NEASA Urges Immediate Removal of Protectionist Duties on Long Steel Products
In a recent development, the National Employers’ Association of South Africa has formally requested that the International Trade Administration Commission of South Africa lift all protectionist duties imposed on long steel products. This call follows the closure of multiple steel manufacturing sites and a rail production plant by ArcelorMittal South Africa, leading to the unfortunate loss of 3,500 jobs.
The duties, which were introduced to protect the local steel industry, have come under increasing scrutiny. NEASA argues that these measures have lost their effectiveness and are now harming the sector, especially as Amsa, the only steel producer to request such duties, can no longer compete in the market under current conditions.
A Timeline of Protectionist Measures
In June 2024, ITAC imposed a 9% safeguard duty on long steel products, aiming to shield South African steel manufacturers from cheaper imports. Then, in November 2024, an additional 52% anti-dumping duty was placed specifically on structural steel, targeting countries accused of selling steel at below-market prices.
These protectionist actions were intended to preserve the local steel industry from foreign competition, but their effectiveness has now been questioned following the recent closures by Amsa, South Africa’s leading steel producer. Amsa's inability to stay competitive within the local market has raised doubts about the necessity and efficiency of these protective duties.
The Impact on Employment and the Local Economy
The closure of Amsa’s steel manufacturing sites and the rail production plant has led to 3,500 job losses, which has had a significant impact on both the local workforce and the broader economy. NEASA argues that the duties were originally designed to protect jobs and maintain local production levels. However, with Amsa no longer viable in the market, the duties no longer serve their intended purpose.
The job losses and closures have also raised concerns about the long-term sustainability of South Africa’s steel industry. The difficulties faced by local producers, especially in light of these closures, are compounded by the rising costs of raw materials. The current safeguard and anti-dumping duties prevent local manufacturers from accessing more affordable imported materials, further inhibiting the ability of South African steel producers to remain competitive.
NEASA's Proposal: Affordability and Competitiveness
NEASA's recommendation to lift the duties is rooted in the belief that doing so would provide steel manufacturers with greater access to affordable imported raw materials. According to NEASA, this would allow for cost savings in production, which could help revitalize the local steel industry by making it more competitive on both domestic and international markets.
By removing the protectionist measures, NEASA suggests that South African manufacturers will be able to source the materials they need at lower prices, potentially reducing operational costs and enhancing their ability to compete with global steel producers.
The Department of Trade, Industry, and Competition's Response
While NEASA is calling for the removal of the duties, the Department of Trade, Industry, and Competition has expressed concern over the potential ramifications of such a move. The dtic remains committed to working closely with Amsa to find viable solutions that would help address the challenges facing the steel sector while maintaining protection for local industries.
The dtic’s response underscores the complexity of balancing domestic industrial protection with the need for international competitiveness. While the department acknowledges the difficulties faced by Amsa, it is also mindful of the broader implications that lifting the duties might have on South Africa’s economy, especially in terms of job preservation and local steel production.
The Bigger Picture: South Africa’s Steel Sector Challenges
The current situation in South Africa's steel industry is reflective of larger global trends, where local industries face increasing pressure from international competition, particularly from countries with lower production costs. As the South African steel sector continues to grapple with these challenges, finding a sustainable balance between protecting local industries and fostering global competitiveness remains a key issue.
The request by NEASA to lift the protectionist duties marks a pivotal moment for South Africa’s steel industry, which must now navigate a path forward that addresses both local industry needs and the realities of global trade.
