On 20 November 2015 the International Trade Administration Commission of South Africa (Itac) published an application for the proposed increase in the ‘General’ rate of customs duty on gas stoves, classifiable in tariff subheading 7321.11, from 15% ad valorem to 30% ad valorem by the creation of an additional 8-digit tariff subheading, for which comment is due by 18 December 2015.
The application was lodged by Defy Appliances (Pty) Ltd who reasoned that (i) Defy had imported the subject product in the past. However, in order to expand the investment and market in the Southern African Customs Union (Sacu) and eventually in Africa, Defy started manufacturing the subject product in July 2014 in South Africa; (ii) However, as a result of imports from abroad, Defy is not competitive with the imports into Sacu taking into account the current ratio on cost (plant utilisation and economies of scale), which leads to higher unit costs of production, reduced profitability and eventually unemployment; (iii) To protect and maintain the equivalent investment and current decent jobs, Defy needs had to apply to Itac for an increase in customs duty in order to allow Defy to be able to compete with low priced imports into Sacu; (iv) The increase in tariff will not only ensure job retention, but it will also allow the company to gain additional market share and therefore increase local production which will result in additional employment; and (v) The increase in tariffs will also support future plans for the introduction of additional range of gas stoves, and especially the planned production of the two new models in the second half of 2015 in Jacobs’s factory based in Durban.