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HOW BUSINESSES CAN COPE IN THE NEW GLOBAL TRADE ENVIRONMENT

As a result of globalization, governments are modernizing their international trade-related legislation.  New concepts have been introduced in Customs and international trade legislation.  

Business’ response to the new legislation is a new concept to define the challenges and opportunities unique to the new international business environment, namely global trade management.  Companies need to employ a strategy and use global trade management solutions to succeed in the new global trade arena. In other words they need to automate their businesses.  That will not be an easy task. There are many companies that claim to provide the best global trade management solutions but it is a daunting task to choose the best solution for your company.

In the quest to maintain a profitable global supply chain, technology is just as important as human know-how. At least, that's what supply chain consulting firm Tompkins International found in 2013, when it surveyed 80 companies for its Global Trade Management (“GTM”) Report. 

Companies have to become globally competitive through customs compliance, reduced costs (for example, by avoiding supply chain delays and penalties), increased productivity and increased shipping performance.

No company could achieve this in isolation. The smaller the company, the more assistance they will need from their supply chain partners and service and solution providers.

Implementing GTM solutions alone is not the alpha and the omega. 74% of respondents told Tompkins International they were implementing technology solutions however, the same percentage said that they were ensuring their staff were well-trained.

Inbound Logistics Magazine feature article, in the March 2014 edition, states that it is paramount for companies to choose that best GTM solution, and – just as important – the investment must work for that company.

GTM solutions help shippers optimize, automate, and monitor transactions with trading partners and service providers. 

It has always been important for companies that are trading internationally to comply with their own Customs legislation as well as with that your partner. It is becoming more important in the modern era.  GTM software assists the user with complying with the customs requirements in more than one country since GTM solution providers focus on customs compliance in more than one country.  However, one needs to investigate if the solution provider focuses on the Customs legislation of the country your partner resides in.  

As an example, it is of no use if a GTM solution provider’s solutions are able to  conduct denied party screenings, assign product classification codes, determine duty and tariff obligations in the United States, submit US customs documents, and transmit data required by agencies such as the U.S. Food and Drug Administration if you are not dealing with the United States.

There will be dramatic operational and cash flow benefits to be gained by businesses that comply with global trade regulations and use the best global trade management solutions.  There is a money-saving motivational point if your companies use GTM solutions however, it will require a lot of dedication, commitment and research from top management down to your operational staff. And you will need well-trained staff.

Customs Tariff Applications and Outstanding Tariff Amendments

The International Trade Administration Commission (ITAC) is responsible for tariff investigations, amendments, and trade remedies in South Africa and on behalf of SACU.

Tariff investigations include: Increases in the customs duty rates in Schedule No. 1 Part 1 of Jacobsens. These applications apply to all the SACU Countries, and, if amended, thus have the potential to affect the import duty rates in Botswana, Lesotho, Namibia, Swaziland and South Africa.

Reductions in the customs duty rates in Schedule No. 1 Part 1. These applications apply to all the SACU Countries, and, if amended, thus have the potential to affect the import duty rates in Botswana, Lesotho, Namibia, Swaziland and South Africa.

Rebates of duty on products, available in the Southern African Customs Union (SACU), for use in the manufacture of goods, as published in Schedule No. 3 Part 1, and in Schedule No. 4 of Jacobsens. Schedule No. 3 Part 1 and Schedule No. 4, are identical in all the SACU Countries.

Rebates of duty on inputs used in the manufacture of goods for export, as published in Schedule No. 3 Part 2 and in item 470.00. These provisions apply to all the SACU Countries.

Refunds of duties and drawbacks of duties as provided for in Schedule No. 5. These provisions are identical in the all the SACU Countries.

Trade remedies include: Anti-dumping duties (in Schedule No. 2 Part 1 of Jacobsens), countervailing duties to counteract subsidisation in foreign countries (in Schedule No. 2 Part 2), and safeguard duties (Schedule No. 2 Part 3), which are imposed as measures when a surge of imports is threatening to overwhelm a domestic producer, in accordance with domestic law and regulations and consistent with WTO rules.

Dumping is defined as a situation where imported goods are being sold at prices lower than in the country of origin, and also causing financial injury to domestic producers of such goods. In other words, there should be a demonstrated causal link between the dumping and the injury experienced.

To remedy such unfair pricing, ITAC may, at times, recommend the imposition of substantial duties on imports or duties that are equivalent to the dumping margin (or to the margin of injury, if this margin is lower).

Countervailing investigations are conducted to determine whether to impose countervailing duties to protect a domestic industry against the unfair trade practice of proven subsidised imports from foreign competitors that cause material injury to a domestic producer.

Safeguard measures, can be introduced to protect a domestic industry against unforeseen and overwhelming foreign competition and not necessarily against unfair trade, like the previous two instruments.

In the WTO system, a member may take a safeguard action, which is, restricting imports temporarily in the face of a sustained increase in imports that is causing serious injury to the domestic producer of like products. Safeguard measures are universally applied to all countries, unlike anti-dumping and countervailing duties that are aimed at a specific firm or country.

Schedule No. 2 is identical in all the SACU Countries.

ITAC published no applications to amend the tariff.

The last notice that ITAC has published was a notice to initiate a sunset review on the anti-dumping duties on fresh or chilled garlic imported from or originating in China.  The Notice (Government Notice R. 244 of 2015) was published in Government Gazette 38574 on 20 March 2015.

Refer to the Bulletin of 1 April 2015 for more information.

Customs Tariff Amendments

With the exception of certain parts of Schedule No. 1, such as Schedule No. 1 Part 2 (excise duties), Schedule No. 1 Part 3 (environmental levies) Schedule No. 1 Part 5 (fuel and road accident fund levies), the other parts of the tariff is amended by SARS based on recommendations made by ITAC resulting from the investigations relating to Customs Tariff Applications received by them. The ITAC then investigates and makes recommendations to the Minister of Trade and Industry, who requests the Minister of Finance to amend the Tariff in line with the ITAC’s recommendations. SARS is responsible for drafting the notices to amend the tariff, as well as for arranging for the publication of the notices in Government Gazettes.

During the annual budget speech by the Minister of Finance in February, it was determined that parts of the tariff that are not amended resulting from ITAC recommendations, must be amended through proposals that are tabled by the Minister of Finance.

Once a year big tariff amendments are published by SARS, which is in line with the commitments of South Africa and SACU under international trade agreements.

Under these amendments, which are either published in November or early in December, the import duties on goods are reduced under South Africa’s international trade commitments under existing trade agreements.

There were no tariff amendments at time of publication. The last tariff amendments were published on 27 March 2015 and were dealt with in last week’s Bulletin dated 1 April 2015.

The amendments of 27 March 2015 were published in Government Gazette 38611 of 27 March 2015 and they have been published to give effect to the Taxation Proposals of the Minister of Finance in relation to:

The abolishment of ad valorem excise duty on digital cinema projectors above R250 000;

The increase of fuel levy on petrol and on diesel with effect from 1 April 2015;

The increase in the road accident fund (RAF) levy on petrol and diesel with effect from 1 April 2015; and

Amendments consequential to these amendments in Part 3 of Schedule No. 6.

The tariff amendments were sent to subscribers under cover of Supplement 1046.

Customs Rule Amendments

The Customs and Excise Act is amended by the Minister of Finance. Certain provisions of the Act are supported by Customs and Excise Rules, which are prescribed by the Commission of SARS. These provisions are numbered in accordance with the sections of the Act. The rules are more user-friendly than the Act, and help to define provisions which would otherwise be unclear and difficult to interpret.

Forms are also prescribed by rule, and are published in the Schedule to the Rules.

Forms are also prescribed by rule, and are published in the Schedule to the Rules. 

The rule amendment (DAR/144) was published on 27 March 2015 in Government Gazette 38603 under Notice R. 246.

Download the latest Customs Watch to have access to the latest tariff and rule amendments.