Commission Warms to Tariff Support

The International Trade Administration Commission of South Africa (ITAC) is adopting a lenient stance towards protecting local industries. Chief Commissioner Siyabulela Tsengiwe recently commented that under strenuous global economic conditions and increasing cost pressures to domestic manufacturing, ITAC had favorably ruled on several tariff increases or on tariff rebates on intermediate inputs used by local manufacturers.

The aim of tariff support was to allow assisted producers to adjust and/or restructure so that in the medium to long term they could become internationally competitive without tariff protection. For this reason most tariffs are approved for a limited time after which they are reviewed. This is a useful policy leaning for agricultural manufacturers provided that there is allowable scope within South Africa’s WTO bindings. The WTO bound rates provide a ceiling above which duty increases are illegal. The Commission is increasingly finding that the bulk of applications for tariff increases are received in the wake of low priced imports from emerging economies.

From an agribusiness perspective the most notable tariff increases were on frozen half-shell mussels where the duty was increased from zero to 25 per cent ad valorem; and on uncooked pasta where the duty was increased by 10 percent to 40 percent. The frozen mussel application was brought by Blue Ocean Mussels, a company in the TerraSan Group and that for pasta by Sasko Pasta from the Pioneer Foods stable. Both applications benefitted from the fact that agro-processing is identified as a priority sector under the dti’s Industrial Policy Action Plan (IPAP 2) and the frozen mussel application was notably supported by the Food and Allied Workers Union (FAWU).

While both these duties were increased, the relief was guarded in that both were raised well short of the maximum levels that could have been granted under South Africa’s WTO tariff binding commitments. Both duties will be reviewed after 3 years in 2015.

Companies interested in exploring tariff relief are welcome to engage with our trade law partners at ‘HiltonLambert – Practitioners of Trade Law’. Enquires in this regard can be made through our office.