The SATMCs application to ITAC on 31 January 2022 to provide additional protection measures against tyres currently being imported from China, was met with furore on the part of South African importers and the transport sector at large.
Local tyre producers alleged that tyre manufactured in China are being dumped in South Africa at predatory prices. They were therefore requesting for an additional duty to be imposed on Chinese imports, as a means of combating the threat to local industry and protecting jobs.
In response, ITAC published a preliminary finding on 8 September 2022, which came into effect on 9 September 2022, that it would impose a provisional payment for all tyres imported from China for the affected tariff codes for a period of six months (8th March 2022).
The provisional payment was set at 38.33% for all tariff codes, exceeding by far the percentage asked for by SATMC in five of the eight tariff codes, with no companies or factories being afforded exemption from the provisional payment. TIASA takes legal action “More protection is being given than what was asked for by the SATMC, which makes absolutely no sense,” argued Charl de Villiers, Chaiperson of TIASA.
Consequently, TIASA filed a Section 96 notice on 19 September 2022 to proceed with legal action the challenge the legality of the imposition of the provisional payments in terms of section 57A of the Customs Act, claiming the specific piece of legislation relied upon to allow the Commissioner of SARS to collect the
Provisional payments had not yet come into effect.
Papers were served on 20 October 2022 to all parties involved, (SARS, ITAC, Minister of Finance, Minister of Trade & Industry, SATMC and their respective members).
Of course, legal matters of this nature can take years to resolve in court, so the question remains, ‘where to from here’? Short-term forecasts According to TIASA, much uncertainty remains as to the final outcome of this application and its investigation. ITAC could finalise their investigation during this period, suspending the
investigation on the grounds that no dumping was found to have been taking place, with SARS thereby refunding all these provisional payments to the importers in full. However, this is considered the least likely outcome.
Should ITAC conclude that dumping did occur, as alleged, they would likely impose a dumping margin per tariff code, to remain in place for a period of five year. (This dumping margin could either be higher, or lower than the current provisional payment). Should a lower dumping margin be imposed, the importer would be free to claim back the differential between the provisional payment of 38.33% and the final duty, yet to be determined.
Alternatively, should the dumping margin be higher than the current 38.33% the importer would be expected to pay the higher amount going forward, but with the higher rate not being applied retrospectively. Another possible outcome is for ITAC to extend the provisional payment period for up nine months, (although it cannot be extended beyond the 18-month period from the date it was published in the Government Gazette).
Unscrupulous traders pose threat to market With South Africa a member of SACU (Common Customs Union), ITAC has been tasked to investigate these type of cases on behalf of the region. According to an agreement between SACU members they work from one tariff book, which means if one member imposes a tax/levy/duty the others should do the same, (also commonly known as a common customs union).
“This is clearly not taking place,” alleged de Villiers, “as Namibia has decided no to impose the provisional payment for tyres manufactured in China. “This creates an imbalance in the system as it is technically legal to import tyres through Namibia, pay the normal import duty in Namibia to the Namibian Government and ship the tyres to any SACU country without attracting an other provisional payments imposed by those member states which Namibian Government has decided not to
The net result, according to de Villilers, is that an Importer can legally set up a Company in Namibia to import and clear their product through the Namibian system and then move the product cross-border to any other SACU member and thereby avoid having to pay the provisional payments that ITAC / SARS have imposed.
TIASA met with SARS on 28 September 2022 to voice their concerns in this regard, whilst also informing the SATMC of the same. De Villiers cautioned that this would have a massive impact on both TIASA and SATMC members who were not in a position to restructure their imports in such a way so as to
avoid paying the provisional payment in RSA, which is 100% legitimate.
Unscrupulous traders are becoming ‘expert’ at finding loopholes in the system that allow them to operate illegally, at unsustainable prices. “SATMC defends its application for a dumping duty, based on the increase of illicit trade in the local market, but ironically, the imposition of this provisional duty, is clearly causing such illicit practices to escalate,” concluded de Villiers.