MRA opposes amendments to pricing preference system guidelines

© Andrey Armyagov – 123RF.com

Despite other industry organisations who have expressed their support for the amendments with specific reference to the copper theft, the MRA not only disagree with these sentiments as they believe that this will only encourage the growth of local, unmonitored copper melting practices to try and make up the deficit which will be caused by export options being made unavailable via these amendments, but are also of the opinion that ‘stolen’ copper will be exported as unidentifiable copper which has been remelted by unscrupulous traders.

The grounds on which the MRA has further opposed the proposed amendments not only highlight its impracticality and efficiencies within the current PPS guidelines, but also pay particular attention to the legal foundations on which trade in ferrous and non-ferrous scrap are being impeded in relation to the International Trade Administration Act 2002, the World Trade Organisation and the South African Constitution.

Flawed and unworkable

The PPS, which was implemented in 2013, has already proved flawed and unworkable and has not managed to achieve the goals it was intended to achieve. At inception, the MRA requested an audience with the pertinent decision-makers so that all related associations and industry organisations could come together and decide a mutually beneficial solution for the industry as a whole, and has done so again within this ITAC submission.

Although environmental, unfair trade practices, reduction in scrap prices and regulatory burdens have been highlighted as some of the general unintended consequences in the submission, it’s the effect these amendments will have on the informal sector that has been addressed as one of bigger concerns. The current amount of informal collectors amounts to well over 400,000 people who are responsible for around 1.8 million dependants and these proposed changes with the PPS will have a direct effect on the ‘employment’ opportunities within this sector.

The bigger picture with this scenario is the risk that will be imposed on the sourcing of scrap metal - at this stage, it’s mostly digging through rubble and industrial area waste which this community is walking the streets of Johannesburg daily trying to collect. To suggest that crime will not increase as the price for scrap diminishes as scrap yards are forced to implicate this market with the massive price cuts, would be ignorant of the industry.

Job losses

In addition to unemployment and job losses which are already having a significant impact since the introduction of the PPS, the administrative burdens the amendment wishes to impose form unnecessary barriers to trade, are unrealistic and violate the proportionality principle embodied in the WTO which states that ‘regulatory measures being adopted have to be the least restrictive of trade’. Furthermore, the proposed amendments which have presumably designed to tighten controls would in fact limit, if not, make it impossible to engage in legitimate exports and are not conducive to the facilitation of trade as envisaged in the ITA Act.

“Based on the comments outline in our submission, plus the numerous requests by the MRA for an audience with ITAC and the pertinent government departments involved, it is not our intention to behave belligerently or confrontational,” says Quintin Starkey, chairman of the MRA. “As representatives for the majority of scrap metal dealers in South Africa, we would like to encourage industry consultation before decisions like the proposed amendments be made which can and will have a detrimental effect to the interests of an already fragile industry,” says Starkey.

“In addition to violating several domestic and legal rights - the right to conduct their trade; the right to just administrative treatment; the right to freedom of trade as embodied in both the ITAC Act and our membership of the WTO; and the right to take further action should our concerns, as expressed within our submission, not be taken into account,” he concludes.