Minister pauses on extra trade restrictions on frozen chips

SOUTH AFRICA – Trade and Industry Minister Rob Davies has put a temporary lid on additional trade restrictions imposed on imports of frozen potato chips.

This particularly applies to frozen chips coming into the Southern Africa Customs Union (Sacu) market from Belgium and the Netherlands.

Mr Davies suspended the recommended introduction of antidumping duties, which would have come on top of existing safeguard duties on potato chips from all countries, excluding developing countries, until the safeguard duties expire in 2016.

Only two companies, Agristo Harelbeke from Belgium and Lam Weston from the Netherlands, will be exempt from the antidumping duties.

The action by Mr Davies comes after the International Trade Administration Commission (Itac) found that dumping was taking place in the Sacu market and recommended that “definitive antidumping duties” be imposed against Belgium and the Netherlands.

Antidumping duties

Mr Davies approved Itac’s recommendations at the end of July for a safeguard duty of 40.92% that will remain in place until July 5 next year, when it will be reduced to 20.45% until June 5 2016.

The minister felt that the safeguard duty offered sufficient protection against imports and that the antidumping duties would apply only to Belgium and the Netherlands when the suspension was lifted after June 4, 2016. The antidumping duties will remain in place for five years.

Trade experts speculated that South Africa wanted to avoid the perception of “overprotection” of a specific product, and that the simultaneous introduction of safeguard and antidumping duties could lead to possible challenges in the World Trade Organisation.

Safeguard measures are used against any unforeseen surges of imports, while antidumping duties are a penalty imposed on suspiciously low-priced imports.

Food company McCain initially launched the safeguard duty application with Itac, and also approached the commission with an application in June last year to investigate claims that producers in Belgium and the Netherlands were dumping their products in South Africa at a discount rate of more than 51% and 22%, respectively.

Dumping margin

Itac made a preliminary finding of dumping in December last year and, after considering comments from affected parties, issued letters stating the grounds on which it considered making a final determination over the possibility of dumping.

XA International Trade Advisors director Donald MacKay questioned Itac’s calculations to determine the dumping margin at which the tariff would be imposed.

The fact that only two companies have been exempted from the future antidumping duties, gave the impression that not all their concerns about the calculations were taken into account, Mr MacKay said.

He said six companies from Belgium and the Netherlands, which were responsible for the lion’s share of the imports into Sacu, responded to the investigation.

This indicated that they were not dumping, or that the margin of dumping, in the cases where dumping was found, was substantially smaller than what was calculated by Itac.

August 15, 2014; http://www.bdlive.co.za/business/trade/2014/08/13/davis-pauses-on-extra-trade-restrictions-on-frozen-chips

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