Presentation to the Portfolio Committee on Economic

Development Workshop
Presented by
Carina van Vuuren
Date: 18 August 2015

1
 Structure of Trade Remedies Unit

Trade Remedies I - Carina van Vuuren

Trade Remedies II – Zoleka Xabendlini

18 investigators and 2 administrators

2
 Instruments

There are three trade remedies instruments:

•Anti-dumping measures
•Countervailing measures
•Safeguard measures

The objectives of these measures are to enable

fair trade in order to sustain domestic product,
retain and create jobs and promote
international competitiveness.
3
Initiations

4
 WTO

• SA member of WTO – bound by rules

• 3 WTO Agreements applicable
– Anti-dumping
– Countervailing
– Safeguards

5
 Domestic Law

• ITA Act
• 3 Regulations
– Anti-dumping
– Countervailing
– Safeguards
• Administrative Justice Act
• Access to Information Act

6
 Historic use of instruments

In the years 1995 to 2011, the Commission initiated only 13 countervailing

investigations, in comparison to the 216 anti-dumping investigations initiated and in
the years 2007 to 2011, the Commission initiated only two countervailing
investigations. Since 2012, more interest has been shown in the countervailing
instrument and four new applications have been received from industry. Although
only one safeguard investigation on lysine has been conducted since the existence of
ITAC, a lot more interest has been shown in this instrument since 2012. One
investigation on frozen potato chips was initiated in 2013. Three, on chicory, graphite
electrodes and olive oil, were declined. With regard to AD, in contrast to the
decreasing tend up to 2011, an increased number of applications have been received
since 2012 Seven new trade remedy investigations were initiated in 2012/2013
whereas in 2013/14, it was four.

Of the three instruments, anti-dumping is the most frequently invoked, both globally
and in South Africa.
7
 Dumping
Dumping

• Dumping: Selling goods at a lower price in the export than the domestic
market.
• Firms engage in geographical price discrimination to maximise profits.
• The problem arises when dumping threatens and/or causes injury to
domestic manufacturers .
• Since Dumping is regarded as an unfair trade practice the WTO AD
Agreement sets out the rules for acting against dumping that causes
injury.
• South Africa is an old and active user of the instrument with the first law
on AD having been enacted in 1914.
8
 Allegation of Dumping :
What to Prove

•Dumping

•Material injury/threat

•Causality

9
 Calculation of dumping margin:

Normal value (after adjustments)

Less

Export price (after adjustments)

As % of export price

10
 Material injury

• Information provided by industry.

• 14 Injury factors considered by the
Commission.
• Price vs Volume injury.
• Trend analysis.

11
 Material injury

1. Actual and potential decline in sales

2. Profits
3. Output
4. Market share
5. Productivity
6. Return on investment
7. Utilization of capacity

12
 Material injury

8. Factors affecting domestic prices

9. Magnitude of margin of dumping
10. Inventories
11. Employment
12. Wages
13. Growth
14. Ability to raise capital

13
 Anti-dumping Investigation procedure and time
frames

Properly Applicant Merit SM approval Merit Implementation

Notification
documented verification submission & place on decision 18 of decision 10
7 7 out on
application prep 21 prep agenda days days
days days Monday
days

Sending exporters’ Verification of Verification plan for

Responses on Identify Exporter/
verification reports 14 exporters importers & exporters
14 14 deficiencies 12 deficiencies and importer
days & verification of 7+30 2
days days days send letter +14 responses
importers days

Commission Publication of
Comments on Finalise prelim & Prelim report Prelim report
2 7 10 prelim. 18 2 10 provisional
verification reports submit agenda ready for SM approval by CC
days days days decision days days days payments
21 days

Final Final Provision for an Comments on Sending out prelim.

Essential 18 2 21
decision submission on 18 oral hearing 21 prelim. report report & notice
facts letters days days days
agenda days days

Total days: 274 Total days: 309

(9 months) (10 months)

Comn. final Final report Approval by SARS

Comments on Final submission 21
3 decision after 10 approval by 14 Minister publication
essential facts 7 after essential facts days
days 18 essential facts days Chief Comm. days
days
days
14
 Time Frames

• 10 months for final measures.

• Provisional measures within 6 months of
initiation.
• Duties stay in place for 5 years.
• Sunset Reviews.

15
 Comparative Time Frames

  South US European Canada India Australia

Africa Union

Preliminary 177 days 140 days 270 days 90 days 150 days 140 days
determination
timeframe

Final 309 days 370 days 450 days 210 days 300 days 215 days
determination
timeframe

16
 Countervailing

• Countervailing is action against imported

products which are subsidised by a
foreign government which causes injury
to the SACU industry

17
 Allegation of Subsidisation :
What to Prove

•Subsidy

•Material injury/threat

•Causality

18
 Process and Time Frames For
Imposition

• Complaint, Merit assessment, Prelim

determination, Final determination and
recommendation
• Consultations
• 10 months for final measures
• Provisional measures within 6 months of initiation

19
 Safeguards

• Safeguard action is taken to protect the

SACU industry against a surge of imports
which causes serious injury

20
 Safeguard Action : What to
prove

•Unforeseen developments

•Surge of imports

•Serious injury/threat

•Causality
21
 Difference w.r.t. other 2 instruments

• Not action against unfair trade

• Against ALL countries
• Adjustment plan needed from industry
• Consultations with Members
• Public interest considerations
22
 Process and Time Frames For
Imposition

• Complaint, Merit assessment, Prelim

determination, Final determination and
recommendation
• All steps notified to WTO
• Consultations with all members
• 10 months for final measures
23
 Duration of Measures

•4 years – ext to 6 years

•Liberalization

•Half way review if longer than 3 years

•Compensation
24
 Investigations completed
1 April 2014 to 31 March 2015

• Frozen Potato chips – Safeguard Investigation

• Soda Ash – Anti-Dumping Investigation
• Frozen Potato Chips – Anti-Dumping Investigation
• Frozen Chicken Portions – Anti-Dumping
• Welded Chain Link – Anti-Dumping Sunset Review
• Gypsum Plasterboard – Anti-Dumping Sunset
Review
• Wire Ropes and Cables – Anti-Dumping Sunset
Review
• Tall Oil Fatty Acid – Anti-Dumping Sunset Review25
 Investigations on-going as on
31 March 2015

• Wheelbarrows – Anti-Dumping
Investigation
• Cement- Anti-Dumping Investigation
• Stainless Steel Sinks – Anti-Dumping Sunset
Review
• Garlic – Anti-Dumping Sunset Review
• Flat/float Glass – Anti-Dumping Sunset
Review
26
 Judicial Reviews/Disputes

•Not a new phenomenon

•50% of all disputes in WTO

•Contentious issue

•Small % of total investigations

27
END

28