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South Africa: State's Fair-Trade Office Flounders
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Business Day (Johannesburg)
7 August 2008
Posted to the web 7 August 2008
Mathabo Le Roux
Johannesburg
THE credibility of a key state institution - tasked with administering fair trade - is in doubt after it lost yet another court battle, raising questions about its institutional capacity to fulfil its mandate.
Swamped with legal challenges over poor trade-remedy decisions, the International Trade Administration Commission (Itac) has lost four court cases in the past 12 months, with another case pending. The courts have criticised Itac's shoddy investigative procedures and flawed findings.
In the latest case, brought in 2006 by AECI subsidiary and explosives manufacturer AEL, the Pretoria High Court ordered Itac to resume an investigation into alleged dumping of shock tubes -- used in blasting -- from China, after it had unlawfully revoked a decision to begin an antidumping probe. While Itac had found evidence of dumping and material injury suffered by the local industry, it stopped the probe, because it said AEL had provided it with wrong information -- a reason rejected by the court, which found that Itac had been biased against AEL.
The ruling contains documentation that then Itac chief commissioner Nomonde Maimela discarded advice from her legal officer that AEL had to be given an opportunity to comment before a final decision was made, saying "if they (AEL) don't know their competitors, then they must die".
Moreover, Maimela threatened to sue AEL, to send "a signal to others" -- in what seemed to be an attempt to deter other companies from bringing antidumping applications.
The ruling would be cold comfort for AEL. The fierce competition from Chinese imports -- subsequently found to have been state-subsidised in contravention of World Trade Organisation rules -- has forced the company to restructure its business and retrench half its 1800 workers.
Graham Edwards, formerly AEL's CE who now heads up AECI, said its was disconcerting that an organ of state was unable to do its job properly. "They have to do their job in an impartial way, but they shouldn't defend the indefensible. The message to the trade and industry department is that one does not see a cohesive approach to industrial strategy," Edwards said.
But trade commentators said the string of losses Itac has stacked up point to a deeper institutional malaise.
"Policy needs to be reinforced with proper implementation frameworks, but at Itac, as with many state institutions, implementation is fundamentally hampered by issues such as high staff turnover and the loss of a lot of the old guard ," one trade specialist said.
Another noted Itac had lost most of its capacity over the past four years, especially in its trade remedy division, with eight of its 11 most senior officials leaving its employ in the 18 months between 2004 and mid-2005.
According to Siyabulela Tsengiwe, Itac chief commissioner since April, the heavy caseload faced by Itac was not unique to SA .
But the commentator, who declined to be named, pointed out that not a single judicial review was lodged against Itac or its predecessor, the Board on Tariffs and Trade, over a six-year period until 2005.
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"Since then it has faced a spate of judicial reviews and has lost by far the majority of these cases. This raises questions regarding the existing capacity to conduct investigations properly," the source said.
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