Duty changes – Duty increase, Duty removal, Rebates
Who is responsible for increasing Customs duties, removing Customs duties and creating temporary and industrial rebates?
The International Trade Administration Commission (ITAC) is responsible for customs duty investigations; trade remedies; and import and export control. SARS collects the duties and ensure imported and export controls determined by ITAC are enforced at the ports of entry and exit.
We manufacture a certain product locally, using a raw material that attracts an import duty but the final product we manufacture is imported duty free by other companies. How can this be resolved?
This situation is referred to as a tariff anomaly and generally places local manufacturers at a pricing disadvantage. It can generally be corrected either by a duty increase on the manufactured end product or a rebate on the raw materials.
Does a duty increase impact imports from the EU or any countries that South Africa has existing Free Trade Agreements (FTA)?
A duty increase will not impact imports from FTA countries. However, anti-dumping, safeguard and countervailing duties can be imposed on products imported from FTA countries. Furthermore, FTA’s contain remedies to address increasing imports. Contact us in this regard.
Who can apply for a duty increase?
Any local manufacturer can apply for a duty increase. Small manufacturers and producers have successfully applied for a duty increase many times.
What does ITAC consider in its decision to amend a duty? i.e. to increase a duty, remove a duty, or provide duty exemption through a temporary or industrial rebate.
Each case is considered on its own merits, however, ITAC generally considers a variety of factors and these include, local industry production capacity and potential, employment, investment, pricing differences between locally manufactured and imported products, market share, trade statistics, demand and supply conditions, cost and price structure among others.
Once a Customs duty is imposed, does it expire?
Duty increases do not expire. They can only be changed when an application to amend them is submitted. The same applies to a product which is currently imported duty free. A duty can only be imposed after an application is made and ITAC decides to do so.
Is there a maximum duty that can be imposed on a specific product.
This depends on the bound rate of the tariff code. A bound rate is the maximum duty that can be imposed on a tariff code. Bound rates were agreed when South Africa joined the World Trade Organization in 1995. A duty cannot be increased beyond the bound rate because it will be a violation of the General Agreement on Tariffs and Trade. However, if the product is classified in an unbound tariff code, any level of duty can be imposed. This depends on the bound rate of the tariff code. A bound rate is the maximum duty that can be imposed on a tariff code. Bound rates were agreed when South Africa joined the World Trade Organization in 1995. A duty cannot be increased beyond the bound rate because it will be a violation of the General Agreement on Tariffs and Trade. However, if the product is classified in an unbound tariff code, any level of duty can be imposed.
Trade remedies – Anti-dumping, Countervailing, Safeguards
What is anti-dumping?
Dumping occurs when a company exports a product at a price lower than the price it charges for the same product in its own home market. The purpose of anti-dumping duty is to rectify the trade distortive effect of dumping and re-establish fair trade. The anti-dumping duty provides relief to domestic manufacturers and producers against injury caused by dumping.
Who can apply for an anti-dumping duty?
The domestic producer(s) making the application must account for at least 25% of total domestic production of the product in question. The application is deemed to have been made by or on behalf of the domestic industry, if it is supported by domestic producers whose total production of the subject product is at least 50%.
Does dumping mean import of cheap products or counterfeits through illegal trade channels like smuggling?
Dumping occurs as described above. Dumping implies low priced imports in the relative sense. This means relative to the normal value i.e. domestic prices in the country were the product was manufactured.
Are anti-dumping duties in the best interests of the consumers?
The purpose of anti-dumping duties is to eliminate dumping that is causing injury to the domestic industry.
What is the maximum anti-dumping duty that can be imposed?
The is no upper limit to anti-dumping duties. The extent of the duty is dependent on ITAC’s findings; however, the duty is generally determined by the margin of dumping i.e. the difference between the normal value and the export price. One of the highest anti-dumping duty in South Africa is 113.25%.
How is injury to domestic industry determined?
Injury is assessed taking into account; sales, selling price, profits, market share, production, utilisation of capacity, employment, return on investment, output, cash flow, growth among others. It is important that the dumping be proved to have caused injury to the domestic industry.
Can anyone participate in anti-dumping investigations?
Interested parties in anti-dumping investigations generally include; the domestic manufacturers / producers; foreign exporters or foreign producers of the subject products (from countries covered in the investigation); importers, government of the exporting countries, trade or industry associations. Other parties with an interest in the matter can make their views known to ITAC.
Are interested parties given adequate opportunity to defend their interests?
Yes, interested parties have an opportunity to represent their case at several stages of investigation. However, this happens under strictly enforced deadlines.
Can an anti-dumping investigation be terminated after being initiated?
Yes. This can happen if ITAC determines that the dumping margin is less than 2% of the export price, volume of dumped imports from a country is less than 3% of the total imports of the subject product imported into South Africa, the volume of dumped imports collectively from all such countries is less than 7% of the total imports. If it is found that the dumping is not the cause of the injury.
How long does an anti-dumping duty remain in place?
An anti-dumping duty is imposed for 5 years. However, it can be reviewed before the expiry following an application by the domestic industry. If the domestic industry does not submit an application, the duty is usually terminated. Generally, the domestic industry always submits the sunset review application.
Can a specific exporter be exempted from anti-dumping duties?
Yes, ITAC can completely exempt a foreign exporter from anti-dumping duties provided the exporter has made a submission to ITAC and no evidence of dumping is found. It’s important to note that an anti-dumping duty is imposed on the exporter and paid by the importer. Exporters that do not participate in an anti-dumping investigations face the country wide duty.
If an exporter is exempted from an anti-dumping duty, does the exemption end at the end of the 5 year period?
Exporters exempted from anti-dumping duties will continue to be exempted for as long as the anti-dumping duty exist. This means there will be no need to make submissions in any sunset review.
Why is there no industry currently protected by countervailing duties in South Africa?
Yes, there are currently no countervailing duties in place in South Africa. There has been many such duties in the past however all of them have been terminated over the years. No countervailing investigations have been initiated by ITAC in more than a decade. Countervailing actions by nature attack the government subsidies of trading partners, so the lack of countervailing initiations may be partly political.
The new industrial rebate on warp knit fabrics has been implemented today, 28 May 2021. The warp knit fabric imported duty-free under the rebate will specifically be used in manufacturing upholstered furniture. An industrial rebate enables a local manufacturer to import raw materials and components without incurring an import duty. The rebate can be createdMay 28, 2021
On 21 May 2021, the International Trade Administration Commission (ITAC) initiated an industrial rebate investigation on titanium dioxide used in manufacturing white masterbatch. This is the second industrial rebate investigation initiated on the same product following another industrial rebate application on titanium dioxide for use in the manufacturing of paints, varnishes, prepared driers initiated inMay 28, 2021