Itac on track to deliver decisions on steel tariffs

Business Report, 23 November 2015
By Banele Ginindza

Producers seek 10% duty on cheap imports

THE INTERNATIONAL Trade Administration Commission (Itac) is meeting its deadlines for investigations and determinations on a whole spectrum of tariff interventions applied for by the steel industry, and will have considered all applications by the end of this month.

The commission is set to make recommendations for tariff reviews on 77 steel product codes as requested by the South African Iron and Steel Institute, ArcelorMittal South Africa and Evraz Highveld Steel and Vanadium, which have applied for the maximum 10 percent allowed for tariff protection from cheap imports.

Recommendations

Itac spokesman Foster Mohale confirmed that the commission was considering recommendations for products that included flat-rolled, structural steel such as angles, shapes and sections of steel; reinforcing bar; wire rod and a number of cold-rolled and hot-rolled products. However, the industry is still grappling with the implications of the interventions and has yet to resolve the fear of downstream manufacturers that the higher tariffs will raise prices, forcing them to either face low margins or pass the costs on to the consumer.

Itac’s recommendations are set to take effect in December and are likely to start internal disputes among downstream manufacturers. Industry responses to a recent Manufacturing Circle survey revealed that more engagement was needed to address the impact of the higher tariffs on producers that had imported out of necessity. Also, there was a lack of understanding of the codes and what had been designated for intervention.

The survey also revealed that competitiveness would be compromised by the impact of the tariffs on downstream manufacturers and possible price hikes.
“The ability to sidestep tariffs due to a lack of monitoring and enforcement was also mentioned,” the Manufacturing Circle survey said.

The circle said it would start a wider engagement process on issues, including the identification of products that needed exemption, and that downstream manufacturers would be encouraged to make applications directly to Itac.

In August, the final determinations were approved by the Department of Trade and Industry for a 10 percent ad valorem duty on zinc-coated or galvanised steel, aluminiumzinc coated steel and colour coated steel products. Part of the approval conditions included that ArcelorMittal SA would invest R250 million in its colour line and Safal Steel would spend R300m on its metal coating line in 2017.