Imported paper tariffs scrapped

Says Chris Sykes, CEO of PIFSA, "PIFSA's successful application will have far-reaching effects on input prices in the printing and packaging industries. Already some of our members have been approached by a local mill with a very different (and lower) pricing structure and a greater willingness to negotiate than has previously been the case.

"The reduction and elimination of duties will have a positive effect in reducing the input costs of our industries. Whilst this cannot be quantified easily, it clearly will run into hundreds of millions of rands over the years to come.

Application rejected in 2002

Explains Natasha Kapp of Jan S. de Villiers, "ITAC's predecessor, the Board on Tariffs and Trade (BTT) had initially rejected a 2002 application to remove the tariff on the grounds that it was necessary to protect and foster the growth of the local paper industry, specifically Sappi and Mondi. This decision was based on economic research commissioned in 1992."

Kapp says they took the decision on review to the Pretoria High Court, alleging that BTT had failed to properly apply its mind. "The court set the BTT's decision aside on the grounds that the legislative environment had changed substantially since 2002. This allowed ITAC to reconsider the application."

The application was supplemented with updated economic research commissioned by PIFSA from independent economic consulting firm Econex.

Regularly reviewed

Dr Nicola Theron, an economist at ECONEX, and who co-authored the report with Dr. Lawrence Edwards, an economics lecturer at UCT, says, "It is contrary to South Africa's commitments under GATT to have duties for an indefinite period on input materials such as paper. These have to be reviewed regularly - and this is what ITAC has done here. We argued that the tariff protection made the downstream industries uncompetitive because the large paper manufacturers were protected at the expense of the local printing industry. It seems ITAC accepted this argument and adjusted the tariffs accordingly."

Kapp says it is heartening to see that the system works. "It is Government's prerogative to regulate with tariffs where it sees a need... But the tariff has served its purpose, and now it's the turn of the local printing industry to get a leg up."

According to Sykes, ITAC plans to conduct a separate investigation into import parity pricing in the paper industry this year in response to a request by the Department of Trade and Industry.