STEEL AND ALUMINIUM
Davies hopes quotas will help SA avoid Trump duties
SA was prepared to negotiate a quota for its steel and aluminium exports to the US as a way of avoiding US President Donald Trump’s ad valorem tariffs, Trade and Industry Minister Rob Davies indicated on Monday.
Davies was speaking at a media briefing on Trump’s proclamations to impose a 10% ad valorem tariff on imports of aluminium products and a 25% ad valorem tariff on imports of steel products, on the grounds that they threaten to harm US national security.
The proclamations made provision for country-based exclusions from the duties should the US and that country arrive at a satisfactory alternative means to address the perceived threat to national security.
Canada and Mexico have been excluded from the duties, which came into force on Friday.
SA has submitted an application for an exemption from these duties.
Davies said he had been informed by ambassador CJ Mahoney, the deputy US trade representative for investment, services, labour, environment, Africa, China and the Western Hemisphere. He told Davies that Trump would decide on whether to grant exemptions to applicant countries by the end of April.
The decision to grant an exemption would be based on whether SA would be prepared to negotiate a quota, information about what SA was doing to deal with the global glut of steel in its own market, whether SA could give the assurance that if it were given access to the US market it would not allow itself to be a gateway for transhipment of products from other developing countries, and information on SA’s role in the World Steel Forum.
Davies said SA was prepared to talk about a quota. He had met the companies involved in steel and aluminium exports to the US on Monday and they would make their own representations to the US government.
The minister said Trump’s decision on exemptions would be based on the US’s own evaluation of its economic and political security and its assessment of SA as partner in the search for global economic security.
In its submission for an exemption SA argued that its steel and aluminium exports to the US were such a small proportion of its total imports that they did not pose a threat to US national security and to the US steel and aluminium industries.
South African exports of aluminium products a year are about 1.6% of total US aluminium imports. These products consist of specialised aluminium sheets, coils and plates for processing in the US automotives, battery and aerospace industries.
US census bureau data showed that the US imported a total of 33.4-million tonnes of steel in 2017, of which imports from SA were about 330,000 tonnes or less than 1% of the total, and 0.3% of total US steel demand of 107-million tonnes.
Despite being a small player, Davies said there were a number of companies that could be hurt quite significantly by the imposition of the duties, and a few thousand jobs could be at risk.
These companies were involved in value chains where further value addition was created in the US or where inputs were imported from the US into the local operations.