SA’s International Trade Administration Commission (Itac) has begun antidumping investigations into stainless steel sink imports from China and Malaysia after local manufacturers claimed that almost half the product value of these imports came from state incentives.

Local manufacturers say imports are selling in SA at prices below the cost of raw material, causing major harm and threatening 500 jobs.

The antidumping application was brought by Franke Kitchen Systems, which claims China’s imports have surged to 60% of total imports from nothing only three years ago. Despite an import duty of 20% on stainless steel sinks, the price of imported products still undercuts locally manufactured sinks.

The test for dumping is whether the price of the product in the country of origin is below the export price.

“We have seen a massive price depression. The product is selling at below the price of stainless steel,” said Gerhard Kotzee, business unit manager at Franke.

Franke also claims that the supply of stainless steel in China is not based on free market principles. But even as Itac has provisionally found evidence of dumping, the commission’s investigation faces formidable challenges.

In an agreement that trade consultants had warned could compromise local industries, SA had granted China market economy status and agreed to enhance debate on antidumping in return for China agreeing to the imposition of import quotas on cheap clothing and textile from that country.

SA has not had a single successful antidumping investigation against China since granting it market economy status. And an Itac official acknowledged earlier this year that the new status had complicated the body’s work and curtailed its ability to investigate dumping complaints brought against China.

Franke brought a second application for countervailing measures in a bid to boost its chances of success.

It claims that Chinese manufacturers benefit from a host of incentives, including special economic zone incentives , grants for export performance, preferential loans, grants, preferential tax, reduced land use fees and preferential purchases from state-owned enterprises.

The overall margin of subsidisation for stainless steel sinks in China could be as high as 47,7%.

“Whole industries in SA have been sacrificed to strengthen our trade ties with other countries. We are trying to prevent this from happening to us,” Kotzee said.