The National Employers’ Association of SA (Neasa) is mobilising firms in the steel industry to oppose the “devastating” tariff proposals outlined by the International Trade Administration Commission of SA (Itac) last week.
Neasa on Monday said if implemented in their current form, the proposals would devastate jobs, accusing the government of bending backwards to protect ArcelorMittal SA (Amsa), at the expense of the downstream industry.
One of the key proposals Itac has put forward is stringent import controls to protect the embattled local industry. Neasa, which represents 1,800 businesses employing 65,000 workers in the engineering sector, took umbrage at this proposal, fearing that the measures would be abused to protect Amsa’s interests.
“Taking into consideration Itac’s continued protection of Amsa, one can only expect the blanket refusal of any application for an import permit for any product closely resembled by the more expensive, and usually long-awaited Amsa counterpart,” Neasa said.
“Any permit granted, should there be any, will also be subject to further rigorous, compulsory standard specifications as set by Itac,” the organisation said.
Steel tariff proposals: Key facts
- New duties: 10% on flat-rolled steel, bars, rods, wires; 15% on pipes, tubes & nails
- Imports: China supplies about 35% of SA’s steel demand
- Safeguards: Itac has invoked WTO emergency measures to justify hikes
- Scope: Review covers 600+ tariff codes worth R67bn
- Feedback: 150+ submissions received; final decision pending
- Concerns: Risks of higher costs, WTO breaches & industry pushback
Itac gave members of the public about two weeks to comment on the proposals, which also include increasing the rate of customs duties to the maximum World Trade Organisation bound rate, 10%-30%, depending on the product.
This was part of Itac’s unprecedented review of R67bn worth of steel imports to protect the local industry, initiated in March. The watchdog has made a preliminary determination that additional rebate provisions be created for scores of steel products, including semifinished products of iron or nonalloy steel.
Despite taking a position that the measures proposed by Itac were a foregone conclusion, Neasa called on its members and other affected parties to submit their submissions, opposing the proposals.
“Public interest and other hearings are a circus with no real possibility for preliminary decisions to be swayed, regardless of concrete evidence on the negative impacts, possible job losses and company closures to follow,” it said, adding that the proposals would “drastically accelerate the decimation” of the domestic steel industry.
“The problem with Itac’s blanket approach towards import duties, is that it doesn’t distinguish between the ‘flooding’ of the SA market with cheaper finished products from predominantly Asia, but also includes in its punishment, the import of good quality, affordable raw steel products from around the world….”
David MacKay, CEO of XA Global Trade Advisors, said the proposed duty increase would add R6bn in potential duties collected, describing the proposals as SA’s version of Donald Trump’s “Liberation Day” tariffs.
“Maybe some of those purchases will go to local suppliers, but I am, again, sceptical. When you reduce competition, which is what tariffs do, prices tend to rise. When prices rise, consumption usually falls,” MacKay said in a note.
“The problem is aggravated in this case by 77% of the tariffs being applied to intermediate goods (stuff that will be used as raw materials to make other stuff), 14% to gross fixed capital formation (capital goods) and only 9% to goods ready for final consumptions (stuff you can buy in a shop),” he said.
“The further upstream you apply duties, the greater the pressure you apply to the downstream industry and in the case of steel, 90% of the employment is downstream.”
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