Process Management

News 467 views last update:6 Aug 2012

South African lysine saga settled

The International Trade Administration Commission (Itac) in South Africa has instituted a safeguard duty of 27% on lysine after protests against the 160% duty that was previously imposed in May.

De Wet Boshoff, general manager of South Africa's Animal Feed Manufacturers Association, said the finding at least brought certainty to feedstock producers who used the product, but other questions about the process remained. In May, Itac imposed a 160% provisional safeguard duty on all imports of lysine, after a complaint by South African Bioproducts, the sole producer of the product in the Southern African Customs Union.

Highest price
Itac's did not provide reasons for this massive duty and handling of the investigation was marred by irregular procedures. Moreover, the body failed to give interested parties an opportunity to comment on and respond to the application before reaching its decision. As a result feedstock producers in SA paid the highest price for lysine in the world.

The trade body's most controversial action, however, which drew litigation, was the decision to impose a safeguard duty against all countries from which the product was imported into SA. Bioproducts' application referred only to injury at the hand of cheap Chinese imports. According to Itac's own documentation Chinese imports in five years time increased from a meagre 2.2 tonnes to 2,400 tonnes last year.

Chinese dominance
Chinese imports had gained a massive 57% chunk of the South African import market, way before the US, with a 21% share of total imports. Itac's finding was challenged by German lysine producer Degussa. The court found that Itac had contravened the World Trade Organisation's (WTO) rules. Itac had failed to give importers the opportunity to make representations, it had also not informed the WTO or its trade partners of the implementation of the measure.

Ignored court ruling
Itac essentially ignored the court's order to reverse the safeguard measure for months. However, without giving reasons or releasing a report, in mid-September it announced in the Government Gazette that the safeguard duty would be reduced from 160% to 27%. The duty will remain at 27% until May 10, 2008, when it will be reduced to 18% and then decline to 9% from May 11, 2009 lasting until April 11, 2010.

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