South Africa is disappointed that it was not granted an exemption from the duties. On 08 March, President Trump had signed a Proclamation imposing a 10 percent ad valorem tariff on imports of aluminum articles and a 25 percent ad valorem tariff on imports of steel articles that excluded select countries including Canada, Mexico, European Union, South Korea, Australia, Argentina and Brazil.
The Proclamation followed reports from the Secretary of Commerce that imports of these products threaten to impair United States of America (US) national security.
South Africa has through the Minister of Trade and Industry, Dr Rob Davies made representations to the US, including two written submissions. The Ambassador of South Africa (SA) to the US, Mr. Mninwa Mahlangu has also engaged with the White House National Security Council Staff, State Department, the Office of the US Trade Representative (USTR) and Commerce Department in this regard.
In addition, Minister Rob Davies had teleconferences with Ambassador Mahoney, the Deputy USTR for Investment, Services, Labor, Environment, Africa, China and the Western Hemisphere on 22 March 2018 and again on 30 April 2018.
In the submissions, SA has argued that it is in itself grappling with the consequences of the global steel glut and that SA has stringent customs control measures and that there is no risk of circumvention or transshipment of steel from third countries.
Notably, SA emphasized that SA exports of aluminum products per annum are equivalent to about 1.6% of total US aluminum imports.
According to the US Census Bureau data, in 2017 the US imported a total of 33.4 million tons of steel, of which imports from SA were approximately 330 000 tons or 0.98% of total US imports and 0.3% of total US steel demand of 107 million tons. The 330 kilo tons exported from SA represents 5% of SA production equating to roughly 7500 jobs in the steel supply chain. As such, SA does not pose a threat to US national security and to the US steel and aluminum industries but is a source of strategic primary and secondary products used in further value added manufacturing in the US contributing to jobs in both countries.
“Because of these measures, SA will be disproportionately affected both in terms of jobs and productive capacity.” remarks the Department of Trade and Industry
Furthermore, SA offered to restrict exports to a quota based on 2017 exports level. However, despite these assurances, the United States has decided not to exempt South Africa from the duties.
“It is important to note that some of the exempted countries are the biggest exporters of steel and aluminum to the United States. For steel imports: collectively, countries granted exemption accounted for 58% of total steel imports into the United States in 2017. For aluminum imports: collectively, countries granted exemptions accounted for 49% of total aluminum imports into the United States over the same period.” states the Department of Trade and Industry
South Africa is therefore not a cause of any national security concerns in the US nor a threat to US industry interests and is not the course of the global steel glut. Instead, South Africa finds itself as collateral damage in the trade war of key global economies. South Africa is concerned by the unfairness of the measures and that it is one of the countries that are singled out as a contributor to US national security concerns when its exports of aluminum and steel products are not that significant.
SA acknowledges the adverse effects of global steel overcapacity. The domestic steel sector has been severely impacted by low priced steel and steel product imports and as a result SA has implemented a number of trade remedy measures. In addition, SA supports and participates in the Organization for Economic Co-operation and Development (OECD) and G20 multilateral processes to achieve outcomes of a fair, sustainable and viable steel industry in the future.
The imposition of the duties will have a negative impact on productive capacity and jobs in a sector already suffering from global steel overcapacity. In addition, SA notes with concern the different treatment of trading partners which will have an effect on the competitiveness of SA steel and aluminium products in the US and is likely to displace SA products out of the US market in favour of the exempted countries. South Africa is also concerned that the measures are implemented in a way that contravenes some of the key WTO principles. The Department of Trade and Industry continues to engage the industry on the matter.
In the meantime, Department of Trade and Industry encourages the domestic exporters to engage their US buyers to consider applying for product exemption under a process conducted by the US Commerce Department for products.