Call for urgent action on tariff protection for downstream steel products

With two weeks remaining
for comment on import tariff
protection on downstream
steel products, industry has
been urged to participate in
a review of customs duty on
a string of products listed
by the International Trade
Administration Commission
(Itac) in a government
gazette notice published last
month.
“We encourage any
member company or
association that needs to
apply or act on behalf of
its members to do so,” said
Henk Langenhoven, chief
economist of the Steel and
Engineering Industries
Federation of Southern
Africa (Seifsa)
The Department of Trade
and Industry (dti) recently
announced tariff protection
measures to protect the
basic ferrous industry in
South Africa in a desperate
measure to prevent the loss
of another 30 000 to 50 000
jobs in the metals and
engineering sector.
According to
Langenhoven, these
measures brought with
them downstream cost
implications impacting the
sector’s sub-industries, which
need further protection. “The
upstream industry has tariff
protection but now it’s made
the costs of steel even more
expensive for downstream
producers, which adds to the
cost of producing their valueadded
steel products.”
He pointed out that this
meant their products were
now less competitive against
cheaper global imports.
“Since the dti announcement
earlier this year, key industry
players – as part of a steel
tariff task force – have
embarked on efforts to strike
a balance between upstream
and downstream producers
regarding protection. These
stakeholders included the dti,
the Department of Economic
Development, Itac and the
business organisations in the
sector,” said Langenhoven.
He reiterated that it was
necessary to protect all
levels in various sectors of
the industry since there
were some metals
and engineering
products that were
even further down
the value chain,
especially products
with more added
value.
“These sectors
have been under
significant threat
from imports, although
they have less protection
than the basic metals
upstream,” he commented.
The notice by Itac for the
protection of the downstream
products was announced
in the Government Gazette
on July 22, providing four
weeks (until
August 22) for
comment.
“Itac
conducted a
very detailed
investigation
of each one
of these tariff
headings to
determine the
scope for tariff
increases and
it is ready
to support
the sector
wherever it
can,” said Langenhoven.
An Itac spokesperson
said that the ongoing global
glut of cheap steel exports
out of China was negatively
impacting the entire Southern
African Customs Union
(Sacu) steel value chain
“A number of Sacu
downstream industries
have expressed concern
regarding the lack of tariff
protection against imports of
finished products that often
come at unsustainably low
prices,” he said, noting that a
competitive steel value chain
that supported increased
beneficiation, investment
and employment was a key
priority for the Sacu region’s
economic development.
Donald
MacKay
from XA
International
Trade
Advisors,
referred to the
move by Itac
as a “gamechanger”.
According to
him, this is
the biggest
industry
review South
Africa has
seen in 15
years and covers import
trade worth R23 billion for
the period June 2015 to May
2016.
Some products have seen
import volume increases of
almost 300% from 2013 to
2016 – with average prices
dropping by 24% for the
same period
“Given that the rand has
depreciated more than 30%
to the dollar over that period,
that is a considerable drop in
price and is a strong indicator
that dumping may be
happening,” he commented.
INSERT & CAPTION
These sectors have
been under significant
threat from imports,
although they have less
protection than the
basic metals upstream.
– Henk Langenhoven