South African manufacturers await court decision
Persistence may soon pay off for South Africa’s tyre manufacturers. In early September the Supreme Court in the city of Bloemfontein will hold the final hearing on an appeal regarding the dumping of Chinese tyres in South Africa. If the decision goes its way, the local industry will be given the means of resisting something said to be injuring its viability.
September’s court hearing will likely be the final battle in a campaign that began six years ago when the South African Tyre Manufacturers Conference (SATMC) applied for International Trade Administration Commission of South Africa to instigate an anti-dumping investigation. The SATMC, who represents the four multinational companies producing tyres in the country – Apollo Tyres, Bridgestone, Continental and Goodyear – alleged tyres originating in or imported from China were causing material injury to the South African tyre manufacturing sector.
The commission claims to have examined “all known producers and exporters” of Chinese tyres by means of questionnaire, and in June 2006 its preliminary determination reported that while manufacturers including Triangle, Aeolus, Shandong Chengshan, Giti, Kenda and Kumho were not dumping tyres in South Africa, other exporters were indeed engaging in this practice. It stated that the South African industry “is suffering material injury” and that there is “a causal link between the dumping of the subject product and the injury.” Yet ten months later, after “considering all the comments from interested parties”, the commission decided that factors other than dumping, such as the volume of Chinese imports at non-dumping prices, were responsible for harming the local industry. The commission therefore recommended to South Africa’s Minister of Trade and Industry that the tyre dumping investigation be terminated.
The SATMC appealed this decision, complaining the investigation team visiting China accepted figures provided by manufacturers without compiling proper audit reports. It claimed the commission displayed a “totally unsympathetic attitude” towards South African tyre manufacturers. In June 2010, the Supreme Court of Appeal ruled in favour of the SATMC’s appeal and ordered the commission to conduct a fresh anti-dumping investigation within four months, using prices from a third country. Instead of complying, the commission took this ruling to the Supreme Court in Bloemfontein, and now the industry awaits the final hearing on September 7.
Recently, Apollo Tyres chairman and managing director Onkar S Kanwar said “government inaction on [the] large scale import of tyres into South Africa is taking a toll on the tyre manufacturing industry.” The cost in terms of rand, pounds or dollars is difficult to calculate, however South Africa’s Mail & Guardian notes that out of an estimated annual replacement tyre market of seven million units, in 2010 Chinese imports account for 1.69 million, or approximately 24 per cent. Seven years earlier only 35,000 tyres were imported from China and the total amount of imported tyres entering South Africa was less than half the 2010 figure of 55 per cent.
The Mail & Guardian reflects that if the Supreme Court requires the International Trade Administration Commission to ignore the South African government’s decision, South African president Jacob Zuma “may have to choose between his relationship with China and the need to assist South African industry as it faces increasing competition from cheap Chinese imports.” Whatever the wider implications for South Africa, with other factors also eroding the local industry’s competitiveness – Kanwar pointed to the “high cost of manufacturing and recurring wage negotiations in South Africa” – it is clear that September’s decision is an important one for the country’s tyre makers.