ITAC, YOU KNOW NOTHING! - sincerely, the Steel Downstream

ITAC, YOU KNOW NOTHING!

- sincerely, the Steel Downstream

by Gerhard Papenfus

According to its website, the aim of the International Trade Administration Commission (ITAC), the government entity responsible for the regulation of goods across South Africa’s borders, is to “foster economic growth and development in order to raise incomes and promote investment and employment in South Africa”.   

It also claims to bear the responsibility:

• of creating an enabling environment for fair trade through efficient and effective administration of its trade instruments; and   

• to follow a developmental approach to tariff setting with the objective of promoting domestic manufacturing, employment retention and creation, and international competitiveness. 

Although the Steel Industry’s decline, over the last decade in particular, cannot be ascribed solely to ITAC’s obsession with saving AMSA, through protectionist duties, it continues to play a dominant role in the gradual demise of the Industry.

What ITAC is doing is the exact opposite of their stated goal, namely, to “follow a developmental approach of tariff setting with the objective of promoting domestic manufacturing, employment retention and creation, and international competitiveness”.

Since 2015, when ITAC’s duty obsession commenced, the Steel Industry has shrunk by 25% and jobs by at least 20%. AMSA, a monopoly, and a few other subsidised, exclusive primary raw-material manufacturers, are the only ones benefitting from this duty-mania. For the remaining 95% of the Industry, this arrangement is utterly destructive.

Although the investigation regarding the latest 52% increase in duties is still ongoing, ITAC shocked the Industry and, without any prior warning, went ahead with its implementation. Did any ITAC official for one moment consider the impact this has on a company whose steel-order is approaching our shores from China, for instance, and the impact it will have on the cost to land on South African shores?

This latest act by ITAC is clearly indicative of its complete disregard for the interests of the Steel Downstream. It also illustrates its ignorance with regard to what it takes to establish a business and then to run it successfully. Academic textbooks cannot teach that. Government officials writing reports and articles, based on theoretical economic models, may create the appearance of an understanding of the intricacies of running a business in the real world, but you know ‘nothing’ until you’ve actually done it yourself.

Is there anyone employed at ITAC who has ever established or operated a business (I’m not talking about working for a corporate), who has first-hand experience, or true comprehension of the impact of their actions on South Africa’s SME’s? I might be wrong, but I doubt it.

So where does this leave the thousands of businesses severely prejudiced by ITAC’s actions? Some, like many businesses before them, might eventually decide to throw in the towel. Only the toughest of the tough, the ‘anti-fragile’, will find a way. As they fight the Industry battle, making new plans, they live life to its fullest, despite the best efforts of those grey souls in their state offices concocting incomprehensible rules.

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

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