The European Union has raised concerns over Minister Ebrahim Patel's plans to ban the exports of scrap metal as a measure to prevent theft, warning that such "trade distorting measures" may contravene South Africa's obligations as a member of the World Trade Organisation.
The issues were raised in a written comment submitted by the EU to the Department of Trade, Industry and Competition on its policy proposals to curb scrap metal theft in South Africa.
The most contentious of the proposed measures is a six-month ban on the exportation of ferrous and non-ferrous waste and scrap metal to curb theft while other regulatory measures are put in place.
The EU has, however, argued that South Africa should first put measures in place at a domestic level before contemplating an export ban.
"The ban is also doubtful from a WTO perspective since it seems to contravene key WTO provisions," the EU said in its submission.
These provisions prohibit quantitative restrictions on the movement of goods, except where it is required to relieve critical shortages.
The EU argued there are no such shortages in SA.
"The EU is of the opinion that, until these regulatory policy controls are implemented in the South African market, stolen scrap and metals will continue to be sold in the domestic market, possibly at lower prices due to oversupply resulting from the export ban. This would in turn create an unfair advantage for the domestic users in relation to those abroad."
The EU also requested an explanation as to why several products affected by the proposed ban are metals that do not appear to relate to scrap. These are unwrought aluminium, lead, zinc, tin, tungsten, molybdenum, tantalum, magnesium and many rare earth metals.
"It may be suggested to put in place the regulatory framework necessary to control the trade and circulation of scrap and metals inside South Africa, and if necessary, examine the need to ban exports," the EU said.
Domestically the ban has received support from some sectors, like the steel industry, while metal recyclers have strongly opposed this measure but have been supportive of the other policy proposals.
In the first phase, government seeks to establish an inter-departmental Metal Trade Task Force. It also proposes a permit system for exporting semi-finished goods and non-ferrous metal products and importing furnaces or other machines capable of transforming metal and disguising its origin.
Among the proposals in the second phase is for a permit system to be applied to scrap exports, an enhanced registration regime, and restrictions on who can sell copper scrap and semi-finished copper products.
Phase three will seek to prohibit the use of cash in scrap metal transactions while also allowing for the blacklisting of offenders.