remedy measures globally. - Raised by Japan at the WTO, 27 October - PowerPoint PPT Presentation

Japan said it was concerned oversupply in steel was mainly due to expansion of production capacity among emerging economies that did not have an economic justification and that this was triggering a rise in trade remedy measures globally. - Raised by Japan at the WTO, 27 October 2016

G20 percentage of anti-dumping cases G20 percentage of countervailing cases 120% 120% 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 35% 41% 33% 51% 38% 63% 67% 58% 87% 42% 0% 0% Jan to Jun 14 Jul to Dec 14 Jan to Jun 15 Jul to Dec 15 Jan to Jun 16 Jan to Jun 14 Jul to Dec 14 Jan to Jun 15 Jul to Dec 15 Jan to Jun 16

With every market that closes to dumped steel, it becomes more likely that steel will be dumped in the next market

Understanding the tariff book

Chapter 73 – Articles of iron and steel Chapter Heading Sub- headings

9% of all downstream imports are cleared through 1 tariff code R2.1bn

7326.90.90 - ARTICLES OF IRON OR STEEL: Other Articles Of Iron Or Steel: - - Other: 60 000 $3 610 per $3 800 - - - Other ton $3 600 50 000 $3 400 $3 050 per 40 000 $3 200 ton $2 790 per $3 000 ton 30 000 $2 800 20 000 $2 600 45 000 36 000 53 000 $2 400 tons tons tons 10 000 $2 200 0 $2 000 May 14 to Apr 15 May 15 to Apr 16 May 16 to Apr 17

Split very broad tariff codes into detailed subheadings

Duty protection options Duty increase Anti-dumping Fastest solution, but limited duty Large potential duties on size and doesn’t impact trade specific countries only. agreement countries Takes longer to yield a result Countervailing Safeguard Used to offset subsidies. No Emergency action to offset a current political appetite to act surge in imports. Potentially large against China duty or quota, but only for a limited period

Duty increase • Duty can only be increased to the bound rate • Duty increase only affects countries which we have no trade agreement with • Does not require industry standing for an investigation to be initiated • Relatively fast action Number of downstream tariff codes below bound rate 163 Number of downstream tariff codes at the bound rate 47 Total downstream steel tariff codes 210

The largest downstream sector never responded to the downstream investigation R5bn 21% Imports between March 2016 and February 2017

• Know the tariff codes for every product you manufacture • Monitor your import statistics to identify risky trends • Split the very broad tariff codes into more detail

Dumping happens when … Goods are exported at a price lower than they are sold in their home market, causing injury to our domestic industry

The calculation Ex-works price in the domestic market – ex-works export price to South Africa = dumping margin Dumping margin / export price = anti-dumping duty

The calculation If more than 20% of the domestic sales are made below cost, then discard all sales below cost

The implementation of duties • Duties are imposed against specific countries and companies • Duties remain in place for 5 years (renewable)

China and market economy status China is deemed to have a market economy, meaning that the dumping margin will be calculated on the actual information submitted by exporters

China and market economy status Options to offset the effect of subsidies 1. Add the value of the subsidies to the costs, thus increasing the dumping margin (more sales below cost) 2. Add the subsidies to the normal value and increase the dumping margin that way This is now a global problem

The more developed the country, the more likely they are to dump

Safeguards – the nuclear option A duty or quota imposed against all trading partners to offset a surge in imports which threatens the industry

The initiation test • Surge in imports • As a result of unforeseen developments • The surge must be sudden, sharp, recent and significant • Industry must experience serious injury • The injury must be caused by both the surge and the unforeseen developments

Implementation of duties • Protection only in place for 3 years • Level of protection must reduce each year • Countries accounting for less than 3% of imports are exempted • Difficult to implement on broad tariff codes

7326.20.90 - ARTICLES OF IRON OR STEEL: Other Articles Of Iron Or Steel: - - Articles Of Iron Or Steel Wire: - - - Other $2 904 per 5 000 $3 100 ton 4 500 $2 900 4 000 $2 700 3 500 $2 500 3 000 2 500 $2 300 $2 328 per $2 042 per ton ton 2 000 $2 100 1 500 $1 900 2 000 tons 2 800 tons 4 300 tons 1 000 $1 700 500 0 $1 500 May 14 to Apr 15 May 15 to Apr 16 May 16 to Apr 17

7326.20.90 - ARTICLES OF IRON OR STEEL: General rate of duty 15% Other Articles Of Iron Or Steel: EU rate of duty Free - - Articles Of Iron Or Steel Wire: Bound rate 15% - - - Other Imports for May 2016 to April 2017 • Duty increase is not possible • Anti-dumping or safeguard could be considered

Simultaneous actions? Anti-dumping and safeguard applications can be brought simultaneously, but the duties will be implemented sequentially

Circumvention

Illegal circumvention • Undervaluation of goods • Incorrect declaration of origin • Manipulation of the tariff classification

When illegal circumvention happens, the exporter receives the full proceeds

Legal circumvention • Minor modifications of the product • Exporting parts, components or sub-assemblies • The absorption of the duty by the exporter • Country hopping

Circumvention can be addressed through anti- circumvention reviews If brought within 12 months of the duty being implemented, no new injury information is required

Rebates You should only pay duty on product you can purchase locally and which is consumed in SACU

Rebates Export rebates allow raw materials to be imported, converted and then exported outside of SACU without paying the duty

Rebates A special steel export rebate may need to be created to cater for the industry’s unique circumstances

Rebates Industrial rebates allow duty to be rebated for a particular purpose or grade Similar process of application to a duty increase

Rebates Temporary rebates allow duties to be suspended while the product is not available locally Similar process of application to a duty increase

Priorities to achieve protection • Know the tariff codes of every product you manufacture • Split broad tariff codes into specific subheadings • Monitor your trade statistics • Focus on tariff codes not whole product ranges • Co-operate to solve the big problems • Apply for rebates of duty where applicable