On 12 February 2016 the South African Revenue Service (Sars) announced an increase in the ‘general’ rate of customs duty in terms of Schedule No,1 Part 1 to the Customs and Excise Act, 1964 on semi-finished steel, steel plates, cold-rolled steel and steel sections, classifiable under tariff subheading 7207.11, 7207.12, 7207.19, 7207.20, 7208.40, 7208.51, 7208.52, 7209.15, 7209.16, 7209.17, 7209.18, 7209.25, 7209.26, 7209.27, 7209.90, 7211.23, 7211.29, 7211.90, 7216.10, 7216.21, 7216.22, 7216.40, 7216.69, 7225.40, 7225.50, 7226.92, 7226.99, and 7228.70 from free to 10% ad valorem.
The reasoning and the substantiation of the recommendations, accepted by the Minister of Trade and Industry, can be found in the International Trade Administration Commission of South Africa (Itac) report number 517.
This follows the following release: ‘The Crisis in the Domestic Steel Sector’ of the Ministry of Trade and Industry on 05 February 2016.
Government is working closely with all the stakeholders in the steel sector to secure agreement on a comprehensive package of measures to support South Africa’s primary steel production capabilities.
The steel crisis results from the fact that there is a global glut of steel arising from the effects of the global recession and excess installed capacity and supply. Following due process involving Itac, the Minister of Trade and Industry, Dr Rob Davies, has assented to tariff increases for three steel products. Investigations into another eight product lines have been finalised and await government approval.
A wide range of the Organisation for Economic Co-operation and Development (OECD) and developed countries have already implemented similar tariff protection measures.
It is of course extremely important that tariff protection measures for primary steel producers do not result in higher steel prices being ‘passed on’ to downstream, steel-intensive manufacturing sectors. These sectors are labour intensive and any measures that may erode the competitiveness of secondary steel-intensive manufacturers must be avoided. It is for this reason that government is very carefully weighing up the basket of measures under consideration and is consulting widely with all stakeholders, the downstream users included.
The Ministers of Trade and Industry, Dr Rob Davies, and of Economic Development, Ebrahim Patel, along with senior officials of both departments, held extensive talks both with executives of Arcelor-Mittal South Africa (AMSA) as well as with senior executives of the company at the recent World Economic Forum in Davos.
In addition to a meeting held in October 2015 with all primary steel producers, downstream manufacturers, industry associations and labour, a further meeting will be convened by government in the near future to finalise the package of measures proposed by government. These measures are designed to secure the primary steel producers, safeguard downstream users and protect employment across the entire steel value chain.
Government is confident that agreement will be reached in this regard.
Once final agreement is reached an announcement setting out the package of measures to be adopted, in addition to those already implemented, will be made.