Request For The Postponement Of The Implementation Of Safeguard Duties

Steel Industry

REQUEST FOR THE POSTPONEMENT

OF THE IMPLEMENTATION OF SAFEGUARD DUTIES

Open Letter to Minister of Trade and Industry

Mr. Rob Davies

Minister of Trade and Industry

Dear Honourable Minister

On many occasions NEASA has articulated its reasons for being opposed to the custom duties already introduced as well as the safeguard duties whose promulgation is apparently imminent.

Minister, the purpose of this letter is to request, for the reasons outlined herein, to at least postpone the promulgation of safeguard duties. This approach by NEASA must however, in no way, be construed as a departure from our view that the introduction of any of these duties will have extremely negative consequences for the Steel Industry and consequently needs to be withdrawn.

We have yet to meet a company which does not complain about the delays in deliveries by AMSA. In addition, for many companies AMSA’s product is simply of inferior quality and, in some cases, AMSA simply does not manufacture the relevant product. Notwithstanding this, these companies will be subjected to both custom- and safeguard duties, if and when the latter is promulgated. This Minister, as far as the downstream is concerned, amounts to ‘industrial sabotage’.

The dti is presenting the system of rebates as a mitigating factor for companies which may be negatively affected by the safeguard duties. In this regard we wish to point out the following:-

1. It seems that there is an unwritten rule that AMSA has the final say on whether they manufacture a certain product or not. ITAC, understandably, has no technical knowledge and seems to rely on AMSA’s determination irrespective of whether Industry experts disagree with them or not. It is unimaginable that AMSA, a monopoly with an antiquated plant and only looking after its own commercial interests, is the sole judge on whether a company might qualify for a rebate or not. In our view, this on its own, is sufficient ground to have the whole safeguard ‘scheme’ reviewed and set aside.
    

2. It is our view that it will soon be proved that the administration involved in the rebate process (red tape and administrative inefficiencies) will make this process impossible to execute. In this regard the following processes need to be considered:-

• the appointment and training of an adequate number of SARS officials;

• potential delays in booking SARS inspections on the relevant business’ premises;

• the creation of codes for all products which may be affected;

• delays at the ports;

• the fact that a substantial portion of products change hands before being exported, while only the importer can claim the rebate;

• smaller companies simply do not have the administrative capacity to administer the process;

• the development of the technical knowhow at the ports is all but impossible, which sets the scene for the creation of ‘fraud hubs’; and

• the establishment of an independent body to determine whether AMSA manufactures a particular product or, even if it does, whether the product is of sufficient quality.

Minister, it is important to note that, according to SARS, the rebates cannot be claimed retrospectively. Should the safeguard duties be implemented now, without the administrative issues being completely dealt with, the downstream, at least those companies which are eligible to apply for the rebates, will financially be severely prejudiced.

While it is apparent that the promulgation of the safeguard duties are imminent, none of the issues raised above are addressed sufficiently, or even at all. Imposing safeguard duties under these circumstances will illustrate the utmost contempt for the interests of the downstream – all to benefit a monopolistic AMSA.

Minister, on behalf of numerous Steel downstream companies, we call on you to place a moratorium on the implementation of these safeguard duties – at least until all administrative issues have been finalised so that the negative effect on the downstream is at least mitigated. We respectfully request that you make an announcement to this effect as soon as possible.

In conclusion, we remain of the firm view that all duties, aimed at protecting AMSA, need to be scrapped altogether.

Kindly note that the content of this letter will be published.

Kind regards

Gerhard Papenfus

Chief Executive

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