23 May 2023
City Press
Dimakatso Leshoro
The International Trade Administration Commission (ITAC) has said there is no solid evidence that the ban on the export of copper waste as well as scrap and semi-finished metals has been effective in curbing theft which that has caused immense damage to South Africa’s infrastructure and economy. In November 2022, Trade, Industry and Competition Minister Ebrahim Patel announced a ban which expires at the end of May. He said the damage caused by thieves who stripped cables from the likes of Eskom and Transnet deeply compromised energy supply, transport and job creation, and cost the economy R47 billion annually.
However, presenting the trade authority’s strategic and annual performance plan to Parliament, ITAC chief commissioner Ayabonga Cawe said even though there was some decline in theft, it could not be exclusively attributed to the ban. “The evidence is mixed. If you check, for instance, the evidence from Eskom, Transnet and the SA Police Service, it’s unfortunate that we are unable to access some of the data at municipal level, and we hope that at some stage we’ll be able to do so. It’s telling a very mixed picture ... If you check Eskom, the picture might be slightly different from what one might see at Transnet.” At Transnet, if we look at the incidences of theft and the length of steel products stolen, it has declined. But the attribution is not necessarily to the ban. The attribution is to investment in greater private security alongside the train tracks.
We are also hearing, for instance, from the police service that there has been a marginal decline, but that does not necessarily mean that the theft has stopped. ‘Not a trade measure’ Other measures that were announced last year include a planned licensing system for copper trading, amendments to existing legislation such as prohibiting the use of cash in transactions involving waste or scrap metal, and for buyers to show electronic banking records for the scrap metal in their possession. Cawe questioned whether six months was long enough to assess the efficacy of the ban.
“We must move away from the notion that there’s a trade measure. It is not a trade measure. This is a measure aimed at dealing with the theft of public infrastructure, and until such time where there is sufficient inroads in ensuring that this doesn’t happen and the market where these things are sold is effectively regulated in a proper manner, we might need measures of this kind.” “We are at the centre of working on building a licensing regime that is able to digitize all the transactions of scrap and copper so that we can get a bigger sense and a dashboard of what exactly is happening in this market.” Last week, the department of trade, industry and competition issued a notice for public comments on the proposal to extend the ban by a further nine months.
Cawe said: [There] was an assertion that insufficient progress had been made in dealing with the issue of public infrastructure theft. Measures contributing to inflation? Asked about whether ITAC considered how the tariff framework and/or broader trade policy framework was adding to the cost-of-living crisis many households find themselves in when imposing tariffs on imported food products such as poultry, Cawe conceded that tariffs had an effect on poor households and added to the country’s elevated inflation, which he said not only affects consumers but also downstream industries which use imports as intermediary inputs.
“I would have a different view to the one that says we indiscriminately provide largesse without hesitation to domestic firms. I think we’ve seen two things happening – the one is in relation to primary goods that are staple goods, particularly for poor households.” “... [There have been] instances when the commission itself has come on the back of the evidence to a recommendation that says on this specific product we feel quite strongly that this position must be recommended to the minister...” “And the minister has arrived at a different conclusion saying that actually the timing of this, if one considers food price inflation as well as the domestic and global balance of what’s happening in the supply chains, this is probably not the best time to do it even if there is a compelling case in line with the regulations...” The second element relates to the variable tariff setting regime in relation to maize, wheat and sugar.
What we have there is a reference pricing system, which says that in instances where we see very high global prices, there is a self-adjusting mechanism that brings the implied tariff and, by extension, the impact on prices to zero. “So, if you check, at the moment, for wheat and sugar in particular, the implied tariff is actually zero because of where global prices [are] ... So, that self-adjusting mechanism is aimed not just at ensuring that poor households aren’t adversely impacted by global prices of some of the staples. “On the flip side, when prices are very low, it effectively provides a protective mechanism for domestic producers so that you don’t have the displacement of jobs in horticultural elements of agriculture, which are some of the most labor-intensive within agriculture. We do have a mechanism in place. We do have these tools.” he said