South Africa orders sector-wide review of paper, packaging industry

SOUTH AFRICA – South Africa has ordered a probe into the state of its paper and packaging industry, with local producers citing struggles to compete against rising imports as the sector faces mounting cost pressures.

Trade, Industry and Competition Minister Parks Tau requested the International Trade Administration Commission to conduct the sector-wide review and recommend trade policy instruments that could drive the industry toward sustainability and resilience. 

Itac will examine the tariff structure, including relevant trade remedy measures, and investigate introducing an import surveillance system for paper and paper products. 

The review will also assess potential injury to the industry and upstream activities from rising imports, alongside trade statistics following US policy changes and conditions in domestic and global markets.

US$2.4B Billion Invested Over Seven Years

The South African pulp and paper industry has made substantial investments, with more than R33 billion (US$2.04 billion) invested over the past seven years. 

The sector possesses technological innovation and sufficient installed production capacity, with processing operations highly intertwined with virgin fibre production and recycled fibre.

This dual feedstock base supports a range of enterprises and employment across forestry, pulping, papermaking and converting operations. 

Packaging paper production represents a significant portion of capacity, supplying corrugated cartons, folding boxboard and flexible paper grades to food, beverage, retail and industrial customers.

Packaging and Tissue Segments Face Mounting Pressure

Despite investment, the industry is under tremendous strain, particularly in uncoated paper, newsprint, packaging and tissue segments.

Producers have raised concerns about growing import penetration, declining demand for print paper and the slowdown in the domestic economy. 

Increasing input costs, particularly electricity and transportation expenses, are placing significant pressure on local manufacturers and squeezing profit margins. 

The packaging segment remains particularly exposed to import competition, as converters and brand owners increasingly source paperboard from lower-cost producers in Asia and Europe.

Consultation Process Sets October Deadline

Comments on the notice must be submitted in questionnaire format, available on Itac’s website, with representations due to officials listed in the relevant Government Gazette notice by October 15. 

Itac will continue evaluating ongoing applications for tariff amendments and trade measures in the sector while making recommendations. 

If these challenges are not effectively addressed, the economy risks losing significant industrial investments, employment opportunities and the economic sustainability of many rural communities that depend on the sector.

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