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Latest News
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WORLD TRADE ORGANISATION: MARRAKESH AGREEMENT: MARKET ACCESS AGREEMENT
There were many changes to the treatment of agricultural products under the
WTO which entered into force on 1 January 1995. These changes affected South
Africa’s regulation of agricultural products in that many products
classifiable in the first 24 Chapters of the Harmonized System which were
subject to quantitative restrictions through an import permitting system
were no longer subject to the quantitative restrictions. Prior to 1995 the
importation of these products was controlled through a quota system. Import
permits were only issued when South African producers were not able to
produce the goods at that time. It had a cost-raising effect on consumers.
The products in question were deleted from the Import Control regulations of
the Department of Trade and Industry and became subject to bound rates which
were higher than on most other products of the Harmonized System. Many of
the products were initially subject to composite duty rates. In other words,
these agricultural products were subject to a combination of ad valorem
rates (such as 40% of the customs value) or a specific rate (cents per
kilogramme). General Note B. 3 to Schedule No. 1 states that, in the case of
compound duties, the parts separated by the word “or” should be treated as
“separate and complete rates of duty” and each part should thus be
calculated separately. The higher or highest rate of duty will apply.
Importers tend to manipulate the customs value of goods by reducing the
value. When goods are subject to compound duties and the customs value is
manipulated, the specific rate of duty will apply. In many instances the
rate of duty will then be prohibitively high.
Under the Uruguay Round (Marrakesh Agreement) certain sensitive industries,
such as the agricultural sector could reduce their import duty rates to the
bound rate over longer periods. (In South Africa the rates of duty on
textiles (Section XI of the HS), paper products (Chapter 48 of the HS) and
the motor vehicle industry (Chapter 87) also received concessions for longer
phase-out periods than in other industries).
In many other countries tariffs were the only form of protection for
agricultural products before the Uruguay. The Uruguay Round negotiations
aimed to remove non-tariff barriers. Therefore a “tariffication” package was
agreed which, amongst other things, provided for the replacement of
agriculture-specific non-tariff measures with a tariff which afforded an
equivalent level of protection. Following the entry into force of the WTO
Agreement on Agriculture, with effect from 1995 there has been a prohibition
on agriculture-specific non-tariff measures, and the tariffs on virtually
all agricultural products traded internationally are bound in the WTO.
Unfortunately many developed countries still continued to subsidize their
agricultural products, which became a serious issue that led to the failure
of the WTO Doha Round.
Each WTO
Member has a “schedule” of tariff concessions (by Harmonized System Tariff
code) covering all agricultural products. The WTO states that these
concessions are an integral part of the results of the Uruguay Round, “are
formally annexed to the Marrakesh Protocol [cross-reference] and
have become an integral part of the GATT 1994 [cross-reference]”. The
schedule sets out for each individual agricultural product, or, in some
cases agricultural products defined more generally, the maximum tariff that
can be applied on imports into the territory of the Member concerned. The
tariffs in the schedules include those that resulted from the tariffication
process, which, in many cases, are considerably higher than industrial
tariffs.
Developed
country Members have agreed to reduce their tariffs by 36 per cent on
average of all agricultural products, with a minimum cut of 15 per cent for
any product over a period of six years. For developing countries, the cuts
were 24 and 10 per cent, respectively. Developing countries received a
longer period to reduce their tariffs - over a period of ten years.
Least-developed country Members were required to bind all agricultural
tariffs, but not to undertake tariff reductions.
South
Africa introduced rebate provisions under rebate item 460.25 in Schedule 4
of the SACU Common External Tariff. Many agricultural products traded
between SACU and the European Union are subject to bilateral tariff rate
quotas. In order to fulfil South Africa's commitment under the World Trade
Organisation (WTO): Marrakesh Agreement (resulting from the Uruguay Round of
negotiations) regarding market access, the Department of Agriculture,
Forestry and Fisheries published a notice relating to the application for
market access (Tariff Rate Quota (TRQ)) permits to be issued for the
products specified in the table of Import Arrangements (Table 1) and under
the conditions set out in the Schedule to the Notice. These TRQ permits
reduce the import duty on many products which are imported from the European
Union. South African agricultural products exported to the EU qualify for
similar concessions through provisions in the EU Customs Tariff.
Go to:
Market Access>Preferential Market Access) and departmental website:
www.daff.gov.za
for more information. |
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Classification Corner
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AN INTRODUCTION TO RULES OF CLASSIFICATION UNDER THE HS
In most cases, goods are classified in HS-based Customs Tariffs by
application of Rule 1, which states, in part, that the terms of the heading
and legal Section and Chapter Notes dictate. In many instances there can be
no argument about the classification.
GRI 2 has 2 parts. Under GRI 2 (a), goods in unassembled form (semi-knocked
down or completely knocked down) are classifiable within the same heading as
the complete article. GRI 2 (a) also deals with the classification of
incomplete or unfinished goods.
GRI 2 (b) directs the classifier to GRI 3, which applies when goods could
potentially be classified in more than one heading.
The first
binder of the HS Explanatory Notes provides useful guidance (explanatory
notes) on the application of the General Rules of Interpretation and should
be consulted.
GRI 3 (a)
deals with the classification of goods which could fall in more than one
heading but which is eventually classified in one heading only because that
heading has a more specific description than the other heading. See for
example windscreens for vehicles are classified as articles of glass of
Chapter 70 and not Section XVII as parts of vehicles. (This is an example of
classification by application of GRI 3 (a) which states that when goods are
potentially classifiable in one or more headings, the goods are to be
classified in the more specific heading.
Rules 3 (b)
states that, if goods cannot be classified by application of GRI 3(a), then
one needs to determine the essential character of the goods and classify
them accordingly. These cases should generally be submitted to SARS for
determination as there are many factors that determine the essential
character of a good.
If goods
cannot be classified by application of GRI 3 (a) or GRI 3 (b), then the
applicable headings must be considered and the goods must be classified in
the last heading that could potentially apply.
GRI 4 is
seldom used. It deals with akinship. It basically states that, when there is
no provision for a product in the HS, goods must be classified in the
heading to which they are most akin to.
GRI 5 deals
with the classification of packing materials and containers – for short term
or long term use – for example camera cases imported with the cameras. Refer
to the first part of the Harmonized System Explanatory Notes for a detailed
explanation.
GRI 6 deals
with the classification of goods in the subheadings, on the same principles
of GRI 1 to 5. In this regard the number of dashes in the subheading are
comparable and must be used. One must consider all the one-dash subheadings
in a heading, then the two-dash subheadings, if applicable, then the
three-dash subheadings if applicable. The SACU CET is only subdivided up to
four-digit dashes. |
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Customs Tariff
Applications and
Outstanding Tariff Amendments
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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.
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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 made a
final determination in respect of the investigation into
remedial action in the form of a safeguard against the increased
imports of cold-rolled steel products.
The notice
(Notice No. 769 of 2017) was published in Government Gazette
41141 of 29 September 2017.
ITAC also
published a final determination in respect of the sunset review
of anti-dumping duty on unframed glass mirrors of thickness of
2mm or more but not exceeding 6mm originating in or imported
from Indonesia.
In Notice 806
of 2017 which was published in Government Gazette 41164
of 6 September 2017 (today), ITAC recommended that the
anti-dumping duties on unframed glass mirrors of thickness of
2mm or more but not exceeding 6mm originating in or imported
from Indonesia be maintained.
Refer to
anti-dumping duty item 213.03/7009.91/01.06 for the rates on
anti-dumping duty.
Enquiries may
be directed to the investigating officers Ms. Regina Peta at +27
12 394 3737 or Mr. Emmanuel Manamela at +27 12 394 3922,
fax number +27 12 394 0518 |
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Customs Tariff Amendments
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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.
Various notices were
published to amend the Southern African Customs Union (SACU) Common
External Tariff (CET). These amendments were published in Notices R.
1080 to R. 1085.
The rate of customs
duty on thermal transfer ribbons and cartridges, classifiable in tariff
subheading 9619.10.10, was reduced from 15% to free as recommended in
ITAC Report 556. |
The anti-dumping
duties on solar glass originating in or imported from Indonesia (items
213.03/7005.29.05/02.08; 213.03/7005.29.05/05.08;
213.03/7005.29.05/07.08 and 213.03/7005.29.05/10.08) are also abolished
to give effect to ITAC Report No. 557.
Parts 1 of Schedule
No. 1, and Schedules numbers 2, 3, 4 and 5 are amended through Notices
which are signed by the Minister of Finance, on request of the Minister
of Trade and Industry, to give effect to the recommendations of the
International Trade Administration Commission of South Africa (ITAC).
The other parts of
the tariff (Schedule 1 Part 2A and B) in respect of excise duties,
environmental levies (Part 3 of Schedule 1), fuel and road fund levies
(Parts 5A and B of Schedule 1) and the rebates in Schedule No. 6 are
amended by the Minister of Finance if he deems it expedient in the
public interest to do so. In this regard there were amendments to
various parts of Schedule No. 6 to provide for a rebate on the excise
duties of beer, wine and other fermented beverages used in the
manufacture of low alcohol and non-alcoholic beverages by a process of
extracting ethanol as well as the movement of the extracted ethanol
by-product and consequential amendments.
The amendments were
published in the Government Gazette 41165 of 6 October 2017.
The loose-leaf pages
to amend the Jacobsens Harmonized Customs Tariff will be sent to
Jacobsens subscribers under cover of Supplement 1095.
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Customs Rule Amendments
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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.
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The Commissioner for
the South African Revenue Service (SARS) published an amendment to Rule
19A3 to facilitate the removal of extracted ethyl alcohol.
The Rule amendment
(DAR/169) was published in the Government Gazette 41165 of 6
October 2017. The notice number is R. 1081. |
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