Import chips now cheaper
REASON: EXPIRY OF ANTI-DUMPING DUTIES
Industry will lose at least 10% of its market share to international producers.
Imported potato chips from Belgium and the Netherlands are now at least 30% cheaper than locally produced chips, mainly because of the termination of long-standing anti-dumping duties. The removal of the duties – ranging between 6% and 30% – means the local industry will be battered. Employment levels are under threat and job losses seem unavoidable. The industry will also lose at least 10% of its market share to international producers.
The International Trade Administration Commission (Itac) admits that the duties expired because it failed to complete its investigation into a sunset review application by local producers in the prescribed time.
The duties were set to expire on 7 August, 2019. McCain Foods submitted a sunset review application to prevent the termination of the duties on 7 February, 2019. The application was supported by Lamberts Bay Foods and Nature’s Garden.
In terms of the anti-dumping regulations anti-dumping duties must be terminated five years after implementation, unless a sunset review is initiated prior to the expiry date.
The Itac investigation started in July, 2019, and the commission failed to complete the sunset review investigation within 18 months.
The exporters have blamed the Itac investigators, saying they were responsible for delays during the verification process because of the “approach the team chose”. This approach made the completion of the verification process impossible, they said.
The commission blames the exporters for providing incorrect or incomplete information, and of having “side meetings” with their consultant which left the investigators waiting for “unreasonabl[y] long” periods during the process.
Francois Dubbelman, founder of FC Dubbelman & Associates, says this is the first time in the history of the commission that it failed to finalise a sunset review application on time.
Potential impact
He has expressed concerns about the potential impact on investigations into other critical sectors of the economy such as poultry and structural steel, where anti-dumping duties are in place or trade-remedy investigations are underway.
In the McCain application, which was submitted well in advance of the expiry date, the company stated that without the duties the SA Customs Union, the industry is likely to see “the continuation of dumping and the recurrence of material injury”.
Itac found there was sufficient and prima facie evidence that the expiry of the anti-dumping duties would “likely lead” to dumping and material injury to local producers.
Dubbelman says in this instance no one can blame the pandemic, since the investigation was initiated long before its onset.
In principle, it is on Itac to push an investigation. It knows it has 18 months to complete the task.
Generally, a sunset review is completed within a year. In terms of the General Agreement on Tariffs and Trade the deadline for investigations is 18 months.
“Somewhere in the dusty Covid-corridors of Itac, the department of trade, industry and competition, and the minister’s office, somebody must take control and ensure the industries that apply for relief are assisted quicker and more efficiently [than] is currently the case,” says Dubbelman.