AFGTI Discussion Paper Series 2025/1 – The emergence of the ‘public interest’ requirement in anti-dumping (and trade remedy) investigations
ITAC conducts its investigations based on International Trade Administration Act 71 od 2002 (ITAA). ITAC conducts trade remedies i.e., anti-dumping, safeguards and countervailing measures and tariffs. The approach to these investigations is guided by the Constitution of the Republic of South Africa, 1996, legislation and policy directives and notices of the Minister. The overriding rights governing the investigations conducted by ITAC is the right to just administrative action. It is common cause that ITAC investigations are administrative in nature and thus subject to judicial review based on section 33 of the Constitution, Promotion of Administrative Justice Act 3 of 2000 (PAJA) and section 46 of the ITAA.
In general, ITAC conducts its investigation based on sections 16 and 26 of the ITAA on tariffs, dumping, safeguards and subsidies. The specific procedures for investigations by ITAC are explained by the ITAA regulations comprising the Amended Tariff Investigations Regulations, Anti-Dumping Regulations, Amended Safeguard Regulations and the Countervailing Regulations respectively.
All ITAC investigations typically commence through the submission of with a ‘properly documented’ compliant and application. A ‘properly documented’ application is one which must contain information that is ‘reasonably available’ to the applicant. The domestic industry making the application must be representative of the Southern African Customs Union (SACU) industry. Usually, this means that the applicant(s) must represent 25 per cent and 50 per cent in terms of market value. When the application is filed, ITAC must verify the accuracy and adequacy of the information provided by the applicants through a verification process, which culminates in a verification report. The same goes for submissions by interested parties. ITAC has the power to reject an incomplete application and thus, deem it materially deficient. Thereafter, a merit assessment is conducted to assess whether the investigation elicits a prima facie case. ITAC must then notify the countries of origin and export of the product in question that it has received a properly documented application after verification but before initiation.
Thereafter, ITAC must publish an Initiation Notice in the Government Gazette notifying interested parties that an investigation has commenced on a trade remedy or tariff and request interested parties to make submissions on the application. This commences the preliminary investigation phase. Broadly speaking, these investigations will investigate if there has been injury or threat of injury to the domestic industry, a casual link and the alleged infraction. It must be borne in mind here that the conduct complained of can either due to lawful trade i.e., tariffs and safeguard measures or unlawful trade i.e., dumping and countervailing measures. This application can then be requested from the investigating team. A public file will be prepared which will contain all the non-confidential submissions of all the parties. Interested parties are then usually given 30 days to comment on the application. This period can be extended upon good cause shown by the party in question. At the end of the preliminary investigation, ITAC makes a preliminary determination and publishes an investigation report to that effect. At this stage, a provisional measure can be imposed to address current injury during the investigation.
Subsequently, the final investigation phase begins with interested parties being given an opportunity to comment on the preliminary investigation report. ITAC will then compile the essential facts letter. This letter elicits the essential facts which will form the basis of its final determination. Interested parties must then be given an opportunity to comments on the essential facts letter. ITAC must then take into consideration these submissions in its final determination. The investigation concludes with the final investigation report. This report is usually not published on the ITAC website until the decision in question is implemented by SARS and thus, the interested parties will not be aware at what stage the investigation is upon making an inquiry. Regardless, the typical investigation usually takes 6 to 18 months.
ITAC must then send its recommendation in the form of the final investigation report and Ministerial Minute or Report explaining the basis of its decision to the Minister. The Minister has the discretion to either accept or reject this recommendation by section 4 of the BTTA. If the Minister accepts this recommendation, then a ‘request’ to the Minister of Finance to give effect to this request under sections 55 to 57 of the CEA. Based on the decisions in Pioneer and SASA, it is the law in South Africa that the Minister of Finance has the discretion to accede or reject this ‘request’ of the Minister of Trade. The question is does this require a consideration of the public interest. This is not a new inquiry as this case has already been made by Brink and Sibanda.[1] Vinti argues that ‘public interest’ can only be considered through the constitutional duty to approve the request of the Minister of Trade and Industry only if it is in the “public interest”.[2]
This discussion is in light of two recent decisions of the Minister on tariffs and dumping have been decided on public interest grounds. First in “Notice of conclusion of an investigation into the alleged dumping of frozen bone-in portions of fowls of the species gallus domesticus originating in or imported from Brazil, Denmark, Ireland, Poland and Spain”. ITAC initiated an anti-dumping investigation on frozen bone-in portions of fowls of the species gallus domesticus (“the subject product”) originating in or imported from Brazil, Denmark, Ireland, Poland and Spain (“subject countries”) through Notice No. 54 of 2021 in Government Gazette No. 44173 dated 05 February 2021. The investigation was initiated after the Commission considered that there was prima facie evidence to show that the subject product was being imported at dumped prices, causing material injury to the SACU industry.
On initiation of the investigation, the known producers and exporters of the subject product in the subject countries were sent foreign manufacturers/exporters questionnaires to complete. Diplomatic representatives of the subject countries were also sent questionnaires to inform unknown producers in those countries. Importers of the subject product were also sent questionnaires to complete. The Commission at its meeting of 09 November 2021, made a preliminary determination, contained in its preliminary report No. 678, to impose provisional payments published through Notice No. 1631 of 2021 in Government Gazette No. 45668 dated 17 December 2021. After considering comments from interested parties, the Commission issued essential facts letters that it was considering making a final determination that the subject product originating in or imported from the subject countries was being dumped into the SACU market, thereby causing material injury to the SACU industry. After considering comments to the essential facts letters, the Commission made a final determination that the subject product originating in or imported from the subject countries was being dumped into the SACU market, causing material injury to the SACU industry. The Commission, therefore, made a recommendation to the Minister of Trade, Industry and Competition (“the Minister”) to impose definitive anti-dumping duties on the subject product originating in or imported from Brazil, Denmark, Ireland, Poland and Spain.
The Minister approved the Commission’s recommendation. However, in making the decision, the Minister considered the current rapid rise in food prices in the SACU market and globally and the significant impact this has, especially on the poor, as well as the impact that the imposition of the anti-dumping duties may have on the price of chicken as one of the more affordable protein sources. The Minister, therefore, decided to suspend the imposition of the anti-dumping duties for a period of twelve (12) months. In my view, this decision was made based on public interest considerations yet is a dumping case in which there is no explicit requirement to do so, at least in the anti-dumping framework.
Secondly, in the “Outcome of tariff amendment investigation: re: application for an increase in the rate of customs duty on frozen mixed vegetables classifiable under tariff subheading 0710.90 lodged by nature’s garden (“The Natures Garden Application”)”.[3] The Commission considered an application by Nature’s Garden (Pty) Ltd (“Nature’s Garden”) for an increase in the rate of customs duty on frozen mixed vegetables classifiable under tariff subheading 0710.90 from 10% ad valorem to the WTO bound rate of 37% ad valorem. The investigation was initiated on 22 February 2019 as per Government Gazette Notice No. 42240. A full-scale investigation culminated in the Commission’s final recommendation on Nature’s Garden’s Application, which recommendation was subsequently forwarded to the Honourable Minister of Trade, Industry and Competition (the “Minister”), for his consideration. The Minister referred the matter back to the Commission subsequent to which the Commission provided clarification and expanded on certain aspects relating to the proposed increase in the rate of customs duty on frozen mixed vegetables.
The Minister raised concerns with regard to the matter of pricing. In particular, the Minister remained concerned that an increase in the rate of customs duty on frozen mixed vegetables may have a detrimental impact on South African consumers. Given the negative impact that food price inflation can have on the South African economy and on financially hard-pressed consumers, the Minister requested the Commission to investigate his concerns relating to the impact of any potential increase in the duty on the Lower Segment Market and the possible impact on food inflation. ITAC’s findings were submitted to the Minister, for his consideration.
The Minister subsequently communicated to ITAC that he took into account a number of issues, such as the current context of high food prices that affects both poor and middle-class consumers, continuing pressures on household incomes from external shocks to the economy, the decline in the level of imports of frozen vegetables from 2020 onwards, the likely impact on aggregate jobs and industrial output in the economy, in deciding whether to impose or decline a tariff increase weighed against other policy objectives.
The Minister also took into account the fact that food prices in South Africa, and globally, are currently rising rapidly and that the impact of the rise in inflation on not only the poor but also the middle class is well documented. Taking into account all information at his disposal, the Minister also considered various options that may mitigate the impact of a tariff increase on consumers but, weighing up all the circumstances, decided to reject the application for an increase in the duty on frozen mixed vegetables classifiable under tariff subheading 0710.90.
However, the Minister acknowledged that circumstances may change in the future, in particular if current geo-political tensions subside and food prices stabilise as the global economy recovers from the impact of COVID-19. In light of the aforementioned, the Minister directed ITAC, in terms of section 16(1)(d)(ii) of the ITAA to review the custom duty on frozen mixed vegetables classifiable under tariff subheading 0710.90 in nine (9) months and submit a report with recommendations for his consideration. This decision also clearly turned on public interest considerations in tariff decisions.
It seems therefore, public interest considerations are emerging as a consideration by both Ministers when deciding whether to impose a trade remedy. This requires that ITAC and the Ministers provide an opportunity for submissions on whether the imposition of a trade remedy is in the public interest. This is a constitutional requirement that requires explicit consideration in the ITAC investigation and the Ministerial determinations.
[1] O Sibanda ‘Public Interest Considerations In The South African Anti-Dumping And Competition Law, Policy, And Practice’ Public Interest Considerations In The South African Anti-Dumping And Competition Law, Policy, And Practice’ International Business & Economics Research Journal – September/October (2015) 14 736-740; Brink ‘Anti-dumping in South Africa’ Tralac Working Paper (2012) 25. Brink ‘National Interest in Anti-Dumping Investigations’ (2009) 126 S. African L.J. 317.
[2] Vinti “The Scope of the Powers of the Minister of Finance in Terms of Section 48(1)(b) of the Customs and Excise Act 91 of 1964: An Appraisal of Recent Developments in Case Law” PER / PELJ 2018(21) 15.
[3] General Notice 1881 in GG No. 48865 of 30 June 2023.