Dispute over higher tyre import duties intensifies

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South African tyre importers have intensified their dispute with four domestic tyre manufacturers over their application to the International Trade Administration Commission (Itac) for additional import duties on imported tyres from China.

The Tyre Importers Association of South Africa (Tiasa) confirmed on Tuesday that it lodged an application with the High Court in Pretoria on 3 August.

It wants the court to:

  • Compel Itac and the SA Tyre Manufacturers Conference (SATMC) to disclose critical information that it claims is being withheld about the latter’s application for the imposition of anti-dumping duties on imported tyres; and
  • Challenge the manner in which Itac is conducting the investigation.

SATMC’s four members are Continental, Bridgestone, Goodyear and Sumitomo.

Tiasa said the SATMC and Itac both gave notice on Tuesday of their intention to oppose the application, and that a court date has not yet been set for the matter to be heard but it is likely to take place early in 2023.

Confirmations

Itac communications manager Thalukanyo Nangammbi confirmed on Tuesday the application has been received by Itac, which is in the process of obtaining advice from its legal representatives.

Nangammbi said the matter is sub judice and it would therefore be inappropriate for Itac to comment any further at this stage.

SATMC managing executive Nduduzo Chala confirmed that SATMC has received Tiasa’s notice of motion and said it is currently being addressed.

At issue

Tiasa’s stance is that import duties of between 25% and 30% are already levied on imported tyres and that SATMC has applied to Itac for the imposition of substantial additional duties of between 8% and 69% on passenger, taxi, bus and truck vehicle tyres imported from China.

Tiasa chair Charl de Villiers said if Itac decides to impose the maximum duty percentage requested by the SATMC, imported tyre prices could increase from 41% for taxi tyres, 38-40% for passenger tyres, and an average of 17% for truck and bus tyres.

“These increases will have dire consequences for commuters, the transport sector and consumers, who are struggling with climbing inflation,” he said.

Read: SA motorists, transport operators ‘will be hardest hit by proposed tyre duties’

De Villiers added that Statistics SA reported last week that consumer inflation had accelerated to a new 13-year high of 7.8%, with “the usual suspects of food, fuel and transport costs” the main drivers of the increase.

‘In the dark’

He said the stakes are high for South Africa but Tiasa is operating in the dark in regard to the application for additional duties because SATMC is refusing to disclose its own import information.

According to De Villiers, domestic manufacturers are unable to produce the full range of tyres,  import 80% of the variety they sell to meet local demand, and refuse “to disclose what they import, from where, and for what reason”.

He said Tiasa is asking the court to:

  • Direct Itac to remedy its sampling;

  • Provide Tiasa with SATMC’s import data and the reasons for the imports; and

  • Allow Tiasa sufficient time to make a submission to Itac before it takes any decision on the imposition of duties.

“If the current process is not corrected, it’s likely that Itac will impose provisional duties without SATMC’s import information, or indeed Tiasa’s submissions, which have – to date – been excluded from consideration by Itac.

“This will be a clear impingement on the rights of affected parties to meaningfully participate in this process,” he said.

Itac investigation challenged

XA Global Trade Advisors CEO Donald MacKay said Itac received submissions from more than 60 companies in response to the investigation but decided to only review a small sample of submissions as the basis for its final decision.

MacKay said Itac refused to allow Tiasa to make any comment or provide input on the sampling methodology.

“With a complex product like tyres, where the local market sells over 3 000 different models, it is almost impossible to select a truly representative sample.

“To base a duty decision on such a flawed process is deeply concerning,” he said.

MacKay added that the information Tiasa has requested is critical because causality is a foundational principle of an anti-dumping case and it is necessary to prove that any injury to the local industry must have been caused by the dumping and not by something else.

“If SATMC members are importing a significant volume of tyres themselves, they would be inflicting their own injury, which would need to be offset for any injury they claim,” he said. “They would therefore need to demonstrate a compelling reason for the imports.”

MacKay stressed that this is not confidential information and it is material to their import duty application and rationale for it.

“SATMC has refused to share any of this information with Tiasa, and Itac has accepted this. We have therefore been forced to apply to court to compel them to do so,” he said.

SATMC has provided ‘all required information’

Chala said SATMC applied to Itac for an investigation and provided evidence to support the position that tyres imported from China at unfairly low prices are causing material injury to the local industry.

Read: Bridgestone’s Port Elizabeth tyre plant will close on November 15 [2020]

He said SATMC continues to cooperate with Itac and has provided all required information to Itac to support the investigation, which was initiated on 21 January and is still ongoing.

Chala said the conclusion of the preliminary phase of the investigation is awaited and thereafter a preliminary report will be published setting out Itac’s preliminary decision.

He said interested parties will have 14 days from the date of publication of the preliminary report to comment in writing to Itac.

Chala said Itac will then continue with its final investigation phase, during which it will review all interested parties’ comments and verify the information that was submitted before issuing an essential facts letter.

This will be followed by Itac’s final determination, which must be published on or before 31 July 2023, he said.

Listen to Fifi Peters’s interview with Tiasa chair Charl de Villiers:

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