Importers are bemoaning the slow pace of decision-making by the trade, industry & competition ministry in customs duty adjustment cases, and they’re calling for transparency and speed in the application process that is stifling planning and future investments.
This comes as President Cyril Ramaphosa’s administration has claimed to be reducing red tape across all departments and driving localisation in a bid to unleash investment and growth.
The debut XA Open Cases Report, compiled by consultancy XA Global Trade Advisors, highlights that under the tariff policy it was taking almost two years in most cases for an import duty change to be implemented.
The consultancy is an SA-based advisory firm with sector expertise in chicken, aluminium, chemicals and tyre-trade issues. As part of its advisory services, it collects data to map out which government policies and laws most affect companies.
In a scenario in which an importer is bringing in goods that are not available in the local market, companies apply for rebates with the International Trade Administration Commission (Itac). Conversely, if local industries feel threatened by imports, they can plead their case for the authorities to impose higher customs duty tariffs.
Seymour Talpert, chair of the Association of Meat Importers and Exporters, told Business Day it has been months since BRM, the meat importing and processing company he heads, applied for a rebate on chicken wings it imports mainly from Brazil.
He said while BRM gives priority to sourcing local protein, there was not enough supply, forcing some companies to import.
BRM, which employs 450 people and requires about 60 tonnes of drumettes a month and 100 tonnes of wings, had requested to be allowed to import locally unavailable portions at a rebated, duty-free rate to keep the price affordable.
“We put this application for a rebated duty in ages ago. It was acknowledged that it was received but nothing has happened,” said Talpert. “They haven’t done anything about it,” he said, adding that the decision has been nine months overdue at a cost of R93m.
The investigations are meant to wrap up within four to six months, according to the XA traders’ report, which was released last week.
It found the average days taken for tariff investigations had increased to 320 since 2015, compared with an average of 191 days between 2009 and 2014.
Warning that the result was billions of rand lost to the public purse due to indecision, XA CEO Donald Mackay said if the overdue cases had been resolved within the allocated period, the government would have collected about R1.25bn.
Given that SA collects about R55bn a year in customs duties, these delays are equivalent to more than 5% of the country’s total customs duty collections.
“In a country where our businesses are undercapitalised and the government has no money, this is upsetting,” Mackay said.
He said while it was unclear why the investigations that were completed by Itac on time were sitting on the desks of ministers for extended periods, one guess was the reciprocal agreements were sprung on applicants in the final phases of their cases.
The agreements supposedly “squeeze” applicant companies for something in return for the duty or tariff concessions, including jobs, investment, training, transformation and price controls.
Calling for all cases that have been open for more than 18 months to be finalised within three months, the consultancy has urged the authorities to publicise the outcomes of privately settled matters and issue a report. It has also called for a template of the reciprocal agreements to be made freely available.
The trade ministry did not respond to questions on the matter.
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