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Customs News Bulletin

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3 February 2017

 

 

Latest News

CHICKEN: TRADE UNIONS versus IMPORTERS

On Wednesday 1 February 2017 hundreds of workers protested against poultry imports.  Trade union members and representatives from the poultry industry marched through Pretoria on Wednesday to protest against chicken imports they argue are destroying their business and threatening jobs. Their demands include:

  • The dumping of poultry from the EU lead to more than 1300 job losses at RCL Food’s Rainbow Chicken Farms (EU Dumping destroys SA jobs);

  • Dumping is not fair play and fair trade (A WCO objective);

  • Food security in South Africa is threatened.

The South African poultry industry has been fighting against cheap imports of frozen in-bone chicken portions imported from the European Union and the United States for many years.  Their main concern now is that the chicken meat are dumped on the South African market.

On 15 December 2016 provisional payments of 13,9% in relation to safeguard measures on frozen bone-in chicken portions have been imposed, in anticipation of these cuts imported from the EU.  This will apply to imports up to 3 July 2017.

On 18 December 2015 provision was made for a temporary rebate provision of the full anti-dumping duty on frozen chicken meat cut into pieces with bone imported from the United States. This concession was published in response to negotiations between the South African and United States authorities, and in consultation with the South African Poultry industry in order for the USA to approve benefits under AGOA legislation. In terms of this rebate agreement a basic annual quota of 65 000 metric tonnes may be imported into South Africa (from the USA) without payment of the anti-dumping duties that currently apply to US chicken imports of this kind.  If the rebate provision in terms of the annual quotas does not apply the anti-dumping duty of R9,40/kg will apply as well a normal customs duty of 31% on  carcasses (excluding necks and offal) with all cuts (e.g. thighs, wings, legs and breasts) removed.  All other frozen chicken cuts imported from the USA will be subject to a customs duty of 81%. There are no normal customs duties on imports from the EU in terms of the SADC Economic Partnership agreement but the anti-dumping duties will apply.

On 27 February 2015 anti-dumping duties were imposed on frozen in-bone chicken portions imported from or originating in Germany, the Netherlands and the United Kingdom.  The anti-dumping duties on imports from the EU are as follows: Germany  31,35 to 73,33%; Netherlands 3,86% to 22,81% and UK 12,07% to 30,99%.

The protesters delivered a list of their demands at the European Union offices.

"These chicken pieces are sold below the cost of production which constitutes unlawful dumping" a memorandum handed by representatives from the poultry industry and the unions to EU officials said.

EU officials rejected the dumping claims, saying the local industry was suffering from various factors, including higher drought-induced feed prices.

"This is something we have to reject fully. As we speak now there is no dumping charge against European producers" EU head of trade, Massimo De Luca, said.  It should be noted that there are anti-dumping duty provisions but these are dealt with accordingly.

There are also allegations of incorrect tariff classification of these cuts as offal by importers.

According to the South African Poultry Association the EU contributed 63.1 % of the total poultry imports into South Africa in November 2016 (SARS statistics).

It would appear that there are many other reasons for the the state of the South African poultry industry and that the imports is just a smoke screen to mislead the public and put political pressure on the authorities.

Mr David Wolpert‚ CEO of the Association Of Meat Importers And Exporters Of South Africa (AMIE) blames the high cost of the drought on feed and other structural problems for the state of the industry.

“We definitely have distress,” South African Minister of Trade and Industry Rob Davies said in an interview in January. “We will not have an industry to raise the competitiveness of” if imports continue to flood the market.

In response to this the EU Trade Commission Cecilia Malmstron said: “The real problems of the South African poultry industry are not so much caused by the imports from the EU but that it is suffering from structural problems affecting its competitiveness.”

We will keep you posted on the matter.

 

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.

ITAC published no applications to amend the SACU Customs Tariff recently.

 

 

 

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 various amendments to the SACU CET which were published in Government Gazettes on 27 January 2017.

Under the first amendment, provision was made for rebate items 311.42/8536.50.50/01.08 and 311.42/8544.49.90/01.08 which provides for switches and wire for the manufacture of electric blankets classifiable in as recommended in ITAC Report No. 536. (Notice R. 66 which was published in Gazette 40578 of 27 January 2017).

The other amendments all relate to the imposition of the carbon dioxide (CO2) tax on emissions of hybrid vehicles and amendments consequential to environmental levy on tyres as announced by the Minister of Finance in his Budget Review on 24 February 2016.  (Notices R. 60 to R. 75 which were published in Gazette No. 40582 of 27 January 2017).

For more information about the latest Tariff amendments view the SARS website at http://www.sars.gov.za/Legal/Primary-Legislation/Pages/HS-2017.aspx.

The amendments have been sent to subscribers under cover of Jacobsens Supplement 1082.

 

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 Rules (Rule 54.F) have been amended to provide for environmental levy on tyres as announced by the Minister of Finance in his budget review on 24 February 2016

The amendment was published in Government Gazette No. 40582 of 27 January 2017. (Notice R. 76 (DAR/ 165)).

 

 

 

 

 

 

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

 

LexisNexis

 

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