Customs News Bulletin

	28 October 2015

Latest News

CUSTOMS ROLE IN SOLVING THE GLOBAL FOOD SECURITY CRISIS

I am currently attending the Agri Cape Week in Worcester in the Western Cape Expo.  The expo is an agricultural and consumer showcase, with its theme “Africa is open for business”, and it is presented at Kleinplasie Showgrounds at Worcester from 28 October 2015 to 31 October 2015.  The expo focuses on the fruit, vegetable and wine industries.

In an article titled “Africa is open for business” Mr Elias Masilela, Executive Chairman of DNA Economics and Member of the National Planning Commission refers to the concern of the United Nations food security concerns.

It is Masilela’s view that solutions to the food security crisis lie within the agricultural sector and the rural community.

This cannot be denied. However, as customs specialists it is clear that few people are aware of the role of Customs in solving the crisis.  In my view there should be a holistic approach and all stakeholders should take hands in solving the food security crisis.

Masilela points out that:

• as much as 20% of agri-produced foods get lost between the farm and the plate (UN estimates);

• the problem must be solved;

• the problem is one of global concern;

• the agricultural sector must play a significant role in solving the problem, assisted by rural communities;

• urgent action and a new approach towards the crisis is required;

• Agriculture is responsible for 1,1, million jobs and currently contributes about R150 billion to the GDP;

• A recent study indicates that agri exports can be quadrupled from the current R67 billion per annum to R212 billion;

• South Africa is currently ranked 10th largest agricultural exporter to Europe;

• Globally 800 million people are undernourished and do not have access to sufficient, safe and nutritious food.

It is Masilela’s view that the private sector and the public sector must contribute to the Comprehensive Africa Agriculture Development Programme, and that South Africa and Africa need to take up their rightful positions, as net food exporters, to ensure the food supply to the World on a larger scale.

In order to achieve the “dream” to eradicate poverty and hunger, stakeholders need to understand their roles, and that of other roleplayers such as Customs.

Firstly, the bulk of the HS 2012 (current HS) and HS 2017 Review result from requests from the United Nation (UN)  Food and Agricultural Organisation (FAO) to amend the HS to assist with the management of the global food security crisis.

The UN FAO is a partner of the World Customs Organization (WCO) in the review of the Harmonized System (HS). The contribution to the HS is crucial for FAO: as the majority of goods that are exported and imported (98%) is classified in HS and almost all countries in the world use it for statistical and administrative purposes. Thus, the HS means to significantly impact the availability and quality of statistics on trade in agriculture, fishery and forest products worldwide. The UN FAO therefore acknowledges the role of the HS as a multipurpose tool, often used for statistics other than trade and as the basis for the development of international and national classifications to strengthen data harmonization across countries and to integrate agricultural statistics with other statistical domains.

Secondly, Customs professionals are responsible for training and consulting to customs brokers.

LexisNexis is the only publisher of legal publications, and their Jacobsens products comprise the Customs Tariff of the Southern African Customs Union, South Africa’s import and export control regulations, the Rules to Customs legislation and the Customs and Excise Act as well as the International Trade Administration Act, 71 of 2002 together with the new Customs legislation and the tax levying acts.

Furthermore, customs information is crucial in trade facilitation, and customs brings together all the governmental roleplayers in imported and exported goods.  Eventually customs and customs information will be instrumental in electronic solutions that will be incorporated in Single Window Solutions. 

All roleplayers must take hands against the global food security crisis, and in my view customs information – and the understanding thereof by the agricultural sector is essential.

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 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. 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.

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. The International Trade Administration Commission (ITAC) has received 2 applications to amend the Customs Tariff of the Southern African Customs Union (SACU), comprising Botswana, Lesotho, Namibia, South Africa and Swaziland.  A correction notice to replace a previous application was also published. The applications relate to: Increase in the general rate of duty on numerous iron and non-alloy steel products of Chapter 72 from free to 10%, as requested by ArchelorMittal South Africa Limited.  (Comments due by 6 November 2015 – within two weeks of publication date); Increase in the general rate of customs duty on certain ceramic ware classifiable in tariff subheadings 6910.10 and 6910.90, as requested by Vaal Sanitaryware (Pty) Ltd from 20% to 30% ad valorem. (Comments due within 4 weeks of the publication date of the Notice, which is 23 October 2015); and   Reduction in the rate of duty on certain diesel, petrol and electric passenger vehicles not exceeding 800kg; diesel goods vehicles not exceeding 1 100kg and petrol and electric goods vehicles exceeding 800kg, from 25% ad valorem to free of duty.  The vehicles are classifiable in tariff subheadings 8703.21.75, 8703.31.85, 8703.90.31, 8704.21.77, 8704.31.77, 8704.90.35 shall have steering wheels fitted on the left hand side of the vehicle and may not be operated on a public road in terms of the National Road Traffic Act (Act 93 of 1996) The applications were published in Government Gazette 39324 of 23 October 2015 under Notice No. 1007 of 2015 (List 11/2015). Download the Notice at http://www.gov.za/sites/www.gov.za/files/39324_gen_1007.pdf List 10/2015 was published under Notice No. 709 of 2015 in a Government Gazette of 18 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. There were no tariff amendments at the time of publication.  The last amendment to amend the SACU Customs Tariff was  published in Government Gazette 300 of 16 October 2015 under Notice R. 900 Under the amendment, rebate items 320.01/5903.20.90/ 01.08 and 320.01/5907.00.90/01.08 are replaced by rebate items 320.01/5903.20.90/02.08 and 320.01/5907.00.90/02.08 in order to amend the wording of qualifying fabrics.  The loose-leaf pages to amend the Jacobsens Harmonized Customs Tariff were sent to subscribers under cover of Supplement 1059.

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. 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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