Steel Industry: On top of existing protectionist duties, additional duties imposed on structural steel … up to 52%.

STEEL INDUSTRY

ON TOP OF EXISTING PROTECTIONIST DUTIES

 ADDITIONAL DUTIES IMPOSED ON STRUCTURAL STEEL …

… UP TO 52%

by Gerhard Papenfus

Dear employer

In a shocking turn of events, Government has imposed new duties of 52,81% with immediate effect, on structural steel, for example U, H, I, and other angles, shapes and sections imported from China.

In addition to this, it has also introduced a duty of 9,12% for these products if imported from Thailand.

Although numerous companies, including NEASA, are still in the process of opposing the proposed duties, Government, in an act of disregard for this process and the devastating consequence of implementation, nevertheless introduced it as a preliminary duty with effect from 29 November 2024. Since the process of considering the objections is not complete, these duties can only be made permanent at a later stage, but within a time period of six months.

These duties come in the wake of an important report and media release published by the Centre for Development and Enterprise (CDE) in its AGENDA 2024 series, titled "ACTION SEVEN: Rethink Growth, Jobs and the DTIC."

This report critically examines the Department of Trade, Industry and Competition’s (DTIC) policies, revealing why they have failed to drive re-industrialisation.

The report highlights troubling trends in South Africa's manufacturing sector:

• Shrinking GDP contribution: manufacturing's share of GDP has plummeted from 20% in 1960 to less than 13% in 2023.

• Job losses: manufacturing employment has dropped from 1.8 million jobs in 2001 to under 1.6 million in 2023, despite significant population growth.

• Export struggles: only 20% of manufacturers export, and the number of exporters has fallen from 42 000 in 2015 to 36 000 in 2022. The majority exports less than 5% of their output. 

The report critiques DTIC’s reliance on:

• protectionism: restricting imports to shield local industries;

• localisation: promoting import substitution over export growth; and

• master plans: policies that have failed to boost competitiveness.

According to Ann Bernstein, CDE’s Executive Director, these policies have reduced productivity, stifled innovation, and hindered South Africa’s ability to grow its exports. “South Africa should not follow a protectionist path that undermines competitiveness,” she cautioned.

Recommendations for change

The CDE proposes a shift to an export-driven economic strategy, including:

• removing tariffs on goods not produced locally, introducing sunset clauses and assessing the broader economic impact of protectionism;

• replacing master plans with productivity councils focused on driving competitiveness and exports; and

• addressing anti-competitive practices while avoiding overregulation.

With the establishment of the Government of National Unity (GNU), there is a rare opportunity to rethink and revamp South Africa's economic approach. Bernstein urges stakeholders to embrace fresh ideas, stating, “the President and NEDLAC partners acknowledge the failure of current policies. Urgent action is needed to put South Africa back on track.”

Gerhard Papenfus is the Chief Executive of the National Employers' Association of South Africa (NEASA).

For more information

NEASA Media Department

media@neasa.co.za

NEASA ... the only labour law specialist an employer will ever need.