Customs News Bulletin

	14 October 2015

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South African National Department of Agriculture, Forestry and Fisheries publishes notices for application of export permits and Market Access permits

Generally agricultural products (Chapters 1 to 24 of the Harmonized System) are the products which attract the highest rates of duty on importation into a country or territory.

Countries have bound rates on goods imported into their territories in terms of which they commit not to increase the rates in their Customs Tariffs above the WTO “bound rates.

In terms of the WTO Rules:

Quantitative restrictions (import permits/licences) may not be used to restrict imports on commodities;

There are exceptions such as anti-dumping duties, safeguards and food safety measures which must also be in line with the respective WTO agreements;

The only measure that is permitted is “ordinary” customs duties (ad valorem and specific customs duties) which must not exceed the WTO bound rates.

The bound rates on agricultural products are substantially higher than on most other commodities, and they were increased when the WTO Agreement entered into force in 1995.  At the same time the quantitative restrictions on agricultural products that applied were abolished and replaced by higher rates of duty that applied prior to 1995.

Eventually the higher rates of duty had to be phased out over longer periods than would apply to products that are less sensitive.

When South Africa and the European Union entered into a bilateral Trade Development and Co-operation Agreement (SA/EU TDCA) in 2000, the rates of duty on many agricultural products were still very high. The agreement aimed, inter alia, to provide (preferential) market access to South African agricultural products in the European Union, and vice versa.

In terms of the SA/EU TDCA South Africa (one the one side) and the EU agreed to issue permits that would enable many European products to enter South Africa duty-free and at lower rates than the rates that would apply from countries with which South Africa and the European Union does not have bilateral trade agreements.  Similarly the European Union provides market access to many South African products to enter the EU duty-free or at lower rates that would apply from countries with which a bilateral trade agreements is not in place.

The permits are in fact tariff rate quota permits. In South Africa two Government Gazette notices are published annually by the National Department of Agriculture (by September/October).

The Tariff Rate Quota permits that provides market access for South African Agricultural products in the European Union is called export permits. Notice No 929 was published in Government Gazette 39275 of 9 October 2015 and is entitled: “PROCEDURES FOR THE APPLICATION, ADMINISTRATION AND ALLOCATION OF EXPORT PERMITS UNDER THE TRADE, DEVELOPMENT AND CO- OPERATION AGREEMENT BETWEEN THE EUROPEAN UNION AND THE REPUBLIC OF SOUTH AFRICA FOR THE YEAR 2016”.

These permits would provide preferential tariff access to South African products which are listed in Table 1 of the notice.  It includes flowers, certain fruit and nuts (of headings 08.11 and 20.08), fruit juices (heading 20.09) and wines and alcoholic beverages (heading 22.04). Download the notice for more information.

The notice which would provide preferential tariff access to agricultural products produced in the EU, Notice 930 of 2015 was published in Government Gazette 39275 of 9 October 2015. It is entitled: “World Trade Organisation: Marrakesh Agreement: Application for market access permits: Agricultural products”.

The conditions for application of the market access permits are published by tariff subheading in Table 1.

South African Importers can import meat, dairy produce, bird’s eggs, certain vegetables of Chapter 7 of the HS, grapes (0806.20), dried fruit (08.13), certain cereals of Chapter 10, for example wheat and meslin (10.01) and maize of (10.05), preparations for infants of (19.01) and pasta (19.02), certain food preparations (21.06) and wines (22.04 to 22.08), tobacco products of Chapter 24 and cotton (52.01) at reduced rates.

Permits will be issued only to importers in South Africa for importation into the Republic for the quantities and at the reduced levels of duty as specified in Table 1.

Download the Notices at http://www.gov.za/sites/www.gov.za/files/39275_gon930.pdf and http://www.gov.za/documents/trade-development-and-co-operation-agreement-between-european-community-and-south-africa-6.

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 09/2015.  The tariff amendment application relates to an increase in the rate of customs duty on certain aluminium plates, sheets, strips and foil products classifiable under tariff heading 76.06 and 76.07 from free of duty to a WTO bound rate of 15%. List 09/2015 was published under Notice 909 of 2015 in Government Gazette 39201 of 11 September 2015.  Comments on the application are due by 9 October 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.

There were no tariff amendments at time of publication. The latest tariff amendments were published in Government Gazette 39235 of 25 September 2015, under Notices R. 894 and R. 895: Refer to the Jacobsens Customs News Bulletin 407 dated 30 September 2015 for more information. The loose-leaf pages to amend the Jacobsens Harmonized Customs Tariff were sent to subscribers under cover of Supplement 1058.

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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