ITAC have just initiated the biggest tariff review in their 22 year history, on steel. This is about much more than just tariffs, but it most definitely also includes tariffs. The scope of the review is everything in chapters 72 (primary steel and stainless steel), 73 (stuff made of steel, like pipes), 82 (tools and cutlery) and 83 (miscellaneous things made of steel, like padlocks).

Click here to attend our very important webinar on this review on Wednesday, 26 March 2025.

Proposed tariff actions

Consideration is being given to:

1. Creating new rebates of duties for raw materials used to make the stuff included in chapters 72, 73, 82 and 83.
2. Removing some of the rebates currently in place. These rebates cover around R780 million in imports in a year (R78 million in duty relief), so significant.
3. Raising tariffs to the bound rate (maximum rate allowed under our WTO commitments). The table containing the full list of the affected products never got attached to the gazette. We’ve requested it, along with a few other missing bits.
4. Invoking  Article XIX of the General Agreement on Tariffs and Trade (GATT), an emergency provision which manifests as safeguards. The nub of this is that South Africa appears to want to withdraw its bound rate commitments on steel and raise tariffs beyond the bound rate. I’ll give the technical waffle about Article XIX in a separate blog post.
5. Changing the duty structure from ad valorem (percentage of value) duties to other formulas such as rands per ton.

Proposed non tariff actions

The non-tariff actions are more complex, but here is the list of things they are considering:

• Measures to reduce raw material prices on “scrap, iron-ore, coking coal and any other feedstock material used in the production of steel”. No detail is given on how they propose dealing with this, but it will affect the scrap metal sector, iron ore mines like Kumba and coal mines. Presumably companies supplying things like the coatings for specialised steel (zinc for example) could also be impacted.
• Tariff rate quotas (you pay no, or a lower duty until a particular volume has been imported and then a higher tariff after that).
• Minimum import reference pricing (if your imports are below a certain price, a minimum value is used to determine your duties). This would be in possible breach of the WTO Valuation Agreement, if I understand what they mean properly.
• Import control, meaning a permit will be required before steel can imported.
• Addressing customs fraud (long overdue and very important indeed). Many of the problems in the sector are caused by customs fraud and if this is fixed, the other measures may not be required to the same degree.
• Introducing compulsory standards on certain steel products.

What happens next?

A very good question. This is a review covering over 600 tariff codes on many different dimensions. We are still gathering information which was omitted from the gazette and which may give us a better steer on how to deal with this. Here is what is very important though:

• Attend our webinar next Wednesday at 14:00. I know this is short notice, but we only have four weeks to respond. We can get up to a two week extension according to the regulations, but even six weeks is not much time to deal with this beast. Click here to register.
• Click here to view our last webinar on this, and download our last report (January 2025) here. We will present updated information next week, but this is good preparation.
• Appoint an expert to assist you. It doesn’t have to be XA (it should be!), but don’t try to wing it alone. The consequences of this review are profound.

I don’t know how the steel industry looks when this review is finished, but it will definitely be different to now. They propose reducing the price of inputs, but what mechanism will be used? Will ITAC create a new Price Preference System for iron ore, which means no one will be able to export iron ore without first offering it locally at a discount? I don’t think its a great idea, but it is within their legal remit. An export duty could also be considered, and the Customs Act has been amended to allow for this, but only National Treasury can impose export duties.

Perhaps most importantly, we have a gazette with the scope of the review, but no supporting information. By time we have our webinar next week, we will know a lot more.

Interested parties have until 16 April to respond.

If you miss the deadline, your information can be ignored by ITAC, so take this deadline seriously.

Of course you should contact us at info@xagta.com to assist you!