STI Electrical (Pty) Ltd, applied for an increase in the general rate of customs duty on transformer cores, having a power handling capacity not exceeding 50 000 KVA, from 5% ad valorem to the WTO bound rate of 15% ad valorem.
The subject product is an integral component of the transformer, regarded as the magnetic circuit part. It is made up of thin laminations of cold-rolled grain-oriented silicon steel, commonly known as core steel.
ITAC found that the domestic manufacturing industry’s total production and sales volumes of the subject product declined during the three-year period under investigation. Also, the Commission found that the domestic industry manufacturing transformation core is relatively price uncompetitive vis-à-vis imports of similar imported products, experiencing declining profits, coupled with an escalating cost structure, in relation to the manufacturing of the subject product, primarily driven by the cost of raw materials.
The Commission concluded that additional tariff support should enable the domestic industry manufacturing the subject products to utilise its existing under-utilised production capacity, achieve economies of scale, resulting in increased volumes with a reduction in the marginal cost of production.
The Commission recommended that the rate of customs duty on transformer cores, having a power handling capacity not exceeding 50 000 KVA, be increased from 5% to the WTO bound rate of 15% ad valorem.
The Commission further recommended that the duty be reviewed to monitor the performance of the industry after a period of three years from the date of implementation, or such other period as decided by the Commission.
Please refer to Report 744 for full details.
ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA