There is currently an anti-dumping duty in Brazil of $1 751.93 per ton, on truck and bus tyres from South Africa, along with duties against South Korea, Japan, Russia, Thailand and Taiwan. The result has been that all exports of these tyres from SA to Brazil has ceased.
Anti-dumping duties are reviewed every 5 years through a process known as a sunset review and these duties need to be reviewed before 24 November 2019 or they will expire and it is unlikely the Brazilian producers will simply allow them to expire.
According to the Brazilian records Apollo Tyres responded in the last investigation but then did not resolve the deficiencies raised, resulting in their information being discarded for purposes of the final decision. No other South African producers responded, resulting in a single duty being imposed for the whole country.
How will the duties be calculated for SA producers who wish to participate in the investigation?
In Brazil, as in South Africa, the sunset review will result in a complete recalculation of the duties, rather than a binary decision about whether or not to maintain the existing duties. Any South African producer of truck and bus tyres can therefore participate in the review and arrive at a separate duty for that specific participant (which could also be zero).
If no one responds, the duties will be extended and possibly increased. If only one company responds, they will have their own duty calculated (possibly zero) and the balance of the market will still be burdened with the residual duty.
Currently South Africa is not exporting any of these tyres to Brazil, but Brazil still imports $280m per annum from countries which do not attract a duty. Brazil’s imports before the anti-dumping duties were imposed was $502m per annum, so there is a significant market to be had if the duties are reduced or removed for South Africa.
At its peak (2011), South Africa exported 3 913 tons at a value of $15.7m to Brazil. Once the anti-dumping duties were imposed this dropped to zero (as did the volumes from most of the countries impacted by the duties), but if these duties were removed, there is a large market worth pursuing. It is also worth noting that South Africa was making those exports at the time the Rand was roughly twice as strong against the Dollar as it is now, so with our current exchange rate, South Africa should be considerably more competitive.
The sunset review must initiate before 24 November. Once the case initiates, interested parties have 30 days to respond, with the possibility of an extension, although these are not always granted. The single biggest risk in any anti-dumping investigation is running out of time. This problem becomes particularly acute in sunset reviews which often don’t have a preliminary phase. This means that once documents have been submitted to the authorities, and they raise deficiencies to be addressed, if these are inadequately addressed, the respondent will simply be rejected from the investigation and face maximum duties for another 5 years.
Get started early
It is extremely unlikely that the Brazilian producers will allow the duties to lapse, so it makes sense to get started with preparation as soon as possible. The Brazilian investigation process is complex and pedantic, so the early start can really make a very big difference between a mediocre or a good outcome.
XA (with our Brazilian partner firm Sidera) has worked on Brazilian anti-dumping actions in the past (with good outcomes) and is well positioned to assist South African exporters in responding to this sunset review.
Contact us on email@example.com to find out more about how we can help you regain access to the Brazilian market.
Anti-dumping duties in Brazil
This is an excellent opportunity to reduce or extinguish the anti-dumping duties in force on bus and truck tyres in Brazil. The new Brazilian government has been making efforts to reduce the responsibilities for collaborative parties in the reviews, since one of the pillars of the new trade policy is to reduce the “Custo Brasil” (i.e., the “Brazil Cost”), and tariffs and surcharges relating to tariffs are part of this problem.
Also due to new Brazilian regulations, the Public Interest Assessment will take place in parallel to the anti-dumping review. Participating in the Public Interest Assessment is also of the utmost importance: even if the review process concludes that there is dumping, injury, and causality, the measure may be suspended or reduced if the authorities establish that it is in the best interest of downstream industries, consumers and for overall performance of the country’s economy. Again, this is a space we have achieved success in, so this is definitely possible.
If you produce truck or bus tyres and wish to gain access to the Brazilian market, please contact us on firstname.lastname@example.org.