Velocity Joints Tariff On 22 March 2013 the International Trade Administration Commission of South Africa (Itac) announced the proposed reduction in the rate of customs duty on constant velocity joints (CV joints), classifiable under tariff subheading 8708.50.90, from 20% ad valorem to free of customs duty by the creation of an additional 8-digit tariff subheading for CV joints under tariff subheading 8708.50. The applicant, Masterparts (Pty) Ltd, reasoned that there were no local manufacturers of CV joints within the Southern African Customs Union (Sacu), and the current customs duty only served as a cost-raising effect. Comments are due by April, 19, 2013. The prevailing rates of customs for tariff subheading 8708.50.90, dependent on the origin of the imported product, are 20% ad valorem (General); 15% ad valorem (European Union); 20% ad valorem (European Free Trade Association); and 0% (free) (Southern African Development Community). The 8-digit tariff subheading is a South Africanspecific tariff subheading. Tariff subheading 8708.50 is subdivided into seven tariff subheadings. Should the proposed tariff application be successful then all imported products will be subject to a rate of customs duty of free (0%). It would be interesting to see what happens to the price of CV joints, which in theory should reduce in price between 15% to 20% dependent on the country of origin. As history suggests, this is unlikely. The application is evidence of South Africa’s reducing manufacturing capacity which negatively impacts employment. Although a case may be made that imports do provide employment opportunities, they do not compensate for the loss of manufacturing employment opportunities. Graphite Electrodes Tariff Itac on 22 March 2013 announced the proposed increase in the “General” (Most Favoured Nation) rate of customs duty on graphite electrodes (of a kind used for furnaces), classifiable under tariff subheading 8545.11, from a rate of customs duty of free to 10% ad valorem. The applicant, GrafTech South Africa (Pty) Ltd, provided the following reasons for the application (i) it is the only manufacturer of graphite electrodes in the Sacu region and is suffering serious injury as a result of rapidly increasing imports at declining import unit prices; (ii) the low-priced imports have severely affected the profitability of the business; (ii) the company’s investment in the Sacu economy is under threat because of the serious injury being caused by imports; and (iii) as the sole Sacu region manufacturer of graphite electrodes, GrafTech South Africa (Pty) Ltd and its products are essential to a number of industries and it is in the best interests of the Sacu economy to retain this important investment. Comments are due by April, 19, 2013. Should the application be successful then only imports from countries other than the EU and Efta would be impacted. The obvious concern with an increase in the rate of customs duty is “import parity pricing”, implying that the South African-manufactured product’s price could increase to match or be just be below that of the landed imported product. It would be interesting to see if an increase in the rate of customs duty will result in an increase in the price of the locally manufactured product. Duty Calls’ Watch List Comments are due by 08 May 2013 in respect of the investigation for remedial action in the form of a safeguard against the increased imports of potato chips.
