Customs News Bulletin

	28 October 2016

Latest News

SACU - MERCOSUR RULES PUBLISHED

SARS published a rule amendment to implement the "Preferential Trade Agreement between the Common Market of the South (MERCOSUR) and the Southern African Customs Union (SACU)".  This Rule amendment is dated 21 October 2016 but it was only released on the SARS website after Monday the 24th of October 2016.

The Rules are numbered 49E. They are Rules to  Part D of the Schedule to General Notes to Part 1 of Schedule No. 1: Annex III: Concerning the definition of the concept of "originating products" and methods of administrative co-operation. In other words they are Rules to the Rules of Origin of the Agreement.

No forms have been published in this Rule amendments as all forms have been updated in the Rule amendment to the SADC EPA. The entry into force of this Agreement is 1 April 2016 while the SADC EPA only entered into force on 10 October 2016.

The rules numbered 49E are rules contemplated in section 49(6)(b) in respect of the Preferential Trade Agreement between the Common Market of the South (MERCOSUR) and the Southern African Customs Union (SACU). The MERCOSUR States comprise the Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay and SACU comprises of the Republic of Botswana, the Kingdom of Lesotho, the Republic of Namibia, the Republic of South Africa and the Kingdom of Swaziland.  

Where any rule reflects a number or numbers in brackets after a serial number, for example, 49E.02(1), the number in brackets refers to the Article number or numbers of Annex III entitled "Definition of the Concept of 'Originating Products' and Arrangements for Administrative Co-operation" of the  Agreement to which the rule relates.

Various expressions are defined in Rule 49E.01(d).

Rule 49E.01(f) deals with the registration of exporters and producers and the relevant forms that need to be completed.

The Rules of the Rules of Origin deal with:

Rule number	Article of SACU - MERCOSUR	Topic
TITLE 1 – GENERAL PROVISIONS
49E.02(1)	Article 1	Definitions (No Rule)
TITLE II - DEFINITION OF THE CONCEPT OF "ORIGINATING PRODUCTS
49E.03(2)	Article 2	General Requirements
49E.04(3)	Article 3	Bilateral cumulation of origin
49E.05(4)	Article 4	Wholly obtained products
49E.06(5)	Article 5	Sufficiently worked or processed products
49E.06(6)	Article 6	Insufficient working or processing operations
49E.07(7)	Article 7	Unit of Qualification (No Rule)
49E.08(8)	Article 8	Accessories, spare parts and tools (No Rule)
49E.09(9)	Article 9	Sets
49E.10(10)	Article 10	Containers and packing materials for transport (No Rule)
49E.11(11)	Article 11	Neutral element (No Rule)

TITLE III - TERRITORIAL REQUIREMENTS

Rule number	Article of EPA	Topic
49E.12(12)	Article 12	Principle of territoriality
49E.13(13)	Article 13	Direct transportation
49E.14(14)	Article 14	Exhibitions

TITLE IV – CERTIFICATE OF ORIGIN

Rule number	Article of EPA	Topic
49E.15(15)	Article 15	General requirements
49E.15(16)	Article 16	Procedure for the issue of a certificate of origin
49E.16(17)	Article 17	Certificate of origin issued retrospectively
49E.17(18)	Article 18	Issue of a certificate of origin
49E.18(19)	Article 19	Issue of a certificate of origin on the basis of a proof of origin

49E.19(20)	Article 20	Validity of certificate of origin
49E.20(21)	Article 21	Submission of certificates of origin
49E.21(22)	Article 22	Importation by instalments
49E.22(23)	Article 23	Exemptions from certificate of origin
49E.23(24)	Article 24	Supporting documents
49E24(25)	Article 25	Preservation of certificate of origin and supporting documents (record keeping)
49E.25(26)	Article 26	Discrepancies and formal errors

TITLE V – ARRANGEMENTS FOR ADMINISTRATIVE CO-OPERATION

Rule number	Article of EPA	Topic
49E.26(27)	Article 27	Notifications
49E.27(28)	Article 28	Verification of certificate of origin
49E.28(29)	Article 29	Dispute settlement
49E.29(30)	Article 30	Penalties
49E.30(31)	Article 31	Free zones

TITLE VI – FINAL PROVISIONS

Rule number	Article of EPA	Topic
49E.31(32)	Article 32	Review (No Rule)

49E.32(33)	Article 33	Transitional provisions for goods in transit or storage
49E.33	Article 33	Appendix (No Rule)
49E.34	Article 34	Supplier’s declarations (No Rule)
49E.35	Article 35	General: (Documents to be submitted and procedures to be followed of presentation of SAD forms for goods in respect of which preferential treatment is claimed)
49E.36	Article 36	Imports into SACU of goods subject to annual tariff quotas in terms of Annex II to the Agreement

In addition to the Rule amendments above, the customs duty rates in Schedule No. 1 Part 1 will be affected. The legal text of the agreement will be published in Schedule 10 to the Customs and Excise Act. LexisNexis is in the process of updating the Rules, the General Notes to Schedule No. 1 and the other parts of Jacobsens and subscribers will receive the amending supplements soon.

ITACS are also updating the learning material for SAQA Unit Standard 252248 which is titled "Certify certificates of origin and other commercial documents".  The updated learning material will be ready at the end of the first week of November 2016. Contact your training provider for more information.

The Unit Standard should deal with the following aspects of certification of certificates of origin and other commercial documents, such as:

Issuing bodies (customs, chamber of commerce and industry), terms such as documentary evidence, certificates of origin, country certified declaration of origin, declaration of origin, certified invoice; requirements of documentary evidence of origin; origin criteria, requests for control, retention of records, applications for and various types of certificates of origin; customs rules and regulations, Chamber of Commerce and Industry regulations; the issuing network, issuing facilities; certification operations; detailed certification requirements;  dispute settlement and other problems with certificates of origin; certification of invoices and other documents; Conditions to be fulfilled by issuing bodies; and undertaking to be given by all authorised issuing bodies.

WCO HS 2017 COMPLIMENTARY PUBLICATIONS

In addition to the entry into force of the Southern African Development Community (SADC)/European Union (EU) Economic Partnership Agreement (EPA) and the Southern African Customs Union (SACU)/Mercosur Free Trade Agreement which necessitated the replacement of Schedule No. 1 Part 1 of the South African Customs and Excise Act, which is also the HS-based Southern African Customs Union (SACU) Common External Tariff (CET), the Harmonized System will also be replaced by a new version, HS 2017, with effect from 1 January 2017.

This will be the sixth version of the HS since its introduction with effect from 1 January 1988.  In terms of SACU’s commitments under the HS Agreement, large parts of Schedule No. 1 Part 1 will once again be amended with effect from 1 January 2017. All complimentary World Customs Organization (WCO) HS publications will be replaced by new publications and products.

LexisNexis acts as an agent for the WCO. We import their publications from Belgium for our local customers. Please see below the latest WCO update with regards to delivery of the 2017 editions.

Due to legal requirements the 2012 edition of the Online HS Database is applicable until 31 December 2016. If you are subscribed to the online database, your database will automatically be updated with the 2017 online edition on 1 January 2017.

Some of LexisNexis’ clients have already ordered their HS 2017 publication.

LexisNexis received correspondence from the WCO stating that there has been a delay with the delivery of the 2017 printed publications.  The following new dates have been supplied by the WCO:

HS 2017 Explanatory Notes and Nomenclature:

Subscribers can expect delivery in early December 2016. 

HS 2017 Alphabetical Index:

Subscribers can expect delivery at the end of January 2017.

The updated Compendium of Classification Opinions will be dispatched with either the Explanatory Notes or the Alphabetical Index.

See https://www.lexisnexis.co.za/Promotions/LexisNexis_WCO_2017/WCO_6th_Ed_Flyer.pdf for more information about the HS 2017 publications and products.

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 08/2016". (Comments due by 21 October 2016). The application deals with the review of the general rate of duty on various downstream steel products classifiable under tariff headings 73.06, 73.15, 73.26 and 87.16. ITAC Ref: 16/2016, Enquires: Lufuno Maliaga/ Njabulo Mahlalela/ Pfarelo Phaswana, Tel: 012 394 3835/3684/3628 or e-mail: lmaliaga@itac.org.za/nmahlalela@itac.org.za/ pphaswana@itac.org.za. The document was published in Government Gazette No. 40293 of 21 October 2016 under General Notice No. 614 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.

SARS Customs published various amendments to implement the Preferential Trade Agreement Between the Common Market of the South (MERCOSUR) and the Southern African Customs Union (SACU) and the Economic Partnership Agreement between the SADC EPA States and the European Union. A notice was also published to impose Anti-Dumping duties on frozen potato chips originating in or imported from Belgium and the Netherlands as recommended in ITAC Report No. 474. The tariff amendments were published in Government Gazette No. 40356 on 21 October 2016. The amendments will be sent to subscribers under cover of Jacobsens Supplement 1080. For more information about these amendments see the subscribers notice to Supplement 1080 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 Customs and Excise Rules were amended by publishing the Rules to implement SACU-Mercosur Agreement.

There was also an amendment to amend the Rules relating to the removal in bond of new and second-hand vehicles using own transport. The amendments were published under Notices R. 1282 (DAR/161) and R. 1288 (DAR/160) in Government Gazette No. 40356 of 21 October 2016 The SACU-MERCOSUR Agreement was published with effect from 1 April 2016.  For more information about these amendments view the latest Customs Watch.  Also see the main article in this Bulletin.

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@itacs.co.za

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