Increase of customs duty on stainless flat products

Columbus Stainless Steel (Pty) Ltd (“applicant” or “Columbus Stainless”) applied for an increase in the general rate of customs duty on stainless steel flat products, namely, hot rolled stainless steel coil and sheet (“Hot-Rolled”), cold-rolled stainless steel coil, sheet, slit (“Cold-Rolled”), and hot rolled stainless steel plates (“Plate”), classifiable under tariff headings 71.19 and 72.20, from 5% ad valorem to the World Trade Organisation (“WTO”) of 10% ad valorem.

The International Trade Administration Commission (“ITAC” or the “Commission”) considered all the relevant information at its disposal. In particular, the Commission considered the following factors:

• The effects of the excess global supply of stainless steel and volatile global trade dynamics on the domestic industry;

• The negative impact of various trade barriers instituted by various countries against China, including the Section 232 tariffs by the USA, which have led to trade diversion to markets without or with low protection such as the SACU region;

• Increase in dutiable import volumes of the subject products from the Asian region eroding the market share of the SACU manufacturer;

• The effects of declining production and sales volumes of the subject products on the applicant’s overall operational efficiency;

• The domestic industry’s low and declining capacity utilization over the period;

• The domestic industry’s escalating cost structures and deteriorating financial position;

• The domestic industry’s eroding competitive position vis-à-vis imports of the subject products; and

• The domestic industry’s significant investment linked to the production of the subject products and the diminishing employment opportunities in the domestic industry.

The Commission concluded that the tariff support should enable the industry manufacturing stainless steel flat products to utilise its existing under-utilised production capacity, achieve economies of scale arising from increased output and operational efficiencies.

The duty will also assist the domestic industry in retaining employment, creating new investment and employment opportunities. The Commission found that the domestic industry manufactures a vast majority of products classifiable under the relevant tariff subheadings but that certain specifications may not manufactured domestically.

The Commission concluded that in cases where the specific products are not manufactured by the domestic industry, the Commission would consider applications for the creation of rebate provisions. In light of the foregoing, the Commission recommended that the general rate of customs duty on stainless steel flat-rolled products classifiable under tariff headings 71.19 and 72.20, be increased from 5% ad valorem to 10% ad valorem.

The Commission further recommended that the duty be reviewed after a period of three (3) years from the date of implementation to determine the performance of the domestic industry unless otherwise determined by the Commission.

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Report 644

ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA