Itac agrees to raise nuts and bolts duty

21 Nov 2014
Business Day, page 1
Amanda Visser

THE effect of imports on the domestic manufacturing of certain screws, nuts and bolts convinced the International Trade Administration Commission (Itac) to heed industry pleas for a rise in import duties on these products, especially from Asian countries.
Itac increased import duties of 10% ad valorem (according to worth) to 20% ad valorem to enable the industry to recover manufacturing overheads and boost production capacity that has fallen 18% from 2010 to 2012. Employment has dropped 22% since 2008 when the marked increase in imports of bolts, nuts and set screws became evident.

South African industries have had greater success with applications for duty protection from the government and its agencies, such as Itac, in the past two years. The government has introduced anti-dumping duties against Brazilian chicken, Chinese and Korean coated paper, Chinese unframed mirrors, windscreens, and kitchen sinks from the Far East.

Some trade law experts raised concerns about the "unprecedented levels of protectionism" last year, cautioning against the effect on consumers’ choice of cheaper imported goods.

Statistics from CBC Fasteners, which brought the application for duty protection, show a rise in imported bolts from 1,808 tonnes a year in 2008 to 3,896 last year, and an increase in set screws from 1,958 tonnes in 2008 to 5,965 tonnes last year.

The application was supported by the South African Fastener Manufacturers’ Association, an industry body representing 80% of the production volumes in the Southern African Customs Union (Sacu), and several local fastener manufacturers and galvanisers. Itac chief commissioner Siyabulela Tsengiwe said on Friday the fastener manufacturing industry was an important link in the domestic iron and steel industry, adding value to locally produced primary steel.

He said the domestic industry suffered a price disadvantage against products imported from Asian countries. "The tariff support for the industry at the level of 20% ad valorem would improve its price competitive position in the face of stiff import competition," he said.

Itac, however, refrained from increasing the duties to the maximum rate of 30% in terms of World Trade Organisation rules as the industry had asked.

In 2012 Itac investigated imports of fully threaded screws with hexagonal heads, excluding stainless steel screws from China, and introduced an antidumping duty of 104.5% to protect the industry. The South African Fasteners Manufacturers Association brought the application.

CBC Fasteners MD Rob Pietersma said on Friday that while the 2012 antidumping duties offered some protection, certain exporters were excluded.

"Imports from excluded exporters soon increased to previous levels, either through the exempt exporters or from other Asian countries like Malaysia, India and Thailand."

He said industry jobs had dropped 22% from 2008 to last year and the industry was running at 60% of capacity. Data from the industry shows that importers of bolts, set screws and nuts had gained the market share lost by the Sacu region since 2008.

Mr Pietersma said lower costs in Asia assisted importers. South Africa’s wage and energy cost increases have continuously been above inflation. "Whilst the weak rand has benefited manufacturers to some extent, it should be recognised that much of the input cost is exchange-rate related." This included steel which represents half of the input costs, he said.

The commission will review the duty structure again in three year’s time to assess the industry’s performance in terms of production, employment and investments, Mr Tsengiwe said.If the tariff protection is not implemented, "jobs could be at risk at black-owned millers and cane growers", given that the sector is a highly empowered one, he said.