daniel chigunwe
South Africa has been one of the top five users of anti-dumping duties to protect its domestic manufacturing industries, but this has declined quite considerably over the past two decades.
Several trade law experts also note a gradual decline in the use of other trade instruments, particularly on the trade policy side, despite signs of continued unfair trade practices in the Southern African Customs Union.
Companies can also obtain protection by requesting the International Trade Administration Commission (Itac) to increase existing most-favoured-nation duties or to introduce countervailing and safeguarding measures. They can also apply for a rebate when paying duties on products that are not produced locally.
Tonderai Chibasa, economist and tariff and trade remedies manager at XA Global Trade Advisors, says companies are opting out because the process is no longer predictable, consistent, or transparent.
The lack of trust in the process can compromise our trade policy, he warns.
Cheap chicken, tyre and potato chip imports from, among others, the European Union, Brazil and China, have been hitting the headlines in the last 12 months.
Rian Geldenhuys, CEO of Trade Law Chambers, says the signs of increased dumping do not correlate with the number of investigations being initiated.
“There may well be certain policy decisions that (are) preventing Itac from initiating these investigations.”
Leading user in Africa
Geldenhuys notes that it may be “easier” to simply apply for an increase in the most-favoured-nation (MFN) tariffs up to the bound rate. A country can apply MFN tariffs to imports from all trading partners that are members of the World Trade Organisation (WTO).
However, the timelines for these applications are not legislated, and in recent years the time taken to finalise them has become lengthy, says Webber Wentzel partners Sarah McKenzie and Meluleki Nzimande with senior associate Johanna Lubuma.
They note that SA remains the leading user of anti-dumping measures in Africa. It is only SA and Egypt that have the domestic capacity to conduct anti-dumping investigations.
Geldenhuys predicts that it will become more difficult to navigate the protection mechanisms offered by Itac.
“Investigations are taking longer, and decisions are becoming more unpredictable.”
This sentiment is echoed by the Webber Wentzel team. “Historically, anti-dumping duties were implemented within 10 to 12 months from the date of initiation. In recent years, investigations have taken approximately 18 months to complete.”
In terms of the WTO rules, anti-dumping investigations must be finalised within 18 months and terminated if they go beyond the allowed timeframe.
Judicial reviews
There has been a “massive increase” in Itac decisions being taken on judicial review. Geldenhuys says inconsistencies and unpredictability are the main reasons for this.
Companies that disagree with the methodology used in the investigation or the anti-dumping margin calculation, or which argue that dumping occurred to a lesser extent than reflected in the investigation, are approaching the courts. Chibasa is aware of at least three cases before the courts now.
He believes the pressure on Itac to complete their investigations within the prescribed timeline results in errors being made.
“It is quite worrying because people are losing confidence in the process. Companies are reluctant to participate and respond if they believe Itac is following a predetermined outcome.”
Decision-making process
The role of Minister of Trade, Industry and Competition Ebrahim Patel in the decision-making process is being questioned.
The Itac process is transparent (although inconsistent), but it is unclear what process the minister follows when making the final decision (whether to accept, reject or request additional assurances on top of Itac’s recommendations), says Chibasa.
In the absence of a decision, cheap imports flood the market and the local company loses market share and may end up laying off staff. It may also compromise foreign direct investments.
“Investors want to see certainty and transparency in trade policy to assure them that their investments will be safe.”
Francois Dubbelman, founder of FC Dubbelman & Associates, says it seems that government believes dumping duties give domestic producers an advantage against imports. — Moneyweb
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