1. Policy Backdrop to The International Trade Administration (ITA) Bill 12 June 2002

2. CONTENTS Historical/Policy Background ITA’s Guiding Trade Policy Objectives ITA’s Key Provisions ITA’s Relationship with SACU Agreement Transitional Arrangements Conclusion

3. Historical/Policy Context ITA Bill motivated by SA’s post-1994 political and economic policy imperatives and choices  economic reform needed to underpin democracy with economic growth driven by manufacturing and exports trade/tariff policy and its reform seen as key in promoting efficiency/competitiveness, and welfare via lower cost/price levels  ITA also responds to regional political imperative to democratize relations with the BLNS states with whom SA shares a common customs tariff wall in SACU – hence in 1994 re-negotiation of SACU agreement (of 1969)

4. Trade Policy Objectives guiding ITA Ratification of WTO agreements in 1995 a signal of continuation of trade/tariff reform process started pre-1994 Trade/tariff reform further deepened with agreements with EU and SADC to boost exports, inward investment and regional integration Policy approach to trade/tariff reform: provide less protection to inputs (capital goods & raw materials) than outputs (finished goods) to enable firms to source world prices and thus to compete in domestic and world markets

5. Trade Policy Objectives guiding ITA To facilitate administration of custom tariff to these ends, a further objective is simplification of the tariff  In 1995 SA undertook in WTO to reduce to 6 the no. of tariff rates to 0%, 5%, 10%, 15%, 20%, and 30% Pursuit of these trade/tariff and regional policy imperatives called for a new institutional dispensation

6. Principles of ITA’s new Institutional Dispensation Separation of investigative and adjudicative functions regarding customs tariffs and other (contingent protection) duties, to enable transparent and objective decision-making Provision for shared decision-making with BLNS in SACU regarding customs tariffs and other (contingent protection) duties, whilst ensuring efficiency of decision-making

7. The New SACU Agreement Rationale  SACU has economic & geo-strategic value for SA: BLNS add a market of 6m people & GDP of over R60bn SA’s exports to BLNS over R29bn; imports of R7,2bn (1998) SACU fosters regional economic and political stability SACU is a regional platform for global integration  Therefore: –Re-negotiation of SACU into democratic & institutionally sound body is a strategic imperative

8. The new SACU Agreement key provisions maintains intra-SACU Free Trade, Common External & Excise Tariffs amends the Revenue Sharing Formula introduces New Institutions gives SACU nature of International Body with Headquarters provides for Common Policies on trade, customs, agriculture, industry, competition, & a dispute settlement system

9. New SACU Institutions Council of Ministers (supreme trade policy & tariffs decision-making body) Tariff Board ( recommends tariff decisions to Council) Tribunal ( to resolve disputes ) Commission of Senior Officials –at DG-level, reports to & advises Council, & supervises Secretariat

10. New SACU Institutions, cont. National Bodies –to receive requests for tariff changes & investigate & recommend to Tariff Board Secretariat –administrative function & depository of records –headed by Executive Secretary, have own staff –HQ decision on basis of joint evaluation of capacity, by scoring agreed criteria –HQ candidates are Windhoek, Maseru or Mbabane Rules of procedure & Protocols for above still to be negotiated & annexed to agreement

11. The ITA Bill - Key Provisions  Authorizes Minister of Trade and Industry to determine trade policy; regulate imports & exports (as per Import & Export Act, 1963)  The Act has as its purpose: “to foster economic growth & development of industry in the Republic and within SACU, by establishing an efficient & effective system for the administration of international trade within the framework of prevailing economic policy, and as provided for in this Act and the SACU agreement”

12. The ITA Bill - Key Provisions  Implements the new SACU agreement’s provisions in SA, i.e.: recognizes SACU as a juristic person in SA authorizes action on behalf of SA regarding the SACU agreement  Creates a national body (Commission of International Trade Administration (CITA)) to interface with new SACU institutions

13. The ITA Bill - Key Provisions  Repeals the BTT Act; provides for CITA to continue BTT functions, re: custom duties, rebates, import/export controls, and anti-dumping, countervailing and safeguard  sets outs CITA’s reporting responsibilities to the Minister and Parliament  establishes the right to appeal, or take matters on review to the high court, with usual limits  authorizes the Minister to make regulations to give effect to the purpose of the Act, such as regarding to annexes elaborating further procedural provisions

14. The ITA Bill - Key Provisions CITA will be constituted of: –Full-time Chief and Deputy Chief Commissioner –Maximum of ten additional Commissioners –Commissioners to be appointed by the President, for terms of up to 5 years

15. Relationship between CITA and SACU institutions Tariff Investigations vs. Decisions: Investigations (national bodies, i.e. CITA in SA) Adjudication & Recommendations (supra- national body, i.e. Tariff Board) Anti-dumping investigations and preliminary findings (national bodies, i.e. CITA) Final determinations (supranational body, recommendation by Tariff Board and decision by Council of Ministers Trade Policy: –Coordination and consensus at SACU level

16. SACU Secretariat (administrative support) National Institutions Council of Ministers SACU Tariff Board Commission of Senior Officials Tribunal recommendations deadlocks advice

17. Transitional Arrangements until Rules & Protocols governing new SACU bodies are in place, ITA provisions on the interface with SACU tariff-setting procedure will not come into force this means there will be no loss of national tariff- setting capacity in the transition to new SACU it will be SA’s negotiating objective to have the efficiency of current national (BTT) procedures incorporated into the envisaged SACU rules & protocols

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