Customs News Bulletin

	2 December 2015

Latest News

EFTA/SACU Reductions in Customs Duty Rates to be published

The SACU/EFTA Free Trade Agreement (FTA) between the EFTA States Iceland, Liechtenstein, Norway and Switzerland on the one side the Southern African Customs Union (SACU) Botswana, Lesotho, Namibia, South Africa and Swaziland was signed in Höfn, Iceland, on 26 June 2006.

The Agreement covers trade in goods and lays the foundation for a further engagement of the Parties with regard to intellectual property, investment, trade in services and public procurement. A Joint Committee is established for the supervision and administration of the Agreement, and provisions are included providing for consultations and dispute settlement procedure and entered into force on 1 May 2008.

Exports from SACU to EFTA increased from US$ 1600 million in 2008 to US$ 2400 million in 2011 but then dropped to US$  1100 million in 2014, while imports from EFTA to SACU increased from US$ 950 million to US$ 980 million in 2014. The highest level of imports from EFTA States was in 2011 (US$ 1050 million).

In terms of paragraph 3 of Article 8 of the SACU/EFTA Agreement, Customs duties on imports into SACU on products originating in an EFTA State listed in Tables 1 and 2 categorized as List 0 and List 1 are eliminated upon the entry into force of the Agreement.

Customs duties on imports into SACU on products originating in an EFTA State listed in Tables 1 and 2 categorised as List 2 have been and will be reduced as follows:

• on the date of entry into force of the Agreement, each duty were reduced to 67 per cent of the basic duty;

• one year after the date of entry into force of the Agreement, each duty were reduced to 33 per cent of the basic duty;

• two years after the date of entry into force of this Agreement, the remaining duties were abolished. 

Additional duties will be reduced to the lowest level nine years after entry into force of the Agreement.

The agreement entered into force during the course of 2008.  The first tariff reductions took place on the actual date of entry into force of the Agreement. 

The second reductions were published with effect from 1 January 2009, i.e. as if the agreement had actually entered into force on 1 January 2008.

Year three reductions were published w.e.f 1 January 2010, year four w.e.f. 1 January 2011, year five (1 January 2012), year six (1 January 2013), year seven (1 January 2014), year eight (1 January 2015).

The final reductions should be published tomorrow w.e.f 1 January 2016.

Next year there should be no EFTA reductions, but then the HS2017 SACU Tariff amendments will be published.

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 published the following applications to amend the SACU Tariff under Notice No. 1168 of 2015 (List 12/2015) in Government Gazette 39433 of 20 November 2015. The applications relate to: 1.   Increase in the general rate of duty on: gas stoves classifiable in 7321.11 from 15% to 30%, as requested by Defy Appliances (Pty) Ltd.  (Comments due by 18 December 2015 – within four (4) weeks of publication date); Enquiries: ITAC Ref: 24/2015, Enquiries: Mr Dumisani Mbambo/Mr Daniel Thwala, Tel: 012 394 3743/5162 or email dmbambo@itac.org.za/dthwala@itac.org.za. 2.   REBATE OF CUSTOMS DUTY ON: Woven fabrics of polyester staple fibres, containing 60 per cent or more by mass of such fibres but not exceeding 70 per cent, mixed mainly or solely with cotton, with a dtex of 115 but not exceeding 145, of a mass exceeding 100 g/m² but not exceeding 119 g/m², dyed, plain weave, classifiable in tariff subheading 5513.21 in such quantities, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit for the manufacture of shirts classifiable in tariff headings 62.05 and 62.06, as requested by Pep Stores Clothing. Enquiries: ITAC Ref: 24/2015, Enquiries: Ms T Morale, Tel: 012 394 3694 or email tmorale@itac.org.za; or Chris Sako Tel No (012) 394 3669, Fax no: (012) 394 4669 Email: csako@itac.org.za. (Comments due by 18 December 2015 – within four (4) weeks of publication date). 3.  REDUCTION IN THE CUSTOMS DUTY ON: Aluminium printing plates classifiable under tariff subheading 3701.30.25, from 15% ad valorem to free of duty. [Ref: 14/2015] Enquiries: Ms. Amina Varachia, Tel: (012) 394 3732, Fax: (012) 934 4732, E-mail: avarachia@itac.org.za or Ms. Khosi Mzinjana, Tel: (012) 394 3664, Fax: (012) 934 4664, E-mail: kmzinjana@itac.org.za Download the Notice at  http://www.gov.za/sites/www.gov.za/files/39433_gen1168.pdf List 11/2015 was published under Notice No. 1007 of 2015 in  Government Gazette 39324 of 23 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. Under the latest amendment, rebate item 318.03/9028.30/01.06  was amended with retrospective effect from 3 July 2015 to provide for goods of any description (excluding mounted or populated circuit boards) for the manufacture of electricity meters classifiable in tariff subheading 9028.30 as recommended in ITAC Report 494. That  amendment was published in Government Gazette 39434 of 20 November 2015 under Notice R. 1159, with retrospective effect from 3 July 2015.The loose-leaf pages to amend the Jacobsens Harmonized Customs Tariff were sent to subscribers under cover of Supplement 1062.

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:
Havandren Nadasan Jacobsens Editor Tel: 031-268 3510 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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