SOUTH AFRICA INITIATES INVESTIGATION FOR REMEDIAL

UNCLAS PRETORIA 001833

SIPDIS

SIPDIS

DEPT FOR AF/S; AF/EPS; EB/TPP
USDOC FOR JDIEMOND
USTR FOR PCOLEMAN
TREASURY FOR TRAND

E.O. 12958: N/A
TAGS: ETRD ECON USTR SF
SUBJECT: SOUTH AFRICA INITIATES INVESTIGATION FOR REMEDIAL
ACTION AGAINST INCREASED IMPORTS OF LYSINE


1. South Africa's International Trade Administration
Commission (ITAC) provided post with notice that it has
initiated an investigation for remedial action in the form of
a safeguard against the increased imports of lysine as
provided in its Government Gazette notice dated May 11, 2007.
On the basis of information available, ITAC also made a
preliminary determination that the surge in imports is
causing serious injury to the Southern African Customs Union
(SACU) industry and is imposing provisional measures due to
critical circumstances. ITAC is currently in the process of
notifying all countries that may be significantly affected by
the safeguard measure. The time-limit for comments is 15:00
on May 31, 2007.


2. South African company SA Bioproducts (Pty) Ltd, the sole
producer of L-Lysine HCI (Feed Grade) min 98.5% (subject
product) in the SACU, claims that a surge in imports of
L-Lysine is causing serious injury to the SACU industry. SA
Bioproducts submitted information that China's 100,000 tons
of installed capacity for lysine in 2003 rose to 480,000 tons
of installed capacity in 2006. According to SA Bioproducts'
submission, China producers had overshot market needs and
this encouraged them to dispose of this surplus capacity,
thereby impacting world prices and forcing exporters to
export at very low prices. ITAC "decided that the expansion
of capacity and oversupply in the world, which occurred after
the negotiation of the relevant tariff concessions, could not
have been foreseen at the time the concessions were
negotiated and therefore represent unforeseen developments,
in accordance with Article XIX of the GATT." Based on this
decision, ITAC requested the Commissioner for South African
Revenue Service to impose provisional measures for a period
of 200 days being a price disadvantage of 160 per cent ad
valorem on L-Lysine HCI (tariff subheading 2922.41) and
L-Lysine Sulphate (tariff subheading 2309.90.65).


3. A full copy of ITAC's Notice, Investigation Report, and
SA Bioproduct's completed application for remedial action are
located at post and can be forwarded via email if requested.
Please contact Trade and Investment Officer Leslie Freriksen
at freriksenld@state.gov to obtain a copy.
Bost