CECE opposes the prospects of raising customs duties for ADTs in South Africa

To differentiate ADTs from other dumpers, ITAC is proposing the creation of a new tariff subheading specifically for articulated dumpers along with the following definition: “articulated dumpers are vehicles consisting of two distinct sections namely, a two-wheeled motor-driven front chassis and a two or four-wheeled rear chassis connected to one another by a pivoting articulation joint for steering”. ITAC is now investigating an increase to 10% in the customs duty rate for ADTs with a G.V.M. exceeding 50t (see Government Gazette No. 45571, Notice 702 of 2021).

This investigation follows the amended application by Bell Equipment submitted to ITAC in the summer requesting an increase in the customs duty rate for ADTs only, thereby excluding from their application other types of dump-trucks like rigid dump-trucks.

The European construction industry is deeply concerned about this investigation. Several European companies manufacture articulated dumpers which are exported to South Africa for use in mining, quarrying and construction industries.

To voice the concerns of the European construction equipment, on 14^th December CECE wrote to ITAC in order to oppose the prospects of an increase in the customs duty rates for ADTs.

Indeed, higher tariffs will lead to increased costs for end customers in the mining, quarrying and construction industries. An increase in tariffs will make exports of European articulated dumpers uncompetitive in South Africa. This will lead to monopoly and lack of diversity in dumpers’ offering in South Africa and distort the local market situation.

From a legal perspective, it seems necessary to assess whether the unilateral amendment of HS classification and the creation of a new HS code for articulated dumpers, which de facto annul the previously enjoyed concession of free of duty for the EU, is compliant with the Economic Partnership Agreement (EPA), in force between the EU and the Southern Africa Development Community (SADC), and the WTO commitments.  Likewise, it seems necessary to assess if the products in question (dumpers, including articulated ones) are covered by the exceptions mentioned by Article 23 of the SADC-EU EPA.

The reasons for the tariff increase outlined by Bell Equipment in their application are not fair and substantial enough. Bell Equipment is advocating again that the measure is necessary to secure the competitiveness of locally manufactured articulated haulers in a general economic decline situation. However, this should not justify the resort to protectionist measures.  In addition, exporting manufacturers are facing higher transport cost and longer lead times by which local manufacturers, such as Bell Equipment, will not be impacted.

Only a climate of openness will foster trade and investment, which will ultimately be the driver for growth. In light of this, it is necessary not to increase the tariff rates on any kind of dumpers designed for off-highway use and maintain the current preferential rates.