Neasa withdraws High Court application to interdict more custom duties

14th August 2020 By: Marleny Arnoldi - Creamer Media Online Writer

The National Employers’ Association of South Africa (Neasa) has withdrawn its urgent application in the Gauteng High Court to stop the implementation of a 10% import tariff and custom duties on coated flat-rolled products.

Neasa had launched an urgent application in the Gauteng High Court last week to stop government from implementing “yet another” set of duties on coated products.

The matter was set to be heard on August 18.

However, primary steel producer ArcelorMittal South Africa (AMSA) says the association’s withdrawal of the application follows after AMSA and International Trade Administration Commission of South Africa (Itac) filed papers in response to the application.

AMSA says Neasa’s application had no merit and was premature, given the comprehensive due diligence process that still needs to be undertaken by Itac before a final decision around legislation is made.

AMSA says it remains convinced that import duties and safeguards are a critical part of the suite of measures needed to ensure the sustainability of the country’s steel sector in its entirety – upstream and downstream.

“Many countries around the world have protected their steel production capacity through measures more stringent than those implemented by the South African government. 

“The increase in the volume of imports has placed the South African steel industry in a desperate situation, where the industry is fighting for survival and trying to protect jobs.  Should we fail to act as a country, there is a very real threat that the primary steel sector may not survive, with devastating consequences for the entire industry,” AMSA notes.

Neasa in a prior statement issued early in August explained that some downstream companies would be severely prejudiced by this development.

“Should the export tax rate be granted, as well as AMSA’s application for a 120% safeguard duty on certain long products, as well as the extension of safeguard duties of 8% on hot-rolled coil, then hot-rolled coil will carry a total duty of 18%.

“Attempts by AMSA for more protectionist duties amid the current severe backlogs, caused by its inability to supply the market, are absurd,” Neasa CE Gerhard Papenfus previously stated.

In response to AMSA's statement, Papenfus explains AMSA is incorrect in stating that Itac is still in the process of taking a decision on whether or not to support the duties. 

"Itac has taken a decision, but, at the time of the court papers being filled, they have formulated their recommendation without disclosing whether it is for or against the duties. In Itac’s answering affidavit, they clearly stated that both Trade, Industry and Competition Minister Ebrahim Patel and Finance Minister Tito Mboweni have the final decision making powers and that both Ministers should ‘apply their mind’ in taking the decision."

Papenfus continues that Neasa’s application was in two parts. Firstly to prevent the recommendation from being forwarded to the Minister and the second part was to take the duties on review if they were implemented. It is therefore correct that the first part was premature. However, Neasa reserves its rights in terms of taking the duties on review if they are indeed implemented.

The duties on nine new tariff codes are applicable on coated products supplied by AMSA and the two rerollers, Safal Steel and Duferco Group. In light of receiving notification from all of the above, Neasa perceives it to be highly unlikely that the respective Ministers will introduce the duties and therefore prevent the downstream from importing the shortfall.

For the fact that AMSA managed to convince government to extend the safeguard duties on hot-rolled coil to prevent their competition, Safal and Duferco, from supplying the market, it may constitute an act of uncompetitive behaviour and should therefore be investigated by the Competition Commission.