The International Trade Administration Commission (Itac) has launched its own investigation into the alleged dumping of frozen potato chips from Belgium, the Netherlands and now also Germany on the South African market.
This is because the commission failed to complete a sunset review request to withhold anti-dumping duties for another five years within the prescribed time. That led to much cheaper imported frozen chips being seen on the local market.
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Moneyweb first reported on the debacle on July 20.
Read: Imported ‘fries’ are now cheaper than South African fries
The commission said in a notice announcing its investigation on Friday (November 19) that it has gathered enough evidence to establish a case of prima facie dumping.
The alleged dumping of the three European countries is causing “significant injury” to the Southern African Customs Union industry.
Itac says that the dumping margins range between 11.75% (Belgium), 83.22% (Netherlands) and 190.23% (Germany).
According to Francois Dubbelman, founder of FC Dubbelman & Associates, this is the first time that the commission has investigated a case of dumping on its own.
This is most likely due to McCain Foods not completing the request for sunset review on time.
In terms of the World Trade Organization rules and South Africa’s anti-dumping regulations, a sunset review must be completed within 18 months of filing the request for review.
The initial anti-dumping duties were due to expire in August 2019. The commission took more than the prescribed 18 months to complete its investigation even though McCain’s application was filed long before the expiration date.
Dubbelman says this self-initiated investigation could take 18 months to complete, meaning that local producers will continue to be hit by dumping.
“I think Itac will try to complete the investigation faster this time. The fact that they initiated the case themselves shows that they know they have screwed up the sunset review investigation. ”
A sunset review request is filed shortly before the expiration of the five-year anti-dumping duties to determine how the local market will be affected when the duties expire.
Read: Crippling Effect of Expired Anti-Dumping Duties on Local Industry and Farmers
Local industry must prove that there will be a continuation or recurrence of property damage or injury when duties expire. If that is the case, Itac can recommend the extension of the rights for another five years.
Since Itac’s investigation is considered a new case and not a request for review, Itac may add Germany if it believes that the country is also involved in the dumping of products in South Africa.
Delays continue to affect other products
Dubbelman says his company is currently involved in four dumping investigations. Itac recommended the introduction of tariffs in two of the dumping cases and the extension of existing tariffs in two sunset review cases.
These cases involve the dumping of pasta from Lithuania, Latvia, Egypt and Turkey, the dumping of float glass from Malaysia, a sunset review of extended tariffs on imports of wheelbarrows from China, and the extension of tariffs against imported garlic from China.
The recommendations are awaiting approval from the Minister of Commerce, Industry and Competition, Ebrahim Patel. All of these are close to the 18-month cut-off period.
“The provisional rights that were introduced to protect local producers until the implementation of a final right have already expired,” says Dubbelman.
“This means that local producers are suffering material damage due to the delays. There is also a risk that the two dumping cases will be terminated if the 18-month investigation period is exceeded. ”
Dubbelman says investigations have never taken so long to complete before. Itac has always prided itself on finalizing cases in one year.
Dubbelman’s firm is also involved in six cases involving import duty increases that are more than two years old. In these cases, the 18-month period is not applicable. Itac used to be able to complete these cases in six months, he notes.
This does not bode well for foreign direct investment.
A key investment consideration is whether the government will act and address unfair trade and whether it will offer relief to protect investment and jobs when a company cannot compete against imports while establishing or restructuring its business.
Send a message to international investors if there are long delays and bureaucratic burdens when producers legitimately require protection to survive.