Downstream users reject steel import tariff plan

26 Aug 2015

Business Day, 26 August 2015
By Penelope Mashego

THE government’s bid to impose a 10% steel import tariff to stem the bleeding in the steel-making sector and potentially save thousands of jobs could take months to materialise as the final decision rests with the Treasury.

Meanwhile, downstream operators on Tuesday bemoaned the devastating effect a tariff could have on their businesses, highlighting the fact that cheap steel imports are a boon for this segment of the market.

The International Trade Administration Commission (Itac) — on whose recommendation an import tariff would either be imposed or denied — said it had completed the leg work to get the process moving forward.

Itac chief commissioner Siyabulela Tsengiwe said the process began with the import and export authority and ended with the finance minister.

Although the International Trade Administration Act states that "the commission may before considering an application give notice in the gazette", Mr Tsengiwe could not confirm whether Itac had done this or not.

He said Itac had conducted the prerequisite preliminary probe into firms seeking the 10% tariff; and engaged with industry associations, labour, and importers and exporters to gauge what effect an import levy would have.

Itac had already completed a final determination and submitted it to Trade and Industry Minister Rob Davies, who would then forward his final decision to the Treasury.

The Department of Trade and Industry and Department of Economic Development share Itac’s administrative duties.

Department of Economic Development chief director of investment and development Mahomed Vawda said on Monday that the state was still mulling over Itac’s advice.

Although he could not give a timeframe for the final decision, he said: "The government will consider the proposal on an expeditious basis, balancing the need to protect the steel industry from global volatility and a steel surplus; while mindful of the need to avoid price shocks to downstream users."

The Steel and Engineering Industries Federation of Southern Africa said on Monday that the state had agreed to a 10% import tariff.

This followed lobbying from the body, organised labour and SA’s biggest steel producers.

Neasa CE Gerhard Papenfus said import tariffs would only protect the main steel producers and "deny downstream manufacturers the benefit of the cheaper steel".

"We need to establish what it is that needs to be done to give SA a competitive advantage. Our mineral advantage is completely underutilised. Structural deficiencies on our labour dispensation need to be addressed — that will require strong political leadership."