Picture: 123RF/SOLAR SEVEN
Picture: 123RF/SOLAR SEVEN

Peter Bruce’s article and Lael Bethlehem’s response refer (“Steel yourself for Ebrahim Patel’s price controls, a loser’s game”, February 10, and “Tariffs alone can never secure the long-term health of an industry”, February 18).

To me this is proof that Bruce is starting to achieve his goal: an actual discussion in the public about the sudden shift in government’s economic policy. Contrary to Bethlehem’s statement that the shift came after a “sophisticated and … consensus-driven approach” by the government, I have not seen any actual public discussion between the government, the business community and its organs, the unions and the public. 

In the late 1990s there were extensive discussions between the ANC, the unions and business about which way to head with a new industrial policy, resulting then in a dramatic opening of our market that unlocked opportunities both locally and for exports. Between 2000 and 2010 the SA economy grew, confirming that opening the market was the right decision and not, as Bethlehem suggests, resulting in substantial loss of jobs.

Today such open discussions are not taking place so it is up to people like Bruce and the press in general to raise these issues and reveal what changes are happening right now that are leading us back to the policies of the National Party of the 1970s and ’80s.

Bethlehem may be an expert in water affairs, city development and rapid bus transit systems, but her comments about the scrap export market and its relevance to local metal manufacturing prove that she has no idea about the metals industry — steel or aluminium.

The benefits of import duties on certain steel products, which protect only Arcelor Mittal SA (Amsa) and the Steel Master Plan, are highly disputed within the downstream metal industry. For the regulations and duties on steel and aluminium the same applies — one can already see that they are failing utterly to create employment at either Amsa or the downstream metal industry.

It is true that before the government introduced a 15% import duty on most aluminium rolled products on December 31, the International Trade Administration Commission (Itac) deliberated for more than two years before coming up with a recommendation to the government. Input was received from numerous end users, traders and manufacturers in the downstream industry, which stressed that duties on such input materials would harm the industry and its employees and protect only the Hulamin monopoly.

Yet the government gave Hulamin 100% of what it asked for, not only an import duty to the highest possible level allowed by the World Trade Organisation but also the condition that all imports had to be approved by Hulamin first. This principle is exactly the same as applied to aluminium imports in the 1980s. I have seen such policy nowhere else in the world. The negative results of this decision will be shown before too long.

Such high import duties and market protections will achieve nothing when it comes to the desperately needed creation of employment. The current change in our industrial policies is a step back to old, failed times. It is unbalanced and clearly not “consensus driven”.

Bethlehem would have been also well advised not to make reference to her position at the Industrial Development Corporation (IDC). Maybe she should look at its investment in companies such as Scaw Metals, Amsa and Hulamin, which have all been extremely costly, together losing billions of taxpayers’ funds.

Protecting these companies now with high import duties will not make them more competitive and successful ventures that create employment in the long run.

Volker Schütte

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