On 22 March 2024, the International Trade Administration Commission of South Africa (ITAC) extended an invitation to comment, by 22 April 2024, on the proposed increase in the ‘General’ rate of customs duty on transformer cores, having a power handling capacity not exceeding 50 000 Kva, classifiable in tariff subheading 8504.90, from 5% ad valorem to the World Trade Organization (WTO) bound rate of 15% ad valorem, by way of the creation of an 8-digit tariff subheading.”
The application was lodged by STI Electrical (Pty) Ltd who reasoned that:
- Transformer cores are currently imported into South Africa, attracting only a 5% ad valorem customs duty, making it difficult for domestic producers to compete with such relatively low-priced imports;
- The price of grain-oriented silicon steel, the main input material used in the manufacture of transformer cores, has increased significantly over the years, particularly between 2019 and 2021, further eroding the competitiveness of the domestic industry manufacturing transformer cores against imports of similar products;
- The domestic industry involved in the fabrication of transformer cores, including but not limited to, sizing, slitting, stacking and clamping processes, contributes significantly towards industrialisation, diversification and value addition in the country;
- The company is an important contributor to job creation and retention, particularly in its home district of Ekurhuleni, a region characterised by high unemployment rates, affecting mostly the youth; and
- Tariff support for the transformer cores manufacturing industry would not only assist in the industry’s growth in South Africa, but also in the country’s industrial development and employment creation objectives.