Embattled ArcelorMittal SA (Amsa) has taken a stance against imports from China to the Southern African Customs Union (Sacu), arguing that SA did not foresee several events when it signed up to the General Agreement on Tariffs and Trade (GATT) 1994, which are now putting China at an advantage.
Amsa, supported by Safal Steel, has convinced the International Trade Administration Commission of SA (Itac) to launch an investigation for remedial action in the form of a safeguard measure against the increased imports of flat-rolled products of iron or non-alloy steel, of a width of 600mm or more, clad, plated or coated, with aluminium-zinc alloys.
“Based on the information submitted, the commission decided that the applicant [Amsa] submitted prima facie evidence to indicate that the events cited can be regarded as unforeseen developments and these unforeseen developments and the effect of the obligations incurred under the GATT 1994 led to the increased volume of imports in absolute and relative terms,” Itac said.
“The surge in the volume of imports is recent, sharp, significant and sudden enough, the Sacu industry is experiencing serious injury and this is causally linked to the surge in imports.”
Amsa, SA’s largest steel producer, told Itac that when SA engaged in the GATT negotiations, which began in the late 1980s and concluded in 1994, it did not foresee several events which now put the Sacu steel industry in peril.
These, according to Amsa, include the slowdown in the Chinese economy — which saw the Chinese domestic market for steel retracting — and as a result of all of the Chinese producers having to increase their exports further, at reduced prices, to rid themselves of excess stocks.
Amsa said countries worldwide are taking urgent action to raise tariffs and impose trade remedies to protect their domestic steel industries; and it is expected that the surge in imports that the Sacu has been experiencing will be augmented by the recent economic slowdown in China and by its export markets contracting rapidly.
Article XIX of the GATT 1994 allows a member country to apply safeguard measures in certain circumstances. The article for example allows a member country to apply safeguard measures if imports of a product have increased due to a reduction or elimination of customs duties.
The article also allows World Trade Organisation member states to apply safeguard measures when increased imports threaten to cause serious injury to the domestic industry.
Itac said its investigation will be conducted in accordance with the International Trade Administration Act.
“The applicant alleged and submitted prima facie evidence indicating that it is experiencing serious injury in the form of a decline in sales, output, net profit, market share and employment, during the period of surge from May 1 2023 to April 30 2024,” the commission said.
“Furthermore, an analysis for the period of investigation from May 1 2021 to April 39 2024, indicates that the applicant has experienced serious injury in the form of a decline in sales, output, net profit, market share, capacity utilisation, productivity and employment.
“On this basis, the commission found that prima facie evidence was submitted to indicate that the Sacu industry was experiencing serious injury which could be causally linked to the recent, sudden, serious and significant surge in imports of the subject products.”
The Itac investigation by Amsa comes as the company is facing an existential crisis — having reported heavy output losses over the past decade. The JSE listed group’s steel output plunged from 6-million tonnes in 2006 to less than 2.5-million in 2023.
Amsa CEO Kobus Verster in August called for a 25% tariff on imports, saying it was the most appropriate measure to protect the embattled domestic industry.
Verster at the time said as China’s exports were forecast to accelerate 24% during the year, many countries that produced steel had acted quickly to enact trade remedies.
SA in June 2024 announced it would impose an additional 9% safeguard duty on imports of hot-rolled steel from all countries for 200 days, starting on June 28.
The provisional safeguard duty, which is levied over and above a 10% general customs duty, has been met with mixed reactions.
With Michelle Gumede
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