Ebrahim Patel faced with Brics juggling act after Itac recommends antidumping penalties

02 May 2023

02 May 2023
Business Day
by Michelle Gumede

The International Trade Administration Commission has called on Patel to impose heavy anti-dumping duties on SA’s Brics partners China and India. Trade, industry & competition minister Ebrahim Patel will have a tough juggling act to perform when he considers the recommendations of the International Trade Administration Commission (Itac) to impose heavy anti-dumping duties on SA’s Brics partners China and India. The two countries are leading voices in the Brics bloc which also has Russia and Brazil as members.

Itac, which is responsible for customs tariff investigations, trade remedies, and import and export controls, has called on Patel to impose antidumping duties on laminated safety glass, spades and shovels originating in China and on picks, rakes and forks from India. This followed two investigations conducted by the watchdog after complaints from domestic companies. The separate probes found that dumping was occurring and causing material injury to local industries.

Itac recommended that the department impose antidumping duties of as much as 232% in some instances on the kaleidoscope of hand tools and construction materials in a bid to protect local industry from undue competition. The first investigation was initiated by Itac in October 2021 after local firm PFG Building Glass alleged that imports of laminated safety glass originating in China were being dumped and causing material injury and a threat of material injury to Southern African Customs Union (Sacu) industry, which includes Botswana, Eswatini, Lesotho, Namibia and SA.

Preliminary findings showed that the claims rang true, prompting the body to request the SA Revenue Service (Sars) in March last year to impose provisional payments of 232% on the product originating in China, effective until September 2022. In terms of the law, provisional duties can be imposed for six months only while Itac investigates. In its final determination concluded in mid-April, the commission found that laminated safety glass was being dumped and recommended the same level of antidumping duties.

‘Capital-intensive industries’

Itac made a similar determination in a separate probe released last week concerning the alleged dumping of spades and shovels imported from China and picks, rakes and forks from India. Itac spokesperson Thalukanyo Nangammbi said firms and exporters often dumped products to penetrate a foreign market via lower end-user prices to maximize profits. “The types of goods that are typically dumped are those goods produced by capital-intensive industries,” Nangammbi said. “Globally, antidumping actions tend to be concentrated in ... base metals, plastics, chemicals, textiles and electrical equipment. It is no surprise that in SA, these are more or less the same sectors in which most actions take place.”

He said while dumping was not prohibited by the World Trade Organization, the problem arose when dumping threatened and/or caused injury. This could be measured as a loss of market share; a decrease in prices, sales volumes and/or profits; or job losses to the domestic manufacturers of the product. “It is therefore not sufficient to just prove dumping ... dumping should be the cause of the injury, [which] should not be attributed to other factors.”

Itac made a final determination to terminate the investigation into spades and shovels with a maximum blade width of 150mm but not exceeding 200mm, which were imported from India, saying the import volumes were negligible. It did recommend definitive antidumping duties on imports of larger spades and shovels from India which have a maximum blade width of more than 200mm but not exceeding 320mm, as well as on picks, rakes and forks with a prong length exceeding 150mm originating in India.

The recommended duties range from as little as 82c/kg on imports of picks to as much as R17.36/kg on imports of forks. Donald MacKay, founder and director of XA International Trade Advisors, said while authorities had a difficult balancing job, the cumbersome process of assessing the effect of each product was necessary.“I’d be very opposed to anything that looks like a general duty,” he told Business Day. “It has to be surgical and you have to deal with the problem at a product level because the problem is not pervasive.”