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Brazil investigating dumping by South African Tyre Manufacturers

The Brazilian Secretariat of Foreign Trade (SECEX), part of their Ministry of Development, Industry and Foreign Trade (MDIC) on June 10th, 2013 initiated an anti-dumping investigation

into the imports of tyres for buses and trucks (tariff heading 4011.20.90) from South Korea, Thailand, South Africa, Russia, Taiwan and Japan. The anti-dumping application against products originating from South Africa was initiated by the Brazilian National Association of the Pneumatic Industry ? ANIP.

This follows on the recent spat between South Africa and Brazil about anti-dumping duties on the importation of chicken from Brazil into South Africa. South Africa imposed provisional anti-dumping duties on Brazilian chicken imports last year, causing the Brazilians to refer a dispute to the World Trade Organization (WTO). Brazil claimed that the anti-dumping investigation by South Africa's International Trade Administration Commission (ITAC) did not comply with the rules of the WTO. South Africa agreed to remove these duties after negotiations with Brazil on a diplomatic level. The domestic industry subsequently applied for a general increase in the customs duty on chicken imports, claiming that they are being hurt by cheap and dumped exports from various countries including Brazil. This tariff increase is being challenged by the South African Association of Meat Importers and Exporters (AMIE), which claims that the domestic industry is uncompetitive and that the tariff application is in actual fact a protectionist measure that will cause harm to consumers and to job losses at members of AMIE.

South African manufacturers and exporters of bus and truck tyres will receive extensive questionnaires from the Brazilian authorities, which will have to be completed within a strict deadline. If South African companies choose not to complete such questionnaires and therefore not to participate in the investigation, they run the risk of being hit with much higher anti-dumping duties. Exports from non-participating exporters will be subject to a general dumping margin that is normally much higher than the specific dumping margins calculated for cooperating exporters. It is therefore important for South African companies exporting to Brazil to obtain legal advice on how to avoid or minimise any possible anti-dumping duties to be applied to them.

If Brazil does not follow the WTO rules in the investigation and in the calculation of the anti-dumping duties on South African exports of bus and truck tyres, the South African government would also have the option of resorting to dispute settlement at the WTO. The South African government, however, seems to have a preference for settling trade disputes on a diplomatic level especially now that South Africa has joined Brazil as a member of the BRICS grouping of developing nations.

Dispute settlement at a diplomatic level will not always provide the domestic industry with the desired results, especially if South Africa's trade partners realises that South Africa will not push for dispute settlement at the WTO level. It is therefore important for domestic industry to lobby government to bring WTO cases where we want our trade partners to comply with their obligations in terms of WTO rules. One of the main reasons for the establishment of the WTO was to create a transparent rules based dispensation for dispute settlement in order to move away from diplomatic settlement of disputes. Trade partners routinely bring dispute settlement cases against each other at the WTO without any major diplomatic repercussions. The dispute settlement history of the WTO actually shows that the more countries trade with one another, the more trade disputes they will have. One of BRICS' main objectives is to increase trade between its members, therefore we are also likely to see an increase in trade disputes between BRICS members. South Africa will therefore more than likely be forced to become involved in WTO dispute settlement in the future. It is preferable that we do not wait until such time, but that we start participating now already so that we can make the best use of the WTO system to the advantage of our domestic industries.

Niel Joubert
© Trade Law Chambers 2013

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