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AMSA and steel duties vs The Treasury’s economic recovery plan

AMSA and steel duties vs The Treasury’s economic recovery plan

The following is the contents of an 'open letter' to the Chief Commissioner of the International Trade Administration Commission of South Africa (ITAC). It was also forwarded to Minister Ebrahim Patel for his information.

It is with both surprise and great concern that we were informed of your intention to convene the relevant ITAC committee with regards to the proposed additional duties on nine new tariff codes from 0 to 10 percent ad valorem.

Your action in this regard is disturbing - to say the least. It is only logical to first attend to your  announcement/undertaking to review the existing duties which were implemented during 2015, simply because of the fact that it is not viable to consider widening the scope of the duties while the bulk of the duties is still under review, unless, of course, ITAC’s undertaking of reviewing the initial duties was not sincere and the outcome is a fait accompli. Your actions in this regard can be likened to proceeding with the building of a second floor of a house while the demolishing of the first floor is under investigation. 

Since the introduction of the new duties is not supposed to be considered, under the circumstances outlined above, we urge you to make a public announcement to this effect. This is paramount because contracts are being cancelled due to the risk of the potential pending new duties. Recent events of business closures, including Robor, is a manifestation of what NEASA warned Government against in 2015 when the first duties were implemented.

The economic recovery plan recently proposed by Treasury and widely supported by political leaders, including the President, states that:

“... ITAC ... considers trade measures on a case-by-case basis through applications. This means that trade policy evolves on a piecemeal basis through applications to ITAC, which lends the process to an inherent bias towards larger, more organised firms. ITAC should be capacitated so that it conducts broader value chain analysis of the impacts of submissions and is proactive in addressing the current biases of trade policy. There should be consistent monitoring and evaluation of industrial policy interventions, possibly through a multi-stakeholder monitoring body enhancing coordination between government departments and institutions.” (p8-9); and

“Due to a lack of more effective and appropriate trade agreements, South African trade policy evolves on a piecemeal basis through applications to ITAC. A major challenge for ITAC is that trade support is provided on a product-by-product basis. This lends the process to an inherent bias towards products produced by large and well-organized firms who can adhere to the administrative requirements associated with ITAC applications, which can reduce overall competitiveness. These industries tend to be further upstream while downstream industries (which are often less concentrated and more dynamic) tend to have less participation in the process. This means that proactive steps are required to address the current bias in trade policy in favour of products produced by large incumbent firms.” (p49)

A continuation of ITAC’s practices, in light of the above, illustrates beyond any doubt a bias towards AMSA at the expense of the steel downstream, where tens of thousands of jobs are at stake. A blatant perpetuation of old practices leaves a bad taste in the proverbial ‘mouth’ of the steel downstream, against the background of a job bloodbath and business closures in the steel industry, in which the steel duties play a substantial role.

We urgently request you to:

  • desist from introducing any further import duties in the steel industry;
  • immediately review current duties; and  
  • to implement the proposals pertaining to this in the Treasury’s economic recovery plan

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