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PRESENTATION TO THE TRADE SEMINAR OF THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY

25 AUGUST 2009

BY

Siyabulela Tsengiwe: Chief Commissioner

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INTRODUCTION

• Establishment of ITAC• Policy and Legal Environments• Tariff Investigations• Trade Remedies• Import and Export Control• Response to the global economic crisis• Conclusion

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ESTABLISHMENT

• 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 9 Part-time. The administrative arm of the Commission has a staff compliment of 120.

• Accountability: The Chief Commissioner is the Accounting Authority and reports to the Minister of Trade and Industry.

• Core Functions: Tariff Investigations; Trade Remedies; Import and Export Control.

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POLICY & LEGAL ENVORONMENTS

• Trade and Industrial Policies• Domestic Law: ITA Act; Regulations; PAJA; Constitution.

• International Agreements (WTO)• Regional Integration (SACU & SADC)• Bilateral Agreements (EU; EFTA; &

MERCOSUR)

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TARIFF INVESTIGATIONS

• Objectives: Promote domestic production; Retention and creation of Jobs; & International competitiveness.

• Applications: Tariff Reductions; Tariff Increases; and Rebates.

• Proactive Investigations: Primary Chemicals; Aluminium; Textiles; Capital Equipment and Machinery.

• Adjudication Criteria: Includes an analysis of the following economic factors (whether a product is produced domestically or not; or whether there is tangible potential to produce domestically; import and export data; demand and supply; comparison of domestic prices with import prices; productivity; productive capacity; market share; profitability; effective rate of protection; employment and investment)

• 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.

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PROCEDURE

• Receipt of an application• Assessment of an application• Preliminary investigation• Tabling of the preliminary findings to the Commission• Publication in the Government Gazette• Table final findings to the Commission• Recommendation to Minister of Trade and Industry• Request to the Minister of Finance to implement• Implementation by SARS through a Gazette

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TRADE REMEDIES

• Objectives: Enable fair trade in order to sustain domestic production, retain 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.

• Litigation is a challenge in the use of trade remedies.

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PROCEDURE

• Lodging of a complaint • Merit Assessment• Submission to the Commission• Publication and notification• Preliminary Determination• Publication and notification• Final Determination• Recommendation to Minister of Trade and Industry• Request to the Minister of Finance to implement• Implementation by SARS through a gazette

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IMPORT & EXPORT CONTROL

• Objectives: The controls are essentially for environmental, health, safety and technical standards. Management of strategic resources. They are also used to sustain domestic production and to retain jobs by controlling the importation of 2nd hand goods.

• Regulations provide for the list of products under control, that can only be imported or exported by obtaining a permit issued by ITAC.

• Import Control: 276 tariff lines

• Export Control 177 tariff lines

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RESPONSE TO THE CRISIS

• NEDLAC & thedti responses

• The crisis requires ITAC to be more responsive and flexible to requests from industry without flouting the rules.

• In the short-term ITAC should not loose sight of those things that must continue to be done for long-term growth and development.

• ITAC has reviewed the time it takes to finalise investigations from 12 to 9 months in respect of trade remedies and from 12 to 6 and 4 months in respect of tariffs.

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CONCLUSION

• ITAC operates in a complex global trade environment and this requires adaptation and renewal from time to time. The mandate is to forester economic growth and development, which requires a balanced approach in the use of the instruments. There are different and sometimes opposing interests in the value chain. There are costs and benefits inherent in the instruments and this requires care and rigour. The alignment to trade and industrial policy objectives cannot be overemphasized. Speeding up the investigations and processes up to implementation by SARS will remain critical.

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Thank You

Office Contact Details: 012-394 3713

Cell: 0824548979www.itac.org.za