2014's Second Trade Centurion: Dumping
19 August 2014
Posted by: Author: Christiaan v. de Lange
Author: Christiaan v. de Lange (Delegation of the European Union to the Republic of South Africa)
introduced as "dumping and
countervailing" in 1914, it was only in the 1992 that a distinction
was drawn between "dumping"
and "countervailing" (anti-subsidy). Presently there are a
trilogy of trade remedies under the World Trade Organization (WTO), namely
dumping, countervailing and safeguards. There is also a trade remedy under the
Trade, Development and Cooperation Agreement (TDCA) – Article 16 safeguard –
but that for another day. The distinction between the trade remedies are that
dumping and countervailing are considered unfair trade remedies, whilst
safeguards as a fair trade remedy. It is called this since unfair trade
remedies addresses practices of unfair trade, whilst the fair trade remedy
provides for an intervention, even though the import is considered to be fair.South
Africa (this also refers to the
collective Southern African Customs Union or SACU), was the fourth country in
the world to introduce dumping and countervailing, following Canada (1904), New
Zealand (1905) and Australia (1906). In 1914 the Union of South Africa
introduced the Customs Tariff Act of 1914, which in part 1 to 3 of section 8
introduced the concepts of "dumping
and countervailing duties". Just before I am challenged and you are
told otherwise, trade remedies, also known as "bounties" or "subsidies",
have a history in Southern Africa dating back to 1903, when it was used in the
then Transvaal colony. This article considers present day South Africa, the collective
of its current provinces, to date back to 31 May 1910, the date of the
establishment of the Union of South Africa.
I would venture to guess
that you did not consider dumping and countervailing measures to have been
around for that long?
The existence of "bounties"
has an even more advanced history, being referenced by Adam Smith, the father
of Economics, in his iconic publication "An Inquiry into the Nature and Causes of the Wealth of Nations"
(Wealth of Nations), which was published on 09 March 1776. 238 years ago. Reference can be found in
Book IV "Of Systems of political
Economy", the Chapter "Of
The intention of this article is not to deal with the principles of dumping
and countervailing measures, nor the provisions of the Customs Duty Bill, but
to provide you with a brief overview of its evolution, and what a journey it
1914: A Special Customs Duty (or Dumping Duty)
comparison, the reference to dumping and countervailing in section 8 of the Customs
Tariff Act of 1914 was 314 words, in the 1964 Act it is 877 words (730 words excluding safeguards), and the
2014 Customs Duty Bill it will be 524 words (The word count only reflects the reference to provisional
anti-dumping, countervailing or safeguard duty, as "import tax",
includes amongst other an ordinary import duty, anti-dumping duty, countervailing
duty or safeguard duty.)
to Section 8(1) of the 1914 Act "In
the case of goods imported into the Union of a class or kind made or produced
in the Union, if the export or actual selling price to an importer in the Union
be less than the true current value of the same goods when sold for home
consumption in the usual and ordinary course in the country from which they
were export to the Union at the time of their exportation thereto, there may,
in addition, to the duties otherwise prescribed, be charged, levied, collected
and paid on those goods on importation into the Union a special customs duty
(or dumping duty) equal to the difference between the said selling price of the
goods for export and the true current value thereof for home consumption as
defined in this Act: Provided that the special customs duty (or dumping duty)
shall not in any case exceed fifteen percent, ad valorem."
Act gave the Governor-General discretionary power to impose a measure on
imported goods whose selling price was less than the price of the same goods in
the country of export. At the time the Director-General provided offending
parties with six weeks' notice prior to the imposition of the measure. This
function was subsequently taken over by the Board of Trade and Industries (BTI).
1924: The Board of Trade and Industries
The BTI was established in February 1923 to undertake
the investigation of allegations of dumping and to make recommendations on the
imposition of anti-dumping measures, where appropriate. On 24 September 1924
the BTI was made responsible for the administration of the anti-dumping and
countervailing dispensation, and on 01 October 1924 a full-time Board was
appointed. Over the years the BTI name has changed, first to the Board
of Trade and Industry also known as the BTI (24 September 1986), then the Board on Tariff and Trade (BTT) (06 May 1992) and to its present name the
International Trade Administration Commission of South Africa (Itac) (01 June 2003).
The first anti-dumping investigation
undertaken by the BTI involved cement, Report No.30, published on 28 November
1923 is simply titled "The Dumping
of Cement". The report was the result of an instruction of the Acting
Minister of Finance to the Chairman of the BTI on 24 September 1923 to report
on the question of the application of anti-dumping duty on cement. With some
irony, when this article was being written, rumours were abound of the cement
industry contemplating an anti-dumping application.
August 1924 the BTI represented Report No.38 simply titled "Dumping". The report states that
"the Board has steadily declined to
investigate specific allegations of dumping until they have been dealt with by
the Customs Department, and on occasion even when urged by the Customs
Department to make investigations into questions of dumping has had to asked to
be excused owing to the pressure of other work". The report goes on to
state that "since then other
complicated questions regarding dumping have presented themselves, and the
Board feels that the moment has arrived for dealing with the whole position".
anti-dumping remedy, whilst not extensively used, was well known and accepted
practice during the time of the General Agreement on Tariffs and Trade (GATT)
and the International Trade Organization (ITO) in the mid-1940s. Although
attracting little discussion, it was included in GATT 1947, GATT Article VI (known as the Anti-dumping Agreement).
1964: Anti-Dumping Duties
its independence, resulting in the establishment of the Republic of South
Africa on 31 May 1961, the Customs and Excise Act of 1964 came into operation,
introducing Sections 55 to 57 of Chapter VI "Anti-Dumping Duties". Section 55 identified the circumstances
and the types of anti-dumping duties that can be imposed. The five types of anti-dumping
duties identified were, ordinary anti-dumping duty, bounty anti-dumping duty,
freight anti-dumping duty, exchange anti-dumping duty, and sales anti-dumping
only during the Kennedy Round of Multilateral Trade Negotiations from November
1963 to May 1967 that the first substantive review of GATT Article VI (Anti-dumping Agreement) occurred. The
resultant negotiations saw the establishment of GATT's first Anti-dumping Code
which expanded and clarified the Article's obligations. South Africa chose not
to be a signatory to the Agreement and to the subsequent Agreement on Subsidies
and Countervailing Measures.
the Customs and Excise Amendment Act of 1967 was introduced that repealed all
anti-dumping measures imposed prior to 24 March 1967.
Tokyo Round on Multilateral Trade Negotiations that lasted from September 1973
to November 1979, contracting parties revisited the Agreement and concluded a
new Agreement namely the Agreement on the Implementation of Article VI of GATT.
Then in its
1977 Annual Report the BTI recommended that "all existing anti-dumping provisions be withdrawn from 1 January 1978".
It was argued that "many of the
anti-dumping provisions had been in existence for over twenty years and the
Board is satisfied that the withdrawal of all provisions would not prejudice
and South African industries in any way". This recommendation came
into effect on 1 January 1978. Disruptive competition was subsequently remedied
through the use of formula duties that maintained the price of imported
products above set floors. This practice continued until 1992.
promulgation of the BTI Amendment Act on 06 May 1992 a distinction was for the
first time drawn between "dumping”
and "countervailing”. This
legislative amendment resulted in the establishment of the Directorate: Dumping
Investigations and the secondment of staff from the Department of Trade and
Industry (the dti).
1994: The Anti-dumping Agreement
On 02 December 1994, South Africa deposited
with the Secretariat of the GATT, a signed instrument of accession to the
Agreement establishing the WTO, and on 06 April 1995, Parliament approved the
accession in accordance with the Constitution of South Africa. On 01 January
1995 WTO was established as a result of the Uruguay Round of Multilateral Trade
Negotiations that lasted from September 1986 to December 1993,
institutionalising the General Agreement on Tariffs and Trade (GATT). As a
consequence, countries were no longer Contracting Parties, but rather
Signatories or Member countries. South Africa accordingly became a Signatory to
the Agreement on the implementation of Article VI of GATT 1994 (Anti-dumping Agreement), the Agreement
on Subsidies and Countervailing Measures, and the Agreement on Safeguards. The
"final provisions" of these
Agreements required that Member countries had to change their laws, regulations
and administrative procedures to as to conform.
During the late 1990s South Africa became
one of the most prolific users of anti-dumping measures in the world, the
fifth-largest in fact, after the United States of America (USA) the European
Union (EU), India and Argentina. Although South Africa's use of trade remedy
measures is no longer close to those levels, trade remedy measures remain an
important element of South Africa's (and
SACU’s) tariff and trade instruments.
2014: Trade Remedies
The article does not deal with the trade
remedy provisions of the Customs Duty Bill, which is expected to be enacted in
2014. The article will conclude with a brief overview of the number of trade
remedy measures in place on 01 January 2014, the countries, and the product
groups to which they apply.
There were 57 final anti-dumping measures in
operation, two provisional anti-dumping measures, two countervailing measures,
and a provisional safeguard measure. The final anti-dumping measures applied to
13 countries, namely Brazil, the People's Republic of China, Germany, India,
Indonesia, the Republic of Korea, Malaysia, Sweden, Taiwan, Thailand, Turkey,
the United Kingdom and the USA. The two countervailing measures both applied to
India. China accounted for 45.61% of the anti-dumping measures, whilst
collectively China (45.61%), India (12.28%) and Indonesia (10.53%), accounted
for 68.42% of the anti-dumping measures. Three product groups, iron and steel
(35.09%), glass and glassware (22.81%) and plastics (8.77%) accounted for 66.7%
of the prevailing anti-dumping measures.
This article first appeared on the August/September edition of Tax Talk.