A leading trade consultancy is warning that the recent sharp decline in applications for duty investigations may be a signal that South African companies are losing faith in the country’s trade administration system, which has become prone to long delays in finalising such probes.

In its eighth and latest ‘Import Duty Investigation Report’, XA Global Trade Advisors shows that only one new application has been lodged with the International Trade Administration Commission of South Africa (Itac) in the past six months.

“This is the lowest level in Itac’s 23-year history and this at a time when South Africa is under incredible trade pressure,” CEO Donald MacKay highlights.

MacKay believes the fall could indicate that companies are losing trust in the system, where investigations are taking far longer than the prescribed six-month period set for completion and where some decisions have been lingering for more than six years.

The report shows that 97% of the 33 active investigations are older than six months, with only one investigation having not yet breached that deadline.

MacKay notes that Itac, which admitted recently to being understaffed, is not the only participant in the process, as final duty decisions require sign-off from both the Minister of Trade, Industry and Competition and the Minister of Finance.

Many such decisions have been tied in recent years to opaque reciprocal agreements, whereby companies have made employment, output, pricing or investment commitments in return for increases or decreases in import duties.

MacKay is a vocal critic of such agreements, which he claims have not been uniformly applied and have added a political dimension to the decision-making process.

“Not everyone wants to sign them, so that slows the process down even further, and I think that the cases are no longer just been adjudicated on technical grounds,” MacKay states, while stressing that he has no firm evidence of this added political dimension.

The report says that while there has been an improvement in the amount of time investigations have spent at Itac and the Ministers in the last six months, older cases are still not getting finalised.

“We cannot be happy and agree that an average of 34 months is an appropriate amount of time to complete an investigation.”

MacKay believes drastic decisions are now needed and that cases with outdated information should be terminated, or reinitiated.

“At this stage any decision is almost better than no decision,” he avers.

Engineering News has approached Itac for comment and will include its response once received.