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The Southern Africa Coil Coaters Association (“SACCA”, or “applicant”), representing ArcelorMittal South Africa Ltd (“AMSA”) and Safal Steel (Pty) Ltd (“Safal”), applied for an increase in the general rate of customs duty on certain coated or plated flat-rolled steel, classifiable under tariff subheadings 7210.20, 7210.30, 7210.50, 7210.69, 7212.20, 7212.50, 7212.60, 7225.91, and 7225.92, from free of duty to the World Trade Organisation (“WTO”) bound rate of 10% ad valorem.
The International Trade Administration Commission (“ITAC” or the “Commission”) considered all the relevant information available at its disposal. In particular, the Commission considered the following factors:
• The strategic nature of the steel industry to the country given its backward and forward linkages;
• The global excess steelmaking capacity remains the biggest challenge for the primary steel sector in achieving sustainable profit margins;
• There exists an anomaly in the tariff structure as the locally manufactured galvanised, electro-galvanised, aluminium-zinc and painted steel attracts a 10 per cent ad valorem duty whilst the imported subject products are free of duty;
• The imported subject products are direct substitutes for locally manufactured galvanised, electro-galvanised, aluminium-zinc and painted steel as they are used in similar roofing and cladding applications;
• The subject products unfairly compete with the locally manufactured products and thus create a loophole which undermines the existing tariff protection afforded and threaten the sustainability of the domestic steel manufacturing industry. This would have a detrimental effect on production, investment and employment in the domestic industry;
• The overall imports of the subject products have dramatically increased since the duties were imposed on the similar products manufactured locally;
• The significant price disadvantages experienced by the domestic industry manufacturing galvanised, electro-galvanised, aluminium-zinc and painted steel vis-à-vis imported subject products; and
• The worsening competitive position of the domestic firms manufacturing galvanised, electro-galvanised, aluminium-zinc and painted steel as a result of escalating cost structures.
The Commission found that there are certain products covered by this investigation which are currently not manufactured locally and do not compete directly with those manufactured by the domestic industry. In this regard, the Commission recommended the creation of rebate provisions in order to reduce production costs and improve the competitive position of the downstream steel industry.
The Commission concluded that tariff support on the subject products would close the loopholes in the tariff structure and should enable the industry manufacturing galvanised, electro-galvanised products, aluminium-zinc and painted steel to utilise its existing under-utilised production capacity and reduce marginal cost of production as a result of increased economies of scale.
The Commission recommended that the rate of customs duty on certain coated or plated flat-rolled steel, classifiable under tariff subheadings 7210.20, 7210.30, 7210.50, 7210.69 7212.20, 7212.50, 7212.60, 7225.91, and 7225.92, be increased from free of duty to 10% ad valorem. The Commission further recommended the creation of Schedule 4 rebate provisions to cater for certain products that are not manufactured locally, as follows:
• Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, plated or coated with lead, including terne-plate, for use in the automotive industry, classifiable under tariff subheading 7210.20, at such times, in such quantities and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the goods are not available in SACU;
• Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, electrolytically plated or coated with zinc, for use in the automotive industry, classifiable under tariff subheading 7210.30, at such times, in such quantities and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the goods are not available in SACU;
• Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, plated or coated with aluminium-silicon alloy but not containing zinc, for use in the manufacture of parts for industrial bakery ovens or for use in the automotive industry, classifiable under tariff subheading 7210.69, at such times, in such quantities and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the goods are not available in the SACU;
• Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, plated or coated with chromium oxide or chromium and chromium oxide, classified under tariff subheading 7210.50, for use in the manufacture of base metal stops, caps and lids, classified under tariff subheading 83.09, at such times, in such quantities and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the goods are not available in the SACU;
• Other flat-rolled products of other alloy steel, of a width of 600 mm or more, electrolytically plated or coated with zinc, for use in the automotive industry, classifiable under tariff subheading 7225.91, at such times, in such quantities and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the goods are not available in SACU; and
• Other flat-rolled products of other alloy steel, of a width of 600 mm or more, otherwise plated or coated with zinc, other, with a thickness of 0,45 mm or more but not exceeding 1.6 mm, for use in the automotive industry, classifiable under tariff subheading 7225.92.90, at such times, in such quantities and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the goods are not available in the SACU.
Finally, the Commission recommended that the proposed duty be reviewed after at least one (1) year following the introduction of the tariff support (unless determined otherwise by the Commission) to monitor the performance of the domestic industry.
ITAC’s detailed reasons for its recommendation are set out in ITAC’s Report No. 631
ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA
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