In a notable trade development, South Africa’s Revenue Service (SARS) recently announced a significant increase in customs duties on stainless steel flat products. These products, categorized under tariff headings 72.19 and 72.20, will now be subject to the World Trade Organization’s (WTO) bound rate of 10%, up from the previous 5%. This pivotal decision, enacted on September 29, 2023, culminated from an investigation that commenced on March 20, 2020. Despite the International Trade Administration Commission of South Africa (ITAC) indicating on its website that the timeframe for normal investigations is six (6) months.
The South African Iron and Steel Institute (SAISI) welcomes the move as a means to safeguard the domestic industry against unfair competition. However, the prolonged investigation timeline has raised concerns within the industry.
Initiated by the International Trade Administration Commission of South Africa (ITAC) more than three years ago, the investigation’s extended duration presented challenges for local steel producers. During this period, the industry had to contend with imports that were potentially unfairly priced, causing uncertainty and disruption. This situation not only undermined the stability of local businesses but also posed a threat to investment and employment opportunities within the sector.
The decision to elevate tariffs on stainless steel flat products to the WTO bound rate carries several crucial implications for both the domestic industry and international stakeholders:
The tariff increase represents a decisive measure to provide domestic producers with a more level playing field. By aligning the tariff rates with the WTO bound rate, the government aims to enhance the competitiveness of local stainless-steel manufacturers.
Importantly, this move serves as a protective measure against the impact of unfairly priced imported products. It ensures that local industries are not unduly disadvantaged by imports that may have been subsidised and/or priced below production costs.
Local manufacturers can now compete more effectively in the market. The increased tariffs provide a buffer against the potential market distortions created by non-competitive imports.
While the decision is welcomed as a positive step to protect the domestic steel industry, concerns linger about the protracted duration of the investigation. The extended timeline left local steel producers grappling with imported competition that may not have been operating on a level playing field. This not only risked the financial stability of these businesses but also the jobs and investments vital to the sector’s growth.
SAISI welcomes the government’s decision to raise tariffs on stainless steel products to the WTO bound and believes that this demonstrates a commitment to supporting domestic producers. However, the prolonged investigative process remains a concern. SAISI believes there is a need for more streamlined and transparent procedures to safeguard local businesses and investments. There remain a number of investigations that are yet to be finalised, such as certain coated products. The influx of significantly low-priced and substandard imports continues to displace local products. While producers are operating significantly below capacity and jobs are threatened.
Refer to SARS implementation notice: https://www.sars.gov.za/wp-content/uploads/Embargo/Tariffs/2023/Legal-LSec-CE-TA-2023-35-R3916-GG-49378-Sch1P1-1-1-1899-Increase-customs-duty-on-stainless-steel-Report-644-29-Sep-23.pdf