Govt considers hiking tariffs on vehicles from China, India amid influx

South Africa's tariff regulator is looking at possibly doubling tariffs on imported vehicles to 50%, amid the influx of cheaper cars being brought into the country from China and India.

As Moneyweb reports, the Department of Trade, Industry and Competition (dtic) is conducting an internal review to assess potential measures to stem inbound shipments, which policymakers say are undermining local manufacturing.

The International Trade Administration Commission of SA (ITAC) told Parliament at a portfolio committee meeting that it is also looking at increasing tariffs on imported motor vehicle components to 30%.

Stephen Grootes asks ITAC Chief Commissioner Ayabonga Cawe about the kinds of tariffs that would be in play.

This would be defined by the extent and the nature of the harm created by imports, Cawe says.

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To start with there is the existing tariff in the form of import tax specified in South Africa's tariff schedule.

"We indicated to Parliament last night that - as far as the concessions SA signed on to in the 1990s to join the World Trade Organization (WTO), for fully built-up passenger vehicles the ceiling is around 50% for what is called the 'bound rate' in trade talk. At the moment those duties are 25%."

For imported vehicle parts and accessories, depending on where they're coming from, the duties are anywhere between 18% and 20%.

Cawe points out that in both cases, there is some policy space to raise duties.

"Part of the discussion within the South African Automotive Masterplan (SAAM) is around this policy room we have to increase tariffs weighted on the balance of evidence."

Other tools that could be used to raise tariffs include instances of unfair pricing, or dumping. What could also be considered is the need for a safeguard measure where there is a sudden flurry in the volume of vehicles coming into the country, he says.

In summary then, an amendment to the general customs duty, an antidumping duty or a safeguard are at this stage the tools government could marshall, where these are deemed necessary.

Cawe reiterates that this would be done on the basis of the balance of evidence, and the balance of understanding what is the extent of injury - if any - that is posed by some of these imports.

For more detail, listen to the interview audio at the top of the article