Once import duties are introduced, they are seldom removed. This is stifling competition and cost South Africans R108bn in the past year. From Moneyweb.
Nearly 94% of tariffs approved by the International Trade Administration Commission of South Africa (Itac) have not been reviewed in 20 years, according to XA Global Advisors’ latest Import Duty Investigation Report.
Import duties, once introduced, are seldom removed, providing evergreen protection for those companies basking under the 3 607 tariff codes that carry duties.
“They are, practically, eternal,” says Donald MacKay, CEO of XA Global Advisors.
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This comes at a staggering cost: South Africans paid an eye-watering R108 billion in duties between July 2024 and June 2025, with nearly 94% of these duties last reviewed before 2005.
Speaking at the launch of the report this week, MacKay said termination dates need to be baked into any duties or subsidies granted. Itac previously committed to reviewing duties after three or five years, but this is no longer the case.
“But even if there is an industry to protect, this does not mean you should retain duty protection indefinitely. Companies shielded from competition for long periods become uncompetitive. This is why monopolies struggle so much when the monopoly is broken.
“By imposing duties and then leaving them in place forever, we build a sluggish economy, unable to adapt to the fast pace of change elsewhere in the world,” the report states.
“Look at the biggest users of duty increases and you will not find young, nimble businesses. Almost without exception these are old, lumbering creatures, unable to thrive in a modern world.”
Duties are allowed to remain in place even when there are no local manufacturers – often just in case a local producer decides to start manufacturing.
Years-long investigations
It now takes an average of 27 months to complete tariff investigations at Itac, against a target of six months.
For most of the last 22 years, investigations took between six and 12 months to complete, but one investigation lasted more than five years.
Companies struggling with import competition can request a duty increase from Itac, a process that should last no more than six months once interested parties have responded and Itac has made its recommendations to the minister of Trade, Industry and Competition. The recommendation then goes to the minister of Finance, and, if approved, the SA Revenue Service (Sars) is instructed to implement the duty change.
In practice, investigations were taking 23 months at Itac in 2023, with a slight improvement to 18 months by June 2025.
“For the first six months of 2025, there are more cases open and fewer cases finalised than in the previous six-month period. This is not good,” says the report. “The older cases are getting older and are not getting finalised.”
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XA Global Advisors recommends Itac make hard calls and either accept or reject applications for duty changes.
“These investigations don’t only exist on paper. There are people and jobs at risk. Make the call.”
Winners and losers
There is a move to control more of what happens in different value chains, driven by the idea that previously failing sectors can be rescued with a combination of tariffs, rebates, subsidies and import controls, says MacKay.
“Given the focus on protection on intermediate goods, we could soon face having saved upstream producers at the cost of the labour-intensive downstream parts of those sectors.”
A case in point is the massive review of the steel sector currently underway, covering R52 billion in imports under 460 tariff codes and impacting 16 319 traders.
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There is a danger that Itac could invoke emergency measures to further raise duties beyond the so-called bound rates agreed when SA joined the World Trade Organisation. There is also concern that SA – like the US and other countries – might invoke national security to avoid complying with its General Agreement on Tariffs and Trade (GATT) obligations.
Matthew Stern, director at DNA Economics, comments that the report’s findings are “graphic and terrifying. The structure for reviewing tariffs appears to be broken. That’s not to underplay the complexity of making decisions. There will always be winners and losers, and we must have a little bit of sympathy for Itac given the problems they are facing.”
But, adopting a piecemeal tariff line approach is sending the wrong signal to business and is not strategic, adds Stern.
Another trend identified in the report is the shift towards issuing duty rebates rather than removing already existing duties. These rebates require permits that come with conditions.
In the textiles sector, applicants must be members of a bargaining council (which raises labour costs); commit to buying certain volumes of locally made textiles; sell the goods only within the Southern African Customs Union country in which they were made; and restrict sales to retailers that have signed the Retail Clothing, Textile, Footwear and Leather Masterplan.
This amounts to government intrusion and some of these conditions were not present when the rebate was first introduced.
Because the rules for rebate permits are issued as guidelines rather than formal regulations, they can be issued by Itac without the minister needing to approve them.
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Permits take time to be issued and add administrative complexity and costs to businesses using them. Many of these rebates are for products that are not made locally, and most are for intermediate products. When companies can’t access these raw materials affordably, factories grind to a halt and jobs are lost.
Itac is now proposing to add import controls on 392 steel tariff codes, covering R45 billion in annual imports. This would mean imports could be stopped altogether without the necessary permit, and Itac plans to introduce a charge for companies to help cover the additional administrative burden associated with issuing these permits.
“It is not difficult to imagine a Home Affairs-type situation arising as companies wait for permits to be issued,” notes the report.
The company submitting the most applications for duty increases – either alone or as part of a group – was ArcelorMittal SA, with 12 applications in a year. Over the course of the review period, private sector companies submitted 111 applications for duty increases, of which 62% were once-off applications.
The report recommends several steps to improve trade efficiency:
- Review duties that are overdue for reassessment
- Get rid of reciprocal agreements that extract concessions from applicants, as these reduce trust in the system
- Publish a non-confidential version of any reciprocal agreement
- Amend tariff regulations to impose time limits on tariff investigations, implement variable duty trigger changes to speed up decision-making, require Itac to publish investigation reports, and insist on a review date for all duty increases.
