Draft proposal aims to lower input cost of raw materials

LEONARD NEILL A DRAFT POLICY proposal on import parity pricing aimed at lowering the input cost of raw materials has been completed by the Department of Trade and Industry and is currently before Cabinet for final approval. “We are looking to fast-track the establishment of policies which can assist in the phasing out of parity pricing altogether,” says Nimrod Zalk, DTI chief director of industrial policy. This, he says, will contribute to the broader accelerated economic growth project, which has as its target driving South Africa’s gross domestic product growth to 6% per year. Policies included in the DTI proposal are aimed at strengthening competition in the market, removing trade protection and amending the department’s internal procedures on company support as well as how to use state-owned companies more strategically. “We cannot directly set prices or tell companies to do so,” says Zalk. “Therefore, we’ve decided to take the route of setting up policies. Negotiating with companies to lower their prices is only part of our strategy. In the end these negotiations will only work when policies are in place. Parity pricing will not be voluntarily phased out.” In June Trade and Industry Minister Mandisi Mpahlwa stated that government would fast-track the removal of import parity pricing. This, he said, would help lower the cost of export materials like steel, chemicals, aluminium and fruit. One example was that motor manufacturers, reliant on steel, would benefit because the current parity price system inflates prices of this commodity by up to 50%, he said. US chickens face unlikely reprieve Anti-dumping review under way ALAN PEAT AFTER ITS five-year period, the anti-dumping duties on chicken legs and thighs from the US expire on December 27 – and a review is currently under way by the International Trade Administration Commission (Itac). The duties fall under the harmonised category TSH 0207.14. “Following an application by the Southern African Poultry Association (Sapa),” said anti-dumping specialists, Deloitte, “it is believed that there is sufficient evidence that this dumping will continue and that this will result in re-occurring material injury to the Southern African Customs Union (SACU) poultry industry. The investigation period for dumping is from April 1, 2000 to December 31, 2004 – and responses are due before October 14. East African investment guide released ALAN PEAT AN INVESTMENT guide to the East African Community (EAC) has just been launched by the United Nations Conference on Trade and Development (Unctad) and the International Chamber of Commerce - together with separate guides for Kenya and Tanzania. According to the East African Standard, the guide covers taxation, labour regulations and investment protection, as well as facts concerning major foreign companies in the region and principal laws affecting investment. Unctad sees the EAC - with its population of over 100-million people – as one of the African areas for investment, along with the Common Market for Eastern and Southern Africa (Comesa), with its 385-m population, and the Southern African Development Community (SADC) with 215-m people. The areas in the EAC with high potential for investment are agriculture, mining and tourism. Jury is out on benefits of free trade pact with US ALAN PEAT WHAT DOES the Southern African Customs Union (SACU) stand to gain from a free trade agreement (FTA) with the US - and at what cost? That’s the question that Gus Mandigora, a Trade Law Centre (tralac) intern, has been pondering. “Negotiations resumed last week,” he told FTW, “after having stalled over a number of key issues. Expectations are that the negotiations will be complete by December 2006.” An important consideration, as Mandigora sees it, is that an extensive list of exports from SACU countries already has duty-free access to the US market under the Africa Growth and Opportunity Act (Agoa). And the significance of this is that Agoa is a unilateral arrangement that does not require a beneficiary country to offer reciprocal market access in return. Also, SA is distinguished from the other Agoa beneficiaries in its sheer range of product exports - with transportation equipment, minerals and metals and machinery forming a large proportion - whereas others, such as Lesotho’s concentration on textiles and apparel, export a very narrow range of products. “For the rest of SACU, export growth and access to the US market have also increased, albeit to a lesser extent,” Mandigora said. “But can SACU lock in these benefits and greatly extend product coverage in this FTA?” The drawback, he added, is that a number of critical concessions may be expected of SACU on issues such as investment protection, market access for US products and protection of intellectual property rights “Increased investment protection may usurp the individual countries’ ability to regulate the nature, conduct and impact of US investment,” said Mandigora. “Increased market access for US products also threatens to harm smaller, less competitive domestic industries in SACU.”