Tyre-manufacturing sector hits a pothole
The tyre-manufacturing sector has been thwarted in its new attempt to reduce the threat of cheap illegal tyre imports to the sustainability and survival of the industry.
|||Johannesburg - The tyre manufacturing industry has been thwarted in its new attempt to reduce the threat of cheap illegal tyre imports to the sustainability and survival of the industry.
This follows the SA Revenue Service (Sars) and Customs and Excise rejecting an industry proposal for a mass-based methodology to determine tyre import duties because of fears it will contravene World Trade Organisation (WTO) and General Agreement on Tariffs and Trade (Gatt) rules.
Read: Makers of new tyres battle for survival in SA
Riaz Haffejee, the chairman of the SA Tyre Manufacturers Conference (SATMC), claimed tyre importers under-declared the value of imports, which resulted in them paying less VAT and import duty. “They cut the price of their tyres on that basis. It’s a classic importer shenanigan,” he said.
Haffejee, who is also the chief executive of Sumitomo Rubber South Africa, said SATMC started co-operating with Sars after its unsuccessful application to the International Trade Administration Commission of South Africa (Itac) for the imposition of antidumping duties on cheap tyre imports.
He said they put in a reference price to alert Customs and Excise when tyres were being under-invoiced but claimed there were no measures to stop the way cheap tyres were being imported.
Nobuzwe Mangcu, the managing executive at SATMC, said it had proposed moving towards a mass-based tyre import methodology for the determination of import duties.
Mangcu said this proposal was supported by the trade and industry and economic development departments and Itac but rejected by Sars and Customs and Excise because it believed it would fall foul of WTO and Gatt rules.
Compliant
Haffejee said South Africa needed something similar that was compliant with WTO and Gatt rules. “We’re moving in the right direction, but we’ve not found the right answer yet,” he said.
Mangcu said SATMC was engaging Sars and trying to find a method that would allow the industry to enjoy the benefits of a mass-based duty system without raising concerns about their adherence to Gatt and WTO. She said SATMC had “gone back to the drawing board”. “In the next three to four weeks we will meet [Sars] again and put an amended proposal to them and get their views on it,” she said.
The local tyre manufacturing industry provides direct employment to about 5 500 people and SATMC has made several attempts to protect the industry against cheap imports. SATMC in 2012 unsuccessfully applied to Itac to impose antidumping duties on tyres imported from China.
The Supreme Court of Appeal subsequently rejected an appeal by SATMC for a review of the Itac decision.
Apollo Tyres South Africa in 2013 applied to Itac for an amendment of the duty structure for certain types of tyres and the imposition of formula-based customs duties on car, bus and truck tyres instead of the current ad valorem duties.
Among the reasons provided by Apollo Tyres for the application was the massive influx of low-priced and under-invoiced imported tyres, mainly from China.
BUSINESS REPORT