Customs News Bulletin

	5 July 2017

Latest News

ERRORS IN INTERNATIONAL TRADE AND THEIR IMPACT ON YOUR BUSINESS

Documentation plays a key role in international trade. Documentation (whether electronic or in paper format) in international  trade are interlinked, and errors on a source document will or may lead to errors on other documents which rely on the information on the source document.

The role of the exporter in providing accurate information on the documents they are responsible for are often underestimated. Large exporters normally have a big turn-over in staff, and various people within the organization may be responsible for completing one form. It then happens that someone in another division receives a document with information which does not mean anything to them.

Documents should be analysed and the people dealing with the documents should never treat the information on any documents as part of a routine process. All your staff members should know where information on a document comes from, what it means, why and by whom the information is required, and where the information will eventually go to.

Customs administrations and inspection authorities are using documents to have a paper trial of all transactions and products within the transaction.

Every transaction has different components: the trade part with documents which need to be completed prior to the shipment of the goods, documents that are required to enable the goods to be transported, documents which are required by Customs and other government departments (official documents/statutory documents) and banking documents – to name just a few categories of goods.

These documents are further broken up into specific documents. Typically these documents must be completed by the exporter, importer, documents that are generally the responsibility of clearing and forwarding agents in relation to their preparation (for example port, carrier, depot and terminal release documents, Customs declarations, insurance declarations and claims) and transaction specific documents.

Whatever documents exporters and importers (or by implication their staff) are handling, they should be aware that the information required on the document should be scrutinised and analysed and treated as if that person completed all information himself/herself. Handling documents should not be regarded as a routine task.

Errors cause risks for both exporters and importers (including the risk of refusal of the cargo, and the risk of non-payment) and they can be very expensive. Since customs administrations and other government departments rely on risk management for customs control, they are able to identify high risk traders to focus on. The risk is thus much higher than just the costs they see in terms of penalties. Additional risks resulting from errors of non-compliance with international trade legislation can include reputational damage to the non-compliant trader, supply chain interruptions (including costs resulting from detentions, penalties and fines), and the focus of government departments on the non-compliant trader resulting from his/her high risk status which will lead to more frequent stops, inspections and audits.

With the above in mind exporters and importers cannot afford not to be familiar with international trade regulation and the impact of non-compliance with the flow of documents. Everyone dealing with documents in international trade should be informed and take reasonable care when they are handling documents and provide information to other parties in the supply chain.

DRAFT DOCUMENTS PUBLISHED BY SARS FOR PUBLIC COMMENT  

Part 2 of Chapter 3 of the Customs Duty Rules, dealing with Deferment has also been published for public comment. The due date for comments is 31 July 2017.

View the documents at http://www.sars.gov.za/Legal/Preparation-of-Legislation/Pages/Draft-Documents-for-Public-Comment.aspx. The path on the SARS website is “Legal Council” / “Preparation of Legislation” / “Draft Documents” and then look for the dates.

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 amended notice to replace List 04/2015 as List 05/2017. The application relates to the increase in the rate of duty on certain self-adhesive film, foil, tape, strip and other flat shapes classifiable in tariff subheadings 3919.10.41, 3919.10.43 and 3919.10.47. In order to implement ITAC’s recommendation SARS will also have to amend the wording on certain 8-digit subheadings.   List 05/2015 was published in Government Gazette No. 40919 of 15 June 2017 under Notice No. 481 of 2017 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. Customs Tariff Application List 04/2017 was published in Government Gazette 40849 of 19 May 2017 under Notice No. 400 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.

The first notice to amend the Southern African Customs Union (SACU) Common External Tariff (CET) was published since Minister Malusi Gigaba became the South African Minister of Finance on 31 March 2017. Although the date of the previous update was indicated as 31 March 2017 it was published on 30 March 2017 and was still signed by Minister Jonas, the then Deputy Minister of Finance.   The tariff amendment was published in Government Gazette No 40934 of 23 June 2017 under Notice No. R. 600. The SARS reference number is 1/1/1152. The rates of duty on wheat and wheaten flour on subheadings 1001.91, 1001.99, 1101.00.10 and 1101.00.99 is reduced from 119.02c/kg to 94,72c/kg and 178.53c/kg to 142,18c/kg respectively, in terms of the revised dollar-based domestic reference price and the existing variable tariff formula as recommended in ITAC Report 538. These amendments will be forwarded to Jacobsens Subscribers under cover of Supplement 1089.

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 has been no amendments to the Rules to the Customs and Excise Act, 1964 at time of publication. The last Rule amendment (DAR/168) was published in Government Gazette 40486 of 19 May 2017.

Contact Information:
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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