Anti-dumping duties: ITAC at loggerheads with Pakistani cement producers
Willemien Viljoen, tralac Researcher, comments on the legal battle between ITAC and Pakistani producers regarding an anti-dumping investigation into cement imports by South Africa
On 22 August 2014 the International Trade Administration Commission (ITAC) of South Africa notified the initiation of an anti-dumping investigation on Portland cement (not elsewhere specified, HS 252329) imported from or originating in Pakistan. According to the ITC Trade Map trade statistics Pakistan is the main supplier of this product to South Africa, followed by China and the United Kingdom. In 2013 and 2014 Pakistani producers supplied 98.5 percent and 99.5 percent, respectively of the South African demand. Between 2010 and 2013 the compound growth rate of Pakistani exports increased by 99 percent, while for the period 2010 to 2014 the compound growth rate was 74 percent. The importance of South Africa as a destination market for Pakistani exports has also increased significantly over the last seven years. South African has become Pakistan’s second largest destination market since 2012.
This significant increase in imports, and its alleged resultant impact on the domestic market in the Southern African Customs Union (SACU) are some of the factors which prompted the anti-dumping investigation application by four of the largest cement manufacturers in the SACU market (Afrisam, Lafarge Industries, NPC Cimpor and PPC). According to the application the difference between the normal value of Portland cement (not elsewhere specified) in Pakistan and the export price during 2013 resulted in a dumping margin of 48 percent which led to a decline in sales values, profit, output, utilization of production capacity and market share with a negative effect on cash flow, return on investment and employment. The applicants further alleged a threat of material injury based on the disposable capacity of the exporters, the significant increase in the alleged dumped imports and the state of the economy in Pakistan. The period for the investigation was set for 1 January-31 December 2013 to determine dumping and 1 January 2010-31 December 2013 for the injury determination.
On 29 April 2015 ITAC released its report with the preliminary determination that dumping has taken place which caused injury and a threat of material injury to the SACU industry. This prompted the implementation of provisional anti-dumping duties for six months (up to and including 13 November 2015).
Table 1: Applicable anti-dumping duties
|HS Code||Description||MFN duty||Anti-dumping duty|
|252329||Portland Cement manufactured or produced by Lucky Cement Limited||Free||14.29%|
|Portland Cement manufactured or produced by Bestway Cement Limited||Free||77.15%|
|Portland Cement manufactured or produced by D.G. Khan Cement Limited||Free||68.87%|
|Portland Cement manufactured or produced by Attock Pakistan Cement Limited||Free||63.53%|
|Other Portland Cement Manufactures in Pakistan||Free||62.69%|
Source: ITAC (2015)
Normally the implementation of provisional measures signals the conclusion of the preliminary investigation; however, in this case it signaled the start of a dispute and a legal battle between ITAC and the Pakistani producers. Not only is ITAC’s actions being challenged in the domestic court (in terms of the International Trade Administration Act of 2002 and the International Trade Administration Commission Anti-dumping Regulations – affidavits filed at the end of August 2015), a request for consultations (9 November 2015) under the multilateral framework (General Agreement on Tariffs and Trade (GATT) 1994, Agreement on Implementation of Article VI of the GATT 1994 (the Anti-Dumping Agreement) and the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU)) has now also been lodged by the Government of Pakistan. Both challenges are based on the same allegation of an ‘erroneous’ investigation approach adopted by ITAC based on various articles in the domestic legislation and the Anti-Dumping Agreement respectively:
The determination of dumping: Pakistani producers have alleged that a fair comparison between the normal value and export price did not take place because certain justifiable adjustments to both were not taken into account. Furthermore, the ‘like’ product was erroneously defined as only bagged cement, which excludes bulk cement.
The injury determination: The injury determination took place over an extended time period, failed to provide an objective examination of the entire product due to the exclusion of bulk cement and disregarded certain factors which contributed to the injury.
Information regarding the evidence of the case: Information was not provided timeously to interested parties, summaries of confidential information were not provided and crucial questions posed by interested parties were not responded to.
The public notice regarding detailed information pertaining to provisional measures: The public notice provided on the affirmative findings of preliminary measures failed to provide certain details, i.e. the manner in which injury was determined, the factual and legal basis for decisions made and the reasons for the determination.
This is not the first time the actions of ITAC have been challenged in either the domestic courts or the WTO Dispute Settlement Body – including the SCAW metals and Association of Meat Importers and Exporters cases (the High Court) and the Brazilian-South Africa anti-dumping duties (WTO DSU). Currently both challenges are still in their initial stages and it will be interesting to note what the results of both will be – Has ITAC violated its procedural and administrative obligations in the ITA Act and Anti-Dumping Regulations? Did ITAC act in a WTO-inconsistent manner by allegedly violating the procedural requirements under the WTO Anti-Dumping Agreement? Will litigation and/or adjudication take place or will a diplomatic resolution be sought?
ITC Trade Map (www.trademap.org);
Business Day (www.bdlive.co.za)