SA has been getting German frozen chips at 190% below cost price, regulators say
- Germany has been dumping frozen chips in South Africa at way, way below cost, says SA's International Trade Administration Commission.
- The Netherlands too stands accused of dumping chips in SA.
- Itac is now starting up an anti-dumping investigation that is likely to lead to a protective tariff for local producers – after previous tariffs expired because of a technical failure.
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Germany has been dumping frozen chips into the South African market at a ridiculous discount, South African regulators said on Friday, and will now face an anti-dumping investigation alongside The Netherlands and Belgium.
That is likely to lead to the reimposition of high tariffs on such frozen chips – which fell away because of technical mistakes – in order to protect local producers.
On Friday, the International Trade Administration Commission of South Africa (Itac) said it had "gathered sufficient evidence to establish a prima facie case based on dumping, material injury and causality", and had decided to self-initiate a formal anti-dumping review.
Based on historic data corrected for inflation, Itac has calculated a dumping margin of 190% for chips from Germany, and of 83% for chips from Dutch exporters. The margin for Belgium came in at a comparatively paltry 12%.
Those low prices have seen an increase in imports, with evidence of local producers suffering "price undercutting and price suppression, as well as an impact in terms of a decline in sales and production volumes; negative net cash flow; a decline in return on investment; a decline in capacity utilisation; a decline in profits, a decline in market share; a decline in employment and negative growth."
Local companies involved in the trade, importers, and the trade representatives of the three European countries now have 30 days to provide information for the review, or request oral hearings.
The most likely outcome is a reimposition of import duties of up to 30% – which South Africa dropped by accident earlier this year.
Under global trade rules, such anti-dumping duties lapse after five years, and South Africa failed to complete the sunset review that would have allowed them to be extended. Horrified local producers warned of significant job losses as a result and blamed Itac, while Itac said the producers were responsible for the delays in its work.
Meanwhile, South African potato prices spiked wildly, then normalised again, just as the pandemic made for unpredictable demand of chips from fast-food outlets.
(Compiled by Phillip de Wet)
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