Minister of Trade and Industry, Rob Davies, yesterday endorsed the International Trade Administration Commission’s (Itac) recommendation for an increase in import duties on sugar.
The endorsement came after an intensive investigation by Itac following the South African Sugar Association’s (Sasa) application for an increase of the dollar-based duty from US$566 per ton to US$856 per ton.
However, Itac noted that after considering factors such as the domestic cost of production – mainly driven by electricity, transport and labour – the commission had only recommended an increase to US$680 per ton.
“While the level is not at the maximum bound rate as initially requested by the industry in the application, the US$680/ton will provide the immediate relief urgently required by the industry and sufficient trade protection against the surge of imports,” a statement from the Department of Trade and Industry read.
The increase on the dollar-based duty on sugar imports forms part of a set of measures laid out by Itac aimed at improving the sustainability of the industry and future growth prospects.
Sasa chairperson, Suresh Naidoo, told FTW Online that the association was still studying the document which laid out these measures, released by Itac, but in a preliminary view had already identified a few areas where more clarity was needed.
“There seem to be some issues within the document that need a bit of clearing up and Sasa will be engaging with Itac on these issues,” he said. “Additionally, we also received a much lower increase than was originally asked for, and while this offers the industry some form of protection it does not offer what is required.”
Naidoo previously pointed out that because import tariffs had been set at an “inappropriate” level there had been a significant increase in sugar imports over the past three years.
“In 2015 the country imported 54 000 tons, while in 2016 there was around 170 000 tons of sugar imported into South Africa,” he said. “However, in 2017 an exceptional amount of 514 000 tons of sugar was imported, representing almost 27% of the entire local market.”
He also noted that the world sugar market was currently a dumped market as world prices were shockingly low, leading to a dilution of South Africa’s sugar prices.