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ITAC STRATEGIC PLAN BRIEFING TO THE PORTFOLIO

COMMITTEE ON ECONOMIC DEVELOPMENT

27 March 2013

Siyabulela Tsengiwe

Chief Commissioner

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Contents

1. Mandate.

2. Key Strategic Objectives, Performance Areas & Services.

3. Situational Analysis and Implications for ITAC.

4. Achievements.

4.1 Investigations.

4.2 APDP and MIDP.

4.3 Judicial Reviews.

5. Challenges

5.1 Procedure and time frames.

5.2 Impact Assessments.

5.3 Organisational Development.

6. Trade Remedies

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• 21 days

ITAC’s Mandate, Vision, Mission,

and Key Strategic Objectives

Vis

ion

M

iss

ion

S

tra

teg

ic O

bje

cti

ve

s

An institution of excellence in international trade administration, enhancing economic growth and

development.

ITAC aims to create an enabling environment for fair trade through: efficient and effective administration

of its trade instruments; and technical advice to the Economic Development Department and thedti.

Ensure appropriate contribution to employment creating growth and development through provision of its

international trade instruments.

Ensure strategic alignment and continued relevance within the Economic Development Department and

national agenda.

Ensure organisational efficiency and effectiveness through business support services.

Ma

nd

ate

The aim of ITAC, as stated in the Act, is to foster economic growth and development in order to raise

incomes and promote investment and employment in South Africa and within the Common Customs

Union Area by establishing an efficient and effective system for the administration of international trade

subject to this Act and the SACU Agreement.

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• 21 days

Key Strategic Objectives,

Performance Areas & Services

Ensure contribution to

employment creating growth

and development through

effective delivery of

international trade instruments

International Trade Instruments

What will be pivotal in improving

the provision of customs tariffs,

trade remedies, and import and

export control will be the quality

and turnaround times.

Customs Tariff Investigations [Increasing Duties, Reducing Duties, &

Creation of Rebates]

Trade Remedies Investigations [Antidumping, Countervailing & Safequards]

Import & Export Control [Permits & Enforcement]

Ensure organisational efficiency

and effectiveness of ITAC

Business Support Services

oHuman Resources

oFinance

oInformation Technology

oLegal Services

oPolicy and Research

Ensure strategic alignment and

continued relevance with the

Department of Economic

Development and national

agenda

International Trade Technical

Advice

ITAC will become more proactive

in the provision of technical inputs

and contributions to trade and

industrial policy implementation,

as well as trade negotiations at

bilateral, regional and multilateral

levels.

Technical Inputs on Trade and

Industrial Policy including Sector

Strategies

Technical Inputs on Trade

Agreements

[WTO, SADC & SACU] ;

Bilateral Agreements

[EU, EFTA, MERCOSUR, & INDIA]

The performance of the institution will

be driven through appropriate business

solutions, efficient and effective

utilisation of material, human and

information technology resources.

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S I T U A T I O N A L A N A L Y S I S

And

I M P L I C A T I C A T I O N S FOR ITAC

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Global and domestic environment

• South Africa is a globally integrated economy.

• The Eurozone crisis with a major part of the European Union in

recession.

• Economic recovery remains sluggish in the US.

• Emerging economies in particular China and India continue to lead

global growth.

• Global economic growth is estimated to increase marginally from 3.2%

in 2012 to 3.5% in 2013.

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Global and domestic environment

• South Africa’s economic growth rate was 2.5% in 2012 and is expected

to grow at 2.7% in 2013.

• SA’s trade performance remains a huge challenge. Exports grew by

just 1.1% while imports grew by 7.2%.

• Manufacturing is slowly recovering save for the increasing cost

pressures and cheap imports.

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ITAC Response and industry

• Alignment of the instruments to government policy.

• Revised time frames 12-10 months (trade remedies) and on Tariff

investigations 12-6 months.

• Quality: Procedure and substantive issues.

• Compliance with the law.

• Steady rise in the use of trade remedies.

• Considerable rise in tariff increases.

• Export control in support of local beneficiation.

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The continent and regional integration

• Africa has a market of over 1 billion and is growing fast.

• Africa accounts for 18% of our total exports.

• Tripartite Free Trade Area.

• SADC consolidation.

• SACU.

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A C H I E V E M E N T S

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Tariff Investigations 2012\2013

APPLICANT PRODUCT APPROVED AMENDMENT TYPE OF AMENDMENT

Kaymac Geo-synthetic clay liners Free – 25% Increase

Uniresins (Pty) Ltd Alkyd resins Free – 15% Increase

Blue Ocean Mussels Mussels Free & 5.5c/kg – 25% Increase

Pioneer Foods (Pty) Ltd Uncooked pasta, not stuffed or

otherwise prepared

30% - 40% Increase

ITAC Salmon & Trout Remain at 25% Increase

Foodcorp (Pty) Ltd Sardines in airtight containers Declined Increase

Grain SA Dollar based reference price - wheat In process Increase

Collier Tool & Die CC Lawn mower blades Free – 20% Increase

Ellies Holdings (Pty) Ltd Outdoor Aerials Free – 20% Increase

Peninsula Drums CC Conical drums Free - 15% Increase

ITAC Set top boxes Free - 15% Increase

Shatterprufe , USG Autoglass CC, FGW

Safety Glass (Pty) Ltd & National Auto Glass

(Pty) Ltd

Laminated automotive windscreens 15% - 30% Increase

Cobra Watertech (Pty) Ltd Taps and Mixers In process Increase

RIC Manufacturing CC PTFE tape In process Increase

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Tariff Investigations 2012\2013

APPLICANT PRODUCT APPROVED AMENDMENT TYPE OF AMENDMENT

Jensen Belts Buckles, magnetic locks & studs for belts Declined Rebate

Paciwave (Pty) Ltd Fabric for bulk containers Declined Rebate

Bagshaw Footwear Leather for protective footwear Declined Rebate

Nyathi Textiles Fabric for impregnation or coating Declined Rebate

ITAC Worn overcoats Approved quota Rebate

Kiran Global Caustic Soda for Meta-silicates In process Rebate

Bidvest Paper Plus (Pty) Ltd Mechanisms for lever arch files Approved Rebate

Department of Trade and Industry Rebate for Automotive Production and

Development Programme – Rebate 317.03

Approved

Rebate

GRW Engineering (Pty) Ltd) Certain parts for refrigerated trailers Declined Rebate

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Tariff Investigations Continued

APPLICANT PRODUCT APPROVED AMENDMENT TYPE OF AMENDMENT

Colas (Pty) Ltd Petroleum Bitumen Approved Rebate

ITAC Rebate 470.01 & 470.03 Approved merging rebates Rebate

ITAC Worn clothing for wiping rags Approved tightening of Guidelines Rebate

ITAC Rebate for Set Top Boxes to exclude populated PC

Boards and other designated inputs

Approved Rebate

ITAC Tyres for organised motor sport & agricultural/

forestry vehicles & machines

Approved Rebate

Department of Trade and

Industry

Temporary deeming of imported aluminium/ steel

for the manufacture of wheels

Approved Rebate

ITAC Extension of the claiming period for Productive

Asset Allowance programme to 2015.

Approved Rebate

EDD SKD manufacturing for Minibuses and Midi buses

Approved Rebate

ITAC Claiming under the Productive Asset Allowance by

component manufacturers, whereby the OEM

transferred its project to participate under the

Automotive Investment Scheme

Approved Rebate

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Tariff Investigations Continued

APPLICANT PRODUCT APPROVED AMENDMENT TYPE OF AMENDMENT

SABAC (Pty) Ltd Brake fluid Approved

10% - free

Reduction

Giants Canning (Pty) Ltd White Pea beans Declined Reduction

General Mills Frosting Declined Reduction

Hudaco Trading (Pty) Ltd AC generators and alternators Approved

5% & 10% - free

Reduction

Massmart Camp Chairs Declined Reduction

Divfood – subsidiary of Nampak Aluminium slugs Declined Reduction

Capco CC Mineral fibre ceiling tiles Declined Reduction

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Trade Remedies Investigations

Product Country Applicant Type Status and Duties

Frozen chicken and parts Brazil Southern African Poultry

Association

Anti-dumping Finalised. No duty.

Frit Brazil

Ferro Industrial Products (Pty) Ltd

Anti dumping

Finalised. 24,65% -Smalticeram Do Brasil

50% - others.

Threaded rods PRC South African Fasteners

Manufactures’ Association

Anti-dumping Finalised. No duty.

Threaded screws PRC South African Fasteners

Manufactures’ Association

Anti-dumping

Finalised. Duties.

Coated Paper PRC, Korea Sappi Fine Paper Anti-dumping In progress – preliminary phase.

Unframed Mirrors PRC PFG Glass Anti dumping In progress – preliminary duties imposed.

ORIGINAL ANTI-DUMPING INVESTIGATIONS

ANTI-DUMPING REVIEWS

Product Country Applicant Type Status and Duties

PVC Rigid PRC, Chinese

Taipei

Arengo Sunset Review In progress – final phase.

Acetaminophenol PRC Anqui Lu’an Pharmaceutical Co

Ltd

New Shipper Review Finalised. No duty.

Hand Tools PRC Lasher Tools Sunset Review In progress – final phase.

Product Country Applicant Status and Duties

Frozen Potato Chips

(French Fries)

All McCain (Pty) Ltd In progress – preliminary phase.

SAFEGUARD INVESTIGATIONS

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APDP and MIDP

• The Automotive Production and Development Programme

regulations, rebate and guidelines have been finalised for

implementation this year. With the introduction of the Automotive

Production and Development Programme, the Motor Industry

Development Programme will be phased out.

• The Automotive Production and Development Programme replaces

the Motor Industry Development Programme and the objective is to

create an enabling environment for the domestic industry to

significantly grow production volumes and local value addition,

leading to the creation of additional employment opportunities

across the value chain.

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Judicial Reviews

• Different and opposing interest in the value chain.

• WTO Dispute Settlement Mechanism.

• Litigation in other Jurisdictions.

• 2008 – 2012 Court Cases.

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C H A L L E N G E S

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Procedure for conducting Tariff Investigations

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

Receipt of

Application

Properly

Documented

Application

Preliminary

Submission

Exco-Sub

Committee

Commission’s

Preliminary

Determination 19 14 5 15 10

10

148 Days = 6 Months

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21 days

Properly

documented

application

Applicant

verification

prep

Merit

submission

prep

21

Merit

decision

SM approval

& place on

agenda

7

Verification

of exporters 12 7+30

+14 2

2 Comments on

prelim. report 21

2 18 10 7 2 Prelim report

ready for SM

Commission

prelim.

decision

Provision for an

oral hearing

10

SARS

publication

18 18

14 10 18 7 3

21

Total days: 274 (9 months)

Total days: 309 (10 months)

7 21 18 10

14 Sending exporters’

verification reports 14 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 for conducting AD Investigations

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Impact Assessments

• ITAC has begun with assessing the impact of its instruments at a

sectoral level.

• Tariff support is now conditional to reciprocal commitments by

beneficiaries against policy objectives of production, investment and

employment. The monitoring is done annually and in 3 year reviews.

• Getting cooperation from firms to supply the necessary data is a

challenge that ITAC is grappling with.

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Organisational Development

• The work of ITAC is increasingly demanding and expanding and

therefore the need for organisational development has become a priority.

• The tough global economic conditions and increasing cost pressures for

domestic producers have led to increased demand for ITAC instruments.

• Time frames for investigations have been shortened whilst ensuring that

quality is not compromised.

• The introduction of the APDP and the initiation of tight export controls

using a price preference system on scrap metal.

• Trade monitoring and evaluation, including impact assessments.

• There is a pressing need to boost human resource capacity and in this

regard ITAC is working closely and in cooperation with EDD on its

organisational development.

• The staff compliment of ITAC is 131 with 100 positions in the core

business and 31 positions in support services.

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T R A D E R E M E D I E S

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Trade Remedies

• 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.

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Dumping & Anti-dumping (AD) 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.

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Turnaround times

South Africa US EU Canada India Brazil Australia

10 Months 9 Months 14 Months 7 Months 12 Months 12 Months 5 Months

Comparison with other Jurisdictions

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SA’s use of Anti-dumping

• Since the founding of the WTO in 1995 to 2010, the top users of the anti-dumping instrument have been, in terms of the

number of investigations initiated –

0

10

20

30

40

50

60

70

80

90

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

European Union

United States

Australia

Argentina

India

South Africa

India: 613 United States: 442;

European Union: 414; Argentina: 277; and

South Africa: 222; Australia: 212.

Anti-dumping investigation initiations by reporting member 1995 – 2010

Source: WTO data files and ITAC

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TRADE REMEDY INITIATIONS 1 January 1995 – 31 December 2011

Total 4,513

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WTO Disputes vs. Trade Remedies + Subsidies

Disputes (Based on panels established)

1995 – 2011

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Thank You

Office Contact Details:

012 394 3713

Cell: 082 454 8979

stsengiwe@itac.org.za

www.itac.org.za