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Customs News Bulletin

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30 June 2016

 

 

Latest News

THE IMPLICATIONS OF THE UK’s DECISION TO LEAVE THE EU FOR SOUTH AFRICA AND THE SOUTHERN AFRICAN CUSTOMS UNION

In a week of high drama, voters in the United Kingdom voted to leave the European Union.  The United Kingdom is one of South Africa’s biggest trade partners.  Currently trade between South Africa and the UK is promoted through the provisions of the reciprocal South African/European Union Trade Development and Co-operation Agreement which provides preferential treatments to goods traded between these two countries.

The UK must now start negotiations to officially withdraw from the EU. The UK must withdraw from the EU within the next two years. Once the UK is not a member of the EU any more, goods imported from the UK will no longer be subject to EU rates, but to General rates of duty. In order to maintain the current rates of duty, a new agreement, probably based on the same principles of the SA/EU Trade Development and Cooperation Agreement or on provisions similar to the EU-SADC Economic Partnership Agreement will have to be negotiated with the UK as an individual country.

Under the current provisions of the SACU Agreement, SACU Members undertook to no longer enter into trade negotiations as individual countries, but as a SACU Bloc. Matters will thus be complicated in that the conditions and economies of the individual SACU Countries will have to be taken into account when the new agreements are negotiated.

Further complexities will be caused by the fact that Free Trade Agreements only take effect once the governments of all parties have ratified the agreements. If only two governments, the UK and South Africa, are involved the newly negotiated agreement will enter into force much quicker than in the case where the governments of four other countries (in this case BLNS) must also ratify the agreement before it takes effect.

These are just some of the effect of the UK’s decision to leave the EU.

 

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 Commission of South Africa (ITAC) also publishes Sunset Review Applications in relation to anti-dumping duty in terms of which any definitive anti-dumping duty will be terminated on a date not later than five years from the date of imposition, unless the International Trade Administration Commission determines, in a review initiated before that date on its own initiative or upon a duly substantiated request made by or on behalf of the domestic industry, that the expiry of the duty would likely lead to continuation or recurrence of dumping and material injury.

The International Trade Administration published the latest applications to amend the Customs Tariff of the Southern African Customs Union (SACU) under a document entitled: "International Trade Administration Act: Customs and Excise Tariff Applications: List 4/2016".

The document was published in Government Gazette No. 40088 of 24 June 2016 under General Notice No. 366 of 2016.

The application relates the creation of rebate of duty on Single yarn (excluding sewing thread) containing 85 per cent or more by mass of polyester staple fibres, not up for retail sale, measuring 160 dtex or more but not exceeding 330 dtex, classifiable in tariff subheading 5509.21, 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 knitted fabrics of a mass exceeding 100/m², classifiable under tariff heading 60.06.

The investigating officers were Ms T Morale or Mr Chris Sako at telephone numbers (012) 394 3694 or (012) 394 3669, or at e-mail  tmorale@itac.org.za or csako@itac.org.za.

Comments are due by 24 July 2016.

Customs Tariff Application List 03/2016 was published in Government Gazette No. 39960 of 29 April 2016 under Notice No. 264 of 2016.

 

 

 

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 was one amendment to the Southern African Customs Union (SACU) Common External Tariff (CET) i.e., the HS-based Customs Tariff of Botswana, Lesotho, Namibia, South Africa and Swaziland.

The rates of duty on various iron and steel products of subheadings in Chapter 72 (other bars, rods and forged) are increased from free to 10% in terms of the recommendations of ITAC Report 526.  

The amendments to the Common External Tariff of the Southern African Customs Union (SACU) were published in Government Gazette No. 40091 dated 24 June 2016 under Notice No. R. 752.

The loose-leaf pages reflecting the amendments will be sent to subscribers under cover of Jacobsens Supplement 1075. For more information about these amendments see the subscribers notice to Supplement 1075 or view the Customs Watch.

 

 

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.

The latest Customs Rule amendment (DAR/158) was published on 6 May 2016 in Government Gazette 39976 under Notice No. R. 509. The amendment relates to the accession of the Republic of Croatia to the European Union Protocol of Trade.

 

 

 

 

 

 

Contact Information:

 

Contact the Author:

Havandren Nadasan
Jacobsens Editor

Tel: 031-268 3510
e-mail to:
jacobsens@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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