South Africa willing to accept metals quotas as it intensifies bid for US tariffs exclusion

26th March 2018 By: Terence Creamer - Creamer Media Editor

South Africa willing to accept metals quotas as it intensifies bid for US tariffs exclusion

US President Donald Trump
Photo by: Reuters

Trade and Industry Minister Dr Rob Davies revealed on Monday that South Africa was willing to accede to quotas on its steel and aluminium exports to the US as part of the country’s ongoing bid to be excluded from tariffs imposed on March 23 following a proclamation signed by President Donald Trump earlier in the month.

South Africa had already made a formal submission requesting exclusion from the 25% tariff increase on steel articles and the 10% duty imposed on aluminium products, emphasising that its low export volumes posed no threat to US national security, or to the US steel and aluminium industries.

South Africa's steel exports, of 330 000 t in 2017, represented less than 1% of total US steel imports, while South Africa's exports of aluminium products were equivalent to around 1.6% of American aluminium imports. South Africa exported 120 000 t of aluminium ingots to the US last year and 52 000 t of semi-fabricated aluminium product.

Applications for exclusion were catered for in Trump’s proclamation, with Canada and Mexico having been immediately excluded from the protective measures. Exemptions were subsequently granted to key “allies”, including the European Union, Argentina, Brazil, South Korea and Australia, when Trump announced a further set of tariffs against China.

Davies said that the prospect of a quota had been canvassed with, and agreed to, by affected local companies and that government anticipated including the offer in a future, supplementary, submission to the US government.

The proposal of a quota had arisen during a recent teleconference with Deputy United States Trade Representative Ambassador CJ Mahoney, who indicated that America would also expect assurances from South Africa that it would not be a conduit for cheap steel and aluminium products arising from other jurisdictions.

The US would also want countries applying for exclusion to present evidence of the actions they were taking to address the global steel glut.

Davies would not comment on what the South African government felt about the US action, saying only that government was doing what it could to ensure that South African jobs and productive capacity were not negatively affected by the increase in protection.

South Africa had raised the fact that a number of the aluminium articles listed for protection were previously exempted from tariffs under the African Growth and Opportunity Act (Agoa). However, it had received an indication that the proclamation applied even to those products covered by Agoa.

Davies said the US government had indicated that it would make a decision on South Africa’s request to be excluded from the tariffs before the end of April.

On the prospect of Trump’s proclamation triggering a ‘trade war’, Davies expressed the concern that smaller countries, such as South Africa, could well be harmed.

“If there were to be a global trade war, I think the old African proverb of, ‘when the elephants fight, the ants take a pounding’, I’m sure would apply and I don’t think we would welcome that.”