Local Industry
Melanie Veness: PCB CEO
Some time back I wrote an article highlighting the challenges faced by my members in the chicken industry with regard to what could be considered to be unfair trade practices in other countries.
What was in essence happening, was that the chicken feed in the particular country concerned was being highly subsidised by the government, making it possible for traders to make their full recovery on the sales of the white meat into traditional western markets where there is a demand for white meat only, and the balance of the chicken was then finding its way into our market at ridiculously low rates. This made it almost impossible for our local producers to compete. I didn’t advocate for tariff barriers, I requested urgent intervention that would result in a levelling of the playing fields. This is because we appreciate that the implementation of tariff protection has far reaching implications on a number of trade fronts. The point that I wish to make is that these kinds of back end market facilitation initiatives and trade incentives seem to be happening on numerous fronts with devastating consequences for local industry. Very often, and quite disconcertingly in BRICS partner countries.
My metal industry guys are really struggling at the moment, because of just such market interference and because of the uneven application of tariffs. Take for example the Aluminium sector.
China has invested and continues to make large investments in Aluminium semi-fabricated production capacity. As such, the utilisation rates of capacity in Chinese manufacturing plants continue to decrease. The Chinese government, in support of beneficiation, provides an export rebate of at least 13%, which combined with the over capacity, creates artificially low global market prices.
In markets like Europe, anti-dumping duties have stabilized prices, however, in some traditional export markets, the situation is dire and the South African market is very exposed to low priced imports. The South African market is one of the few markets into which aluminium flat rolled products are imported without any duties. South African product sales into China attract a 6% duty and sales into Brazil are subject to a minimum of 12% import duty. The South African market for aluminium flat rolled products continues to increase, but ironically (and quite unacceptably) much of this growth is supplied by producers based in Brazil and China.
Local industry is hamstrung by energy challenges, both electricity and Liquid Petroleum Gas (LPG) shortages, whilst their competitors elsewhere in the world have easy access to cheaper Natural Gas. The industry is heavily dependent on electricity and gas energy and we currently don’t have the infrastructure or capacity to meet their needs.
If we aren’t even able to compete in our own market, then we are in serious trouble. If some urgent intervention is not forthcoming, then there are thousands of jobs at risk in this sector, and many of those are in Pietermaritzburg. At the very least there should be an even application of tariffs.
