Fighting unfair trade: South Africa’s SATMC defends tariff application

South Africa is currently contemplating anti-dumping tariffs for tyres imported from China, and the investigation initiated by the country’s International Trade Administration Commission (ITAC) on 31 January 2022 is currently in its preliminary phase. The next procedural step in the investigation will be a preliminary determination by ITAC in August, and the investigation must be finalised within 18 months from the date of initiation. A final determination is expected to be made in early 2023. A healthy head of steam has already built up on both sides of the argument, with the recent debate including a claim from the Tyre Importers Association of South Africa (TIASA) that the tariffs will simply result in Chinese imports being substituted for tyres from Europe or Japan. The South African Tyre Manufacturers Conference (SATMC) has issued a statement countering assertions such as this.

According to the SATMC, independently compiled data shows that over 70 per cent of the tyres sold by its members – Bridgestone, Continental, Goodyear and Sumitomo Rubber South Africa – in 2021 were produced locally, a figure that at first glance appears very much at odds with a comment made by the chairman of TIASA. Charl de Villiers noted that the four tyre makers import some 80 per cent of the 3,200 units they sell within the country, however the SATMC figure relates to total volumes rather than SKUs.

Sustained effort to rescue local industry

The SATMC considers its application to investigate the unfair trade caused by dumped imports of passenger, truck and bus tyres imported from China to be part of a “sustained effort to rescue the local tyre industry and the livelihoods dependent upon it.”

Nduduzo Chala, the association’s managing executive, states: “The SATMC is not against healthy trade and competition at fair prices, but rather against tyres designed and manufactured in China that are imported unfairly into South Africa at unsustainable, rock-bottom rates. This limits the competitiveness of domestic manufacturers, who employ more than 6,000 people directly in South Africa and create indirect employment opportunities for more than 19,000 people.” The association reports that its members contributed in excess of R15.9 billion (£786.1 million) to the national economy between 2019 and 2021.

Imports at predatory prices

Research conducted by the SATMC indicates that imported tyres accounted for more than 50 per cent of local circulation last year, with China the most heavily-represented country of origin amongst these tyre imports. In its application to the ITAC, SATMC asserts that tyres from China were being imported at predatory prices and causing material injury to the domestic manufacturing industry.

“This has been occurring over a number of years and the continued proliferation of large consignments of cheap imported tyres from China is something we are strongly opposed to,” states Chala. “It is not our intention to increase tyre prices or to hit the wallets of customers. This is about fighting unfair trade. SATMC members are concerned about the knock-on effects of these destructive practices for job creation and economic growth within South Africa. We want to keep the South African manufacturing sector alive.”

Level playing field

Chala shares that the four local manufacturers “have made sizeable investments into upping their domestic capacity” but points out that “this continues to be eroded as rising cheap imports adversely impact industry capacity utilisation.” His hope is that the SATMC’s anti-dumping application to the ITAC will, if successful, help to “provide a more level playing field for the South African tyre manufacturers to sustain the significant role of this industry within the economy.”

The ITAC investigation could lead to import duties being levied on the imported tyres from China. SATMC observes that “similar action has been taken in countries such as India, Nigeria, the United States and the United Kingdom, in order to protect local industry and save jobs.”