- May 7, 2020
- Posted by: Taapano Paradza
- Categories: DALRRD, DALRRD Permits
The Economic Partnership Agreement (EPA) provides for Tariff Rate Quotas (TRQ), however, some importers and exporters of covered products have little knowledge of what this is and how it works.
What is a Tariff Rate Quota?
A TRQ is a system that allows volumes of certain agricultural products imported within the quota, to enter South Africa duty-free. Volumes imported outside the quota, attract the normal Customs duty rate. Importing outside a TRQ may not be as profitable because of high duties on some of the agricultural products. The use of a TRQ can provide good savings on Customs duty costs.
The challenge with TRQ’s is that volumes are limited, hence the word quota. Demand for quota volumes by importers differ between products. In South Africa, the wheat TRQ is often used up within a few days at the beginning of the year because of the high demand. This makes meticulous planning of shipments a necessity in order to benefit.
Which products are eligible for Tariff Rate Quotas in the EPA?
Below is a table containing products that have TRQ’s when importing from the EU. The products that have TRQ’s when exporting from South Africa to the EU are also provided.
|Importing from the EU to South Africa||Exporting from South Africa to the EU|
|Wheat and meslin||Skimmed milk powder|
|Barley||Flowers: roses, orchids and chrysanthemums, lilies and other|
|Cheese||Orange juice, apple juice, and pineapple juice|
|Cereal based food preparations||Strawberries|
|Butter and other dairy fats||Butter|
|Ice cream||White crystalline powder, Active yeast|
|Mortadella Bologna||Citrus jams, canned fruit except for tropical canned fruit|
How do tariff rate quotas come about?
TRQ’s are created during trade negotiations. They are also a compromise between the interests of negotiating countries or trade blocs. They help protect South African producers from import competition and at the same time provide exporters with access to the local market.
What is the difference between Tariff Rate Quotas and the Minimum Market Access system?
These are two different systems although similar in intended objectives. The Minimum Market Access (MMA) system allows importers of specific products covered under the regime to benefit from low preferential import duty rates. The MMA system is an outcome of the World Trade Organisation (WTO) negotiations and not the EPA.
Unlike the EPA TRQ system, products covered in the MMA system still attract some level of duty. However, it still helps with import duty cost savings. You may find out more about MMA by clicking here.
Some products are covered in both the EPA TRQ system and the MMA system, for example, wheat. Taking advantage of both systems potentially yields large duty savings.
How can l get a quota?
The EPA TRQ system does not require a quota permit before importing from the EU. It operates on a first-come-first-served basis.
To export to the EU under the TRQ system, an export quota permit is required. The permits are administered by DAFF.
The MMA system requires a quota permit on all products covered. The permits are also administered by DAFF.