Tyre importers and manufacturers in China have been slapped with anti-dumping duties for the next five years following an investigation by the International Trade Administration Commission (Itac).

The commission recommended that Minister of Trade, Industry and Competition Ebrahim Patel impose anti-dumping duties on new pneumatic tyres imported from China for cars, buses and lorries ranging between 7.18% and 43.6%.

The application was lodged by the South African Tyres Manufacturers Conference (SATMC), representing Bridgestone, Continental, Goodyear and Sumitomo. These firms are responsible for the production of these tyres in the Southern African Customs Union (Sacu) area.

They allege that the dumping causes material injury in terms of price undercutting, decline in sales volumes, market share, employment, output and productivity.

SATMC submitted its application on 24 November 2021, and Itac introduced provisional duties of 38.33% on the back of prima facie evidence of dumping. These duties expired on 8 March this year.

Itac found some deficiencies in the initial application, and after SATMC updated its information, initiated its investigation at the end of January.

The Tyre Importers Association of South Africa (Tiasa) was vehemently opposed to the imposition of the provisional duties and the investigation by Itac.

It approached the courts to compel Itac and SATMC to disclose critical information that it claims was being withheld about the local manufacturers’ application, but eventually withdrew from the legal process.

Spike in prices.

Tiasa argued that the introduction of anti-dumping duties would result in a spike in the price of tyres for passenger vehicles, buses and lorries. It also claimed these duties would negatively affect taxi commuters who were already suffering because of a rapid increase in living costs across the board.

Tiasa argued that import duties of between 25% and 30% were already levied on imported tyres and that the imposition of more duties could increase prices by between 17% and 40%.

Tonderai Chibasa, tariff and trade remedies manager at XA Global Trade Advisors, says the impact of the additional duty is that it will undoubtedly be passed on to the final consumer. The local industry does not have the capacity to produce all the types of tyres and is itself dependent on imports.

Chibasa says there might be a shift of imports to other countries that are not affected by the anti-dumping duties, such as the European Union or Thailand where some Chinese manufacturers also have plants.

A recent study by Genesis Analytics on the impact of anti-dumping duties on prices in the South African market (for frozen bone-in chicken) noted that the duty is imposed on the free-on-board (FOB) price of imports and not on the final retail price.

“The smaller the proportion that the FOB price contributes to the retail price, the smaller the impact that any duty will have on the retail price,” the study found.

Dumping from China

SATMC initially asked for anti-dumping duties ranging between 7% and 69%, however, the highest final anti-dumping duty levied on Chinese imported tyres is 43.6%. A product is ‘dumped’ in South Africa if the landed cost (in SA) is less than the price customers in China pay for it.

Itac’s investigation showed that dumped tyres with different rim sizes for cars, buses and lorries from China ranged between 36% and 81% of total imports for the period 1 August 2020 to 31 July 2021.

SATMC said in a statement it welcomes the final decision to introduce the anti-dumping duties that will remain in place until July 2028.

He adds that the outcome of the investigation acknowledges the challenges faced by the domestic tyre manufacturing sector. “We are also satisfied that the minister found that the evidence of material injury to the industry was properly substantiated,” he says.

“SATMC and its members remain committed to driving growth, promoting innovation, and ensuring the sustainability of the domestic tyre industry and the continued supplying of the wide SACU customer base. These duties will be essential in establishing a fair competitive landscape for our industry, ensuring a level playing field for domestic manufacturers, and preserving local employment opportunities.”

Source: Moneyweb