The South African Revenue Service has hiked the import duties of certain screws, bolts and fasteners to level the competitive playing field for local producers.
The International Trade Administration Commission of South Africa (Itac) said in a statement that the South African Customs Union’s collective market share declined from about 71% in 2010 to 47% in 2012, while production fell 18% during the same period.
The commission noted that the installed domestic manufacturing capacity was underused and had declined “considerably” – despite boasting the capabilities to manufacture the majority of products classifiable under the tariff subheadings concerned – and economically viable orders from customers were lost.
In an effort to renew the industry and provide a domestic advantage against imported products, Itac recommended an increase in custom duty on certain screws and bolts from 10% to 20% ad valorem.
The duty on hexagon nuts, excluding hexagon dome nuts, hexagon nuts with nonmetallic inserts, hexagon collared nuts, and hexagon self-locking nuts, were also increased to 20% ad valorem through the creation of a separate tariff subheading.
“The domestic [SACU] manufacturing industry is experiencing price disadvantages [because of] low-priced competition, especially from East Asia,” Itac said, noting the price disadvantage experienced by the domestic producers.
The tariff support for the industry at the level of 20% ad valorem would improve its price competitive position in the face of stiff import competition.
Major fastener producer CBC Fasteners said in an application to Itac for an increase in the customs duties – a move supported by many smaller manufacturers – that the group was unable to recover manufacturing overheads at the current low levels of production and that there was “urgent need” for it and other SACU manufacturers to increase the volumes required to sustain critical mass.
Additional tariff support for the fastener manufacturing industry would improve its price-competitive position “without an undue cost-raising effect on industrial consumers”.
“The support would restore profitability to the industry, enable it to use its installed production capacity and achieve economies of scale, [as well as] allow for further investment,” Itac pointed out.
However, importers, including Bearing Man Group and National Socket Screws, raised objections centred on issues relating to the cost-raising effect of custom duties on downstream industries, uncompetitive prices and practices and the domestic product range.
The commission said it would review the duty structure three years from the date of implementation to assess the industry’s performance in terms of production, employment and investment.