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Govt implementation of African free trade agreement threatens SA coatings sector

Home Manufacturing & Processing Chemicals Govt implementation of African free trade agreement threatens SA coatings sector

THE government’s new move to allow producers in the African paint, polymers and coatings sector to export products to South Africa – free of customs duties on some specific tariff headings, in terms of the African Continental Free Trade Area agreement (AFCTA) – would threaten the very existence of the local coatings sector, Sanjeev Bhatt, chairperson of the SA Paint Manufacturing Association (SAPMA) has warned.

A shocked Bhatt says the coatings sector had been expecting protection from a deluge of cheaper, and often inferior, paint and polymer products being dumped in SA in terms of AFCTA. “However. the Department of Trade Industry and Competition (DTIC) assured SAPMA that the SA coatings sector would be protected and ring-fenced on discussed tariff headings, in terms of the African Free Trade Agreement, to prevent coatings and associated raw material imports from the likes of Egypt – a prolific producer – to be allowed duty-free into South Africa.   Now it appears that, without any consultation with the SA coatings sector or SAPMA, the African Free Trade Agreement tariff listings were altered to allow African producers to be exempt from duties when offering their products on our market.

“Such unfair competition, most likely to be lower priced and of doubtful quality, would not only threaten sustaining the quality of coatings sold in SA but virtually shut down the local coatings industry – with huge job losses. The employment and energy rates that some African governments, such as Egypt, grant their manufacturing sectors, make production costs there much lower than in South Africa. If these cheaper imports from Africa are allowed to flood the SA market, the local coatings manufacturing sector will suffer serious economic consequences and ultimately cease production.”

Bhatt says SAPMA noticed the scrapping of import duties for the rest of the African coatings market virtually by chance when executives of the DTIC and the International Trade Commission Administration (ITAC) called on him to discuss other matters. “When I queried the new move to allow imported duty-free coatings on the local market, the DTIC and the ITAC confirmed they are currently investigating where this directive came from.”

SAPMA intends to urgently approach the government to point out the potentially disastrous consequences for an entire SA coatings and polymers sector if the new tariff headings are implemented.

“SAPMA members already pay millions of rands in import duties to obtain essential feed stock, such as titanium dioxide and TOFA, as none of these vital components are produced locally. Disruptions in electricity supply, crumbling infrastructure and inefficient management of parastatal entities are also major burdens for coatings and other industries in SA. Now the coatings sector is expected to compete against the entire African coatings market on a totally unfair basis. Dumping of cheap paint and polymers at our ports will almost certainly follow, if not remedied or rectified.  This must not be allowed to happen,” urged Bhatt.

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