in public interest’ and immediately nullify the implementation thereof.

This open letter is by Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA).