Gerhard Erasmus, tralac Associate, comments on what lies ahead for Zimbabwe following the removal of President Robert Mugabe

The jubilation in the streets of Harare is one of the most telling aspects of the ousting of Robert Mugabe as President of Zimbabwe. Zimbabweans rejoiced because the shackles of political tyranny and economic devastation have been removed. A new day has dawned. Reconstruction and reconciliation are now possible.

Zimbabwe has gained a long-overdue opportunity to restore democratic rule and rebuild its economy. Put simply; Mugabe’s removal offers the prospect to become a normal state. It can serve its people again; which has demonstrated a remarkable resilience under Mugabe’s rule. Zimbabwe can also, over time, revitalize its economic potential and regain its rightful place in the regional and international arrangements to which it belongs. A stable Zimbabwe will bring benefits to the whole Southern African region. This will be a daunting task but neighbouring nations and the broader international community wish it well. We all want Zimbabwe to succeed.

What happened in Harare last week and why did it take so long to remove Mugabe? The act of removing him has been something akin to a “peaceful constitutional coup d’état”. The text books on political science will probably take note, or classify this event as a unique combination of limited military intervention and a party-political rescue mission. The fruits of this remarkable event need to be consolidated through proper democratic elections and full legitimacy. Ultimately the people of Zimbabwe must choose their government. There will probably be a period of interim consolidation but the danger of disappointed expectations should not be ignored. What do Zimbabweans now want and deserve?

The havoc of Mugabe’s rule has been an open secret for years. The governments in neighbouring countries and elsewhere have been fully aware of the ruin brought about by Mugabe’s policies and his dictatorship. Millions of Zimbabweans have become refugees (a matter which has caused tension and xenophobia in South Africa), the national currency first exploded and then disappeared, there was rampant corruption and exploitation (the Zimbabwean police has a particularly bad reputation), while regional agreements (the SADC Protocol on Trade in particular) have flagrantly been violated. However, there was no constructive effort (Botswana voiced mild criticism from time to time) to engage with the real problem. Sanctions by Western governments never generated sufficient global support or United Nations backing. Robert Mugabe was, for some, an icon! Some even lauded his ruinous land reform policy; which, by the way, caused the demise of the SADC Tribunal. It is no surprise to read media reports that the new President has identified the reform of the land reforms of Mugabe as a priority.

Many African political leaders have been complicit in what has happened for so long. Stolen elections offered an opportunity to show respect for democracy and the rule of law but resulted in the opposite. Continued support for Mugabe at critical moments allowed the prolongation of his paranoid exploitation of that nation. It comes as no surprise that some of them (and apparently SADC too) are not welcomed back with open arms.

There are lessons here. Clinging to incumbency at all cost should not inspire others. The evidence that respect for the rule of law in regional trade and integration arrangements offers a vastly superior benchmark has become irrefutable. It remains a mystery why African governments steadfastly refuse to allow dispute settlement by impartial forums to become part and parcel of regional trade arrangements. Such disputes can be confined to technical aspects and do not signify disrespect for “sovereignty”. African states accept the logic of rules-based trade governance in the multilateral context of the WTO but refuse to allow the benefits of certainty and predictability for their own firms, traders, investors and service providers.

The Regional Economic Communities with protocols and programmes about regional political stability should revisit their mandate, priorities, resolve and track record. SADC’s record in Zimbabwe (and elsewhere) in respect of the monitoring of elections is a cause for concern.

In a few weeks, the elation of 21 November 2017 will be replaced by the urgent business of reform, stable governance and meeting expectations. It will not be an easy task and there are no quick fixes. Zimbabwe’s economy will not return to what it used to be. The regional and international landscapes have changed too much and the domestic destruction has been too vast. However, Zimbabwe has the undeniable human and natural resources to rise from the ashes of Mugabe’s rule. It should be supported by all who share in the joy of this week’s developments in Harare and who wish it well.

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Willemien Viljoen, tralac Researcher, discusses trade remedies and the steel rod industry in South Africa

On 25 October 2017 the United States (US) Department of Commerce announced the commencement of preliminary anti-dumping duties on imports of carbon and alloy steel wire rod from seven countries, one of which is South Africa (the others are Italy, Korea, Spain, Turkey, Ukraine and the United Kingdom).

The investigation period is 1 January 2016 to 31 December 2016. 22% of US imports in 2016 were from the seven countries subject to the preliminary anti-dumping duties. During this period the US imported US$ 1.14 billion of the designated steel rods, mainly from countries not subject to the new duties – notably, Japan (30 percent) and Canada (29 percent).

The products covered in the investigation are hot-rolled bars and rods of iron, non-alloy steel and silco-manganese under HS 721391, HS 721399, HS 722720 HS 722790 and the anti-dumping duty rates varies from 2.80% (Turkey) to 147.63% (United Kingdom). The anti-dumping duty for imports from South Africa is 142.26% (ArcelorMittal South Africa Limited (AMSA), Scaw South Africa (Pty) Ltd. and Consolidated Wire Industries (CWI) and 135.46% for imports from all other producers and/or exporters. The final anti-dumping determination is expected in January 2018.

Imports from South Africa were US$ 8 million, a 58% decline from the US$ 18 million the US imported from South Africa in the previous year. However, the US is the biggest destination market for these products exported from South Africa, 32% of South Africa’s steel rod exports were to the US in 2016. For six of the seven countries subject to the anti-dumping duties steel rods enter the US market at the Most Favoured Nation (MFN) applied tariff of 0%; the applied tariff for Korea’s imports are either 5% or 10%, depending on the specific product.

In the dumping investigation for South African producers and exporters three companies were specifically named in the petition; AMSA, Scaw and Davsteel Division of Cape Gate (Pty) Ltd. The latter successfully proved a lack of exports and shipments of the specific products during the investigation period and was excluded from the investigation. However, the Department of Commerce made some interesting findings regarding AMSA and Scaw:

• AMSA, Scaw and CWI were determined to be affiliates in the South African market and consequently collapsed into a single entity for the purpose of the anti-dumping investigation. It was found that ‘AMSA and Scaw each have production facilities for similar or identical products that would not require substantial retooling in order to restructure manufacturing priorities, and that there is significant potential for manipulation of price or production. Additionally, the Department has treated producers and non-producing entities, such as affiliated exporters, trading companies, invoicing companies, and input suppliers, as a single entity in prior cases where there is a significant potential for manipulation of price or production.’

• Scaw received the anti-dumping questionnaire from the Department of Commerce but failed to complete and return the questionnaire and did not participate in the investigation; on the contrary the Department is of the view that Scaw intentionally impeded the investigation by its lack of participation.

• Due to the treatment of AMSA, Scaw and CWI as one entity and the lack of participation by Scaw, the International Trade Administration (ITA) determined the applicable preliminary anti-dumping duty based on ‘facts otherwise available’ and in accordance with the principle of adverse inferences.

• The ITA has a wide discretion to determine the applicable anti-dumping rate based on the information in the filed anti-dumping petition, the final determination of the less-than-fair-value determination, a previous administrative review or any other information on the record. The ITA’s standard practice is to use the highest of either the dumping margin alleged in the petition or the calculated rate of any respondent in the investigation. For imports from AMSA, Scaw and CWI, it was decided to use the highest dumping margin for South African imports alleged in the petition, 142.26%, as the anti-dumping duty.

What are the implications for the South African steel rod industry?

The US was the main destination market for South African steel rod exports in 2016, but previously the main destination markets were Kenya and Uganda. Since 2015 South Africa’s exports to the US increased as Kenya and Uganda increased their imports from China.

The significant increase in the duty South African steel rod exporters now face in the US market can have a trade diversion effect; South African exporters might now once again look at increasing exports to other African economies. However, whether trade diversion takes place will depend on the competitiveness of the South African steel rod industry – to what extent are they still able to compete in the US market after absorbing the cost of the increased duty versus how competitive they are in comparison with Chinese steel rod imports in the African market?

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