Duty-free imports from Africa put South African coatings sector at risk, says Sapma

South Africa’s coatings industry has warned the government that its future existence will be threatened by allowing African paint, polymer and coatings producers to export products to the country duty-free under the Zone agreement. African Continental Free Trade Agreement (AfCFTA).

SA Paint Manufacturing Association (Sapma) President Sanjeev Bhatt said on Tuesday that the industry was shocked to find that on a few specific tariff headings, these product lines could be imported duty-free from July of This year.

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Bhatt said the sector had previously been assured by the Department of Trade, Industry and Competition (dtic) that the domestic coatings sector would be protected and isolated on certain tariff headings under the AfCFTA agreement.

He said this was to prevent imports of coatings and associated raw materials from Egypt, which is a prolific producer, into South Africa duty free.

Bhatt said the coatings industry expected to be protected from a deluge of cheaper, and often substandard, paint and polymer products dumped in South Africa.

Mysteriously “altered” price lists

However, he said it appears that – without any consultation with the SA or Sapma coatings industry – the tariff schedules of the AfCFTA agreement have been amended to allow African producers to be duty free when offering their products in the South African market.

“Such unfair competition would not only threaten the continued quality of coatings sold in South Africa – likely at much lower cost – but would virtually shut down the local coatings industry with huge job losses,” Bhatt said. , adding that the sector provides direct employment to more than 15,000 people.

He said Sapma had stumbled upon the removal of import duties for the rest of the African coatings market when updating the new tariff headings.

Bhatt said he wrote a formal letter to the dtic’s chemicals office and asked them to enlighten Sapma as to where this zero duty list came from, but “oddly enough, they weren’t aware of it either. more”.

“When I asked [it] … the dtic and the Itac [International Trade Administration Commission] confirmed that they are currently investigating the origin of this directive.

“As of now, they still haven’t explained to us how it was implemented. It’s a mystery to us right now,” Bhatt said.

“It’s a bit sad and unfortunate that nobody in these departments is aware of something that has been implemented and approved by the minister.

” Is it a mistake ? Was it done knowingly? These are the answers we are all looking for.

A list of questions was emailed to dtic and itac.

Itac responds

No response has yet been received from dtic, but Itac communications manager Thalukanyo Nangammbi said the commission was not aware of any discussions with Sapma in terms of establishing the directive that led to the fee structure proposed under the AfCFTA agreement.

“These free trade agreements are in the realm of dtic,” he said.

“On September 6, 2022, Sapma only engaged Itac with respect to providing an update on the creation of reimbursement facilities for titanium dioxide used in the manufacture of, among other things, prepared paints, varnishes and driers.”

Responding to a question about protecting consumers from substandard imports, Nangammbi said that issue was a matter for the National Consumer Council (NCC) and possibly, with the imposition of standards, the SA Bureau of Standards (SABS) , which also resides outside. The domain of Itac.

“However, any industry that suffers material injury as a result of dumped imports can approach the commission and submit supporting evidence, which will be investigated by the commission,” he said.

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Bhatt said the employment and energy rates that some African governments, such as Egypt, give to their manufacturing sectors make production costs in those countries much lower than those in South Africa.

He added that Sapma members already pay millions of rands in import duties to obtain essential raw materials, such as titanium dioxide and TOFA (tall oil fatty acids), because none of these vital components is not produced locally.

“Disruptions in electricity supply, collapsing infrastructure and inefficient management of parastatal entities are also major burdens on coatings and all other industries in South Africa.

“Now the coatings industry is expected to compete with the entire African coatings market on a totally unfair basis,” Bhatt said.

“If these cheaper imports from Africa are allowed to flood the South African market, the local coatings manufacturing industry will suffer severe economic consequences and eventually cease production.

“The dumping of cheap paint and polymers into our ports will almost certainly follow, if not corrected or rectified.

“That must not happen.”

Read: New concerns over anti-dumping protection agreements

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