Importance of Import and Export Controls in South Africa

1. Presentation to the Portfolio Committee on Economic Development Workshop Presented by Marius Collins Date: 18 August 2015

2. INTRODUCTION The International Trade Administration Act (“ITA Act”) makes provision for the control of certain goods imported into South Africa through a system of permits. The International Trade Administration Commission of South Africa (“ITAC”), through its Import and Export Control Unit, is responsible for administering this system. Import control is also the subject of international agreements. South Africa is a signatory to a number of such international agreements, which include agreements under the auspices of the World Trade Organisation (WTO), such as the General Agreement on Tariffs and Trade 1994 (GATT 1994). The purpose of regulating imports is, among others, to ensure the health and safety of South Africans, to protect the environment, to assist law enforcement agencies and to comply with obligations under international agreements. Import Control

3. Introduction continued… To carry out its mandate in the area of import control, the Import and Export Control Unit has well-established relationships with numerous domestic entities, such as the Department of Environmental Affairs, the Department of Energy, the Department of Health, the Department of Agriculture, Forestry and Fisheries, the South African Police Service, the South African Revenue Service, the National Regulator for Compulsory Specifications, the Independent Communications Authority of South Africa, the National Gambling Board, the Civil Aviation Authority, as well as representative organisations in trade and industry. From 1 July 1985, a number of 2400 items were liberalised from import control leaving twenty three per cent of South Africa’s total imports subject to import control measures. The process of the liberalisation of control on industrial goods continued to the extent that only 276 tariff subheadings are currently subject to import control measures. The historical trade strategy of South Africa based on import substitution was, therefore, not only supported by high tariff protection but also by rigid import control measures. These measures were applicable to both agricultural products and industrial goods.

4. GOODS SUBJECT TO IMPORT CONTROL The following is a brief summary of the new goods that are subject to import control measures, and the tariff heading chapter in which they are classified: • Fish, fresh or chilled of chapter 3; • Oils and other products of the distillation of high temperature coal tar of chapter 27; • Inorganic acids and inorganic oxygen compounds of non-metals of chapter 28; • Radioactive chemical elements and radioactive isotopes of chapter 28; • Hydrocarbons and their derivatives of chapter 29; • Ethers, alcohol peroxides and ether peroxides, Keton-function compounds and quinine-function compounds, Carboxylic acids and their derivatives, Glycosides of vegetable alkaloids and their derivatives of chapter 29; • Chemical products and preparations of the chemical or allied industries of chapter 38; • Pneumatic tyres of chapter 40; • Arms, ammunition and parts thereof of chapter 93; and • Gambling machines of chapter 95.

5. GOODS SUBJECT TO IMPORT CONTROLUsed and Second-Hand Goods The importation of all used and second-hand goods is subject to import control measures in terms of the provisions of the ITA Act and regulations published in the Government Gazette in terms of the Act. The importation of used and second- hand goods including waste and scrap of whatever nature is controlled for environmental reasons, health reasons and safety and quality compliance reasons.

6. Export Control INTRODUCTION  The International Trade Administration Act (ITA Act) makes provision for the control of certain goods exported from South Africa through a system of permits. The International Trade Administration Commission of South Africa (“ITAC”) through its Import and Export Control Unit is responsible for administering this system. Export control is also the subject of international agreements. South Africa is a signatory to a number of such international agreements, which include agreements under the auspices of the World Trade Organisation (WTO) such as the General Agreement on Tariffs and Trade 1994 (GATT 1994). South Africa regulates exports for a variety of reasons. For example, export controls assist law enforcement agencies in addressing the exportation of stolen goods such as vehicles. Export controls also ensure compliance with international agreements regulating, for example, the exportation of waste and scrap.

7. Introduction continued… To carry out its mandate in the area of export control, the Import and Export Control Unit has well-established relationships with numerous domestic entities, such as the Department of Environmental Affairs, the Department of Minerals, the Department of Energy, the Department of Health, the Department of Agriculture, Forestry and Fisheries, the South African Police Service, the South African Revenue Service, the National Regulator for Compulsory Specifications, the Independent Communications Authority of South Africa, the National Gambling Board, as well as representative organisations in trade and industry. Currently goods of 177 tariff lines are subject to export control measures. These tariff lines pertain to goods of the forestry sector, to minerals and energy, to health, to ferrous and non-ferrous waste and scrap, to industrial goods and to organic and inorganic chemicals.

8. GOODS SUBJECT TO EXPORT CONTROL Outlined hereunder are details of the goods subject to export control measures and the tariff heading chapter in which they are classified. • Wattle seed of chapter 12. • Precious stones and semi-precious stones/mineral substances not elsewhere specified or included: Lithium ore and Sugulite of chapter 25 (ore) and 71 (unworked). • Mineral fuels and Mineral Oils: Petrol, Aviation Spirit, Kerosene, Power Kerosene, Diesel Oil, Residual fuels, Propane and Butane of chapter 27. • Human Blood of chapter 30. • Yellowwood, Stinkwood and Blackwood, sawn and logs of chapter 44. • Waste and scrap of paper or paperboard of chapter 47. • Tiger’s-eye of chapter 71. • Ferrous waste and scrap, copper, copper-zinc base alloys, copper-tin base alloys, copper-nickel base alloys, copper, nickel, aluminium, lead, zinc, tin, tungsten, molybdenum, tantalum, magnesium, cadmium, antimony, manganese, beryllium, chromium, germanium, vanadium, gallium, hafnium, indium, niobium waste and scrap of chapter 72 – 81. • Motor cars and other vehicles principally designed for the transport of persons and goods of chapter 87. • Chemicals controlled in terms of the Montreal Protocol of chapter 29 and 38. • Chemicals controlled in terms of the 1988 Convention against Illicit Traffic in Narcotics Drugs and Psychotropic Substances of chapter 28 and 29.

9. Enforcement of the ITA Act The Enforcement section of the Import and Export Control unit conducts enforcement activities in terms of Section 41 of the ITA Act in order to detect and investigate contraventions. The following are activities within their mandate: • Ensure compliancewith the Act, Regulations and permitconditions. • Inspections - Pro active Inspections. - Scheduled/Container inspections. • Investigations - After detection of non- compliance. • Seizure of goods - After prima facie evidence of non- compliance.

10. 2014/2015 Financial Year Statistics • During the reporting period, 18 454 import and 14 181 export permits were issued. The bulk of the import permits namely 3 765 were issued for the importation of machinery and mechanical appliances, equipment and parts thereof of chapter 84 of the Harmonized Customs Tariff. • A total of 2 133 import permits were issued for the importation of vehicles and parts thereof of chapter 87, a total of 1 431 import permits to import marine resources of chapter 03, a total of 2 438 permits were issued to import rubber and articles thereof, including tyres of chapter 40, a total of 1 553 permits were issued to import arms and ammunition of chapter 93, a total of 1 201 permits were issued to import electrical machinery and equipment and parts thereof of chapter 85, a total of 950 permits were issued to import metals of chapter 71 to 81, a total of 1 240 permits were issued to import mineral fuels, mineral oils and products of their distillation of chapter 27, and a total of 493 import permits were issued to import organic and inorganic chemicals of chapter 28 and 29. • The bulk of export permits issued namely 6 434 were issued for exportation of ferrous and non-ferrous waste and scrap of chapters 71 to 81 of the Harmonized Customs Tariff, 1 889export permits were issued for the exportation of organic and inorganic chemicals of chapters 28 and 29, 5 130 export permits were issued for the exportation of used motor vehicles of chapter 87 and 559 export permits were issued for the exportation of mineral fuels and products of their distillation of chapter 27. • Enforcement activities are made up of scheduled inspections, unscheduled or surprise inspections and investigations. During the 2014/2015 financial year, 792 scheduled inspections were conducted, 563 unscheduled inspections and 36 investigations were conducted. Industry sectors inspected were clothing, ferrous and non-ferrous scrap metals, automotive, pneumatic tyres and machinery and equipment.

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