The South African Tyre Manufacturers Conference (SATMC) has levelled some stinging criticisms at the International Trade Administration Commission of South Africa (Itac) following its protracted anti-dumping struggle. Itac has responded with a rebuttal in each case.
- Itac investigations are protracted
SATMC criticism: Generally, Itac’s investigation was very protracted. The tyre industry antidumping investigation was only finalised in 524 days (17 months). On average, Itac takes around 481 days (16 months) to finalise investigations, despite the World Trade Organisation (WTO) anti-dumping agreement requiring an investigations to be normally finalised within 12 months. Itac’s average time to finalise investigations is the longest of all major users of the instrument, with some countries — including Australia and New Zealand — taking less than 180 days. Time is obviously of the essence in any anti-dumping application — an application is only brought when an industry is haemorrhaging.
Itac rebuttal: The tyre investigation did take longer than most investigations due to the fact that seven exporters and nine importers participated in the investigation, and information had to be verified in China on two different occasions. The investigation was further complicated by the number and different of types of tyres included in the scope of the investigation. Itac currently completes investigations on average within 10 months, which compares very favourably with other investigating authorities, such as the European Commission, Brazil and India. For the financial year 2010/11, Itac completed eight anti-dumping investigations (including original and sunset reviews) all in between nine to 12 months.
- Difficulty in access
SATMC criticism: When SATMC brought the judicial review, it had to approach, or threaten to approach, a high court on three occasions simply to obtain the record from Itac — a process that took more than six months; and Itac eventually simply indicated that it had “lost” several thousand pages of documents (so that the full record was never made available). This process should not have taken more than 30 days at the most.
Itac rebuttal: This is not correct. Itac provided the non-confidential record, as is required, but SATMC requested access to all the confidential information which was submitted to Itac. According to the International Trade Act (ITA Act), Itac can only provide access to confidential documentation if consent is granted by the provider of the information, or it is ordered to do so by a court of law. The providers of the confidential information refused to grant Itac consent to give access to this information. SATMC therefore had to approach the court, as is required in terms of the ITA Act, and the providers of the confidential information thereafter agreed to provide confidential information to SATMC, subject to confidentiality agreements. The legal advisers of SATMC had full access to all documentation that was submitted to Itac during the course of the investigation. After being granted access to the documentation, the legal advisers of the SATMC compiled the record that they wanted to be used in court. The allegation regarding the loss of thousands of pages, and that no full record was ever provided, is therefore somewhat curious.
- Four year case
SATMC criticism: This was just one of several delays caused by Itac during the review, which eventually led to the Appellate Court hearing taking place more than four years after the final decisions.
Itac rebuttal: This is not true. As indicated above, the process on which SATMC embarked, had a serious effect on the time lines of the review. Further, SATMC was at liberty, at any time during the period of review, to submit a fresh application with Itac, which it chose not to do.
- Facts not considered
SATMC criticism: In the investigation, in various vital instances, Itac did not refer to information submitted by the industry to show that individual Chinese companies were dumping, and made findings 100% opposed to the information submitted by the manufacturers. For instance, it showed that one large Chinese tyre company (Kumho) was bankrupt and continued to operate at the significant loss — yet Itac found that its sales were in the ordinary course of trade. In fact, Itac found that all sales had been made in the ordinary course of trade. Chinese manufacturers also made false and incomplete submissions, which was pointed out to Itac, but it accepted those submissions fully. Adjustments were also made to “normal value” in violation of the regulations and wrong products were used for comparative purposes.
Itac rebuttal: All of these allegations of Dr Human also formed part of SATMC’s review application against Itac. All the allegations were answered in full by Itac in the review application and the court did not make a finding against Itac on any of these grounds. As was found by the court, Itac considered all information submitted by all interested parties. The fact that Itac did not agree with all the allegations and did not make a finding in favour of the SATMC, does not mean that information was not considered.
- Liberal extensions
SATMC criticism: Itac liberally granted extensions to the Chinese manufacturers long after final deadlines. And, for instance, extensions were granted on the basis of Christmas — yet China does not celebrate Christmas.
Itac rebuttal: The investigation was initiated on October 28 2005, and responses were expected back from interested parties only early in December 2005. Extensions to deadlines are done in accordance with the Anti-Dumping Regulations, and the same criteria exist for all interested parties, whether the domestic industry or exporters.
- Confidential information disclosed
SATMC criticism: Confidential industry information which was accepted by Itac on that basis was however subsequently released. Although Itac’s Acting Chief Commissioner apologised for this oversight and promised that it would never happen again, it did happen again — but Itac has taken no disciplinary action against its officers. Human says this reflects Itac’s negative attitude towards the domestic industry. Several reports contain confidential information that can be used by other parties to better access the South African market. In stark contrast, Itac refuse to require (Chinese) exporters to submit proper non-confidential submissions, showing a “complete bias” in favour of exporters. The domestic industry is at an extreme disadvantage in investigations — this is not limited to the current investigation, but applies to all anti-dumping investigations.”
Itac rebuttal: This is an issue which never even formed part of SATMC’s review case, and it is therefore strange that this issue is raised now. The generalisation about all investigations conducted by Itac is strange. The Itac Act has strict requirements and penalties with regard to confidential information and the protection thereof and if it is true that Itac reports contain confidential information which can be used by other parties, Itac would have been taken on in this regard a long time ago.
- All information or prima facie?
SATMC criticism: The regulations require only that a prima facie case of dumping, injury and causal link should be established for investigation to be initiated. But Itac requires that an industry submits all injury information prior to the initiation and insists on verifying this information before initiation. South Africa is the only country in the world where this is required. He says Itac’s current practice causes significant delays in the initiation of investigations and leads to many applications not being launched or continued with.
Itac rebuttal: The test for “prima facie” is not a low standard. It is therefore incorrect to state that our regulations “only” require prima facie information. All investigating authorities are required to test the information on which the application is based to ensure accuracy and adequacy of the information, as required by the WTO. Delays in initiating investigations more than often are caused by a slow response from industry to deficiencies identified in applications and not due to the time taken to verify before initiation.
- Inexperienced investigation officers
SATMC criticism: Itac’s current investigating officers are “quite inexperienced” and are not receiving adequate training. As a result of their lack of experience, the “success rate” of investigations — that is, the percentage of initiated cases that have resulted in imposition of duties — has decreased from just under 70% under Itac’s predecessor, the Board of Tariffs and Trade (BTT) to less than 40% under Itac. “Consultants are in concurrence that the investigators have no idea of what they are doing during foreign verifications. They often arrive without computers and even without the necessary documents, and any consultant can easily derail any verification … Basic mistakes, including simple calculation errors, are also made.”
Itac rebuttal: In South Africa, as is the case worldwide, the only relevant experience with anti-dumping investigations, is gained at a practical level from an investigating authority. Therefore, all new investigators, whether it be at the previous BTT or Itac, had to go through an on-the-job training and experience. Itac has 18 investigators in trade remedies, all trained, with experience on various levels. All investigations are conducted by at least two investigators, of which one would be the more experienced. At least six of our investigators have been doing this work for 10 years or more. The investigation on tyres was led by one of the most experienced investigators, who has been with the BTT and Itac for 19 years. The definition of the “success rate” of investigations is strange — the success rate of an investigation has nothing to do with whether duties were imposed or not, but whether the investigation was done in a proper, fair and rigorous manner. Itac is an independent institution which evaluates all information it receives according to the same criteria. The allegations which are made on behalf of other consultants are untrue and of concern. It will be welcomed if more specific information in is furnished pertaining to particular cases.
- Submissions not read
SATMC criticism: Generally, submissions to Itac are often not read and that its reports fail to meet the requirements of the constitution and other laws and regulations.
Itac rebuttal: As stated earlier, Itac considers all information submitted to it, and the mere fact that Itac does not agree with information submitted, does not mean that the information was not considered. Our detailed reports clearly indicate what information was considered by the Commission and public files contain copies of all non-confidential versions. If Itac’s reports failed to meet the requirements of the constitution and other laws and regulations, this would have been addressed by the courts.
Competition Tribunal
Human suggests that the Competition Tribunal should be mandated to review Itac decisions on request by aggrieved parties because it would finalise reviews quicker and less costly than to approach the high court, while its commissioners would also have a better understanding of the issues at play than judges. This is despite the fact that the four major tyre manufacturers are currently under investigation by the Competition Commission for alleged collusion in setting prices.
Cosatu comments
Tony Ehrenreich, regional secretary of the Congress of South African Trade Unions for of the Western Cape, commented that when a company or industry makes an application for anti-dumping duties, it is generally already in trouble. But the process used by Itac has been much too slow, and needs to be speeded up. Also he says, Itac does not take the initiative or, for instance, watch out for changes in import patterns.
“We should remember that an industry like the tyre industry doesn’t belong to the manufacturers only — it is a South African asset,” he said.
Trade practitioner Gustav Brink commented that there is an urgent need to redraft the anti-dumping regulations so that there are strict obligations on timing and procedure for Itac — and not just on the interested parties.