Customs News Bulletin

	9 June 2017

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ANTI DUMPING DUTIES, COUNTERVAILING DUTIES AND SAFEGUARD DUTIES

An anti-dumping duty is imposed on imports 'dumped' in the Southern African Customs Union. Dumping takes place when imported goods are sold at a price substantially below their normal value in the domestic market.

'Countervailing' measures are anti-subsidy measures such as duties or other actions, such as import quantity restrictions, to imports that benefit from specific subsidies in their country of origin.

Safeguards are actions temporarily imposed on imports expected or likely to cause serious damage to a domestic industry competing with the imported goods. 

The World Trade Organization (WTO) Anti-dumping Agreement, Agreement on Subsidies and Countervailing Measures and Safeguards Agreement are three principal trade defence agreements. The Southern African Customs Union (SACU) Members, Botswana, Lesotho, Namibia, South Africa and Swaziland are party to the agreements.

Anti-dumping duty (ADD) is imposed in addition to any normal customs duty for which the goods being imported are liable. It enables the SACU to take action against goods sold at considerably less than their 'normal value'.

Any WTO member state can apply anti-dumping measures after an investigation shows that the imported goods infringe the ADD agreement and that the dumped imports are causing material injury to a domestic industry producing a similar product.  SACU investigations are conducted by ITAC on behalf of all SACU members.

Anti-dumping investigations are normally initiated after a manufacturer in the Southern African Customs Union has observed dumping that has caused, or threatened to cause, material injury to the SACU domestic industry. The suspected dumping is then reported to the International Trade Administration Commission of South Africa (ITAC) who will investigate the allegations. If there is a prima facie case for dumping, provisional payments will be levied on imports. If dumping did not take place the provisional payments will be refunded to importers.

The WTO Agreement on Subsidies and Countervailing Measures (ASCM) is the second principal WTO trade remedy agreement all SACU Countries are party to.

The WTO Agreement on Subsidies and Countervailing Measures covers two separate but closely related topics:

• Anti-subsidy measures allow importing countries to take banning action against certain kinds of subsidized imports. 'Subsidies' are defined as financial assistance from the government of a third country to a company or group of companies in that country.

• Other types of subsidy that are 'actionable'. This means that the importing country must investigate and be able to demonstrate how the subsidized imports have caused damage to (SACU) domestic industry before it imposes any countervailing duties on the subsidized products.

The issue of subsidies is complex and is handled at government level with disputes being settled by the WTO. A system of notification and reviews of measures allows for transparency.

The agreement does not apply to trade in agricultural products, where export subsidies are common in some countries.

The WTO Safeguards Agreement is the third principal WTO trade remedy agreement all SACU Countries are party to.

The Safeguards Agreement differs from the ADD and the ASCM  as countries are entitled to take action in cases of unfair foreign competition arising from either anti-dumping, anti-subsidy, or both.

Safeguards do not cover traders’ allegations that the competition is unfair. They allow a WTO member to temporarily restrict imports of a product to protect a specific domestic industry. This could occur because unforeseen surges in imports cause or threaten to cause serious damage to that particular industry.

Measures can be applied under the Safeguards Agreement providing that all the following conditions prevail and apply during the term of the measures:

• they only apply for a temporary period;

• they are only imposed when the imports are found to cause or threaten serious injury to a competing domestic industry;

• they are applied to imports from all sources on a non-selective basis;

• the measures are progressively liberalized while in effect, the member imposing the safeguards may be required to compensate the members whose trade is affected.

There are currently no countervailing or safeguard duties in the Southern African Customs Union Tariff. 

In the next issue of the Bulletin on 13 June 2017 we will focus on the countervailing procedure in the Southern African Customs Union (SAC) and will include a case study.

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 Commission of South Africa (ITAC) published an application to increase the rate of duty on the importation of biaxially oriented polymers of propylene, of a width not exceeding 200 mm, classifiable in tariff subheading 3919.10.43 from 10% to 20%. The ITAC reference number is 29/2016. For comments or enquiries contact: Mrs Ayanda Gandi at endou@itac.org.za or fax (012) 394 4724 or Mr Nkulana Phenya at nphenya@itac.org.za or fax (012) 394 4677. The application was published in Government Gazette No. 40847 of 19 May 2017 under Notice No. 400 of 2017. Comments are due by 15 June 2017. Customs Tariff Application List 03/2017 was published in Government Gazette 40793 of 21 April 2017 under Notice No. 308 of 2017.

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 amendments to the Common External Tariff (CET) of the Southern African Customs Union (SACU) at time of publication. The latest tariff amendments were published on 31 March 2017. These amendments were forwarded to Jacobsens Subscribers under cover of Supplement 1088. The amendments have been published in the Customs Watch which is also available on the Jacobsens website at www.jacobsens.co.za.

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 Commissioner of the South African Revenue Services published an amendment to Rule 101A.12 under section 101A to the Customs and Excise Act No. 91 of 1964. Rule 101A.12 has been amended to amend the time reflected when any amended tariff heading or item to any schedule takes effect on the date of publication.

The new Rule states: For the purposes of paragraph 15 of the agreement, where the Commissioner, either by paper document or electronic communication, on the date preceding the date of publication in the Gazette gives notice of an amendment to any tariff heading or item of any Schedule, a registered user may not submit a clearance declaration giving effect to that amendment before 00.00 on the date of publication. The Rule amendment (DAR/168) was published in Government Gazette 40486 of 19 May 2017 under Notice No. R. 431.

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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