Jan 20, 2012
Trade trends and forecastsBack
Africa|Africa|China|South Africa|Duty Increase Applications|Food Products|Intermediate Products|Manufacturing|Products|Sunset Review Antidumping Applications|Supply Chain|Ebrahim Patel|Rob Davies
© Reuse this
This is particularly interesting, compared with 2010, when there were no fresh antidumping cases at all. We had, in fact, thought that 2010 would be the year of protection, but we apparently missed the target by a year.
So, why all this activity? We can partly attribute this surge to companies really struggling and requiring protection, but I think a healthy dose of this is also opportunistic. Companies are aware that they finally have a sympathetic ear in the form of Economic Development Minister Ebrahim Patel. The result is that, on average, duties are moving upwards, giving local manufacturers some advantage over their import competition. At the same time, though, we will see prices slowly creep up as the duties have a direct inflationary impact. Some of this is not so visible because the items are hidden as intermediate products somewhere in a supply chain, but other items will impact on people far more directly, such as the protective application on food products.
Let us speculate a bit about 2012. Certainly, it would appear this protection trend is going to continue for a while and we believe this year will once again see significant applications for both antidumping and normal customs duty increases. I also think we will start to see countervailing (antigovernment subsidy) applications appear (the last counter- vailing application was published in 2008) as manufacturers find limited joy with antidumping cases against China.
South Africa signed a memorandum of understanding with China in 2004, the result of which is that China is treated as a free-market economy as soon as a Chinese company responds in an antidumping case. Without getting into all sorts of technical detail, the net result of this is that it is almost impossible to impose a meaningful antidumping duty against China if Chinese companies respond in antidumping cases (and evidence suggests that, increasingly, they are responding).
Globally, the trend is strongly in the direction of countervailing cases against China. In 2010, a total of nine countervailing cases were initiated (as opposed to 28 in 2009). Of these nine cases, six were brought against China, making China the most countervailed country in the world, which is in direct contrast to Trade and Industry Minister Rob Davies’ comment that no one brings countervailing cases against China.
The question is: Will the politicians allow the imposition of a countervailing duty against China or will they intervene and stop this being applied? Many directors of manufacturing companies believe the politicians will intervene and no duties will be imposed. Of course, the comments by Davies fuel this position, so we will have to wait and see.
What will the economic impact be of all this protection? Will jobs be created or will local company margins simply be improved? Will other countries retaliate and start invoking more protective measures against South Africa?
All these are possible outcomes. There is never an action without some sort of repercussion, so let us see if the repercussions are positive or negative. Whatever happens, 2012 promises to be an interesting year from a trade point of view.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
Other Pieter du Plessis & Donald Mackay News
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
The board of UD Trucks Southern Africa (UDTSA) has announced the resignation of MD Jacques Carelse. Long-time UD employee, corporate planning and marketing GM, Rory Schulz, has been appointed as acting MD while the process started to appoint a new MD. The Japanese...
There is a need to start planning another pumped storage scheme in South Africa. Much work has already been done at a site in the Limpopo province and the project was very close to being put out to tender at one stage. In 2008/9 the National Energy Regulator of South...
The Coega Development Corporation (CDC) is preparing to leverage its strategic coastal position to develop the Eastern Cape economy through proposed aquaculture development zones (ADZs), with a proposed R2-billion project aiming to contribute $278-million to the...
Completion of the ongoing construction of the 102 km Zomba–Jali–Phalombe–Chitakale road, in southern Malawi, has been extended from June to December 15 because of persistent rains and difficulties in paying the contractor. The project is being undertaken by Kuwait's...
The Malawi government has awarded South African firm Fischer Consortium the contract to upgrade the Malawi Road Traffic Information System. The Directorate of Road Traffic and Safety Services at Malawi's Ministry of Transport and Public Works says Fischer...
Next ArticleTrade aspects of capital projects