The International Trade Administration Commission of South Africa (Itac) extended an invitation, by means of a Government Gazette notice published on April 3, to comment on its draft guidelines and conditions pertaining to a safeguard application in terms of Article 16 of the Trade, Development and Cooperation Agreement (TDCA) between the European Community and its member States and South Africa.

Comments are due by April 20.

According to Itac, Article 16 provides for safeguard action in defined circumstance. The TDCA came into force on January 1. There are three trade remedies available to domestic industries: antidumping, countervailing and safeguard measures. While antidumping and countervailing measures serve to address unfair trade, safeguards serve to address fair trade. In certain literature, safeguard measures are referred to as an “escape valve” allowing for World Trade Organisation (WTO) member countries to act against each other in instances of prevailing fair trade.

However, in the case of the European Union (EU), the European Free Trade Association (EFTA) and the Southern African Development Community (SADC) region, South Africa cannot increase the rate of customs duty on its imports, leaving only trade remedies as protec- tive measures. Essentially, these measures can only be invoked subject to application, quali- fication and substantiation by the domestic manufacturing industry and an investigation, confirmation and recommendation by Itac and the subsequent consideration and acceptance of such recommendation and an instruction for the imposition of trade remedy measures (duties) by the Minister of Trade and Industry.

In its Government Gazette notice, Itac published draft guidelines, as well as an application form, which it refers to as a reference and procedural guide pertaining to the application for safeguard action in terms of Article 16 of the TDCA.

Article 16 reads: “Notwithstanding other provisions of this agreement and, in particular, Article 24, if, given the particular sensitivity of the agricultural markets, imports of products originating in one party cause or threaten to cause a serious disturbance to the markets in the other party, the Cooperation Council shall immediately consider the matter to find an appropriate solution. Pending a decision by the Cooperation Council, and where exceptional circumstances require immediate action, the affected party may take provisional measures to limit or redress the disturbance. In taking such provisional measures, the affected party shall take into account the interests of both parties.”

The proposed process of application and subsequent initiation and the conclusion of the investigation, as detailed in the notice, can be summarised as follows: a South African manufacturer or industry association submits an application for Itac’s consideration. If it is warranted, the investigation is initiated by means of the publication in the Government Gazette a request for comment by interested parties, with the comments to be submitted in 20 days. The investigating officers consider the comments and Itac makes a preliminary determination. The preliminary determination serves as the basis for the Department of Trade and Industry (DTI) to raise the matter in the Cooperation Council. Where there are ‘excep- tional circumstances’, once the DTI raises the matter with the Cooperation Council, Itac requests the commissioner for the South African Revenue Service (Sars) to impose provisional measures in the form of a provisional safeguard duty. The provisional measures remain in place until a decision has been reached by the Cooperation Council.

It is uncertain from the notice exactly how the TDCA safeguards will operate. It is accepted that the TDCA safeguards should in no way discriminate against imports from the EU, particularly in instances where there is more than one dominant imports competing in South Africa that are from different countries of ori- gin. If the EU importer is faced with provisional safeguards while a similar investigation is still under way against another imported product, this could be perceived to be discrimination.

It is not known what necessitated the publication of this notice at this time. Could it be increased imports from the EU? It is also not certain what the imports that are of concern to South African manufacturers are, although the media has cited frozen chips (which are subject to a safeguard investigation) and frozen chicken (for which Brazil was the target of an antidumping investigation).

As at April 6, the 27-member EU, South Africa’s biggest trading partner in 2012 and for many years before that, accounts for only 6 of the 62 (or 9.68%) of the defini- tive antidumping duties that are in effect. Two antidumping duties apiece have been imposed on tall oil fatty acids from Sweden, ropes of cables of iron or steel from the UK and Germany. All the EU dumping duties are residual duties, which implies that the investigations, when initiated, were defended (opposed), resulting in the imposition of different rates of antidumping duties.

No countervailing duties are effective for imports from the EU, and no safeguards are currently in effect on imports from any country.
Definitive antidumping duties are effective against ten countries – if the EU is considered as a collective. The People’s Republic of China accounts for 30, or 48.39%, and India for 7, or 11.29%, of the definitive antidumping duties that are in effect. As for trade blocs, if Brazil, Russia, India, China and South Africa – or Brics – group of countries is considered as trade bloc, it accounts for 62.90% of the definitive antidumping duties, while the EFTA and the SADC member countries do not have any definitive duties imposed on them.

Proposed Diesel Refund Amendments
On April 5, Sars published proposed amendments to Schedule No 6 of the Customs and Excise Act relating to diesel refunds. The first amendment relates to Schedule No 6, Part 3, of the Act and entails the insertion of Note 5A to make retrospective allowance for supplementary information that farming diesel refund benefi- ciaries may present in the absence of log books to support refund claims for the period April 1, 2011, to March 31, 2013. The second amendment of Schedule No 6, Part 3, of the Act relates to the deletion of Note 5A and the insertion of Note 6(a)(xi) to define the log book record requirements expected from all diesel refund beneficiaries to substantiate diesel refund claims. Sars also published an example of a diesel storage log book and of a diesel use log book.
Comments are due by April 19.

Productive Asset Allowance
Sars published two tariff amendments on April 5 to the Rebate Item 460.17/87.00/03.02 and Refund Item 537.02/87.00/01.02 for the extension of the periods for the issuing of Productive Asset Allowance certificates for goods.