Cosatu rallies behind Itac proposal for renewable energy import duties

SA’s International Trade Administration Commission (Itac) has advanced ambitious proposals to curb the import dependence of the renewable energy sector. After decades of liberal trade orthodoxy, progressives now have a chance to align tariff policy with climate, employment and development goals.

The Congress of SA Trade Unions (Cosatu) has filed public comments on two measures: first, raising customs duties on solar, battery and wind components to the ceilings allowed by the World Trade Organisation. Second, tightening duty rebates while restricting exports of unprocessed critical minerals.

Global firms such as Jinko Solar, Solaire Direct, SunPower, JA Powerway and SMA have closed local production and shifted to imports. The two survivors, ArtSolar and Seraphim, cited those exits in their successful petition for protection. Itac then imposed a 10% tariff on photovoltaic cells, modules and panels in Report 613, recognising the role of such duties in an emerging industrial strategy.

To meet the booming energy storage demand Balancell has opened an advanced battery production facility in Ndabeni, Cape Town, with a 1GWh annual capacity. This R150m facility targets African and European markets, producing lithium ferro-phosphate smart batteries for electric vehicles and renewable energy storage. The factory employs 70 full time staff and reportedly supports an additional 1,500 indirect jobs throughout its value chain. 

Balancell CEO Ian de Vries says the company has been trying to canvas the government to levy import duties on assembled batteries. “SA will probably never be able to make the actual cells, but we can produce the whole battery and create a tremendous amount of jobs doing so.” 

De Vries’ comments linked to a key recommendation issued by Cosatu to improve the bite of Itac’s proposed import duty protections. We argue that any firm that receives a duty rebate, a localisation incentive or a public contract should sign an enforceable compact specifying job numbers, wage floors, training quotas and quarterly disclosure of outcomes, with benefits automatically suspended when targets are missed. Shielding companies from foreign competition is society’s bargaining chip; predictable, decent work is the fair return. 

In the connected electrical equipment subsector of the economy several component factories have already closed since 2018, while overall employment in the subsector has fallen by as much as 30% even as demand for solar and battery systems has soared to the continent’s highest levels. Despite this, electrical machinery is our third most labour intensive manufacturing branch, generating roughly 10 formal jobs for every R1m invested in fixed assets. To realise this growth we need to ensure our demand and supply side incentives are properly aligned with our developmental objectives.

Every week we have delayed developing an active trade policy and investing in our own skills development has represented the loss of potential new worker’s income, unrealised apprenticeship opportunities and new investment in productive manufacturing capacity that never materialises.

Addressing the dominance of imported Chinese goods

Dominance by foreign suppliers underscores the urgency. Chinese firms produce about 80% of the world’s solar panels and ship 95% of the batteries SA imports. Co-operation with China remains vital, but permanent dependence would doom any strategy that aims to be employment intensive. The SA government should be encouraged to drive harder bargains and more creative proposals in the ongoing bilateral engagements with the Chinese government. 

We can leverage the extreme supply chain concentration in China to broker bilateral agreements that embed technology transfer through joint ventures with compulsory skills quotas, local research and development, intellectual property localisation and expiry dates on restrictive licensing. 

For decades raw ores have left the country unprocessed, forfeiting value that could fund battery and fuel cell supply chains. Itac’s proposed export controls on unbeneficiated critical minerals, paired with selective import relief for inputs that local factories cannot yet produce competitively, could create linkages to affordable domestic feedstock for downstream localisation opportunities.

This approach aligns with the findings of independent studies by the Localisation Support Fund showing battery assembly is SA’s most immediate opportunity, provided mineral policy keeps value inside the borders.

Monitoring and compliance more critical than ever

Accompanying these important interventions we need to ensure robust accountability is made fit for purpose. As an example of measures Cosatu proposes in its submission, there is a call to link National Energy Regulator of SA generation licences with SA Revenue Service customs data so that declared local content claims are checked against actual import records.

A quarterly review process could also be established to assess the effectiveness of tariff measures in achieving stated industrial policy objectives, including employment creation, capacity utilisation and local content compliance rates. 

Linked to an improved structure for reporting providing greater transparency in the labour dynamics in renewable energy value chains, we should see the consolidation of a sectoral framework of decent work that spells out minimum standards, permanent contracts, living wages and formal apprenticeships, and prescribes penalties for noncompliance.

Itac’s notice has also created a rallying point for progressive social forces that are engaged in the development of green industrial platforms for SA. Supporting the tariff package while demanding enforceable labour and technology clauses will require a confrontation with private sector lobbyists and investor groups that are chasing short-term rents, and seek to capture policy development processes ordinary South Africans are depending on to deliver real growth and quality employment for the next generation.

• Kamanzi is with Trade Unions for Energy Democracy; Tengela is Cosatu trade and industrial policy co-ordinator.