POSSIBLE
SAFEGUARD DUTIES TO BE IMPOSED BY ITAC AGAINST INCREASED IMPORTS OF CERTAIN
IRON AND STEEL PRODUCTS
(Comments due by 13 April 2016)
The rates
of duty on various steel products were increased from free to 10% on 18
December 2015 following a request by ArchelorMittal which was approved by
the International Trade Administration Commission of South Africa (ITAC).
ITAC’s
recommendations related to the tariff review on 77 steel product codes in
Chapters 72 and 73 of the SACU Harmonised Customs Tariff as requested by the
South African Iron and Steel Institute, ArcelorMittal South Africa and Evraz
Highveld Steel and Vanadium, which have applied for the maximum 10 percent
allowed for tariff protection from cheap imports.
The final
determinations were approved by the Department of Trade and Industry for a
10 percent ad valorem duty on zinc-coated or galvanised steel, aluminium-zinc
coated steel and colour coated steel products. Some of the approval
conditions included that ArcelorMittal SA would invest R250 million in its
colour line and Safal Steel would spend R300m on its metal coating line in
2017.
Refer to
ITAC Report 517 of 15 December 2015 for more information.
In terms of
South Africa’s commitments under the WTO Uruguay Round, the bound rate on
these iron and steel products in question is 10% at time of importation.
The South
African Iron & Steel Institute (SAISI) an industry body, on behalf of its
members producing the iron and steel products in question further produced
information to convince ITAC that the applicant submitted prima facie
information to indicate:
-
Events
cited can be regarded as unforeseen developments that led to the
increased volumes of imports;
-
surge
in the volumes of imports; and
-
SACU
industry is suffering serious injury;
-
There
is a causal link between the serious injury suffered by the applicant
and the surge in volumes of imports.
The
International Trade Administration Commission of South Africa (ITAC)
therefore decided to proceed with an investigation for remedial action in
the form of a safeguard against the increased imports of certain flat-rolled
products of iron, non-alloy steel or other alloy steel (not including
stainless steel), whether or not in coils (including products cut-to length
and ‘narrow strip’), not further worked than hot-rolled (hot-rolled flat),
not clad, plated or coated, excluding grain-oriented silicon electrical
steel. The application was published in Government Gazette No. 39860
dated 24 March 2016 under Notice No. 149 of 2016 under the title: “NOTICE
OF AN INITIATION OF THE INVESTIGATION FOR REMEDIAL ACTION IN THE FORM OF A
SAFEGUARD AGAINST THE INCREASED IMPORTS OF CERTAIN FLAT-ROLLED PRODUCTS OF
IRON, NON-ALLOY STEEL OR OTHER ALLOY STEEL (NOT INCLUDING STAINLESS STEEL),
WHETHER OR NOT IN COILS (INCLUDING PRODUCTS CUT-TO-LENGTH AND ‘NARROW
STRIP’), NOT FURTHER WORKED THAN HOT-ROLLED (HOT-ROLLED FLAT), NOT CLAD,
PLATED OR COATED, EXCLUDING GRAIN-ORIENTED SILICON ELECTRICAL STEEL”.
The
Applicant (the South African Iron & Steel Institute (SAISI) an industry
body, on behalf of its members producing the iron and steel products in
question) submitted that a confluence of events forms the basis of the
unforeseen development that supports the application. That is, ultimately
the considerable oversupply of steel, and specifically the subject products,
in the world today causing a surge in the volumes of imports into the SACU.
The Applicant stated that during the Uruguay Round of negotiations, South
Africa did not foresee the following events:
-
The
unprecedented steep rate of increase in steel production capacity
(including the subject products) over the ensuing two decades (more than
doubled since 1994) to support growing construction and manufacturing
activity, as well as to help build infrastructure, particularly in
emerging economies;
-
The
significant market downturns in emerging (and other) economies and the
resultant contraction of demand for steel that contribute to the
imbalance between capacity and demand, that is, the global oversupply of
steel (including the subject products);
-
Record
export volumes by countries with excess capacity, fuelled by excess
steel supply;
-
Given
the global nature of the steel industry, excess capacity in one region
can potentially displace production in other regions, thus harming
producers in those markets. This has already led to several trade
actions by major steel markets.
-
Recent
trade measures by those countries are a result of all the above named
unforeseen developments, and the fact that their markets are now
protected, contracts the global demand for steel even further,
exasperating the problem of increased imports into the SACU;
-
The
oversupply of steel (including the subject products) has led to a
deterioration in the financial situation of steelmakers globally and
also the SACU. The excess capacity is considered as one of the main
challenges facing the global steel sector today; and
-
Despite
slowing demand growth and the existing excess capacity, there are
several new investment projects underway and planned (especially in
current net-importing countries) in the steel industry that will result
in global steelmaking capacity to continue to expand and causing the
SACU to expect further increases of imports of the subject products.
The
applicant made allegations of serious injury and casual link, and it
was investigated by ITAC.
The period
of investigation for data evaluation for the purposes of determining the
allegation of serious injury is 1 January 2012 to 31 December 2014 plus
additional seven months information for 2012 to 2015 (01 January to 31
July).
The injury
analysis relates to information submitted by ArcelorMittal South Africa
Limited (AMSA’s), a member of SAISI with a collective output of the like or
directly competitive products constituting a major proportion (approximately
more than 70%) of the total domestic production of those products.
The
Applicant alleged and submitted prima facie information indicating that it
is experiencing serious injury in the form of a decline in sales volumes,
output, market share, utilisation of capacity and employment for the period
1 January 2012 to 31 December 2014.
The
applicant further experienced serious injury in the form of a decline in
sales volumes, output, market share, and utilisation of capacity for the
seven months period 1 January to 31 July (2012 – 2015).
On this
basis the Commission found that prima facie information was submitted to
indicate that the SACU industry was suffering serious injury which could be
causally linked to the surge in the volumes of imports of the subject
products.
The
products under investigation are described as certain flat-rolled
products of iron, non-alloy steel or other alloy steel (not including
stainless steel), whether or not in coils (including products cut-to-length
and ‘narrow strip’), not further worked than hot-rolled (hot-rolled flat),
not clad, plated or coated, excluding grain-oriented silicon electrical
steel.
The tariff
subheadings in question with their descriptions are indicated with an *
below:
HS Subheading |
Description |
72.08 |
Flat-rolled products of iron or non-alloy steel, of a width of 600
mm or more, hot-rolled, not clad, plated or coated: |
7208.10* |
In
coils, not further worked than hot-rolled, with patterns in relief |
7208.2 |
Other, in coils, not further worked than hot-rolled, pickled: |
7208.25* |
Of
a thickness of 4,75 mm or more |
7208.26* |
Of
a thickness of 3 mm or more but less than 4,75 mm |
7208.27* |
Of
a thickness of less than 3 mm |
7208.3 |
Other, in coils, not further worked than hot-rolled: |
7208.36* |
Of
a thickness exceeding 10 mm |
7208.37* |
Of
a thickness of 4,75 mm or more but not exceeding 10 mm |
7208.38* |
Of
a thickness of 3 mm or more but less than 4,75 mm |
7208.39* |
Of
a thickness of less than 3 mm |
7208.40* |
Not
in coils, not further worked than hot-rolled, with patterns in
relief |
7208.5 |
Other, not in coils, not further worked than hot-rolled: |
7208.51* |
Of
a thickness exceeding 10 mm |
7208.52* |
Of
a thickness of 4,75 mm or more but not exceeding 10 mm |
7208.53* |
Of
a thickness of 3 mm or more but less than 4,75 mm |
7208.54* |
Of
a thickness of less than 3 mm |
7208.90* |
Other |
72.11 |
FLAT-ROLLED PRODUCTS OF IRON OR NON-ALLOY STEEL, OF A WIDTH OF LESS
THAN 600 MM, NOT CLAD, PLATED OR COATED: |
7211.1 |
Not further worked than hot-rolled: |
7211.13 |
Rolled on four faces or in a closed box pass, of a width exceeding
150 mm and a thickness of not less than 4 mm, not in coils and
without patterns in relief |
7211.14* |
Other, of a thickness of 4,75 mm or more |
7211.19* |
Other |
72.25 |
FLAT-ROLLED PRODUCTS OF OTHER ALLOY STEEL, OF A WIDTH OF 600 MM OR
MORE: |
7225.1 |
Of silicon-electrical steel: |
7225.11 |
Grain-oriented |
7225.19 |
Other |
7225.30* |
Other, not further worked than hot-rolled, in coils |
7225.40* |
Other, not further worked than hot-rolled, not in coils |
7225.50 |
Other, not further worked than cold-rolled (cold-reduced) |
7225.9 |
Other: |
7225.91 |
Electrolytically plated or coated with zinc |
7225.92 |
Otherwise plated or coated with zinc |
7225.99* |
Other |
72.26 |
FLAT-ROLLED PRODUCTS OF OTHER ALLOY STEEL, OF A WIDTH OF LESS THAN
600 MM: |
7226.1 |
Of silicon-electrical steel: |
7226.11 |
Grain-oriented |
7226.19 |
Other |
7226.20 |
Of
high speed steel |
7226.9 |
Other: |
7226.91* |
Not
further worked than hot-rolled |
7226.92 |
Not
further worked than cold-rolled (cold reduced) |
7226.99* |
Other |
Only the
products that are marked with an asterisk are under investigation. However,
due to the nature of the lay-out of the HS subheadings and for the purposes
of better identification and simplification all the subheadings of the
headings in question are indicated above.
The
Southern African Customs Union (SACU) product is described as certain
flat-rolled products of iron, non-alloy steel or other alloy steel (not
including stainless steel), whether or not in coils (including products
cut-to-length and ‘narrow strip’), not further worked than hot-rolled
(hot-rolled flat), not clad, plated or coated, excluding grain-oriented
silicon electrical steel.
The
investigation will be conducted in accordance with the International Trade
Administration Act, 2002 (ITA Act) and the International Trade
Administration Commission Safeguard Regulations (SGR) read with the World
Trade Organization Agreement on Safeguards (the Safeguard Agreement).
In the
notice ITAC states that if any information is considered to be confidential,
a non-confidential version of the information must be submitted for the
public file, simultaneously with the confidential version. In submitting a
non-confidential version, the following rules are strictly applicable and
parties must indicate:
-
where
confidential information has been omitted and the nature of such
information;
-
reasons
for such confidentiality;
-
a
summary of the confidential information which permits a reasonable
understanding of the substance of the confidential information; and
-
in
exceptional cases, where information is not susceptible to summary,
reasons must be submitted to this effect.
This rule
applies to all parties and to all correspondence with and submissions to
ITAC, which unless indicated to be confidential and filed together with a
non-confidential version, will be placed on the public file and be made
available to other interested parties.
All
information submitted, including non-confidential copies thereof, should be
received by the Senior Manager: Trade Remedies II by 13 April 2016.
Interested
parties are invited to submit comments on the initiation of the
investigation or any information regarding this matter to the following
address:
Physical address
Senior
Manager: Trade Remedies II
International Trade Administration Commission
Block E –
The DTI Campus PRETORIA
77
Meintjies Street
Synnyside
PRETORIA
SOUTH
AFRICA
Postal address
Senior
Manager: Trade Remedies II
International Trade Administration Commission
Private Bag
X753 0001 SUNNYSIDE
SOUTH
AFRICA PRETORIA
Any
interested party may request an oral hearing provided that reasons are given
for not relying on written submissions only.
Parties
requesting an oral hearing shall provide the Commission with a detailed
agenda for, and a detailed version, including a non-confidential version, of
the information to be discussed at the oral hearing at the time of the
request.
Contact the
investigating officers, Mr Edwin Mkwanazi at +27 12 394 3742 or Ms Mercy
Mutheiwana at 012 394 3907, or at fax number 012 394 0518 for more
information. |
The International Trade Administration Commission (ITAC)
is responsible for tariff investigations, amendments, and trade
remedies in South Africa and on behalf of SACU.
Tariff
investigations include: Increases in the customs duty rates
in Schedule No. 1 Part 1 of Jacobsens. These applications apply
to all the SACU Countries, and, if amended, thus have the
potential to affect the import duty rates in Botswana, Lesotho,
Namibia, Swaziland and South Africa.
Reductions in
the customs duty rates in Schedule No. 1 Part 1. These
applications apply to all the SACU Countries, and, if amended,
thus have the potential to affect the import duty rates in
Botswana, Lesotho, Namibia, Swaziland and South Africa.
Rebates of duty
on products, available in the Southern African Customs Union (SACU),
for use in the manufacture of goods, as published in Schedule
No. 3 Part 1, and in Schedule No. 4 of Jacobsens. Schedule No. 3
Part 1 and Schedule No. 4, are identical in all the SACU
Countries.
Rebates of
duty on inputs used in the manufacture of goods for export, as
published in Schedule No. 3 Part 2 and in item 470.00. These
provisions apply to all the SACU Countries.
Refunds of
duties and drawbacks of duties as provided for in Schedule No.
5. These provisions are identical in all the SACU Countries.
Trade
remedies include: Anti-dumping duties (in Schedule No. 2
Part 1 of Jacobsens), countervailing duties to counteract
subsidisation in foreign countries (in Schedule No. 2 Part 2),
and safeguard duties (Schedule No. 2 Part 3), which are imposed
as measures when a surge of imports is threatening to overwhelm
a domestic producer, in accordance with domestic law and
regulations and consistent with WTO rules.
To remedy such
unfair pricing, ITAC may, at times, recommend the imposition of
substantial duties on imports or duties that are equivalent to
the dumping margin (or to the margin of injury, if this margin
is lower)
Countervailing investigations are conducted to determine
whether to impose countervailing duties to protect a domestic
industry against the unfair trade practice of proven subsidised
imports from foreign competitors that cause material injury to a
domestic producer.
Safeguard measures, can be introduced to protect a domestic
industry against unforeseen and overwhelming foreign competition
and not necessarily against unfair trade, like the previous two
instruments. |
Dumping is
defined as a situation where imported goods are being sold at
prices lower than in the country of origin, and also causing
financial injury to domestic producers of such goods. In other
words, there should be a demonstrated causal link between the
dumping and the injury experienced.
The International Trade Commission of South Africa (ITAC) also
publishes Sunset Review Applications in relation to anti-dumping
duty in terms of which any definitive anti-dumping duty will be
terminated on a date not later than five years from the date of
imposition, unless the International Trade Administration
Commission determines, in a review initiated before that date on
its own initiative or upon a duly substantiated request made by
or on behalf of the domestic industry, that the expiry of the
duty would likely lead to continuation or recurrence of dumping
and material injury.
The International Trade Administration published a document
entitled: International Trade Administration Act: Initiation of
investigation for remedial action in form of safeguard against
increased imports of certain flat-rolled products of iron,
non-alloy steel or other alloy steel, whether or not in coils
Responses and any information regarding this matter must be
submitted in writing by 13 April 2016.
Contact the investigating officers Mr Edwin Mkwanazi at
telephone number: +27 12 394 3742 or Ms Mercy Mutheiwana at
telephone number: +27 12 394 3907 or at fax number: +27 12 394
0518 for more information.
The document was published in Government Gazette No.
39860 of 24 March 2016 under Notice No. 149 of 2016.
Download the notice at http://www.gov.za/sites/www.gov.za/files/39860_gen149.pdf
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