BELARUS, INDONESIA, AND TURKEY ADDED TO THE COUNTRIES ATTRACTING THE SAFEGUARD DUTIES ON BOLT ENDS AND SCREW NUTS
by Tafara Maguti | Jul 17, 2022
On 15 July 2022, ITAC published amendments for “bolt ends and screw nuts” tariff headings, 7318.15.41, 7318.15.42, and 7318.16.30, to include imports originating in or imported from Belarus, Indonesia, and Turkey.
“Bolt ends and screw studs (excluding those of stainless steel and those identifiable for aircraft)”
Imports from these countries are effectively subject to a 52.04% safeguard duty with rebate provisions for rebate items:
These measures will be effective from 15 July 2022 to 23 July 2022.
The safeguard duty will drop to 50.04% from 24 July 2022 to 23 June 2023.
by Tafara Maguti | Jul 17, 2022
On 15 July 2022, ITAC initiated a temporary rebate on the importation of flat-rolled steel or iron products under tariff headings 72.08, 72.09, 72.10, 72.11, 72.12, 7225.1, 7225.99 and 7226.9. The identified tariff headings listed above primarily constitute of hot-rolled, cold-rolled, clad and coated steel products.
As previously referred to in the blog post: https://xa.co.za/request-for-yet-more-steel-rebates/, the steel industry has been experiencing supply challenges and shortages of flat steel products over and above the adverse ripple effects resulting from the Covid19 pandemic. The depressed local supply has in the past prompted the DTIC to take a contradictory protectionist approach that advocates for duty increases to shield local industry. However, as expected such measures do not yield positive economic outcomes due to their perverse nature that distort market forces.
This is however a temporary rebate, which means it can only be accessed when the relevant product cannot be supplied locally. An application needs to be made to ITAC for a permit and once they confirm the lack of supply, they will issue the permit and the goods can then be imported without paying the duties.
On 16 March 2021, an application for a duty rebate on steel was submitted by the DTIC. As a result, “A temporary fully duty rebate dated 15 July 2022 has been granted for all imports across tariff headings identified above”
by Tafara Maguti | Jul 17, 2022
On 15 July 2022, The South African Revenue Service (SARS) notified the public that the ongoing Industrial action would impede its operations. As a result, temporary contingency measures relating to the authentication and authorisation of SADC certificates of origin for cargo exported from South Africa have been instituted.
Temporary Arrangement Options
- Traders who are currently unable to process their SADC certificates at land borders can submit them for authentication and approval at their local Customs district office.
- Traders can alternatively opt to export their goods and pay the general duty rates prescribed at the country of destination (importing country) in relation to the goods. In such instances, SARS will issue retrospective SADC certificates to present to the importing country, thus enabling importers to claim refunds at a later stage.
PROVISIONAL ANTI-DUMPING DUTIES IMPOSED ON FROZEN POTATO CHIPS FROM BELGIUM, GERMANY, AND THE NETHERLANDS
by Donald MacKay | Jul 17, 2022
On 14 July 2022, ITAC imposed provisional anti-dumping duties for frozen potato chips, under tariff codes 2004.10.21 and 2004.10.29, imported or originating from Belgium, Germany, and the Netherlands.
The table illustrated below highlights how the provisional duty payments will be applied:
Residual duty (everyone in Belgium, besides Mydibel)
Farm Frites International
Residual duty (everyone in Netherlands, besides Aviko and Farm Frites)
|Everyone in Germany||181.05%||
The provisional duties will be imposed until 14 January 2023, unless the case finalises before then.
Why the different duty levels?
Let’s start with Germany. No German producers submitted any information to allow ITAC to calculate their specific dumping margins and so Germany’s information was calculated using best information available to ITAC. It is too late for any German producers to submit specific information now, which means for them to achieve a better outcome, they need rely on ITAC not finding injury or causality. More on this later.
3 Belgian manufacturers submitted specific company information, but only Mydibel’s information was verified (audited) by ITAC and accepted. However, we don’t yet have ITAC’s calculations or their provisional duty report, so we don’t know how they calculated the duties for Mydibel (or any of the others).
Similarly, there were 2 Dutch manufacturers who submitted information (Aviko and Farm Frites), but again we don’t know how their duties were calculated.
All of the companies who cooperated, but who didn’t receive specific duties, have until 29 July to submit updated information at which point they will have specific duties calculated for the final duties.
Those companies identified above and who believe there are errors in their calculations have until the same deadline to file their concerns and potentially have their final duty position updated. If the errors are material, then the provisional duty can be updated, rather than to wait for the final.
Injury and causality
In order to impose anti-dumping duties, ITAC has to find dumping (as noted above), material injury and the injury must be caused by the dumping and not something else. Implied in all of this is that the domestic industry can supply the market with at least the volumes facing anti-dumping duties, which is clearly not the case at the moment.
The domestic industry were substantial importers from Belgium and the Netherlands during the period of investigation and this remains. There are shortages of raw material (potatoes) in the local market, so it’s not clear how the domestic industry will be able to supply the market if the imported chips are removed from the market. Chips will, in other words, become quite a bit more expensive.
It should be borne in mind that the domestic industry didn’t bring the current application for anti-dumping duties. ITAC self-initiated the investigation and there is every indication that this was inappropriately initiated given the supply conditions in the market.
Don’t forget! Any comments or updates are due with ITAC no later than 15:00 on 29 July 2022.
THE COMPETITION COMMISSION’S ‘GUIDELINES ON COLLABORATION BETWEEN COMPETITORS ON LOCALISATION INITIATIVES’ HAVE ENTERED INTO OPERATION
by Clive Vinti | Jul 18, 2022
You might have missed this because of load-shedding and the latest round of petrol price increases, but the Competition Commission quietly published the ‘Guidelines on collaboration between competitors on localisation initiatives’ (Guidelines) on 18 March 2022, which incidentally is also the date they entered into operation. These Guidelines give effect to the Economic Reconstruction and Recovery Plan (ERRP), which regards ‘localisation’ as one of its key objectives.
Despite the Commission’s exhortation that they must be ‘considered’, these Guidelines coming out of section 79 of the Competition Act 89 of 1998 are, in law, ‘not binding’. The Guidelines concede this much, but they, in violation of section 79 of the Competition Act, state that one is ‘obliged’ to take them ‘into account’. Leaving aside this self-evidently dubious legal basis, ‘localisation’ is defined here as ‘increasing the level of local production or services’. A ‘localisation initiative’ is then defined as any ‘project or effort to achieve greater levels of localisation through increasing the share of total procurement of an identified input from local suppliers’. These localisation initiatives may originate from the relevant industry, a trade union, an NGO, or any other government department or public entity to capitalise on opportunities to further local procurement objectives. One example of such an initiative is the industry Master Plan process and the DTI’s CEO Localisation Initiative. The Guidelines do not affect the ‘application’ of the South African Value Chain Sugarcane Master Plan to 2030 published on 16 July 2021, and they should not be read to be in conflict with the collaboration processes in the Sugar industry as provided for in the Sugarcane Master Plan Guidelines.
The key objective of the Guidelines is to absolve from legal liability, firms engaged in collaborative action during a ‘localisation initiative’. This is done through the provision that participation by firms in the discussions on any ‘localisation initiative’ within the provisions of these Guidelines does not amount to a violation of section 4(1) of the Competition Act, which prohibits collusive conduct between competitors such as cartel conduct. Similarly, an agreement between the ‘Facilitator’ and firms on individual localisation targets facilitated by the ‘Facilitator’ will not amount to a contravention of section 4(1) of the Act. However, the Commission cannot absolve the collaborations that had already occurred in this regard, which may have amounted to cartel conduct in contravention of the Competition Act since the Guidelines only became effective on 18 March 2022. They would have to state that they apply retroactively, i.e. changing the law from the past or retrospectively, i.e. attaching new consequences to past conduct. They do not.
There is a notification requirement as firms wishing to embark on a localisation initiative must inform the Commission in writing to allow for the assessment of whether the initiative may raise competition concerns. Firms may discuss the proposed localisation initiative in line with these Guidelines before informing the Commission of a proposed framework regarding such an initiative. This collaboration by firms in respect of localisation initiatives may involve the identification of opportunities for localisation initiatives, the process of setting industry local procurement targets, the process of setting individual firm local procurement targets and demand forecasting.
These collaborations are overseen by a ‘Facilitator’ if initiated by a state organ or an ‘Independent Facilitator’ if initiated by the private sector member such as domestic industry, trade unions or NGOs. The Facilitator must, amongst other things, keep records of the minutes of all meetings in respect of the localisation initiative, all the competitively sensitive information received from firms, and the aggregated competitively sensitive information, including the manner in which the competitively sensitive information was aggregated. Curiously these Facilitators, which when used in the Guidelines encompasses both iterations of these role players, report to the bodies that appointed them. This raises questions about their independence despite the requirement that they must not have any direct or indirect interest in the relevant firms. The Facilitators report to the Commission not as a rule, but upon request.
The Facilitator has a reporting obligation to the Commission before sharing aggregated information with firms. This information includes the disaggregated competitively sensitive information received from firms, the aggregated information which is intended to be shared with firms and an explanation of how the disaggregated competitively sensitive information was collated to form the aggregated information which is intended to be shared with firms.
On the other hand, the Commission has a weak monitoring function regarding these localisation initiatives. It is entitled, at any time, to request from the Facilitator any information or records collected, including minutes of meetings, all communications between the Facilitator and firms, competitively sensitive information received by the Facilitator and the aggregation and format of such information received by the Facilitator. The Facilitator must comply with the Commission’s request for information within a reasonable time. The Commission is not entitled to get periodic reports of all these activities, and if it requests information, this is done at its own discretion. The Guidelines also require that this Facilitator must retain competitively sensitive information for at least five years after the localisation initiative.
Furthermore, any information in relation to industry targets may be published. However, this information must be aggregated information and must not contain competitively sensitive information. The aggregated information may be provided to the DTIC.
On the whole, the Guidelines fail to address the problem of the collusion that may have occurred prior to their promulgation during the concluded Master Plans processes, and they themselves rest on dubious legal grounds since they legally are not binding. This calls to question why the Minister did not promulgate them as regulations to the Competition Act, which would be legally binding or why the exemption route was not taken. The safeguards to protect competitively sensitive information are insufficient since they are accompanied by a weak monitoring system that is largely overseen by a Facilitator appointed by the same firms which may be accused of cartel conduct. It is unclear why the Commission does not appoint all the Facilitators and require mandatory periodic reporting of all these activities since they have a bearing on competition in the market and, ultimately, consumer welfare.
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