SA tyre manufacturers potentially exposed to dumping from China

Anti-dumping duties against Chinese exporters of car, bus and lorry tyres to South Africa have expired, leaving local producers potentially exposed to far cheaper products that can be dumped on the market.

The Chinese manufacturers are also entitled to claim a refund from the South African Revenue Service (Sars) for the 38.3% provisional duties imposed on them since September last year.

The International Trade Administration Commission of South Africa (Itac) imposed these duties for six months pending the finalisation of its investigation into the allegations of dumping.

However, the provisional duties lapsed before the investigation was completed.

In terms of World Trade Organisation rules, investigations should be completed within one year, and in no case more than 18 months after initiation. Itac says it has until 29 July to complete its investigation.

The South African Tyre Manufacturers Conference (SATMC), representing Bridgestone, Continental, Goodyear and Sumitomo, applied for protection against dumping from imported Chinese tyre manufacturers.

Read/listen: SATMC: Why we proposed the tariffs on imported tyres

The commission found there was prima facie evidence that the tyres were imported at dumped prices, which caused material injury to local manufacturers and the Southern African Customs Union (Sacu) industry. The provisional duties were imposed to prevent further injury.

Itac says once the investigation is finalised it will make a recommendation to Minister of Trade, Industry and Competition Ebrahim Patel.

The introduction of the provisional duties caused a major outcry, with fears it would inflate prices and harm consumers.

The Tyre Importers Association of South Africa (Tiasa) said at the time government’s rationale for the imposition of the duties was ostensibly to help protect local manufacturers. However, local manufacturers themselves have to import 80% of the over 3 000 different models of tyre ranges they sell.

Tiasa chair Charl de Villiers says it is awaiting the essential facts letter from Itac, setting out its findings after its audit of nine manufacturers selected as a representative sample.

Once the letter has been issued Tiasa members will have the opportunity to respond.

Most of the Tiasa members have applied for a refund, since the anti-dumping duties runs into millions of rands.

Impact on local industry

Francois Dubbelman, trade law expert and founder of FC Dubbelman & Associates, says it will be interesting to see whether exporters who do claim the refund will also refund their customers for the increase in their prices.

De Villiers expects a price adjustment, but says it will not happen overnight. “We are already seeing a downward trend in certain segments [of the market].

“Although it will take some time, I do believe the savings will come through,” he adds.

Dubbelman remains of the view that the lapsing of provisional duties payments will be to the detriment of the Sacu tyre industry. Imports will again flood the market at dumped prices, putting the future of the industry at risk. This may further impact employment in the manufacturing industry.

Dubbelman says delays in offering protection when local industries suffer material harm due to dumping does not benefit the Sacu economies, nor the substantial investments of private companies in South Africa.

Fair trade

Prior to Patel’s appointment the Department of Trade, Industry and Competition was determined to address unfair trade as quickly as possible, says Dubbelman.

“This was to ensure that the industry [could] continue to retain and create jobs while competing on a fair basis, not an unfair basis as is the case with dumped imports.”

Fair trade from Japan, the US, and South Korea was not impacted by the tyre-dumping investigation or the provisional duties that were imposed.

Dubbelman says the longer it takes to address unfair trade, the more devastating and lasting the impact on the Sacu industry will be. It makes it more difficult for the industry to recover fully and re-employ people who had to be retrenched because of financial losses suffered.

It appears that a final determination on the duties – the imposition of anti-dumping duties or no duties – is expected soon.

Anti-dumping duties remain in force for five years.