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Africa|Manufacturing|Pneumatic|Road|Rubber|Service|tyres|Manufacturing
Africa|Manufacturing|Pneumatic|Road|Rubber|Service|tyres|Manufacturing
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Tyre import rumblings

13th October 2023

By: Riaan de Lange

     

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In the Government Gazette of September 29, the International Trade Administration Commission of South Africa (Itac) extended an invitation for comment, by October 13, on the proposed introduction of an import permit condition for wheel imports.

The importation of both road wheels and wheel rims fitted with tyres is subject to Itac’s import control measures published in the Government Gazette of December 31, 2015, while the importation of new rubber pneumatic tyres is subject to Itac’s import control measures published in the Government Gazette of December 22, 2016. The eight-digit tariff subheadings for wheels were created on January 1, 2016, following an application to the South African Revenue Service by the South African Tyre Manufacturers Conference (SATMC), the Tyre Association of South Africa and the Tyre Dealers and Fitment Centre Association of South Africa.

The motivation for the application was to address the risk that tyres imported as parts of vehicles or trailers under the existing tariff subheadings of Chapters 84 (Machinery and Mechanical Appliances), and 87 (Vehicles) may be imported with the express purpose of evading Itac’s import permit control and the National Regulator for Compulsory Specifications (NRCS) homologation compliance control, as well as avoiding the customs duty applicable to tyres classifiable under Chapter 40 (rubber) as new rubber pneumatic tyres.

Itac has noted that, since November 2022, there has been a significant increase in the volume of wheels imported into the Southern African Customs Union (Sacu), and this has raised concerns about the potential misuse of tariff subheadings for tariff circumvention purposes. Consequently, certain industry members are of the view that, at the time of the application for the eight-digit tariff subheadings for wheels, tyres imported as parts under the existing tariff headings were removed from the rims and sold separately.

If this assessment is indeed correct, this practice would have no ostensible commercial purpose other than allowing importers to benefit from the lower rate of customs duty payable for tyres imported on wheel rims, compared with loose tyres imported under Chapter 40.

From a customs compliance perspective, it is important that imported wheels are used as the tyre-and-rim combinations, in the spirit that the recipients of the permits are bona fide importers and dealers/users of wheels. Thus, removing tyres from rims and selling them separately erodes the bona fide tyre import sector and the Sacu tyre manufacturing industry and the employment opportunities created in this industry. Such tyre removal and selling result in the circumvention of customs duties, leading to harm being caused to the Sacu economy.

At issue is not solely the circumvention of ordinary customs duties. Following an application that was submitted to Itac by the SATMC to address the alleged dumping of new pneumatic tyres classified under Chapter 40 and exported from or originating in China, Itac initiated an antidumping investigation on January 31, 2021. The commission’s preliminary determination report recommended the imposition of a provisional payment from September 9, 2022, until March 8, 2023, on imported tyres.

Itac’s final determination report of May 30 imposed definitive antidumping duties on imported tyres, with effect from July 28, for a period of five years. It is Itac’s view that imported tyres without rims are classifiable under Chapter 40, and tyres intended for resale without rims must therefore be imported and declared as such. In addition, all imported tyres and wheels, for use on passenger and commercial vehicles, are subject to a NRCS homologation certificate.

To ensure that bona fide wheel importers do not circumvent customs duties and/or anti-dumping duties, Itac proposes that an import permit condition be introduced, to read: “No tyres imported as wheels against this permit may be separated from wheel rims for resale purposes and all wheels (tyre and wheel rim combinations) must be sold/used as a tyre and wheel rim combination in the same state as imported.”

In addition, applicants must submit a sworn affidavit/declaration stating that the importation of wheels is done on a bona fide commercial basis, and that the tyres will not be removed from rims after importation for resale or for any other purpose.

Edited by Creamer Media Reporter

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