SA’s trade regulation body, the International Trade Administration Commission (Itac), has launched an investigation into the alleged dumping of tyres from China.
The application for anti-dumping duties on car, truck and bus tyres from China was made by the SA Tyre Manufacturers Conference (SATMC).
Good Year, Dunlop, Continental and Sumitomo — the sole members of the SATMC — are collectively requesting that duties of between 8% and 69.9% be slapped onto various categories of Chinese tyres.
These four companies also happen to be under close scrutiny by the Competition Commission for alleged price-fixing.
A successful application for anti-dumping duties would see the price of tyres surge in SA, putting already cash-strapped consumers under further pressure. Conversely, a protectionist stance may help shore up local manufacturing.
Itac’s trade remedies unit is conducting the anti-dumping investigation, said spokesperson Thalukanyo Nangammbi. She added that numerous anti-dumping investigations concerning tyres have been investigated by Itac in the past.
The SATMC alleges that new pneumatic tyres used on cars, buses and lorries originating in or imported from China are being dumped into the Southern African Customs Union (Sacu) market, causing material injury.
Dumping, a form of international price discrimination, becomes an unfair business practice and actionable under domestic and international law when it causes or threatens to cause material injury to domestic manufacturers that produce an identical or similar product to the dumped import.
“There are various importers and exporters of the subject products that will be directly impacted by the investigation. However, the exact identities of [the affected] parties will only be known to Itac once responses have been received,” said Nangammbi.
The SATMC was not available for comment.
Tyres worth R5.7bn were imported into SA between August 2020 and July 2021, with 47% of that (R2.7bn) coming from China.
As founder and director at XA International Trade Advisors, a consultancy house, Donald MacKay said the companies involved are also said to be importers from China, though they have claimed confidentiality on how much and why they import.
“We don’t know how much they imported from China, but we do know they could shift at least some of their procurement to other regions if duties are imposed,” MacKay said in a research note.
“This would have the effect of removing current import competitors, who are dependent on Chinese supply, and allow more expensive tyres from, say, the EU to be supplied instead.”
Data by the SATMC shows that SA tyre exports went from just more than 1.5-million in 2019 to 1.3-million in 2020. Overall trends point to a steady decline in total local production, going from about 10-million tyres produced in 2016 to about 6.5-million in 2020.
Investment slumped from R1.5bn to R596m in the period.
Itac has 18 months from the date of initiation to probe whether dumping of products originating in China is taking place, whether the local industry is suffering a material injury, and whether a threat of material injury exists. It must also determine if there is a causal link between the alleged dumped imports, the material injury suffered by Sacu industry and the threat of material injury to Sacu. Material injury is measured in terms of declines in prices, sales volumes, profits, market share, employment and other factors of domestic manufacturers.
“During anti-dumping investigations, there are no public hearings held,” Nangammbi told Business Day.
“However, interested parties at various stages of the investigation may request to directly make oral presentations to the commission on various matters related to the investigation.”
Meanwhile, the Competition Commission has maintained that the four tyre manufacturers had a collusive relationship from 1999 until at least 2007.
The commission maintains it was characterised by dubious meetings and phone conversations to agree on price increases and to co-ordinate the timing of each price increase, in contravention of the Competition Act.
Goodyear and Continental have denied any wrongdoing. Bridgestone applied for and was granted leniency in 2009, and Dunlop has settled.
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