Customs

Graphite Electrodes Duty Increase

Sars announced an increase in the “General” rate of customs duty (Schedule No.1 Part 1) on graphite electrodes, classifiable under tariff subheading 8545.11, from free of customs duty to 10% ad valorem. The application was published in the Government Gazette of 22 March 2013 and took 238 days (just under 8 months) to complete. 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 interest of the Sacu economy to retain this important investment. Comments were due by 19 April 2013. Should the application be successful then only imports from countries other than the European Union (EU), the European Free Trade Association (EFTA), and the Southern African Development Community (SADC) 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 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.

SA Customs Buzz