Anti-dumping duties on Chinese exporters of cars, buses and lorries to South Africa have expired, leaving local producers potentially exposed to cheaper products being dumped on the market.
Chinese manufacturers also have the right to claim a refund from the South African Revenue Service (Sars) for the 38.3% temporary duty imposed since September last year.
South Africa’s International Trade Administration Commission (Itac) imposed the task for six months pending the finalization of an investigation into allegations of dumping.
However, the temporary assignment was completed before the investigation was completed.
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The investigation continues
Under World Trade Organization rules, an investigation must be completed within one year, and no later than 18 months after its initiation. Itac said it has until July 29 to complete its investigation.
The South African Tire Manufacturers Conference (SATMC), which represents Bridgestone, Continental, Goodyear and Sumitomo, applied for protection against dumping from imported Chinese tire manufacturers.
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The Commission found there was prima facie evidence that the tires were imported at dumped prices, which caused material damage to local manufacturers and the South African Customs Union (Sacu) industry. A temporary duty was imposed to prevent further harm.
Itac said that once the investigation is complete it will make recommendations to Trade, Industry and Competition Minister Ebrahim Patel.
The introduction of the temporary duty caused a great outcry, with the fear that it will inflate prices and harm consumers.
The Tire Importers Association of South Africa (Tiasa) said the government’s reason for imposing the duty was to help protect local manufacturers. However, local manufacturers themselves have to import 80% of the more than 3,000 tire models they sell.
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Tiasa chairman Charl de Villiers said he was awaiting an important fact sheet from Itac, which set out its findings after an audit of nine manufacturers selected as a representative sample.
Once the letter has been issued Tiasa members will have an opportunity to respond.
Most Tiasa members have applied for refunds, as the anti-dumping duties amount to millions of rands.
Impact on local industry
Francois Dubbelman, trade law expert and founder of FC Dubbelman & Associates, said it will be interesting to see if exporters who claim refunds will also refund customers due to price increases.
De Villiers expects a price adjustment, but says it won’t happen overnight. “We have seen a downward trend in certain segments [of the market].
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“Although it will take some time, I believe the savings will pay off,” he said.
Dubbelman is of the opinion that the lapse of temporary duty payments will damage the Sacu tire industry. Re-imports will flood the market with dumped prices, putting the future of the industry at risk. This may affect employment in the manufacturing industry.
Dubbelman said the delay provides protection when local industries suffer material damage due to unfavorable spending on Sacu’s economy, or large investments by private companies in South Africa.
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Fair trade
Before Patel’s appointment, the Department of Trade, Industry and Competition was determined to address unfair trade as quickly as possible, said Dubbelman.
“This is to ensure that the industry [could] continue to maintain and create jobs while competing fairly, not on an unfair basis as in the case of dumped imports.
Fair trade from Japan, the US, and South Korea was not affected by the tire dumping investigation or the temporary duties imposed.
Dubbelman said the longer it takes to address unfair trade, the more damaging and enduring the impact on the Sacu industry. It becomes more difficult for the industry to fully recover and re-employ people who have had to be laid off due to the financial losses they have suffered.
It appears that the final determination of duties – the imposition of anti-dumping duties or no duties – is expected soon.
The anti-dumping duty remains in effect for five years.
This article originally appeared on Moneyweb and is republished with permission.
Read the original article here.