SA’s embattled steel industry, dominated by the equally troubled ArcelorMittal SA (Amsa), is set for the biggest tariff overhaul after authorities concluded the most extensive review in more than 20 years.
A review of R67bn worth of imports calls for an increase in customs duties and stringent import controls to protect the local industry.
The move, aimed squarely at chronic overcapacity abroad, signals a shift from decades of broad imports towards a targeted, rules-based protection strategy.
The preliminary findings of the International Trade Administration Commission of SA (Itac), which administers the country’s trade instruments, are that “the ongoing geopolitical landscape does constitute an unprecedented emergency, necessitating urgent action”.
Itac said that had forced its hand to invoke provisions in the World Trade Organisation (WTO) regime that give countries the go-ahead to temporarily restrict imports if they face a surge in imports that cause serious injury to domestic players.
Itac is moving to increase the rate of customs duties on dozens of products. They extend from primary and stainless steel to their respective bound rates, which range from 10% to as much as 20%. In many respects, these products currently attract no duties.
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. Itac has proposed stringent import controls to protect the embattled local industry.
“It should be noted that the commission has not yet made its final determination on any of the above matters, and nothing in this notice should be construed as such,” according to a government notice. The final determination will only be made once the commission has considered comments from members of the public on this “preliminary determination”.
Amsa lifeline
The mooted tariffs are likely to provide a lifeline to Amsa, the country’s largest steelmaker and a bellwether for the entire value chain, which has made public warnings of imminent mill closures in Newcastle and Vereeniging. The closures threaten jobs and a cascade of small business closures.
Still, Itac chief commissioner Ayabonga Cawe said framing these measures as a mere cover for a single domestic producer missed the scale and seriousness of the crisis. “What we face now is chronic global overcapacity inflicting sustained harm on every part of our steel value chain, from integrated mills to wire and tubing producers,” he said.
To prevent rebate abuse, Cawe said Itac had drafted stringent guidelines requiring companies to prove that no local supplier could meet their needs. “Rebates are not a blank cheque,” he said. “They exist where domestic production no longer covers demand.”
The overhaul comes as the global trading system is reeling from a volley of tariff walls being raised in the US — from steel and aluminium duties to fresh levies on electric vehicles — that have frayed the WTO’s once universal guardrails.
In a world splintering into national silos, Itac’s overhaul of steel tariffs is SA’s bid to fortify its industrial backbone and insulate the economy from the fallout of protectionist contagion, using what Cawe said was within the WTO rules.
“The power to act in an emergency comes bundled with our WTO commitments. We’re not inventing new rules; we’re using agreed-upon tools. Many jurisdictions, from the EU to the US, have activated similar provisions. Our preliminary finding is that the scale of steel imports, coupled with geopolitical volatility, justifies emergency intervention,” he said.
SA’s steel industry has lost 25,000 jobs since 2009, losses that continued after the introduction of the price preference system more than a decade ago, according to a report by independent economic research consultancy Econometrix. The report points to the government’s interventionist policies in the steel industry, in which production has plunged 40% below its 2006 peak. The data shows that about 7,500 jobs have been lost in the sector since 2014, after the introduction of the price preference system the previous year.
The policy regulates the export of ferrous and nonferrous scrap by not allowing exports of scrap metal unless it has first been offered to domestic consumers at a discount to the international price at the time of sale.
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