G/SG/N/8/ZAF/5  
G/SG/N/10/ZAF/4  
G/SG/N/11/ZAF/4/Suppl.2  
 
6 February 2019  
(19-0687) Page: 1/9 
Committee on Safeguards  Original: English  
 
NOTIFICATION UNDER A RTICLE  12.1(B) OF THE AGREE MENT ON  
SAFEGUARDS ON FINDIN G A SERIOUS INJURY OR TH REAT  
THEREOF CAUSED BY IN CREASED IMPORTS  
 
NOTIFICATIONS PURSUA NT TO ARTICLE  12.1(C)  
OF THE AGREEMENT ON SAFEGUARDS  
 
NOTIFICATION PURSUAN T TO ARTICLE  9, FOOTNOTE  2, 
OF THE AGREEMENT ON SAFEGUARDS  
 
SOUTH AFRICA 
(Other screws fully threaded with hexagon heads made of steel)  
The following communication, dated 1 February  2019, is being circulated at the re quest of the 
delegation of South  Africa . 
 
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The subject product is described as other screws fully threaded with hexagon heads made of steel, 
classifiable under tariff subheading 7318.15.39.  
 
In light of the agreed format for notifications (G/SG/W/1, 23  February  1995), South  Africa provides 
notifications to the Committee on Safeguards of findings of serious injury or threat thereof caused 
by increased imports and proposed safeguard measures.  
 
On 20  April 2018, the International Trade Administration Commission of South  Africa 
(the Commission) ini tiated an investigation relating to serious injury to the South  African producers 
of the like or directly competitive with the imported product. Following a preliminary determination, 
South  Africa imposed provisional safeguard measures against the imports of the product concerned 
in Notice N o. 792 of 2018 in Government Gazette N o. 41812 dated 3  August  2018.  
 
The initiation of the investigation and the imposition of provisional measures have been notified to 
the Committee on Safeguards (see WTO documents G/SG/N/7/ZAF/3  – G/SG/N/11/ZAF/4).  
 
  G/SG/N/8/ZAF/5 • G/SG/N/10/ZAF/4 • G/SG/N/11/ZAF/4/Suppl.2  
 
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  1  NOTIFICATION UNDER A RTICLE S 12.1(B) AND (C)  
1.1  Provide evidence of serious injury or threat thereof caused by increased imports  
(a) Unforeseen Developments  
The unforeseen developments are as follows:  
• The unprecedented steep rate of increase in fastener production capacity after the Uruguay 
Round of negotiations. This mainly took place to support growing construction and 
manufacturing activity, as well as to help build infrastructure, particularly in emerging 
economies. This g rowth in global capacity was mainly fuelled by the growth of the Chinese 
and Asian fastener markets;  
• The significant downturn of the fastener market as a result of the Asian financial crisis that 
contributed to the imbalance between capacity and demand, th at is, the global oversupply 
of fasteners. This led to a significant increase in export volumes by countries with excess 
capacity; and  
• This in turn led to an increase in trade remedy actions being taken on fastener products, 
including set screws, by a numb er of countries, notably Canada and the European  Union, 
which are significant export markets for these products. Given the fact that fasteners are 
a commodity product, excess capacity in one region can, with relative ease, displace 
production in other regi ons, thus harming producers in those markets.  
(b) Serious Injury  
In order to make a final determination of serious injury and threat thereof to the domestic producer 
of the like products, an evaluation of all relevant factors on an objective and quantifiable b asis having 
a bearing on its situation has been undertaken.  
(i) Domestic Sales Volume  
 July 2014  – June 2015  July 2015  – June 2016  July 2016  – June 2017  
Sales volume (Ton)  100 69 68 
These figures were indexed due to confidentiality using period ending June 2015 as the base year . 
The Applicant 's sales volume decreased by 31 index points from the period ending June 2015 to the 
period ending June 2016, and decreased by 1 index points from the period ending June 2016 to the 
period ending June 2017.  
(ii) Pro fit and Loss  
 July 2014 – 
June 2015  July 2015 – 
June 2016  July 2016 – 
June 2017  
Applicant 's gross profit  Negative  Negative  Positive  
Applicant's Units sold (tons)  100 69 68 
Applicant 's total gross profit (R)  Negative  Negative  Positive  
Applicant 's net profit R/ton  Negative  Negative  Negative  
Applicant 's net profit (R)  Negative  Negative  Negative  
These figures were indexed due to confidentiality using the year ending June 2015 as the base year . 
The above table indicates that the net losses decreased during the period June 2015 to June 2017, 
it is clear that the Applicant has been operating at net losses during the period of investigation.  G/SG/N/8/ZAF/5 • G/SG/N/10/ZAF/4 • G/SG/N/11/ZAF/4/Suppl.2  
 
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  (iii) Output  
 July 2014 – 
June 2015  July 2015 – 
June 2016  July 2016  
June 2017  
Total production of product concerned  100 69 70 
Estimate of other SACU producers ' production 
for SACU consumption  100 69 70 
These figures were indexed due to confidentiality using the year ending June 2015 as the base year . 
The table  above indicates that the output decreased by 31 index points from the period ending in 
June 2015 to the period ending in June 2017, and increase by 1 index point from the period ending 
June 2016 to the period ending in June 2017.  
(iv) Market Share 
  July 2014– 
June 2015  July 2015 – 
June 2016  July 2016 – 
June 2017  
Applicant sales volume (tons)  100 69 68 
Estimated sales by other SACU producers (tons)  100 69 68 
Estimated total volume of SACU sales by SACU 
producers (tons)  100 69 68 
Volume of imports (tons) excluding own imports  6 826 5 361  7 115  
Applicant market share %  100 86 69 
Total market share held by SACU producers %  100 86 69 
Market share held by imports %  100 107 116 
These figures were indexed due to confidentiality using the year ending June 2015 as the base year . 
The table above indicates that the market share of the SACU industry decreased by 31 index points 
from the period ending June 2015 to June 2017 whilst imports increased by 16 index points for the 
same period.  
(v) Productivity  
  July 2014– 
June 2015  July 2015 – 
June 2016  July 2016 – 
June 2017  
Applicant's Total production volume (Ton)  100 72 72 
Applicant's Number of employees (manufacturing)  100 96 93 
Applicant's tons per employee  100 76 77 
Applicant 's total employment  100 94 92 
Applicant's Total investment  100 96 98 
Applicant's Output ratio  100 95 105 
These figures were indexed due to confidentiality using the year ending June 2015 as the base year . 
From the table above, productivity decreased by 23 index points from the period  ending in June  2015 
to period ending in June 2017 while total production decreased by 28 index points in the same 
period. Total employment decreased by 8 index points. The decrease in production had an impact 
on the decrease in productivity during the per iod of investigation.  G/SG/N/8/ZAF/5 • G/SG/N/10/ZAF/4 • G/SG/N/11/ZAF/4/Suppl.2  
 
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  (vi) Utilisation of Production Capacity  
 July 2014 – 
June 2015  July 2014 – 
June 2015  July 2014 – 
June 2015  
Applicant 's capacity (Tons)  100 100 100 
Applicant 's capacity utilisation %  100 73 73 
These figures were indexed due to confidentiality using the year ending June 2015 as the base year . 
The table above indicates that utilization of production capacity decreased by 27 index points during 
the period of investigation.  
(vii) Employment  
  July 2014 – 
June 2015  July 2015 – 
June 201 6 July 2016 – 
June 2017  
Applicant's number of employees (manufacturing)  100 96 93 
Applicant's total employment  100 94 92 
These figures were indexed due to confidentiality using the year ending June 2015 as the base year . 
The table above indicates total employment decreased by 8 index points during the period of 
investigation.  
(viii) Other Relevant Factors  
The Applicant stated that in addition, the serious injury experienced by the fastener industry directly 
as detailed in the statistics and financial inf ormation presented, also had a knock -on effect on the 
primary producer of steel.  
The Applicant also stated that what needs to be considered is the impact that this sudden and 
significant increase in imports had caused as a direct result of the loss of prod uction and market 
share by local manufacturers:  
• ArcelorMittal, the primary steel producer supplying the fastener manufacturers has 
reduced dispatches to the industry from 43 000 tons in 2008 to current levels estimated 
at 20 000 tons per annum. This in its elf has affected the viability of their primary steel 
supplier and has increased the risk of the ability to viably produce fastener quality steel 
for the future;  
• Whilst electricity supply was at one stage a constraint, in terms of current demand, ESKOM 
desperately needs to get back the huge loss of supply to maintain its viability and 
sustainability;  
• Value added work that has been subcontracted in the form of galvanising, hot -dipped or 
electro, heat treatment, tooling manufacture have all lost critical volume to their business;  
• Loss of local production leads to losses in a number of other input costs. These includes, 
but is not limited to:  
o Packaging material;  
o Chemicals and oils;  
o Maintenance spares; and  
o Tooling utilised in the forging and threading process, internally produced or 
outsourced.  
The Applicant further stated that in addition to the fastener industry, which has suffered a huge loss 
of employment, across all the sectors detailed above there has been loss of employment. This loss G/SG/N/8/ZAF/5 • G/SG/N/10/ZAF/4 • G/SG/N/11/ZAF/4/Suppl.2  
 
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  of employme nt has not only been the direct worker losing employment itself where chances of 
re-employment are slim, but the multiplier impact of dependants of the person losing employment.  
The Applicant stated that the above deals with the serious injury that has alr eady taken place. Should 
a safeguard duty not be approved, the likely further injury scenario is as follows:  
• Fastener quality steel by ArcelorMittal could potentially be eliminated because the product 
is not viable in their production process. Import alter natives to local fastener 
manufacturers are not viable because of quality risks, pre -payment requirements and the 
increased safety stock requirement;  
• More of the affected industries mentioned above will suffer, including electricity demand, 
galvanisers, ch emical. Lubrication oils, packaging and tooling. It is very likely that some 
industries will close down;  
• The viability of local fastener manufacture will increasingly be diminished. The alternative 
is import and/or closure. In both cases loss of employment  will take place which an 
overburdened unemployed economy can ill afford.  
• The loss of local manufacture will result in the "just in time " requirement of industry which 
local manufacturers serve will be lost. This in itself will result in potential stoppage s and 
downtime in the broad spectrum of industries local manufactures serve.  
• The increasing dominance of one big across the board importer will ultimately lead to 
control of prices and an additional cost to the economy.  
(c) Causation  
In order to examine the ex istence of a causal link between the increased imports and the serious 
injury, and in order to ensure that the serious injury caused by other factors is not attributed to the 
increased imports, the effects of the following factors were analysed:  
(i) Volume  of Imports and Market Share 
 July 2014 – 
June 2015  July 2015 – 
June 2016  July 2016 – 
June 2017  
Total market share held by SACU producers %  100 86 69 
Market share held by imports %  100 107 116 
These figures were indexed due to confidentiality using the year ending June 2015 as the base year . 
The table above indicates that the market share of the SACU industry decreased by 31 index points 
from the period ending June 2015 to June 2017 whilst imports increased by 16 index points for the 
same period.  
(ii) Consequent Impact of Increased Imports  
Imports in absolute terms  Increased  
Imports in relative terms  Increased  
Sales volumes (Tons)  Decreased  
Net Losses (R)  Decreased  
Output (Tons)  Decreased  
Market share (Applicant)  Decreased  
Productivity (Units  per employee)  Decreased  
Utilisation of capacity (%)  Decreased  
Employment (number of employees)  Decreased  
 
(iii) Factors other than the increase in imports, which could cause injury  
• Strikes, go slows or lock outs during the past twelve months : 
The Applicant stated that there were no strikes, go slows o lock outs during the past 
twelve months.  G/SG/N/8/ZAF/5 • G/SG/N/10/ZAF/4 • G/SG/N/11/ZAF/4/Suppl.2  
 
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  • Contraction in demand : 
The Applicant stated that there were no contractions in demand or changes in pattern of 
consumption.  
• Developments in technology:  
The Applicant indicated that there were no significant developments.  
• Productivity of the domestic industry : 
The Applicant stated that the productivity of the domestic industry is on par with that of 
the exporters.  
• View of the Applicant 's clients regarding qual ity, delivery times, service and after sales 
delivery . 
o Quality : 
The Applicant stated that the quality of the Applicants ' products is generally regarded 
as good, even for demanding applications. The products are tested and delivered to 
international specifi cations on material properties and tolerances. Several quality 
checks are systematically performed to minimize defective material.  
o Delivery times : 
The Applicant stated that delivery times are regarded as good as most of the general 
items are sold from stoc k. 
o Service and after sales : 
The Applicant stated that service is generally regarded as good and the Applicants ' 
regularly interacts with their customers in this regard.  
o After sales service, including guarantees and warrantees and technical 
training to cust omers : 
The Applicant stated that a small but experienced technical support exist for 
customers regarding the product. The products concerned are fully guaranteed to 
the applicable international specification ordered. Prompt resolution of quality claims 
is ensured by personal attention from a dedicated team.  
o Conclusion on causation : 
After considering all factors, it is concluded that there is a substantial link between 
the increased imports and serious injury experienced by the SACU industry.  
1.2  Provide information on whether there is an absolute increase in imports or an 
increase in imports relative to domestic production  
 July 2012 – 
June 2013  July 2013 – 
June 2014  July 2014 – 
June 2015  July 2015 – 
June 2016  July 2016 – 
June 2017  
Total import volumes  2 989  7 352  6 826  5 915 7 883  
 
The information in the table above indicates that the total imports increased by 145 % from the 
period ending June 2013 to the period ending June 2014 and slightly declined by 7 % from the period 
2014 to 2015. However, there is a 163 % increase for the period ending June 2013 to period ending 
June 2017, which is 18 % more than the surge level in the period ending June 2014. Notwithstanding 
the increase in the customs duty to 30 % ad valorem  in March  2017, imports continue at levels higher 
than that in March 2017.  
Tons  July 2014 – 
June 2015  July 2015 – 
June 2016  July 2016 – 
June 2017  
Total imports  6 826  5 915  7 883  
Applicant total production  100 69 70 
Imports as a % of the Applicant 's output  100 125 165 
These figures were indexed due to confidentiality using the period ending June 2015 as the base year . G/SG/N/8/ZAF/5 • G/SG/N/10/ZAF/4 • G/SG/N/11/ZAF/4/Suppl.2  
 
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  The above table indicates that imports relative to production increased by 65 index points from 2015 
to 2017. The imports increased by  almost 2000 tons from the year ending June 2016 to the year 
ending June 2017.  
1.3  Provide a precise description of the product involved  
The subject product is described as other screws fully threaded with hexagon heads made of steel.  
1.4  Provide a precise descrip tion of the proposed measure  
A definitive measure of 50.54% on other screws fully threaded with hexagon heads made of steel, 
classifiable under tariff subheading 7318.15.39.  
1.5  Provide the proposed date of introduction of the measure  
It is expected that the d efinitive measure, if adopted, will come into effect in mid -February 2019.  
1.6  Provide the expected duration of the measure  
The safeguard measure, if adopted, will remain in force for three  years, including the period of 
application of the provisional measure.  
1.7  For a measure with a duration of more than three years, provide the proposed date 
for the review (under Article  7.4) to be held not later than the mid -term of the measure, 
if such date for the review has already been scheduled  
Not applicable . 
1.8  If the expec ted duration is over one year, provide the expected timetable for 
progressive liberalization of the measure  
Period  Rate of Safeguard Measure  
19 Feb ruary  2019 – 2 Aug ust 2019 50.54%  
3 Aug ust 2019 – 2 Aug ust 2020 48.01%  
3 Aug ust 2020 – 1 Aug ust 2021 45.61%  
 
1.9  If the measure is being extended, also provide: (i) evidence that the industry 
concerned is adjusting and that the safeguard measure continues to be necessary to 
prevent or remedy serious injury  
Not applicable . 
2  NOTIFICATION UNDER A RTICLE  9, FOOTNO TE 2 
2.1  Specify the measure  
The measure consists of 50.54% described in the notification under Article  12.1(c), above.  
2.2  Specify the products subject to the measure  
The measure shall be applied to the products described in paragraph  4 of the notification under 
Article  12.1(c), above.  G/SG/N/8/ZAF/5 • G/SG/N/10/ZAF/4 • G/SG/N/11/ZAF/4/Suppl.2  
 
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  2.3  Specify the developing countries to which the measure is not applied under Article  9.1 
of the Agreement on Safeguards, and the import shares of these countries individually 
and collectively  
Afghanistan  Liberia  
Albania  Libya 
Algeria  Lithuania  
American Samoa  Macedonia, FYR  
Angola  Madagascar  
Antigua and Barbuda  Malawi  
Argentina  Maldives  
Armenia  Mali 
Azerbaijan  Marshall Islands  
Bangladesh  Mauritania  
Belarus  Mauritius  
Belize  Mexico  
Benin  Micronesia, Fed. Sts.  
Bhutan  Moldova  
Bolivia  Mongolia  
Bosnia and Herzegovina  Montenegro  
Brazil  Morocco  
Bulgaria  Mozambique  
Burkina Faso  Myanmar  
Burundi  Nepal  
Cambodia  Nicaragua  
Cameroon  Niger  
Cape Verde  Nigeria  
Central African Republic  Pakistan  
Chad Palau  
Chile Panama  
Chinese Taipei  Papua New Guinea  
Colombia  Paraguay  
Comoros  Peru  
Congo  Philippines  
Cook Islands  Romania  
Costa Rica  Russian Federation  
Côte d'Ivoire  Rwanda  
Cuba Samoa  
Cura São Tomé and Principe  
Djibouti  Saudi Arabia, Kingdom  
Dominica  Senegal  
Dominican Republic  Serbia  
Ecuador  Seychelles  
Egypt, Arab Rep.  Sierra Leone  
El Salvador  Solomon Islands  
Eritrea  Somalia  
Ethiopia  South Sudan  
Fiji Sri Lanka  
Gabon  St. Lucia  
Gambia, The  St. Vincent and the Grenadines  
Georgia  Sudan  
Ghana  Suriname  
Grenada  Syrian Arab Republic  
Guatemala  Tajikistan  
Guinea  Tanzania  
Guinea -Bissau  Thailand  
Guyana  Timor -Leste  
Haiti Togo G/SG/N/8/ZAF/5 • G/SG/N/10/ZAF/4 • G/SG/N/11/ZAF/4/Suppl.2  
 
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  Honduras  Tonga  
India Tunisia  
Indonesia  Turkey  
Iran, Islamic Rep.  Turkmenistan  
Iraq Tuvalu  
Israel  Uganda  
Jamaica  United Arab Emirates  
Jordan  Ukraine  
Kazakhstan  Uruguay  
Kenya  Uzbekistan  
Kiribati  Vanuatu  
Korea, Dem Rep.  Venezuela, RB  
Kuwait, the State of  Viet Nam 
Kosovo  West Bank and Gaza  
Kyrgyz Republic  Yemen, Rep.  
Lao PDR  Zambia  
Latvia  Zimbabwe  
 
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