1 ITAC STRATEGIC PLAN PRESENTATION TO THE PORTFOLIO COMMITTEE ON ECONOMIC DEVELOPMENT 17 AUGUST 2010

2 CONTENTS Establishment of ITAC Import Tariffs Trade Remedies Import and Export Control

3 ESTABLISHMENT Established by an Act of Parliament, ITA Act of Mandate : to foster economic growth and development in order to raise incomes and promote investment and employment in SA and within the Common Customs Union Area by establishing an efficient and effective system for the administration of international trade. Structure: The Commission is constituted of 2 Full- time Commissioners ( Chief Commissioner and Deputy Chief Commissioner) and 6 Part-time. The administrative arm of the Commission has a staff compliment of 132. Reporting Lines: The administration of the ITA Act has been transferred to the Minister of Economic Development (Policy and Oversight) except for decision making powers on individual tariff and trade remedy investigations that have been retained by the Minister of Trade and Industry. Core Functions : Tariff Investigations; Trade Remedies; Import and Export Control.

4 IMPORT TARIFFS Policy and Legal Framework Tariff Amendments Sectors Investigated Methodology Procedure

5 Policy and Legal Framework Developmental Growth Path; Trade Policy Framework and National Industrial Policy. Domestic Law: ITA Act; Regulations; PAJA; Constitution. International Agreements (WTO) Regional Integration (SACU & SADC) Bilateral Agreements (EU; EFTA; & MERCOSUR)

6 Tariff Amendments Ongoing investigations for selective tariff increases. Ongoing investigations for selective tariff decreases. Creation of rebates. Objectives: Promote domestic production; Retention and creation of jobs; & International competitiveness. Agriculture Sector: Tariff setting for this sector is more complex given the global distortions; the need for a right balance between profitability of producers on the one hand and consumer prices on the other is critical.

7 Investigated sectors/industries Basic chemicals (polymers) Aluminium Capital equipment and machinery Textiles for Clothing; Fabrics for Home Textiles Clothing Plastic products Self copy paper Automotive components Spades and shovels; gas cylinders Wheat; Sugar; Soya bean oil cake; and Pineapples.

8 METHODOLOGY Domestic productive capacity and potential Trade flows (Imports and Exports) Cost Structure Price differentials (Disadvantage or Advantage) Market share of domestic producers Demand and supply Financial state Employment Investment Productivity

9 PROCEDURE Government Gazette Notice Final Submission Exco-Sub Committee Commission’s Final Determination Reports & Submission Minister of Trade and Industry Deputy Minister of Finance Publication Notice by SARS Receipt of Application Properly Documented Application Preliminary Submission Exco-Sub Committee Commission’s Preliminary Determination Days = 6 Months

10 TRADE REMEDIES Trade remedy instruments Dumping and anti-dumping actions Procedure

11 Trade remedy instruments Objectives: Enable fair trade in order to sustain domestic production, retain and create jobs and promote international competitiveness. Anti-dumping measures are taken against injurious dumped imports. Dumping is used to refer to a situation where goods are sold to a foreign market at prices less than the country of origin. Countervailing measures are used against subsidised imports that threaten and/or cause injury ( i.e. decrease in prices; loss of market share; decrease in profits; decrease in sales volumes; job losses etc.) to the domestic manufacturer. Safeguards are actions against trade that may be regarded as fair but overwhelms domestic producers. Safeguards are used against an unforeseen surge of imports that threatens and/or causes injury to the domestic producers.

12 Dumping and anti-dumping actions Dumping: Selling goods at a lower price in the export than the domestic market. Firms engage in geographical price discrimination to maximise profits. The problem arises when dumping threatens and/or causes injury to domestic manufacturers ( Decline: Prices; Sales Volumes; Profits; Market shares; Job losses etc.) Since Dumping is regarded as an unfair trade practice the WTO AD Agreement sets out the rules for acting against dumping that causes injury. South Africa is an old and active user of the instrument with the first law on AD having been enacted in 1914.

13 21 days Properly documented application Applicant verification prep Merit submission prep 21 Merit decision SM approval & place on agenda 7 Verification of exporters Comments on prelim. report Prelim report ready for SM Commission prelim. decision Provision for an oral hearing 10 SARS publication Total days: 274 (9 months) Total days: 309 (10 months) Sending exporters’ verification reports 14 Verification plan for importers & exporters & verification of importers Identify deficiencies and send letter Exporter/ importer responses Comments on verification reports Prelim report approval by CC Final submission on agenda Sending out prelim. report & notice Implementation of decision Notification initiation of investigation Responses on deficiencies Finalise prelim & submit agenda Publication of provisional payments Essential facts letters Final decision Approval by Minister Final report approval by Chief Comm. Comn. final decision after essential facts Final submission after essential facts Comments on essential facts PROCEDURE

14 IMPORT & EXPORT CONTROL Import control measures Export control measures

15 Import Control Governed by the WTO Agreement. SA introduced its first import restrictions in 1949 to address balance of payments problems. Invoked and withdrawn between the years From 1985 import controls were withdrawn from 2400 tariff lines to 276 tariff subheadings (items). WTO Agreement 1995 Tariffication of import restrictions in agriculture. Import Substitution strategy: High tariffs and import restrictions on agricultural and industrial goods.

16 Import Control (New and 2 nd hands) Objective: To enforce health, safety, environmental, and technical standards that arise from domestic law and international agreements. Partnerships with government departments and institutions. Industrial and trade policy implications (defensive and offensive interests). New Goods: Radioactive chemicals; Pneumatic tyres; Chemicals 1988 Convention; Fossil fuels; Arms and ammunition. 2 nd hands: Clothing; Motor vehicles; Electronic equipment; Waste and scrap; medical equipment; Aircraft.

17 Export Control Objective: Health; safety, environmental and technical standards. 177 tariff subheadings are under export control. Minerals including tiger’s eye. Raw materials ( waste and scrap metals). Motor vehicles International agreements: Montreal Protocol, Basel Convention, and 1998 UN Convention. Enforcement of the Regulations.

18 Thank You Office Contact Details: Cell: