As of December 31, 2014, definitive antidumping duties were imposed by the Department of Trade and Industry on several base metals products, law firm Norton Rose Fulbright competition director Marianne Wagener and competition associate Candice Upfold state.
Antidumping laws protect vulnerable industries from products being dumped in their sectors, with the base metals and base metals products industries particularly reliant on antidumping duties, they add.
Almost 30% of all antidumping measures are imposed on exports of base metals and base metals products.
Products affected by these duties include nuts and bolts from China, stainless steel sinks from China and Malaysia, wire ropes from China, Germany and the UK, as well as paper-insulated lead-covered electric cable from India.
Wagener and Upfold explain that dumping occurs when a company exports its products at a price either below the price charged in the market of its home country or below a company’s cost of production, noting that this is often done to drive competition out of an importing country.
They add that South African Schedule 3A public entity the International Trade Administration Commission has reported that goods from capital-intensive industries are the ones that are typically dumped.
“In industries of this nature, volumes are integral to sustain the capital-intensive business model, which makes dumping of these products more prevalent.”
Dumping is particularly prevalent in the base metals industry because of the complex processes, such as flotation and smelting, which are required to produce final base metals products.
Wagener and Upfold add that, dumping that typically occurs in the base metals industry is known as persistent dumping, which happens when a firm constantly sells a portion of its products at a lower price on the foreign market, taking advantage of the greater price elasticity of demand.
They explain that antidumping measures are put in place when there is evidence of material injury to an industry and to allow for the long-term sustainability of an industry, adding that antidumping measures will need to be carefully considered against the role played by unregulated global competition, diversified short-term consumer choices or lowered consumer costs.
Upfold and Wagener add that there are, however, other trade remedies to protect local industry from dumping. For example, the amendment to the export control guidelines in February 2015 guarantees that ferrous scrap metal will be offered to local industry first at a 30% markdown from the international benchmark price at which it would be sold.