South Africa’s four tyre manufacturing companies have welcomed the imposition of provisional payments on passenger, truck and bus tyres imported from China.
The International Trade Administration Commission (Itac) announced an additional across the board 38.33% anti-dumping duty on Chinese imports. The duties will remain in place until March next year.
The South African Tyre Manufacturers Conference (SATMC), representing Bridgestone, Continental, Goodyear and Sumitomo, says in a statement fairly traded imports at prevailing prices from countries like South Korea, Japan and the US will not be affected.
The local manufacturers applied for relief against dumped imports from China late last year.
Itac has now completed its preliminary report and found that there is evidence of dumping and that it is causing the local industry material harm.
“SATMC believes that these provisional payments will address the issue of unfairly traded tyres from China that over many years have caused the SACU [Southern African Customs Union] tyre industry to suffer material injury. It placed the tyre industry’s future, investment opportunities, as well as direct and indirect job creation, at risk,” says Nduduzo Chala, SATMC managing executive, in a statement issued shortly after the publication of the provisional payments.
Tyre imports carry general customs duties of 30% on passenger car tyres and 25% on truck and bus tyres. The imports from China will now carry an additional 38.33%.
Francois Dubbelman, trade law expert and founder of FC Dubbelman & Associates, says if there is no final determination by 8 March next year the provisional payments will lapse.
“The aim [of] the payments is to ensure the local manufacturers get protection against unfair trade in the form of dumping.
“This is to level the playing field until the investigation has been finalised.”
In terms of World Trade Organisation rules and South African anti-dumping regulations, a dumping investigation must be completed within 18 months after an application is initiated for investigation.
The final determination – with consent from Trade, Industry and Competition Minister Ebrahim Patel – must be published by 31 July next year.
Move will ‘drive prices up’
Gavin Kelly, CEO of the Road Freight Association, says the duty will increase the price of imported tyres “driving the price of the transportation of goods up by at least 8%”.
Depending on the transport leg variables, this could be more, he adds.
“This means that, despite the dire economic situation in the country, consumers will pay more for goods, including the basic basket of everyday food, transport and medicines.”
Kelly says the country cannot have a situation where tyres become so expensive that fleet owners and private individuals begin to push tyres to the extreme limits of wear and endurance.
He appeals to the Department of Trade, Industry and Competition to reconsider the decision.
Dubbelman says the Free on Board (FOB) price of a 13-inch tyre from China (85% of the imports) is on average R197, while the same tyre is imported from countries like Japan and Korea at an average price of R296.
The average price of a 20-inch tyre from China (74% of the imports) is R1 800, while the average FOB price of other imports is R2 900.
He questions the notion that this price differential is passed on to consumers.
Importers buy the dumped product at the low price, but charge consumers a slightly lower price than locally produced tyres, says Dubbelman.
“Any price increase because of the anti-dumping duty will be because importers want to maintain their profits on the Chinese imports, at the expense of the consumer,” he adds.
China imports 43% of the tyres in subheading 4011.01.03 and 04011.01.05; 42% in 4011.01.07; 62% in 4011.01.09; 27% in 4011.01.20 and 41% in 4011.01.18.
Manufacturers ‘also import tyres’
Charl de Villiers, chair of the Tyre Importers Association of South Africa (Tiasa), says in a statement released on Monday that government’s rationale for the imposition of duties is ostensibly to help protect local manufacturers.
But, he says, in the case of tyres the local manufacturers themselves are having to import the vast majority (80%) of the over 3 000 different models of tyre ranges they sell.
“They have to do this because it is not cost effective to set up production lines for that many models within one plant,” says De Villiers.
Dubbelman questions the statement that local manufacturers import 80% of their tyres since production information is classified. “Simply because a tyre appears in the catalogue does not mean it is imported.”
Tiasa has applied to court for an order compelling SATMC and Itac to disclose information relating to the investigation.
Both sides argue about job losses.
The local manufacturers say they will have to shed jobs because of the impact of dumped Chinese tyres while the importers say the additional duties will push many of them out of business.
Listen to Fifi Peters’s interview with Tiasa chair Charl de Villiers: