The Department of Trade and Industry (DTI) announced on July 17 that, after ten years, the Economic Partnership Agreement (EPA) between the Southern African Development Community (SADC) and the European Union (EU) had been ‘initialled’ by the chief negotiators in Pretoria on July 17.

The ‘initialling’ of the EPA signals that the negotiations have been concluded. It pre-empts the October 1 deadline imposed by the EU after which Botswana, Namibia and Swaziland would have lost preferential access to the EU market for their exports of beef, fish and sugar.

Through the EPA, South Africa achieved improved market access for 32 agricultural products, with a significant improvement in the country’s access to the EU market for wine (110-million litres customs duty free), sugar (150 000 t customs duty free) and ethanol (80 000 t customs duty free). In addition, there is improved access for South Africa’s exports of flowers, some dairy products, fruit and fruit products.

The EPA rules of origin improve on the Trade, Development and Cooperation Agreement (TDCA), as they will facilitate intraregional trade and industrialisation across Southern and East Africa. The new rules include provisions that will encourage South African clothing exports. Several other restrictive trade rules under the TDCA have been eased under the EPA. The EPA provides greater flexibility than the TDCA to impose export taxes on eight products for 12 years, with some exception for exports to the EU. South Africa also obtained the concession that the EU will eliminate export subsidies on agricultural goods destined for the Southern African Customs Union (Sacu) region, as well as more effective safeguards to address damaging surges in imports.

South Africa agreed to negotiate a protocol on geographic indications (GIs) since it has an interest in protecting the names of the many South African wines exported to the EU and a growing interest in protecting the names of specialised South African agricultural products (such as rooibos and honeybush). The outcome of the GI negotiations will not affect the product names currently being used by producers in South Africa. The EPA also established a mechanism to address nontariff barriers that inhibit trade in wine.

According to the DTI, in terms of the process and timeframe for entry into force, the EPA will first be subjected to a two-month legal vetting process. Thereafter, it can be presented to the South African Cabinet and, if approved, submitted to the South African Parliament for rati- fication. Once ratified, the EPA may be signed, and it will enter into force once all parties have concluded their respective national approval processes. The DTI expects that the timeframe for this process will be about eight months.

Citrus Black Spot
On July 21, the Citrus Growers Association of Southern Africa (CGA) announced that the plant health authorities in the Netherlands had notified the South African Department of Agriculture, Forestry and Fisheries (DAFF) that they had intercepted a consignment of South African citrus with citrus black spot (CBS) and issued a notification of phytosanitary noncompliance. This is the first interception by the EU inspectors this year.

The CGA dispatched an accredited expert to accompany representatives of the DAFF to the farm in question to investigate how CBS could have slipped through the risk management net and, importantly, to propose any measures to prevent a reoccurrence. In addition, the CGA special envoy will travel to the EU for discussions with the relevant authorities.

Iron/Steel Tariff Application
On July 18, the International Trade Admini- stration Commission of South Africa (Itac) published an application for the proposed increase in the ‘general’ rate of customs duty on:

• wire of iron or nonalloy steel, plated or coated with zinc and classifiable under tariff subheading 7217.20, from free of duty to 10% ad valorem;

• barbed wire of iron or steel, twisted hoop or single flat wire, barbed or not, and loosely twisted double wire, of a kind used for fencing, of iron or steel, classifiable under tariff subheading 7313.00, from 5% ad valorem to 15% ad valorem;

• other grill, netting and fencing, welded at the intersection, plated or coated with zinc, classifiable under tariff subheading 7314.31, from 5% ad valorem to 15% ad valorem; and

• other cloth, grill, netting and fencing, plated or coated with zinc, classifiable under tariff subheading 7314.41, from 5% ad valorem to 15% ad valorem.

The application was lodged by Hendok, which argued that labour, electricity and the domestic price of steel had increased over the last few years, resulting in increasing the domestic ex-factory cost. This had left the Sacu industry vulnerable to imported products being sold at or below the domestic manufactured costs.

Comment is due by August 15.

Mussel Tariff Application
On July 18, Itac published its intention to amend its recommendation in its report No 413 to include mussels, classifiable under tariff subheading 1605.53, in the scope of the customs duty. The tariff amendment will include the creation of additional eight-digit tariff subheadings under tariff subheading 1605.53 with the same rate of customs duty as on mussels classifiable under Chapter 3 as follows: mussels prepared or preserved, in airtight containers, from 5.5c/kg to 25% ad valorem, and other mussels, prepared or preserved, from 5.5c/kg to 25% ad valorem.

Comment is due by August 1.

Lead Acid Tariff Application
On July 18, Itac announced an increase in the ‘general’ rate of customs duty on lead acid batteries, of a kind used for starting piston engines, classifiable under tariff subheading 8507.10, from 5% to 30% ad valorem.

The application was lodged by Powertech Batteries, a division of Powertech Industries, which argued that in the recent years, imported automotive lead acid batteries had continued to flow into the Sacu market. As a result, Sacu manufacturers had found it increasingly difficult to compete, as the pricing models adopted by foreign manufacturers were often below local costing. The net effect of this influx of low-priced batteries was a threat to local battery manufacturers’ sales, market share and employment. A number of battery importers were sending back scrap batteries to the countries where they were originally manufactured. This raised the cost of local recycled lead, making Sacu manufacturing uncompetitive and uneconomical. It was estimated that importers had grown their share of the South African battery market from about 8.5% in 2010 to just over 20% in 2013. This had a significant negative impact on Sacu manufacturers, and this was compounded by scrap batteries.

Comment is due by August 15.

Wire Duty Reduction
On July 17, the South African Revenue Service (Sars) informed of the insertion of tariff subheading 7312.10.10 to reduce the ‘general’ rate of customs duty on stranded wire, of wire which is plated, coated or clad with copper-zinc base alloys (brasses), from 5% ad valorem to free.

Taxation Amendment Bills
On July 17, Sars published for comment by August 17 the Draft Taxation Laws Amendment Bill, 2014, and Draft Tax Administration Laws Amendment Bill, 2014.