Steel duties approved – with conditions

31 August 2015

Trade and Industry Minister Dr Rob Davies confirmed on Friday that duties across eight tariff subheadings would be increased to the World Trade Organisation bound rate of 10%.

However, government insisted that there could be no price increases for the steel products in question and also placed conditions on job cuts and future investments at beneficiary companies.

Industry participants, including AMSA, Highveld Steel & Vanadium and Scaw Metals, also indicated that initial applications for 10% protection could be followed up by anti-dumping applications, which would target “unfair” imports from specific countries.

The domestic industry was particularly concerned about the rise in imports from China, where a glut of “subsidised” steel is seeking new markets, owing to a decline in Chinese demand.

Besides the stipulation that domestic prices should not increase as a result of the newly instituted duties, Davies said protection was also subject to the following conditions:
•A further Itac review, within three years, into the duty structure
•A R250-million investment by AMSA into its colour line and a R300-million Safal investment into its metal- coating line in 2017.
•A commitment by both companies not to cut jobs on these production lines over the coming three years.
•Itac establishment of a committee of applicants, downstream users, the departments of Trade and Industry and Economic Development and relevant experts to monitor the impact of the change in tariffs and steel prices on downstream users as well as the performance of the applicants against the commitments agreed upon.
•And an immediate Itac review of the tariff dispensation in the event of default.
Work was also continuing on a pricing model that ensured both the short- and the long-term viability of the sector.

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) welcomed the 10% tariff on cheap, imported steel. Seifsa chief economist Henk Langenhoven said that, while the country’s long-term priority was to grow the economy by ensuring it was more competitive internationally, the import tariffs help local manufacturers enhance their ability to compete and save jobs. Protection was a “choice between losing the entire sector, as we have seen happening in Australia, or trying to ‘ride the short-term storm’ and adjust for the future”.

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