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Customs News Bulletin

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9 September 2015

 

 

Latest News

THE WEAK RAND IS SOUTH AFRICAN MANUFACTURERS’ BIGGEST ALLEY

In a media statement that was issued on 28 August 2015, the Minister of Trade and Industry, Dr Rob Davies announced that the recommendation by the International Trade Administration Commission of South Africa (ITAC) was approved and that the rate of customs duty on zinc-coated/galvanised steel, aluminium-zinc coated steel and colour coated steel, classifiable under tariff subheadings 7210.41, 7210.49, 7212.30, 7210.61, 7210.90, 7225.99, 7210.70 and 7212.40 will be increased from free of duty to 10% ad valorem. The World Trade Organisation (WTO) bound rate for all the tariff subheadings is 10% ad valorem.

The investigation was initiated after an application from the South African Coil Coaters Association on behalf of Arcelor Mittal South Africa Limited (AMSA) and Safal Steel (Pty) Ltd (SAFAL). The DTI said the ITAC recommendations approved by the minister are subject to strict conditions, which are :

  • There will be no price increases for the steel products in question as a result of this tariff adjustment and that pre-existing commitments to reduce prices on some products are honoured;

  • ITAC will conduct a review of the duty structure to determine its impact on the industry value chain, three years from the date of implementation;

  • AMSA will invest an additional 250 million rand (about 19 million U.S. dollars) in its colour line and SAFAL will investment an additional 300 million rand (about 23 million dollars) in its metal coating line in 2017;

  • AMSA and SAFAL commit to no retrenchments in these production lines over the next three years;

  • ITAC will establish a committee comprising the applicants, downstream users, the Departments of Trade and Industry and Economic Development and relevant experts to monitor the impact of the change in tariffs and steel prices on downstream users as well as the performance of the applicants against the commitments agreed upon; and

  • ITAC will initiate an immediate review of the tariff dispensation in the event of default.

Last week, the government reached an agreement with the steel industry and trade unions to protect South Africa from duty free or zero tariff Asian steel imports.

The government had imposed the duty free regime after the industry refused to scrap import parity pricing of locally manufactured steel. The latter refers to a strategy of marking locally made products as if they have been imported from abroad.

The steel industry and trade unions have pressed the government to impose tariffs on steel imports from China so as to lessen the effect of a surge in imports, which are being supplied at prices as much as 25 percent below local production costs.

The SA steel industry is facing challenges arising mainly from global factors including the current glut of steel resulting in increasing imports of steel products into South Africa and cost-pressures on the industry. There have been reports that SA steel companies would cut thousands of jobs after the cheap iron and steel prices have hurt the local industry.

The increase comes at a time when the South African Rand is hobbering around all-time low rates against the USA Dollar and other major foreign currencies, and the weak rand should assist to protect steel producers futher.

 

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.

The International Trade Administration Commission of South Africa (ITAC) published the following application to amend the Customs Tariff of the Southern African Customs Union (SACU) under List 08/2015. 

The tariff amendment applications relate to:

1)  The creation of a provision for a  rebate of full duty on “Other plates, sheets, film, foil and strip of poly (methyl methacrylate), non-cellular and not re-inforced, laminated supported or similar combined with other materials, classifiable in tariff sub-heading 3920.51 for the manufacture of acrylic sanitary ware”, subject to a permit being issued by ITAC.

2)   Increase in the rate of customs duty on polyurethane prepolymers, classifiable under tariff subheading 3909.50, from free of duty to 10% ad valorem, by way of creating an additional 8-digit tariff subheading under tariff heading 39.09, which reads as follows: “Polyurethane prepolymers with an NCO percentage of less than 20 per cent”.

List 08/2015 was published under Notice 859 of 2015 in Government Gazette 39127 of 21 August 2015.  Comments on the applications are due by 21 September 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.

A notice to impose anti-dumping duties on wheelbarrows was published in Government Gazette 39173 of 4 September 2015.

In terms of the notice, anti-dumping duty items 215.02/8716.80.10/01.08, 215.02/8716.80.10/02.08 and 215.02/8716.80.10/03.08 are created, with retrospective effect to 6 March 2015, for the imposition of anti-dumping on wheelbarrows originating in or imported from China as recommended in ITAC Report 502.

The anti-dumping duties relate to the imposition of provisional payments in relation to the alleged dumping of wheelbarrows, with effect from 6 March 2015 up to and including 4 September 2015. (See Notice R. 185 of 6 March 2015, Jacobsens Reference PP/148).

It should be noted that the anti-dumping duties have been imposed with retrospective effect to 6 March 2015 (the date of the introduction of the preliminary duties.  It should further be noted that the provisional payments will not be refunded since the anti-dumping duties were imposed before the preliminary duties expired.

The loose-leaf pages to amend the Jacobsens Harmonized Customs Tariff were sent to subscribers under cover of Supplement 1056.

 

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.

 

LexisNexis

 

 

 

 

 

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

 

LexisNexis

 

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