On 4 December 2015 the South African Revenue Service (Sars) announced an increase in the ‘general’ or Most Favoured Nation (MFN) rate of customs duty, from 10-15% ad valorem (statistical unit kilogram or kg), on certain large bore steel pipes, classifiable under tariff headings 73.03, 73.05 and 73.06. The preferential rates of customs duty for the European Union (EU), the European Free Trade Association (EFTA) and the Southern African Development Community (SADC) remain at a rate of customs duty of ‘free’. The application took 224 days or nearly seven and a half months to complete.
Tariff subheadings in question are: 7303.00 ‘Tubes, pipes and hollow profiles, of cast iron’; 7305.11 ‘Longitudinally submerged arc welded”; 7305.12 ‘Other, longitudinally welded’; 7305.19 ‘Other’; 7305.20 ‘Casing of a kind used in drilling for oil or gas’; 7305.31.10 ‘High-pressure hydro-electric conduits, of steel, with an internal cross-sectional dimension exceeding 400 mm and a wall thickness exceeding 10,5 mm’; 7305.31.90 ‘Other’; 7305.39.10 ‘High-pressure hydro-electric conduits, of steel, with an internal cross-sectional dimension exceeding 400 mm and a wall thickness exceeding 10,5 mm’; 7305.39.90 ‘Other’; 7305.90.10 ‘High-pressure hydro-electric conduits, of steel, with an internal cross-sectional dimension exceeding 400 mm and a wall thickness exceeding 10,5 mm’; 7305.90.90 ‘Other’; 7306.19 ‘Other’; 7306.29 ‘Other’; 7306.30.30 ‘With a wall thickness exceeding 2 mm, galvanised’; 7306.30.40 ‘With a wall thickness exceeding 2 mm, not galvanised’.
The International Trade Administration Commission of South Africa (Itac) initiated the investigation on 24 April 2015. The application was lodged by Hall Longmore Pty (Ltd) who reasoned that they had recently invested a substantial amount in upgrading their Electric Resistance Welded (ERW) mill to ensure that the Southern African Customs Union (Sacu) market could be serviced at the right quality. This investment contributed to retaining Sacu jobs. However, the Sacu industry cannot be sustainable in the face of low priced imports of welded steel pipes classifiable under tariff headings 7305 and 7306. However, there are close substitutes which compete directly with these products, which include ductile and seamless pipes which are classifiable under tariff subheadings 7303.00, 7304.19, 7304.23 and 7304.29. Therefore, these substitutes must be considered for an increase in the ‘general’ rate of customs duties. The Sacu market share has declined even though Hall Longmore (Pty) Ltd is the only manufacturer of ERW steel pipe range in Sacu.
