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Another frozen chicken meat investigation

8th November 2013

By: Callie Lombard

  

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In an earlier instalment of this column, titled ‘Itac mulling frozen chicken duty increase’, readers were informed of the Government Gazette of April 12, released with the Government Gazette for the week ending April 26, in which the International Trade Administration Commission of South Africa (Itac) published a notice in respect of an increase in the rate of customs duty on frozen chicken meat.

The application pertains to five tariff subheadings – 0207.12.20, 0207.12.90, 0207.14.10, 0207.14.20 and 0207.14.90 – and, in essence, is a request for the imposition of a specific rate of customs duty or a formula (rated) rate of customs duty on the bound rate. The proposal is for the increase in the rate of customs duty falling under two tariff subheadings – 0207.12.20 and 0201.12.90 – to a specific customs duty which is capped, and three tariff subheadings – 0207.14.10, 0207.14.20 and 0207.14.90 – to a formula or rated duty customs duty which is capped.

On September 30, the South African Revenue Service (Sars) announced, through a notice in the Government Gazette, an increase in the ‘general’ rate of customs duty on frozen chicken meat, classifiable under tariff subheadings 0207.12.20, 0207.12.90, 0207.14.10, 0207.14.20 and 0207.14.90. The increase in the ‘general’ rate of customs duty does not impact on the preferential rates of customs duty for the European Union (EU), the European Free Trade Association and the Southern African Development Community.

Further, in the Government Gazette of October 25, Itac published a notice of the initiation of an investigation into the alleged dumping of frozen bone-in portions of fowls of the species Gallus Domesticus, classifiable under tariff subheading 0207.14.90, originating in or imported from Germany, the Netherlands and the UK, all of which are EU member countries.

The application was lodged by the South African Poultry Association (SAPA), an industrial organisation for poultry producers in the Southern African Customs Union (Sacu) market. The SAPA constitutes about 72% of the Sacu production volume of the subject product. The application by the SAPA is supported by Grain SA, the Animal Feed Manufacturers Association, Namib Poultry Industries, Swazi Poultry Processors, the Botswana Poultry Association and the Basotho Poultry Farmers Association.

Afgri, Country Fair, Early Bird (Olifants- fontein), Early Bird (Standerton), Rainbow Chicken, Sovereign Foods and Supreme Poultry provided injury information in this regard, and they constitute a major portion of the total Sacu production.

According to the notice, the allegation of dumping is based on the comparison between the normal value and the export price from Germany, the Netherlands and the UK. The normal values were determined based on an export price to an appropriate third-party country. The application provided exports from Germany, the Netherlands and the UK to various third-party countries. The third-party country selected was Benin, based on the following: the volumes exported to Benin were found to be comparable to the volumes exported to the Sacu region; the customers exported to in Benin are comparable to the customers exported to in the Sacu region, and Benin has a domestic industry. The export prices were based on official import statistics obtained from Sars. On this basis, Itac found that there was prima facie proof of dumping.

According to the notice, in respect of allegation of material injury, the SAPA submitted evidence of price suppression. The SAPA’s information indicated a decline in return on investment, negative net cash flow, and negative effects on capacity use, a decline in profits, an increase in inventory and a decrease in productivity. On this basis, Itac found that there was prima facie proof of material injury.

With respect to the threat of material injury, the SAPA submitted information indicating that there is freely disposable capacity an immi- nent substantial increase in the capacity of the exporters in the EU (Germany, the Netherlands and the UK), there is a significant increase in allegedly dumped imports into the Sacu market, which indicates the likelihood of substantially increased importation and that the subject product is entering the Sacu market at prices that will have a significant depressing or suppressing effect on Sacu prices and are likely to increase demand for further imports. The applicant made reference to the Trade, Development and Cooperation Agreement being fully implemented, stating that it is expected that the landed cost of imported product will be reduced even further as the import duties will be zero, and this threatens to significantly under- cut the prices of the Sacu producers in the foreseeable future.

The applicant also indicated that there is a likelihood that the alleged dumped imports will also enter the Sacu market in substantially increased volumes in the foreseeable future. On this basis, Itac found that there was prima facie proof of a threat of material injury.

Comment is due by December 3.

Final Comment on Customs Bills
The Standing Committee on Finance has invited stakeholders and interested parties to submit written submissions or to make oral presentations on the Draft Customs Bills on October 28. These Bills were introduced in the National Assembly on October 24 and Parliamentary public hearings were conducted on October 30.

Commercial Fishing Permit Holders
On October 25, Sars announced the amendment of Note 6(ij)(ii)(aa)C in Part 3 of Schedule No 6 to provide clarity in the interpretation regarding eligible commercial fishing permit holders. The notice was initially published for comment on August 22, with the deadline for the submision of comments being September 13.

The Note reads: “. . . that are nominated on a valid commercial fishing permit issued by the Department of Agriculture, Forestry and Fisheries in terms of the Martine Living Resources Act, 1998 (Act No 18 of 1998)”.

Uncoated Paper and Paperboard
A proposal has been made to increase the ‘general’ rate of customs duty on uncoated paper and paperboard, classifiable under tariff subheadings 4802.56.20 and 4802.56.90, from free of duty to the World Trade Organisation bound rate of 5% ad valorem and 20% ad valorem respectively.
Comment is due by November 15.

Blades for Windscreen Wipers
A proposal has also beem made to increase the ‘general’ rate of customs duty on blades for windscreen wipers, classifiable under tariff subheading 8512.90, from free of customs duty to 30% ad valorem, by way of creating an additional eight-digit tariff subheading under tariff subheading 8512.90, for blades for windscreen wipers.
Comment is due by November 15.

Wheel Hubs
Also proposed is a reduction (decrease) in the ‘general’ rate of customs duty on wheel hubs (excluding those of unmachined cast metal), classifiable under tariff subheading 8708.50.20, from 20% ad valorem to free of duty.
Comment is due by November 15.

Methyl Ester Sulphate
Also proposed is rebate of the customs duty (creation of a rebate item) for methyl ester sulphate, classifiable under tariff subheading 3402.11, for the manufacture of washing prepa- rations (detergents), classifiable under tariff subheading 34.02.

Comment is due by November 15.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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