Steel Construction Vol 40 no 6 - International Steel Structures | Page 7

SAISC feature If the rebate is refused, drawbacks are still an option. Once ITAC have approved the rebate, the manufacturer needs to register the rebate store with SARS. Once approved by SARS, a guarantee needs to be provided to SARS to cover the value of the duty contained in the store at any one time. So, if the duty on the goods held in store amounts to an average of, say, R500 000, then the manufacturer would need to provide SARS with either a bank and or insurance guarantee to cover this value. From this point on, the manufacturer applies to ITAC for permit to allow imports into the rebate store without attracting duty. Such permit will usually cover 6 months of imports. The import is then carried out and the duty suspended by SARS. Once the export has taken place, this suspension is converted into a full rebate and the duty is not payable. SARS has stringent record keeping requirements around rebate stores, so the administration of the store must be well managed or large penalties will be levied. Customs drawbacks Customs drawbacks fulfill a similar function to the 470.03 rebate, but rather than having the duty rebated, with drawbacks, the duty is paid and then claimed back after the export has taken place. Whilst it is obviously not ideal to pay the money over to SARS and then claim it back, drawbacks are actually easier to manage than rebates. No guarantees are required and the money is generally refunded fairly quickly (by SARS standards), if the claim is properly prepared. The first claim is generally quite difficult as everything is checked by SARS, but once the process is set up, it usually smooths out and the refunds speed up. The challenge with drawbacks is the administration and actual claim process. If the documentation is not in order, SARS will simply not make the refund. There are also critical time frames to be adhered to and again, if these are missed, the refunds will not be made. The registration for the drawback can be time-consuming and no exports will be considered for refund before the registration has been approved, so it is important to act quickly to avoid leaving money on the table. using the term trade agreement loosely, to cover all forms of preferential trade offered by our trading partners. As an example, the African Growth and Opportunity Act (AGOA) is American legislation allowing preferential access, on a wide variety of products, to the USA market. It is crucial to understand the map of these agreements to better be able to plan your export strategy. Below is a list of the agreements that currently offer trade preferences to South African exporters. Please visit xa.co.za to find our more information about these agreements. You will notice that the Indian and Tripartite agreements are still under negotiation. Whilst the Indian agreement has largely stalled for the last few years, the Tripartite agreement is being negotiated right now. If you want to gain preferential access to important African markets such as Kenya and Egypt, then it’s important to participate in this negotiation process. Trade agreements Trade agreements are arrangements between different countries, designed to drive trade between those regions. South Africa is currently signatory to 9 trade agreements of different varieties, some of which offer preferences on steel products. This means that any duty normally payable for exports from countries not within the trade agreement, will be lowered for trade agreement partners. In this case, we are Trade Agreements Type Status Southern African Customs Union (SACU) Customs Union In force Southern African Development Community (SADC) FTA Free trade agreement In force EFTA-SACU Free Trade Agreement (FTA) Free trade agreement In force Economic Partnership Agreement Free trade agreement In force SACU-Southern Common Market (Mercosur) PTA Preferential trade agreement In force Zimbabwe – South Africa Bilateral Trade Agreement Bilateral agreement In force Africa Growth and Opportunity Act (AGOA) Unilateral non reciprocal USA legislation In force Generalised System of Preferences (GSP) Unilateral non reciprocal tariff preferences offered by various developed countries In force SACU-India PTA Preferential trade agreement Under negotiation SADC-EAC-COMESA Tripartite FTA Free trade agreement Under negotiation Rules of origin Because trade agreements are designed to drive trade between different trade blocs, it becomes important that goods benefiting from any given preference actually originate in the country participating in this agreement. By example, if a steel coil is manufactured in China and then simply cut and slit in South Africa and then exported to the EU, this would not confer South African origin on this product. The rules that govern this process are known as the rules of origin and form a pivotal part of actually being able to secure a duty benefit. The rules are not consistent between agreements and in fact, are not even consistent within a single agreement. Different industries will have different requirements for value add in order to qualify for the benefits, so it’s important to understand these rules of origin to ensure you will benefit from the lower rates provided in the different agreements. Export competitiveness is a complex area to cover in a short article. If you require assistance, or wish to know more, please visit xa.co.za. Contact Details: Donald MacKay Director, XA International Trade Advisors [email protected] 082 494 1019 Steel Construction Vol. 40 No. 6 2016 5