Presentation to the Portfolio Committee on Economic Development Workshop Presented by Carina van Vuuren Date: 18 August 2015

Structure of Trade Remedies Unit Trade Remedies I - Carina van Vuuren Trade Remedies II – Zoleka Xabendlini 18 investigators and 2 administrators

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.

Initiations

WTO SA member of WTO – bound by rules 3 WTO Agreements applicable Anti-dumping Countervailing Safeguards

Domestic Law ITA Act 3 Regulations Anti-dumping Countervailing Safeguards Administrative Justice Act Access to Information Act

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.

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.

Allegation of Dumping : What to Prove Dumping Material injury/threat Causality

Calculation of dumping margin: Normal value (after adjustments) Less Export price (after adjustments) As % of export price

Material injury Information provided by industry. 14 Injury factors considered by the Commission. Price vs Volume injury. Trend analysis.

Material injury Actual and potential decline in sales Profits Output Market share Productivity Return on investment Utilization of capacity

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

Anti-dumping Investigation procedure and time frames 21 days Properly documented application Applicant verification prep Merit submission prep SM approval & place on agenda Merit decision Implementation of decision Notification out on Monday 18 days 10 days 7 days 7 days 21 days Sending exporters’ verification reports Verification of exporters Verification plan for importers & exporters & verification of importers Responses on deficiencies Identify deficiencies and send letter Exporter/ importer responses 14 days 14 days 14 days 12 days 7+30+14 2 days Commission prelim. decision Publication of provisional payments Comments on verification reports Finalise prelim & submit agenda Prelim report ready for SM Prelim report approval by CC 2 days 7 days 10 days 18 days 2 days 10 days Important notes: The investigation procedure described below is applicable to all anti-dumping investigations. It should however, be noted that complexities differ from one investigation to another. The timeframes indicated therefore are based on assumptions of one exporting country named in the application, two responding importers, two exporters, homogenous product, one oral hearing and a proficient ITAC investigator. SARS officially takes 6 weeks to publish notices but we only estimated 21 days, which they sometimes take.   Final decision Final submission on agenda Provision for an oral hearing Comments on prelim. report Sending out prelim. report & notice Essential facts letters 18 days 2 days 21 days 18 days 21 days Total days: 274 (9 months) Total days: 309 (10 months) Comn. final decision after essential facts Final report approval by Chief Comm. Approval by Minister SARS publication Comments on essential facts Final submission after essential facts 21 days 3 days 10 days 14 days 7 days 18 days

Time Frames 10 months for final measures. Provisional measures within 6 months of initiation. Duties stay in place for 5 years. Sunset Reviews.

Comparative Time Frames   South Africa US European Union Canada India Australia Preliminary determination timeframe 177 days 140 days 270 days 90 days 150 days Final determination timeframe 309 days 370 days 450 days 210 days 300 days 215 days

Countervailing Countervailing is action against imported products which are subsidised by a foreign government which causes injury to the SACU industry

Allegation of Subsidisation : What to Prove Subsidy Material injury/threat Causality

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

Safeguards Safeguard action is taken to protect the SACU industry against a surge of imports which causes serious injury

Safeguard Action : What to prove Unforeseen developments Surge of imports Serious injury/threat Causality

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

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

Duration of Measures 4 years – ext to 6 years Liberalization Half way review if longer than 3 years Compensation

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 Review

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

Judicial Reviews/Disputes Not a new phenomenon 50% of all disputes in WTO Contentious issue Small % of total investigations

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