ITAC STRATEGIC PLAN PRESENTATION TO THE PORTFOLIO COMMITTEE ON ECONOMIC DEVELOPMENT

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

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

3. Established by an Act of Parliament, ITA Act of 2002. 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. ESTABLISHMENT

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

5. 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) Policy and Legal Framework

6. 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. Tariff Amendments

7. 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. Investigated sectors/industries

8. 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 METHODOLOGY

9. PROCEDURE Receipt of Application Properly Documented Application Preliminary Submission Exco-Sub Committee Commission’s Preliminary Determination 10 19 5 14 15 Government Gazette Notice Final Submission Exco-Sub Committee Commission’s Final Determination Reports & Submission 40 5 15 15 Minister of Trade and Industry Deputy Minister of Finance Publication Notice by SARS 10 148 Days = 6 Months

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

11. 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. Trade remedy instruments

12. 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. Dumping and anti-dumping actions

13. PROCEDURE 21days Properly documented application Applicant verification prep Merit submission prep SM approval & place on agenda Merit decision Implementation of decision Notification initiation of investigation 21 7 7 18 10 Sending exporters’ verification reports Verification of exporters Verification plan for importers & exporters & verification of importers Responses on deficiencies Identify deficiencies and send letter Exporter/ importer responses 14 14 14 12 7+30+14 2 Comments on verification reports Finalise prelim & submit agenda Commission prelim. decision Prelim report ready for SM Prelim report approval by CC Publication of provisional payments 2 7 10 18 2 10 Essential facts letters Final decision Final submission on agenda Provision for an oral hearing Comments on prelim. report Sending out prelim. report & notice 18 18 21 2 21 Total days: 274 (9 months) Total days: 309 (10 months) Comments on essential facts Final submission after essential facts Comn. final decision after essential facts Final report approval by Chief Comm. Approval by Minister SARS publication 10 14 21 3 7 18

14. Import control measures Export control measures IMPORT & EXPORT CONTROL

15. 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 1969-1983. 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. Import Control

16. 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. 2nd hands: Clothing; Motor vehicles; Electronic equipment; Waste and scrap; medical equipment; Aircraft. Import Control (New and 2nd hands)

17. 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. Export Control

18. Thank YouOffice Contact Details: 012 394 3713Cell: 082 454 8979 stsengiwe@itac.org.zawww.itac.org.za