STEEL INDUSTRY: WHY DUTIES TO PROTECT THE DOWNSTREAM IS NOT AN OPTION

STEEL INDUSTRY

WHY DUTIES TO PROTECT THE DOWNSTREAM IS NOT AN OPTION
By Gerhard Papenfus

NEASA recently published letters from steel downstream businesses highlighting the difficulties they experience as a result of the import duties protecting AMSA.

The uncompetitiveness of AMSA’s steel, and the protection it is afforded against the importation of better quality and cheaper steel, have made local manufacturers uncompetitive. That has had a severe impact on local manufacturing and the resultant increase in importation of finished products.

As an example, the importation of tubing increased by 46,7% the year after the safeguard duties were imposed on hot-rolled coil, which is used in the manufacturing of tubing.

The total duty imposed on hot-rolled coil was, at one stage, 22% and therefore it made sense to rather import the finished product. The apparent logical question therefore arises: why not impose safeguard duties on tubing that exceeds the duties applicable on hot-rolled coil?

The following is our view in this regard:
• the introduction of duties and/or safeguards on tens of thousands of HS-codes of products that may contain steel, is an administrative impossibility; and
• an application for duties and safeguards is expensive, time-consuming and seldom successful.
Since the introduction of steel duties and/or safeguards, there has been a gradual contraction of South African manufacturing. Duties on finished products is not a viable solution and, consequently, the fundamental principle that remains is that the Steel Industry needs access to cost-effective, high-quality, duty-free steel in order to enhance the competitiveness and growth of the Industry.

Regards

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