On 28 August 2015 Business Day reported that Trade and Industry Minister Dr Rob Davies had approved an increase in the ‘Ordinary’ rate of customs duty on certain steel products from free (0%) to 10% ad valorem.
The increase in the rate of customs duty is subject to certain stringent conditions, including that steel producers refrain from increasing prices for the products subject to the customs duty and that they honour their commitments to reduce prices on some products.
The approval is also conditional on ArcelorMittal SA investing an additional R250 million in its colour line and Safal Steel an additional R300 million in its metal coating line in 2017. In addition, both companies also have to commit to not retrenching any workers in these production lines over the next three years.
It is understood that the International Trade Administration Commission of South Africa (Itac) will also establish a committee with industry and government stakeholders and experts to monitor the effect of the change in tariffs and steel prices on downstream users, as well as the performance of the applicants against the commitments agreed on. In the instance of default, Itac will immediately initiate a review of the ‘Ordinary’ rate of customs duty. Government will also engage with the steel industry and the downstream users to secure an agreement on a pricing model that ensures the short- and the long-term viability of the sector.
