Customs News Bulletin

	26 August 2015

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SOUTH AFRICA MUST NOW CREATE AN EXPORT CULTURE

In a dramatic week, the South African Rand has crashed to an all-time low against the US Dollar. This, and efforts by the government to improve South Africa’s relationships with other countries and the export promotion services of the government (in particular the dti) now leaves the country with now option than to create an export culture.  The entire country should undergo a mindshift and get rid of the myths surrounding international trade.

No one can deny that the South African economy is in a bad state. There are many reasons for it, and the recent crisis in China is only of these reasons. Fortunately South Africa is not alone. Other emerging market economies such as Turkey, Brazil and Russia are also suffering.

Firstly the government and exporters must become aware of the importance that international trade plays (and can play in strengthening the economy). And that does not only include exports. Imports is required to grow exports. Evidence of this can be find in the Jacobsens Harmonized Customs Tariff.  Not only are a lot of items free of duty in Schedule No 1 Part 1, but there are also items such as 470.00 (particularly 470.03) and 498.00 which are aimed at promoting exports. These goods are also exempted from payment of VAT at time of importation, which is in line with exports which are zero-rated. In addition there are many drawback provisions.  (Drawbacks are refunds on exports).

Exports are generally not as complex as imports – from a customs compliance perspective.  That is another motivation for exporters to become involved in international trade. However, exporters must be aware that importers and customs (in both the importing and exporting country) rely on the accuracy of information produced by the exporter. It applies in particular to the accurate description – and tariff classification and values of the exported goods.

International trade as a percentage of the South African GDP has increased substantially from 1994/1995 which coincides with  South Africa’s re-admittance in the global arena and the conclusion of the WTO Uruguay Round of Talks but there is a lot of room for improvement.  South Africa must focus on growing the economy and global competitiveness through sound legislation and trade facilitation. Government is responsible for passing the legislation, but importers and exporters must comply therewith.

Exporters must become familiar with the role of the dti in exports.

Exporters must also be familiar with the tools government use to promote exports and boost the economy.  These instruments are reviewed on a frequent basis.

In addition importers and exporters must be familiar with trade agreements and how these agreements can grant preferential access to the products they deal in. These agreements can be unilateral, bilateral or multilateral, and new ones are negotiated from time to time. The outcome of the current AGOA negotiations should be followed with interest, particularly if one wants to export to the number one economy in the World.

The role of the Department of Trade and Industry in creating an export culture must not be under-estimated. But it also begins with exporters.

A lot of assistance and training is available to exporters. But they need to start building on their own export culture – and that starts with research and a mindset shift. In other words it starts with the exporter and he must make use of all available resources.

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. ITAC published the following application to amend the Customs Tariff of Botswana, Lesotho, Namibia and Swaziland under List 07/2015. The application was published under Notice R.792 of 2015 in Government Gazette 39045 of 31 July 2015. WITHDRAWAL OF PARTIAL REBATE ITEM 316.23/85.29/03.06 ON DISPLAY PANELS FOR THE ASSEMBLY OF MONITORS. ITAC is the applicant and argues that there has been a significant shift from the semi-knocked down (SKD) model of assembly towards full completely-knocked down (CKD) manufacturing in the local industry and subsequently, the CKD manufacture has resulted in higher value-addition and capital investment. Enquiries: ITAC Ref 06/2015: Ms L Maliaga, Tel: 012 394 3835, Email: lmaliaga@itac.org.za. Comments are due by 31 August 2015. ITAC also published a notice to maintain the anti-dumping duties on CLEAR DRAWN AND FLOAT GLASS ORIGINATING IN OR IMPORTED FROM THE PEOPLE’S REPUBLIC OF CHINA (CHINA) AND INDIA.  The provisions exist in Schedule No. 2, item 213.03. The Notice (R.793 of 2015) was published in Government Gazette 39045 of 31 July 2015. List 06/2015 was published under Notice R.589 of 2015 in Government Gazette 38877 of 19 June 2015.

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. Two notices were published to amend the Customs Tariff of the Southern African Customs Union.

In the first notice, rebate item 315.05 and rebate item 315.05/7308.90.90/01.01 is inserted to  provide for a rebate on steel panels used for the manufacture of raised access flooring systems as recommended in ITAC Report 500. In the second notice, tariff subheadings 1001.91 and 1001.99, as well as 1101.00.10 and 1101.00.90are amended to  reduce the rate of customs duty on wheat and wheaten flour from 80,01c/kg to 51,06c/kg and 120,02c/kg to 76,59c/kg respectively, in terms of the existing variable tariff formula - ITAC Minute M03/2015 The notices to implement the tariff amendments were published in Government Gazette 39126 on 21 August 2014. See Notices R. 742 and R. 743. A loose-leaf pages to amend the Jacobsens Harmonized Customs Tariff were sent to subscribers under cover of Supplement 1055.

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.  There were no Rule amendments at time of publication. On 3 July 2015, SARS Customs published an Amendment of the Customs and Excise Rules under section 21A relating to special economic zones (SEZs).

The rule amendment (DAR/156) was published on 3 July 2015 in Government Gazette 38925 under Notice R. 566. The effective date of this amendment will be on the date that the regulations under the Special Economic Zones Act, 2014 come into effect. Download the latest Customs Watch at www.jacobsens.co.za to have access to the latest tariff and rule amendments.

Contact Information:	Contact the Author:
Mayuri Govender Jacobsens Editor Tel: 031-268 3273 e-mail to: jacobsen@lexisnexis.co.za	Leon Marais Independent Customs Consultant Tel: 053-203 0727 e-mail to: leon.marais@intekom.co.za

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