Pakistan firm fights SA duty

01 Sep 2015

Business Day, 31 August 2015
By Linda Ensor

THE International Trade Administration Commission (Itac), which investigates and sets tariffs on imported products, is facing legal action by a Pakistani cement firm. South Africa’s four largest cement companies have been named as respondents.

The Karachi-based firm has filed papers in the High Court in Pretoria contesting the 14.29% provisional antidumping duty imposed in May on its cement exports to the Southern African Customs Union (Sacu) following complaints by local producers.

Itac plans to oppose Lucky Cement’s application for the court to set aside its decision.

The duties imposed on other Pakistani cement importers were much higher ranging from 62% to 77.15%. Itac found that the continued increase in Pakistani cement imports — by 664% between 2010 and 2013 — threatened the Sacu industry with "material injury".

Sales volumes and output, as well as profits and cash flow, were on the decline; while the Pakistani industry increased production capacity and exports to its traditional markets were declining.

In addition to Itac, the respondents are South African Revenue Service commissioner Tom Moyane, and local cement producers Afrisam, Lafarge Industries, NPC-Cimpor and PPC.

One of the arguments made by Lucky Cement chief financial officer Muhammad Faisal in his affidavit was that Itac failed to consider the losses suffered by producers as a result of a Competition Commission ruling on a cement cartel.

The commission did, in fact, consider this but concluded that it did not "sufficiently detract" from the dumping harm. The Competition Commission imposed a fine of R124m on Afrisam and R149m on Lafarge in 2011 and 2012 respectively after finding the existence of a cement cartel. It estimated its intervention would save consumers R4.5bn-R5.8bn for the period 2010-13.

"The breaking up of anticompetitive behaviour must have resulted in more normal competition in the industry with resulting lower prices and tighter margins," Mr Faisal said.

"It was illogical and irrational for Itac to attribute 100% of the injury to the Sacu cement industry to Pakistani exports." The total value of Pakistani cement imports from 2010-13 was only R1.24bn.

"The approach adopted by Itac was erroneous," Mr Faisal said. He objected to the fact that Itac retrospectively limited its inquiry to bagged cement and not to both bagged and bulk cement as gazetted. He said the dumping margin imputed to Lucky Cement was based on all its cement sales whereas Itac focused only on bagged cement in Sacu.

"This materially affected the calculation of injury as Itac was not comparing like with like," he said.

Further submissions in the affidavit relate to Itac’s allegedly illegitimate refusal to consider adjustments to Lucky Cement’s normal price to take account of coal transport, selling, administration and general costs.