I do appreciate that the Government Gazette is not the favoured reading material for many, and its detractors might equate reading it to reading a telephone directory, which someone actually did. When asked about their experience, they said: “There were characters aplenty, but not much of a story.”
For me, reading the Government Gazette is akin to scouting or hunting for the activities of the International Trade Administration Commission of South Africa (Itac), which, I must confess, are relatively scarce and, when spotted, are quite monotonous. As evidence of this, Itac has published only six tariff applications across three lists since January, and now we are nearly midway through the year. The last list, which has three applications, is for two nontraditional products.
A recent instalment of this column dealt with two palm oil applications; this week, attention turns to conical steel drums. If you are unfamiliar with this type of drums, let me assist you: conical drums feature a tapered side and are used around the globe to store various products safely. Tapered drums are typically used for transporting and storing liquids, powders, and other materials. They are known for their efficient space usage and ease of handling.
The Government Gazette published on May 24 featured an application seeking an increase in the ‘general’ rate of customs duty on conical steel drums of a capacity of 210 ℓ or more but not exceeding 234 ℓ from ‘free of duty’ to the World Trade Organisation (WTO) bound rate of 15% ad valorem by the deletion of the current tariff subheading and the creation of a new tariff subheading for conical steel drums of a capacity of 210 ℓ or more.
The application was lodged by Peninsula Drums, which mentioned that, in 2012, it applied for, and was granted, an increase in duty from ‘free of duty’ to 15% ad valorem for conical steel drums with a capacity of 235 ℓ or more.
However, the company stated in its application that it is coming under increasing pressure from low-priced imports in the capacity range of 210 ℓ to 234c, resulting in a loss of business. If the loss of business continues, it added, this will have an extremely negative effect across all products supplied. Although the company said it is aware that requesting the duty increase will not fully address the existing price differentials, the duty increase, if granted, will be a good start to addressing the existing challenge.
There is a fair bit to digest here. The ‘general’ rate of customs duty implies that it will only be increased for countries with which the Southern African Customs Union has no trade agreement. So, it will exclude the African Continental Free Trade Area, the European Free Trade Association, the European Union, Mercosur (the South American trade bloc established in 1991) and the UK.
So, will the customs duty, in fact, be against China? Will a 15% customs duty really stem the tide, even when considering South Africa’s depreciating currency? How will it be ‘a good start’? What will be next: a trade remedy application? If so, why not start with it, as the rate of the trade remedy duty could be much higher than the 15% sought? Could it be that there is no dumping? If so, then it will not be ‘a good start’, but simply an ‘ending’, and not even a happy one.
It is not clear whether the application intends to protect Peninsula Drums’ newly manufactured drums or its reconditioned drums, especially considering its tagline: ‘Recycle for a Better Future’. The company is, after all, a founding member of the South African Industrial Container Reconditioners Association (SAICRA). However, if the application is indeed for new drums, the question is why was such an application not lodged in conjunction with fellow SAICRA members that are new drum manufacturers: Bona Once Bona Twice, Infinity Drums & Packaging, Grief South Africa, New Rheem, PackSolve Drums, Phezulu Drums and RainHam Drums (New Drum Plant) – Durban?