escalating protectionism: non -tariff barriers and

Escalating protectionism: NON-TARIFF BARRIERS AND PROTECTION BEYOND DUTIES2nd Edition, 2016

www.xa.co.za www.tradespot.co.za

3

Contributors

Tradespot | 2nd Edition 2016

© XA International Trade Advisors - 1

Donald MacKayDirector at XA International Trade Advisors

Heinrich KrogmanConsultant at Tutwa Consulting

Taapano Paradza Consultant at XA International Trade Advisors

Tiego Basaya Consultant at XA International Trade Advisors

Biandri JoubertConsultant at XA International Trade Advisors

I founded XA 13 years ago and have been in-volved in international trade consulting for almost 20 years (the 7 preceding XA spent at Deloitte). I think it’s important to make the complexities of international trade more ap-proachable to the general public. Trade af-fects our lives and yet so few truly have a grasp on this fascinating subject. Tradespot is one of our attempts to make this information more accessible and useable to the market.

l am a researcher at Tutwa Consulting and aregulatory research projects for national and provincial governments, state agen-cies and intergovernmental organisations. I hold a Bachelor in International Trade and Economics, and an Honours in International trade.

I enjoy problem solving in the complex area of international trade, particularly trade rem-

years ago, nothing is routine as each and ev-ery matter comes with its own unique chal-lenges to be solved. Research is important in this line of work as the international trade terrain is constantly changing. My research interests are centred but not limited to trade policy and regional integration.

If you want numbers crunched, I am the go-to person. I am an economist with a Master’s de-gree from Wits University. My research inter-ests anchor on the developmental impact of industrial upgrading, international trade and developing countries’ strategic insertion into the global economy.

I’m a researcher for XA with a fascination of the intricacies of international trade. I stud-ied law and did a Masters in Import and Ex-port Law at North West University. Currently I am also doing Doctoral research on Sanitary and Phytosanitary Measures.

ContentsWelcome back........................................................ 2

The bound rate position........................................ 4

Reviewing the trade protection trends................. 6

A glimpse of 2015 South African

trade protection trends...................................... 12

Anti-dumping actions......................................... 14

2015 industry protection map............................. 15

New legislation.................................................... 16

71 ......................................................setupsid edarT

A word from Tutwa Consulting............................ 21

2016 has been a really interesting year. With South Africa being dragged back to the WTO in the cement anti-dumping case (but then dropped by Pakistan), to 3 �nance ministers in 5 days, this really has been a very intense year.

Welcome back…

The Rand managed to drop to all time lows, yet our trade de�cit actu -

ally broadened, which is alarming but also to be expected given our

dire electricity position.

On the trade front, we see a lot of activity right at the end of 2015; with

the really broad range of steel duty increase applications. By the time

of printing this edition of Tradespot, most of these increases had been

implemented, with the exception of hot-rolled steel (now the subject

of a safeguard action) and tinplate, where Arcelor Mittal agreed to

withdraw the application.

Making practical use of the information in this report

can move goods across borders, that do not take the form of a duty

-

-

The term “barrier” doesn’t necessarily mean it prohibits or stops trade

measures. The United Nations Conference on Trade and Development

-

national trade in goods, changing quantities traded, or prices or both.

DONALD MACKAY Director, XA International Trade Advisors

measure is not justi -

�ed

Lacks transparency

The measure is not proportional to the

risk it tries to mitigate

Is arbitrary, discriminatory,

unjusti�able

Is not based on scien-ti�c evidence

or internationally agreed standards

If less trade distorting measures are available but then the measure with the greatest negative impact is

used, this becomes


5© XA International Trade Advisors - 3

movement of goods throughout the world. However, many such

importer or exporter, it’s essential to understand what you’re up

against and consider the resources necessary to overcome the bar-

riers applied to your products. As a manufacturer its important

to your advantage. Equally of course, you need to understand the

into those new markets.

In last year’s edition we made some predictions for 2015. Let’s see how reality measured up against the predictions.

The 2015 crystal ball. How did we do?

potentially impact the movement of your goods.

1. Protection will continue to rise, but the rate of increase will likely taper

Protection indeed continued to rise with duty increase initiations having grown by 70% in 2015 compared to 2014.

We believe these are increasing and in some cases impact

generally a challenge to track. We are still of the view that these will continue to increase. South African exporters are also

There were 2 cases against ITAC. ITAC won 1 case while the complainant withdrew 1.

codes have duties than before. Complexity has de�nitely increased.

This has not come to pass, but our view remains that this will happen.

Aside from the duty increase on wheat, not much happened in the agricultural sector, however my view is that we called this early, not that we are wrong. See our 2016 predictions for more on this.

2. We will see more

imposed, especially in industries that have their duties bound at zero

3. We will see more litigation against ITAC.

become larger and more complex

5. Pressure will be brought to bear to consider temporary rebates, which are currently a very small part of our trade

6. We are going to see more protective actions in the agricultural sectors

?

?

x

The bound rate position

Lines that attract duty (besides trade agreement countries)

TOTAL

7 483

Below bound rate5 077 (68%)

At bound rate1 719 (23%)

Speci�c duties287 (4%)

Unbound396 (5%)

Anomalies - Above BR4 (0%)

(categories are not mutually

exclusive)

5 473

1 723

Lines that can be increased

Lines thatcan NOT be increased

Speci�c duties are excluded here as they cannot be easily assessed against the bound rate

EFTA1 735

EU1 117

SADC19

GENERAL3 357

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The bound rate position

Lines that attract duty (besides trade agreement countries)

TOTAL

7 483

Below bound rate5 077 (68%)

At bound rate1 719 (23%)

Speci�c duties287 (4%)

Unbound396 (5%)

Anomalies - Above BR4 (0%)

(categories are not mutually

exclusive)

5 473

1 723

Lines that can be increased

Lines thatcan NOT be increased

Speci�c duties are excluded here as they cannot be easily assessed against the bound rate

EFTA1 735

EU1 117

GENERAL3 357

be increased

Escalating protectionism | 2nd Edition 2016

More safeguard actions 2016 more than anything appears to be set on more aggressive actions.

comparable. The sheer scale of a safeguard action dwarfs almost any other duty related action and at the time of

going to print we have already seen 2 safeguard actions initiated (one being a very special one that only impacts

the EU). I have no reason to doubt we will see more safeguards before Tradespot 2017. More safeguards may also

result in more litigation and possibly even WTO disputes being lodged against South Africa.

More agricultural actions - ers, particularly sanitary and phytosanitary actions (these are explained below). We have already seen the lemon

farmers voluntarily withhold lemon exports to the EU rather than face an outright ban in the EU. I believe we will

see South Africa invoke more stringent requirements on all sorts agricultural products. Given the poultry indus-

try’s relentless pursuit of protection, particularly over the last 5 years, it would not surprise me to see more actions

to increase protection (both duty and non-duty related) in the next year.

Still more tari� increases - There is no reason to think we will see any signi�cant reduction in

duty increases. There is particularly scope in the downstream steel sector (and even in primary portions of the

sector like stainless steel). The strain on the economy and consequently the strain on some manufacturing sec-

tors mean protection will continue to increase. Nonetheless, 2016 is unlikely to surpass the number of initiations

recorded in 2015 considering that a signi�cant number of duty increases were at the behest of the steel industry,

which of course appears to be reeling from imports. It is a challenge accurately predicting when protection will

Still more litigation - The actions being brought are more and more aggressive, resulting in stronger

responses. ITAC �nds itself between a rock and a hard place with many of the matters it needs to consider and the

stakes are really high in these matters. Litigation from both applicants and defendants will become more com-

monplace as both sides stand to lose more.

A re-look at countervailing cases - I am not sure if this will happen in the next year, but

South Africa is going to have to revise its position on refusing to bring countervailing actions against China. Cou-

pled with the 2006 Record of Understanding signed with China, it makes taking meaningful action against China

is still heavily subsidizing certain sectors resulting in ever increasing global overcapacity in a number of sectors,

driving prices ever lower. This capacity would never be installed without intervention by the Chinese government,

driving a huge increase in the number of countervailing and anti-dumping actions against China. South Africa is

conspicuously absent from these actions. I believe pressure will the brought to bear to put these actions back on

the table in order to compensate for the state intervention in a number of large primary industries.

XA’s view on the next 12 months


We are not likely to see a change in the strong trend towards more protection until Customs duties play less of a role in South Africa’s industrial policy and that is still some way o�

Reviewing the 2015 tari� protection trends

The South African perspective

A profound legacy of the 2008 global �nancial

crises is that, South Africa’s economy remains

weak and continues to battle with miniature

growth. GDP growth for 2015 was 1.3% while the

2016 GDP growth is forecasted at 0.9%, signaling

further economic contraction. Considering that

the economy grew by 1.5% in 2014, it is apparent

that little headway is being made in addressing

the economic goliaths of accelerating unemploy-

ment and poverty. The private sector continued

to shed jobs, with unemployment now around

24.5% in the last quarter of 2015. This is signi�-

cant. South Africa’s closer trade ties to advanced

economies, particularly the EU means that the

insigni�cant growth levels being experienced in

these nations continue to have a negative impact

on demand for South Africa’s export products.

Returning to pre-crisis growth rates, which aver-

aged 5% per annum is therefore an immense task

for all economic stakeholders.

The weakening of the Rand continued relentless-

ly. While the weak Rand helps our manufactured

exports to become more competitive, the down-

side is that South Africa imports a lot of products

among many others. These have become more

expensive to import. The prevailing drought

conditions in the country means some imported

agricultural products such as maize are going

to become critical in meeting shortfalls. A weak

Rand will contribute to making these imported

agricultural products expensive and will possibly

contribute to higher food in�ation in the coming

months. The lower commodity prices globally ex-

posed not only South Africa’s commodity export-

ers but also the economy as a whole because a

sizeable chunk of our GDP is commodity based.

While attempts to change South Africa’s export

basket have been ongoing since the historic tran-

sition to democracy, the export basket remains

largely unchanged though progress is being

made albeit at a slow pace. SA exports continue

to be dominated by commodities, except in Afri-

can markets where manufactured goods domi-

nate the export basket. The African continent has

become more important in growing our manu-

factured exports. In 2014, R300 billion worth of

exports were destined for Africa. These grew by

34 billion from the year 2013. Further signi�cant

growth can be expected in the coming years.

Customs duties continue to play a pivotal role in

South Africa’s industrial policy. In his 2015 Budget

speech, the Minister of Economic Development

without improved investment and productivity,

we will not become competitive.” Indications are

that, South Africa’s competitiveness improved

slightly as measured by the Global Competitive-

ness Report published under the auspices of

the World Economic Forum. Ranked out of 144

countries, South Africa improved from 56th posi-

tion in 2014 to 49th position in 2015. Out of its 4

BRICS counterparts, South Africa sits in 3rd po-

sition, while Brazil is in last position. In his 2015

Budget speech the former Minister of Finance

Nhlanhla Nene correctly pointed out that “…our

primary challenge is to deal with the structural

and competitiveness challenges that hold back

production and investment in our economy.” In-

dustry competitiveness is essential in ensuring

TAAPANO PARADZAConsultant, XA International Trade Advisors

Reviewing the 2015 tari� protection trends



“Our primary challenge is to deal with the structural and competi -tiveness challenges that hold back production and investment in our economy”

Former Minister of Finance Nhlanhla Nene

that South African manufactured products

are competitive in the global markets. Mov-

ing forward, sustained growth in the long run

will depend on a concoction of policies which

among others include boosting the level of

productivity in the economy particularly on

the manufacturing front. In order to achieve

higher levels of productivity, investments to

enhance productivity are required. Higher

growth is possible with a stronger competitive

export performance.

Against this backdrop, a number of Customs

duty increase investigations were initiated

by ITAC. The prominent investigations being

the various duty increases on steel products

requested by ArcelorMittal and Hulamin’s

request for duty increases on rolled and ex-

truded aluminium products. These two duty

increase applications appear to have far

reaching cost implications for downstream

manufacturers. While it is critical to ensure

a competitive steel and aluminium industry

that feeds downstream manufacturers with

competitively priced input products, the im-

position of duties upstream potentially makes

�nal products of downstream manufactur-

ers uncompetitive. ITAC continues to face the

challenge of balancing the needs of upstream

manufacturers and downstream manufactur -

ers. The further upstream a duty increase sits,

the less predictable its impact. With products

like steel, the economic impact of a duty in-

crease is almost impossible to assess.

It is apparent that demands for protection by

domestic manufacturers continued as pre -

dicted in the 2015 Tradespot publication. The

number of duty increase applications in 2015

signi�cantly surpassed the 2014 �gure. There

were however no new trade remedy actions

(anti-dumping, countervailing and safeguard

applications) in 2015. It does not appear as

though industries did not attempt to bring

these. Rather, applicants are facing much

greater challenges in getting these cases ini-

tiated. We believe that there are a number of

anti-dumping, countervailing and safeguard

applications that have been received by ITAC.

However, they are yet to be initiated possibly

because internal processes are being followed

or the applications are not properly docu-

mented. The prevailing domestic and global

economic environment means protectionist

pressures are bound to be resilient.

49th South Africa improved its ranking in the Global Competitiveness Report from 56th to 49th position in 2015


Global economic growth remains modest, un-

even and protracted. Resisting protectionist sen -

timents becomes paramount. Following the 2008

global economic crises and the persistent global

economic weakness, G20 countries committed

themselves to resist implementing measures that

restrict trade, implementing measures that sup -

port their domestic industries while discriminat -

ing against foreign competitors and roll back ex-

isting protective measures. While this is good for

the global economy, this “standstill agreement”

has largely not been honoured, although a limit-

ed number of existing measures have been rolled

back. The problem is further exacerbated be -

cause certain countries are also increasing subsi -

dies, driving other members to impose measures

South Africa does not respond to these subsidies.

WTO statistics show that 1 441 trade-restrictive

measures were introduced by the G20 econo-

mies since 2008. These include among others

anti-dumping, countervailing, safeguard mea-

1 441 only 354 measures have been removed

as of mid-October 2015. Despite the commit-

The United States stood out as the largest user of the countervailing instrument

G20 Initiated anti-dumping investigations (Bi-annually)

G20 Initiated anti-dumping investigations (Annually)

160

140

120

100

80

60

40

20

0

250

200

150

100

50

0Jul-Dec

20132009 2010 2011 2012 2013 2014 2015

(up to june)Jul-Dec

2014Jan-Jun

2014Jan-Jun

2015

The global perspective

ment to roll back protectionist measures more

than 75% of those implemented since 2008

remain in place. The rate at which protective

measures are being removed is slower than

the rate at which they are being implemented,

so markets are closing in spite of the lip ser-

vice paid to not resorting to protectionism.

Between May 2015 and October 2015, G20 mem-

bers put in place 83 new measures that potential-

ly restrict trade. This is down from 93 new mea -

sures imposed during the same period in 2014.

On average 17 new measures are imposed every

month. The continuing decrease in the number

of trade remedy investigations (anti-dumping,

safeguard, countervailing investigations) by

G20 economies is the main reason for the sta-

bility of the overall monthly �gure, on average.

Looking at the most recent data (January –

June 2015), a total of 78 new anti-dumping in-

vestigations were initiated by G20 countries.

When compared to the previous six months

(July – December 2014) which recorded 115

new initiations, a signi�cant decline is noted.

Argentina, Australia, Brazil, the Republic of Korea

and the United States are partly responsible for

the decrease in initiated investigations. However,

G20 anti-dumping investigations by industry

G20 anti-dumping initiations by country

Argentina

Australia

Brazil

CanadaChina EU

India

IndonesiaJapan

Korea Rep.

Mexico

Russia F

ed.

South Africa

Turke

yUsa

40

35

30

25

20

15

10

5

0

Jul-Dec 2013 Jul-Dec 2014 Jan-Jun 2015Jan-Jun 2014

Metal

Textile

Chemical

Plastic

Machinery

Metal Chemical

Jul-Dec2014

Metal

Textile

Chemical

Plastic

Machinery

Glass\Ceramic

Metal

Others

Plastic

Paper

Chemical

Jul-Dec2014

Jan-Jun2015

On average the G20 countries

initiate 17 new trade remedy

cases every month

Jan-Jun2015

Paper

Ceramic

Jul-Dec2014

Machinery


the number of investigations initiated by the EU,

India, Mexico and Turkey signi�cantly increased.

The top three product groups targeted in anti-

dumping investigations were, in their order,

metal products, chemical products and plas -

tic products. Metal products have become a

signi�cant target for protection through the

anti-dumping instrument because of the global

overcapacity in the steel industry and declining

prices. South Africa’s steel industry has not been

spared in this regard. The domestic steel indus -

try is reeling from increasing imports of various

steel products particularly from China. Several

anti-dumping investigations targeting Chinese

.6102 ni detcepxe era ralucitrap ni stropmi leets

It is likely that metal products will remain a sig -

ni�cant target for anti-dumping until the global

steel industry recovers and some level of stabil -

ity is reached. China continues to be the largest

target of investigations on metal products. 14

investigations targeting China were initiated dur-

ing July 2014 – June 2015. 7 investigations target-

ed India while 6 targeted the Republic of Korea.

G20 countries that accounted for the largest ini-

tiated investigations in the metal sector during

the last 12 months ending June 2015 are Aus-

tralia (12 investigations), Canada, the EU and

Mexico, which initiated 11 investigations each.

In the chemicals sector China was the main

target, with 25 initiations with the rest having

been targeted at various other countries. In the

plastics sector Brazil was the most aggressive

accounting for over half of the initiated investi-

gations (38 of the 61). This is not surprising con-

sidering that Brazil is one of the world’s largest

users of the anti-dumping instrument.

Countervailing investigations initiated Safeguard investigations initiated

G20 countervailing investigations by industry

20

15

10

5

0

12

10

8

6

4

2

0Jul-Dec

2013Jul-Dec

2014Jan-Jun

2014Jan-Jun

2015

Metal

Jan-Jun2015

Chemical

Metal

Other

Plastic

Chemical

Metal

Jul-Dec2014Plastic

Machinery

Jan-Jun2015

Paper

Metal

Ceramic

Jul-Dec2014

Machinery

Jan-Jun2015

Chemical

Metal

Other

Plastic

Chemical

Metal

Jul-Dec2014Plastic

Machinery

78 new anti-dumping investigations were initiated by G20 countries between January to June 2015

Jul-Dec2013

Jul-Dec2014

Jan-Jun2014

Jan-Jun2015

2

13

G20 Safeguard investigations by industry

Jan-Jun2015

Paper

Metal

Ceramic

Jul-Dec2014

Machinery

Jan-Jun2015

Chemical

Metal

Other

Plastic

Chemical

Metal

Jul-Dec2014Plastic

Machinery

Jan-Jun2015

Paper

Metal

Ceramic

Jul-Dec2014

Machinery

Chemical

Plastic

Chemical

Plastic

Machinery

Countervailing actions initiated by G20 members de-

clined moderately as shown on the previous page. 14

investigations were initiated during the �rst half of 2014.

Out of a total of 69 initiated investigations, the United

States stood out as the largest user of the countervail -

ing instrument, accounting for 59% of the initiations (41).

Canada accounted for 20% while the EU accounted for

9%. The rest were spread out over six other countries.

Like in anti-dumping investigations, metal products were

the most targeted followed by chemicals and plastic

products. The United States chemicals industry appears

to have found the countervailing instrument attractive as

it accounted for 7 of the 9 initiations in the chemicals sec-

tor. It appears the bulk of the countervailing actions were

also conducted parallel to anti-dumping investigations.

This is not prohibited in terms of WTO regulations.

A total of 15 safeguard investigations were initiated as

shown in the initiated safeguards chart on the previous

page. All the investigations were initiated by developing

countries, with India accounting for 7 while Indonesia and

Turkey each accounted for 4 investigations. During the 12

months of 2014 only developing countries (India, Indone-

sia and Morocco) initiated safeguard investigations (24).

It appears developed countries are not utilizing this in-

strument possibly because of the advanced state of their

industries.

Safeguard investigations have tended to focus on a few

half of 2014, as shown above.

Jan-Jun2015

Metal

Other

Metal

Jul-Dec2014

We are not likely to see a change in the strong trend towards more protection until Customs duties play less of a role in South Africa’s industrial policy and that is still some way o�

A glimpse of 2015 South African tari� protection trends

Initiated Customs duty increase applications in -

creased by 70% in 2015. 10 investigations were initiated

in 2014 while 17 investigations were initiated in 2015.

-

in 2014 was 18 whereas in 2015, products classi�ed

-

tection will continue to rise but at some point it will

decline gradually. The point at which it starts to de -

cline remains to be seen but as long as the domes-

tic and global economy is not on a solid footing it is

-

cant portion of duty increase applications emanated

from the steel industry. In fact towards the end of

2015, the media was awash with reports on the chal-

lenges in the steel industry.

Lets brie�y touch on what transpired here.

The steel industry is critical in South Africa. While

-

cuss whether South Africa should have a steel in-

dustry or not, but rather to have an overview of

why this industry requested for protection so late

in the game and what lessons can be drawn. The

primary reasons for requesting protection by the

steel industry were slow economic growth locally

and globally, exposure to the construction indus-

try (this industry consumes about 60% of steel

produces), high costs, energy constraints, global

overcapacity and the �ood of cheap imports. The

South African steel industry contends it has no

protection at all while the developed economies

with steel manufacturing industries already have

some form of protection for their local producers.

The global economic slow down and the slow down

in the Chinese economy in particular has led to ex-

cess stock and over capacity in the global steel in -

dustry. Global producers have to �nd markets for

excess stock. With no duties, South Africa became

an attractive market particularly for Chinese pro -

ducers. In our case the protection seems to be com-

Over the years, we have seen this in a number of

industries, where protection was sought a little bit

too late. In some cases, this has led to a complete

closure of the industry. The graphite electrodes

manufacturing industry is a recent example of this.

The steel industry itself has had a number of com -

panies that have headed to the industrial graveyard.

The question is could this have been prevented? My


Initiated Customs duty applications increased by 70% in 2015

The steel industry woes

Number of duty increase applications initiated

Number of duty increase applications approved

20

15

10

5

0

12

10

8

6

4

2

0

2008 20122010 20142009 20132011 2015

2008 20122010 20142009 20132011 2015


educated guess is probably yes. It is crucial to monitor im-

port volumes and prices of competing products regularly

and look into appropriate protective actions in a timely

manner. Where justi�able and necessary, protection may be

provided sooner rather than later. The lesson to be drawn

from the steel industry predicament is that injury to an in-

dustry may accelerate rapidly and cause a lot of damage

within a short space of time. The challenge of course is that

subsidies (countervailing) and has tended to favour anti-

dumping cases where China is concerned. This leaves the

industry with few options to tackle the challenges it faces.

The steel industry brought 10 duty increase applications

in duties being pushed upwards at the time of �nalizing this

publication while the remainder were yet to be �nalised

moved to the bound rate. It is most likely that the remaining

be increased to, in terms of South Africa’s WTO obligations).

We believe a number of anti-dumping, countervailing and

safeguard applications have also been lodged with ITAC and

some of these will likely be initiated during 2016. (1 safe-

guard has been initiated at the time of printing this report).

China is the likely target of these actions. However, it is not

implausible that other countries might be targeted. While

the steel industry is indeed under strain, it is important to

balance the need for protection upstream and competi-

tiveness of downstream producers. This is especially true

considering that the steel industry has a huge reach down-

stream into all sorts of industries and when duty increases

happen, everything downstream can rapidly become un-

competitive.

ITAC did no initiate any new anti-dumping investigations in 2015. This is surprising considering that at least 3 anti-dumping duties have been initiated each year in the last 7 years. We believe certain industries lodged anti-dumping applications with ITAC and these may be initiated in the near future.

Nevertheless, existing anti-dump-ing protection in South Africa re-mains considerable and spread out across many products and in-dustries as shown on overleaf be-low.

ANTI-DUMPING ACTIONS

The top 3 largest product groups protected by anti-dumping duties are:, glass products, base metals and articles of base metals and agri-cultural animal products.

Investigations resulting in anti-dumping duties

7

6

5

4

3

2

1

020122010 201420092008 20132011 2015

Number of anti-dumping investigations initated

12

10

8

6

4

2

02008 20122010 20142009 20132011 2015

The bulk of the protective measures were imposed on steel products. These protec-tive actions were in the form of normal Customs duty increases. There were no anti-dumping, countervailing or safeguard duties imposed in 2015. In fact none of the three instruments were initiated by ITAC in 2015. It remains to be seen whether the protec-tion granted to the steel industry will have the much-desired impact of curbing import volumes.

2015 INDUSTRY PROTECTION MAP

Agricultural animal products

Agricultural plant products

Chemicals products

Plastics and plastics products

Textiles and textile products

Glass products

Base metals and articles of base metal products

and vessel products

Electrical Machinery and Equipment

Plaster and plasterrelated products

18% (14)

9% (7)

6% (5)

6% (5)

4% (3)25% (20)

24% (19)

1% (1)

4% (3)

3% (2)

Spreadof existing

anti-dumping protection

Product category Percentage Product category Percentage

Increasing protection Reducing protection

Duty increases

Anti-dumping sunset reviews

Articles of iron or steelPlastics and articles thereofIron and steel

Agricultural vegetable products

151

37

2

27%2%

67%

4%

Duty reductions

Anti-dumping

Rebates

Textile products12

10%20%

Man made staple �bersGlass and glassware

11

10%10%

Knitted or crocheted fabricsIron or steel productscomponents

1 10%

10%

Electricity supply or production metersElectrical machinery and equipment

2

1

20%

10%

1

Glass\Ceramic Paper

Annual Report | for the year ended 31 March 2015

18

NEW LEGISLATION Amended Tari� Investigation Regulations (ATIR)

If a company wishes to appoint an expert to assist them in either bringing a duty change under these regula-tions, or responding to such a change, the consultant or advisor now has to be appointed by:

1. The CEO of the company, or someone with sim -ilar executive authority if there is no CEO.

2. Someone who is an authorised representative of the company. If this option is used (which will be the most common option, especially when dealing with large groups), then the person sign -ing the appointment document must show that they are actually authorised to use the services of the consultant or advisor.

This is an interesting development and one that will

for large companies. The very process of proving that the person making the appointment is actually au-thorised to do so can cost the responding company a lot of valuable time. There is no corresponding

application to prove that they are authorised to do so, in cases where an external advisor is not used The old regulations required the Commission to only communicate through a duly appointed advisor, once that advisor was on record. The new regulations now allows the Commission to communicate directly with the interested party without any obligation to notify the advisor of such communication. In large groups, this direct communication runs the risk of simply going missing and deadlines therefore possibly being missed. The applicant can now make electronic applications to the Commission, provided a signed hard copy of

the application is sent to the Commission within 14 days of submitting the electronic application. No in-dication is given about whether a similar provision

-ever, ITAC does accept comments electronically

conditional on a commitment by bene�ciaries on how they will perform against government’s set policy objectives…” . This essentially means ITAC

to reciprocal commitments. Reciprocal commit -ments are typically on employment and investment. It remains to be seen exactly how this is implement-ed. Will ITAC revoke protection if a company fails to abide by its reciprocal commitments? This has not happened yet but if does happen it will show how ITAC is serious about enforcing commitments made. If an applicant withdraws their application, the Com -mission can now choose to accept the withdrawal or reject the withdrawal and continue with the in-vestigation irrespective of the request to withdraw. The ATIRs suggest that ITAC may be busy revamping all of its legistlation particularly, the International Trade Administration Act, as well as the Anti-dumping Regu-

have signi�cant changes. Nevertheless, it is important to watch this space as it has fundamental implications on how ITAC conducts its investigations.

-crease, duty removal and rebate applications and investigations. The ATIR

the ATIR. Below is a summary of the big changes �owing out of the updated regulations.

APPOINTING AN ADVISOR OR CONSULTANT

RECIPROCAL COMMITMENTS

WITHDRAWAL OF APPLICATIONS

ELECTRONIC APPLICATIONS


A brief outline of the legal actions in 2015TRADE DISPUTES

19

As the number of trade protection investigations increase, so are the complexities and challenges that come with each investigation. With so much

ing hundreds of millions of Rands at stake for both importers and domestic manufacturers alike, the number of ITAC’s decisions brought un-der review will likely increase in future.

Since 2008 ITAC have been involved in a num-ber of judicial reviews, which we provided some detail on in the last edition. The statistics are provided below. However we will provide brief details on 2015 court cases only.

LUCKY CEMENT v ITAC THE ISSUE - Lucky Cement, a Pakistani manu-

facturer and exporter of Portland Cement ap-

proached the High Court to review, declare

invalid and set aside ITAC’s �nding of dump-

ing against Lucky Cement and consequent

imposition of preliminary anti-dumping du-

ties of 14.29% on Lucky Cement’s exports into

the SACU market. ITAC calculated the 14.29%

justments claimed by Lucky Cement on its do-

domestic selling price was higher than its

.gnipmud fo gnidnif eht ecneh ,ecirp tropxe

Lucky argued that the adjustments were nec-

essary and adequately supported as required

by the anti-dumping regulations.

THE RESULT - The matter was withdrawn.

While the papers challenging ITAC’s prelimi-

nary determination were �led with the High

Court, the case did not go to trial as a few

months later ITAC made a �nal determina-

tion. What this means is that Lucky could no

longer challenge the preliminary determina-

tion as a �nal determination was in place. The

option would have been to amend its Court

papers and challenge the �nal determination.

However, Lucky opted not to follow this route.

THE ISSUE - Ezamvelo sought an interdict

preventing ITAC from making a �nal deter-

mination in respect of the imposition of

�nal anti-dumping duties on the imports

of Portland Cement from Pakistan based

on the essential facts letter it issued on

14 September 2015. An essential facts letter

sets out all the facts ITAC will consider in mak-

ing a �nal determination. Furthermore Ezam-

velo sought an order directing and compelling

ITAC to comply with its duties as provided for

in Regulation 37 of the Anti-Dumping Regula-

tions. The Regulations obligate ITAC to issue

an essential facts letter. It was argued that

the essential facts letter issued by ITAC was

de�cient and therefore could not be used as

a proper basis to make a �nal determination.

THE VERDICT - The application was dis-

missed. The details of the judgement have

not however been released yet been released

and so we can only speculate on the reasons

for the dismissal. This will however be made

available when the judge issues his reasons.

Number of anti-dumping disputes

2008

2009

1 1 1 1 1

2 2

2010

2011

2012

2013

2014

2015

EZAMVELO v ITAC

20

As trade agreements are signed and duties fall, and the world economy tightens, alternative barriers to import competition become more prevalent.

THE RISE OF NON-TARIFF BARRIERS

in making import competition less competitive, they

than duties. They make trade particularly unpredict -

able and this of course serves as an enormous deter-

rent to trade with a given country. Impose enough of

these invisible barriers and you will soon �nd a back -

lash, which can rapidly escalate, into markets closing

-

signed and implemented with protectionist motives.

However, they typically result from government laws,

regulations, policies, conditions, restrictions, speci�c

requirements, or prohibitions that protect the domes -

tic industries from foreign competition.

-

tecting domestic producers and market access. This

is a common argument raised by developing country

exporters such as South Africa against the developed

-

riers have become a disguised way of protecting local

producers and restricting market access, which is pur -

-

riers or not, they make moving products around the

world expensive and time consuming. Of course not all

of these barriers are unreasonable. We all want to feel

safe in eating our food or taking our medicine. It’s when

this process of securing the consumer morphs into pro-

tectionism that we have an unfair barrier to trade.

into the following broad categories:

Administrative practices and

Customs procedures

Health, safety and technical barriers to

trade

Government participation in

trade and restrictive government policies

Quantitative restrictions and similar speci�c

limitationsimports


is a complex and challenging exercise as such infor-

mation is typically not held in a central place. In 2008,

SADC, COMESA and EAC set up a mechanism for report-

barriers Reporting, Monitoring and Eliminating Mecha-

nism). This is an online and SMS platform for traders

to lodge complaints regarding NTBs. The complaints

are then attended to by the relevant authorities in

each country. The statistics provided by this database

are only those that have actually been lodged, so its

likely that the actual position is more severe than re -

ported. We have opted to not include these statistics

in this report because the reliability of this data at the

moment is questionable. It also only covers one small

part of South Africa’s trade and thus doesn’t give a true

re�ection of the actual position. There is unfortunately

outside of this database unless matters escalate to the

WTO, which is seldom. South Africa does not maintain a

SANITARY and PHYTOSANI -TARY (SPS) BARRIERS Sanitary (applies to animals and humans) and phyto -

sanitary (applies to plants) measures are necessary to

ensure that the food you eat is safe and that the ani-

mals that are being imported alive or slaughtered for

example are not introducing diseases into South Africa,

or in any other country for that matter, that could harm

human, animal or plant life and health. SPS measures

are by nature barriers since they legitimately protect,

animal, human and plant life and health from the dis -

eases and related health concerns introduced by in -

to trade” when scienti�cally unjusti�able, essentially

used as disguised protectionist measures. It is impor -

tant to note that they are allowed to be barriers in the

normal sense of the word just not scienti�cally unjus -

ti�able trade barriers. This makes SPS measures, their

identi�cation, justi�cation and challenging them very

complicated and time consuming. Nevertheless, what

is clear is that, SPS measures can have a great im -

pact on trade �ows.

Recent examples of SPS issues impacting trade

�ows have been the EU blocking South African cit-

rus exports and exports of Dragon energy drink and

been resolved, but the cost of the black spot was

a loss of exports of R8bn. Zimbabwe revoked the

ban on the beverages, but then followed up with

large duties, in violation of the SADC agreement.

Of course the most recent issue was the chicken

from the USA, which has also been resolved (al-

though the domestic industry, may say the line was

crossed into forced).

In the recent few months the media has been awash

with reports that South Africa might lose its prefer-

ential market access to the US market in terms of

the African Growth and Opportunity Act (AGOA).

What is AGOA and how important is it for South Af-

rica? AGOA is a United States Trade Act which came

into force in May 2000. It provides duty-free access

to the USA market for almost all products exported

from more than 40 eligible sub-Saharan African

(SSA) countries, including South Africa. AGOA is

Approximately 5 200 products lines qualify for duty

free access into the US market of which around 800

are agricultural. Some agricultural products are ex -

cluded, for example sugar, groundnuts and certain

alcoholic beverages.

In November 2015 the chicken “wars” between the

domestic producers in South Africa, the import-

ers and exporters and the USA reached a pinnacle

when President Barack Obama announced that the

renewal of South Africa’s AGOA bene�ts depended

on the successful negotiation of SPS related mat -

ters between the South African Government and

the United States Government on matters related

to poultry, pork and beef imports into South Africa

from the United States. There has been a Highly

Pathogenic Avian In�uenza (HPAI) related ban on


R8bn The cost of the

citrus black spot ban was a loss

of South African exports of R8bn

KEEPING TRACK OF NON-TARIFF BARRIRES

products

poultry imports from the USA for a while. The ban

applied to the entire country, despite HPAI being

prevalent in only a few States. Moreover, some SPS

requirements on beef and pork imports from the US

further weighed in on the AGOA debacle. However,

this has since been resolved and South Africa con-

tinues to bene�t from AGOA. Irrespective of who is

right or wrong in all the above, what is clear is that

SPS measures play a crucial role in protecting do -

mestic producers.

How important is AGOA for South Africa?

It is undeniable that much of South Africa’s exports

to the USA bene�t from AGOA. But just how much,

and how is it spread? We did a bit of digging.Lets

look at the infographic below.


5200 Approximately 5200 products

qualify for duty-free access into

the US market, of which around 800

are agricultural

Products 2012 2013 2014 2015 (up to sep) Total (R)

Electronic products 137 760 154 240 - - 292 000 Machinery 51 660 - 21 660 2 269 500 2 342 820 Energy-related products

284 130 925 440 259 920 969 000 2 438 490

Forest products 792 120 530 200 1 104 660 803 250 3 230 230Footwear 2 720 760 4 280 160 3 736 350 7 089 000 17 826 270Miscellaneous manu-factures

9 755 130 9 900 280 24 010 110 15 440 250 59 105 770

Textiles and apparel 45 228 330 57 830 360 61 601 040 67 026 750 231 686 480 Chemicals and re-lated products

545 271 300 600 495 517 566 487 076 546 876 436

Agricultural products 1 404 962 580 1 778 734 1 902 647 1 961 906 1 410 605 867 Minerals and metals 1 904 919 450 1 955 367 960 2 289 353 700 1 259 904 000 7 409 545 110 Transportation equip -ment

16 606 537 500 20 448 493 14 155 470 057 293 525 01 27 166 534 213

Total exports 20 520 660 720 2 051 816 362 2 396 663 123 11 881 343 482 36 850 484 687


Non-tari� barriers have a disproportionate e�ect on small companies trading from less de-veloped economies. It ultimately makes market access di�cult to assess with the result that trade withers. The large markets are what developed countries most need access to

A WORD FROM OUR FOLKS AT TUTWA CONSULTING…

Lines of Defence: The State of Protec-

tionist Measures in the Global Trade

System

Over the past 20 years the global market

economy has become �ercely competitive

as more suppliers, notably new entrants

from developing states, compete for the

same global consumer base. As a result,

States continually resort to protectionist

tection to domestic producers, although not

in the usual manner. Procedural obstacles,

plicates trade especially for exporters from

smaller developing States who needs to

comply with a wide range of requirements

including technical regulations, product

standards and customs procedures.

Charting the contours of protectionism

since the global �nancial crisis

As noted in the 18th Global Trade Alert (GTA)

Report, global trade has been contracting in

terms of value and volume since the end of

2014. While this is partially due to declining

commodity prices, a stronger US Dollar, and

the reorganization of supply chains involv-

ing China owing to the rising China cost, it is

also due to a plethora of new trade distort-

ing measures implemented worldwide. The

authors found that over the ten months prior

to the report, 539 trade distorting measures

were imposed worldwide, of which 443

were from G20 countries. Trade distortions

are currently two-and-a-half times greater

than at the same point in 2009 with 3581

measures that harm foreign commercial in-

terests imposed since the beginning of the

global �nancial crisis. The majority of these

trade-distorting measures remain in force.

In a report by the WTO, it was found that

the overall stockpile of trade restrictive

measures continues to grow. While new

trade-restrictive measures are plateauing,

of the 2,557 trade-restrictive measures,

including trade remedies introduced by

WTO Members since 2008, only 642 had

been removed by mid-October 2015. Al-

though it has to be noted that a total of

222 measures aimed at facilitating trade

were taken over under the review period.

In the last review (3 December 2015) 126

new speci�c trade concerns were raised.

These correspond to concerns about Tech-

nical Barriers to Trade (TBT) measures main-

tained by one or more WTO Members on

one or more products. The WTO’s triennial

review of the operation and implementa-

tion of the Agreement on Technical Barriers

to Trade focuses on seven thematic issues

with a view to recommend adjustments of

Members’ rights and obligations, under the

TBT Agreement, where necessary to ensure

mutual economic advantage and balance of

ness of the review and committee is ques-

tionable, given the steady increase in new

speci�c trade concerns and noti�cations,

the importance thereof cannot be doubted.

HEINRICH KROGMANConsultant at Tutwa Consulting

The WTO SPS Committee has received a record

number of noti�cations from developing countries

concerning SPS concerns. Although noti�cation

does not necessarily translate into imposed protec-

tionist measures a correlation does seem to exist.

save their export domestic producers as they of-

fer valuable jobs and a way to claw back foreign

earnings, supposedly improving the national trade

balance. The Global Trade Atlas report mentions

“Governments can react to falling exports in more

or less discriminatory ways.” Governments can

tional trade balance) impose discriminating import

measures seeking to match a fall in exports with

a fall in purchases from abroad, similar to import

substitution initiatives observed in South Africa.

The report also points out that 28 product lines,

ranging from commodities to value added goods,

account for close to 80% of the fall in global trade

over the report period and each one of the 28

product lines. Of the 28 product lines, 20 are

manufactured goods that account for 45.8% of

the fall in global trade over the report period.

While commodities and the associated drop in com-

modity prices can explain part of the contraction in

global trade, there’s an element of trade policy tar-

geting that must also bear responsibility. According

to the report the following measures, only including

those implemented by G20 member states, contrib-

uted to the decline:

opmI •

port quotas, and import bans

-noc etats nierehw ,serusaem tnemerucorp cilbuP •

�rms

• Export taxes and restrictions

• Export incentives, including subsidised trade �nance

• Bailouts and non-export related �scal incentives

(including tax breaks and subsidies).



New speci�c trade concerns per Triennial Review Period

Measures reported by GTA up to 31 Octoberin year of implementation

1streview1997

2009

Total Discriminatory Liberalising

2010 2011 2012 2013 2014 2015

2ndreview2000

5threview2009

3rdreview2003

6threview2012

4threview2006

7threview2015

800

700

600

500

400

300

200

100

0

2131

50 50

105 107126

222measures aimed

at facilitating trade have been

introduced by G20 countries

Bailouts/subsidised24%

TradeDefense

17%

11%Localization

Requirements

9%

Dubious trade�nance initiatives

6%

Others33%

Trade Distorting

Policy Instruments

in 2015

While there is some correlation between the imple-

mented measures and those products that account

for much of the recent global trade fall, the evidence

is not proven with all variables controlled and ac-

counted for. However, to claim that the recent con-

traction of world trade is entirely benign and unrelat-

ed to “beggar-thy-neighbour” (an economic policy

that seeks to promote a country’s economy at the

expense of another country) activity is unfounded.

The GTA report also notes that more than

60% of all trade distortions in 2015 can be at-

tributed to the following policy instruments:

The views from the WTO Director General seem a

bit more optimistic as it’s rep orted that new trade-

restrictive measures are levelling-out along with an

increase in the number of measures aimed at facili-

tating trade. However, it was acknowledged that the

total number of restrictive measures introduced by

WTO Members continues to grow, partially due to

continued implementation of trade-restrictive mea-

sures but mostly due to the relatively slow removal

of these measures. So once trade restrictive mea-

sures are put in place, they are not easily removed.

Unfortunately, adding in the view that the multilat-

eral negotiation system is stagnant and quite fragile

at the moment, it seems that trade protection is a

game of whack-a-mole. As soon as one set of protec-

tionist measures are resolved another two pop up to

take its place. That said it’s not necessarily the mo-

tivation behind the measures that are in themselves

sinister but rather the opportunity for abuse they

Where does SA �t into the Picture?

Overall, the GTA report highlights an interesting, if

predictable, pattern of South African protectionism.

The most protectionist measures were imposed on

China, the US, Europe, Brazil, India, and Southeast

Asian countries in the same category. In other words,

our major trading partners were the principal tar-

gets. Furthermore, South Africa has been escalating

the incidence of protectionist measures, as this re-

port clearly shows. That said, South Africa still rates

substantially better than the G20 averages recorded

in the GTA report, both for new liberalizing measures

imposed, and for protectionist measures imposed.

No doubt this �nding will fuel criticism that South

Africa tries to be ‘holier than thou’ when it comes

to its international trading partners, but in our view

this is a good thing, because relatively small, open,

economies need to trade to survive, and speci�cally

to import in order to export. This is the essence of a

gateway economy, which South Africa undoubtedly

is. Indeed, the fact that import restrictions imposed

substantially outweigh liberalising measures imple -

mented is, in our view, a cause for concern.

Foreign trade distorting measures’ impact on South

Africa’s interests follow a not quite symmetrical pat -

tern. India imposed the largest number of discrimi -

the US, Brazil, Argentina, Europe, Russia, China, and

Southeast Asian nations in the same category. It is un -

likely that this re�ects a simple process of retaliation

for restrictions imposed by South Africa, although

that may be a driver. Rather, it is more likely that these

States, outside of trade defence measures – notably

anti-dumping – are imposing general trade restrictions

against all trading partners. In the Indian case, for exam -

GTA report notes much of them constitute ‘murky pro-

tectionism’, or things such as new product standards, in

trade protectionism.

Overall, in our view South Africa as a gateway econ-

omy has a major interest in advocating for an open

international trading system and resisting imposi -

tion of protectionist measures. Unfortunately, our

major geopolitical allies, notably India, and key trad -

ing partners, are amongst the worst culprits when

it comes to undermining these objectives. It’s likely

that the current rise of protectionist measures in

South Africa is a reaction to the global rise of protec-

tionism (what seems to be the new norm for devel-

oping states), a fear of the new wave of developing

country competitors and an associated survivalist

instinct to take advantage of a loop hole, and ideo-

logical inclinations in the governing tripartite alli -

ance which seems to have turned sharply towards

inward looking trade and industrial policies since

the 2009 national elections. How to deal with the

protectionist trend without imposing further dis-

tortions ourselves should bring a sharp focus to our



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