Life just seems to be getting more and more expensive as the days go by. The price of imported products increases when the dollar strengthens against the rand and when the International Trade Administration Commission (ITAC) either increases the rate of customs duty or imposes additional duties, for example anti-dumping duty.
Dumping is defined in the International Trade Administration Act 2 of 2002 (ITA Act) as being the “introduction of goods into the commerce of the … Common Customs Area at an export price… that is less than the normal value … of the goods”.
Essentially what this means is that, when an exporting country sends goods to South Africa which cost less than the goods produced and sold locally, the exporting country is said to be ‘dumping’.
“Anti-dumping duties are imposed as protection for a SACU industry against unfair trade, where foreign producers export products to the Southern African Customs Union (SACU) at prices lower than their domestic selling prices”.[1] Since anti-dumping duty is imposed for five years, the local industry has time to try and remedy the situation by, for example, making a better quality product than that which is imported, or finding ways of cutting costs to make the locally produced product more competitive.
In terms of section 16(1)(a) of the ITA Act, ITAC must investigate and evaluate applications with regards to alleged dumping or subsidised exports into the Common Customs Area (the Common Customs Area consists of Botswana; South Africa; Lesotho; Namibia and Eswatini).
If, at the end of its evaluation, ITAC considers the product in question to be ‘dumped’ it will impose an appropriate anti-dumping duty. The anti-dumping duty applies to all goods imported under the relevant tariff heading and is payable in addition to any import or excise duties. As stated, anti-dumping duties are in place for a period of five years, whereafter they are subjected to a sunset review, that is, ITAC calls for comment from interested parties as to why the anti-dumping duty should remain or why it should be scrapped.
While ITAC imposes the anti-dumping duties, it is the responsibility of the Customs division of the South African Revenue Service (SARS) to ensure that the anti-dumping duties are collected, and that importers do not try to evade payment of the additional duty.
According to section 47(1) of the Customs & Excise Act 91 of 1964 (the Customs Act), duty on imported goods is payable to the National Revenue Fund (NRF). Section 1 of the Customs Act defines a duty to be “any duty leviable under this Act…”. Section 1 further defines a customs duty as being “any duty leviable under … Schedule No. 2…”. Schedule No. 2 of the Customs Act is where one will find a list of anti-dumping duties currently in force.
It therefore seems that customs duty (which includes anti-dumping duty) falls into the category of ‘duty’ and is payable to the NRF.
Section 213 of the Constitution of the Republic of South Africa 1996 (the Constitution) provides for the NRF. In terms of section 213, all money received by the national government must be paid into the NRF unless specifically excluded by an Act of Parliament.
Section 11 of the Public Finance Management Act 1 of 1999 (PFMA) places National Treasury in charge of the NRF. National Treasury must ensure that there are always sufficient funds in the NRF. The money held in the NRF is allocated by the Finance Minister to the various government departments for spending.
The anti-dumping duties imposed by ITAC and collected by SARS are not specifically used to uplift the related industry but are instead allocated for spending by the Finance Minister. It is therefore very difficult to see how an industry that is not necessarily an industry falling within the scope of the government development programmes, will be able to reach a position where it no longer requires the added protection of anti-dumping duties. For example, government decides to prioritise farming. What types of farms do they prioritise? Anti-dumping duties may be imposed on spinach, which forms a small part of the farming industry as a whole. Chances are the spinach industry will not receive specific financial help from the government.
The government-run projects like Letsema, which, according to www.gov.za, is used to promote the Fetsa Tlala food production initiative, are more focused on the development of smallholder farms in rural communities.[2]
By 2030, as per the government’s National Development Plan, it hopes to ensure “that one million hectares are used to produce crops including fruit and livestock, and provide superior breeding animals to targeted smallholder and subsistence farmers”.[3]
It is our conclusion that there can be no doubt that the money collected via anti-dumping duty is put to good use as it is not specifically used to uplift those who allege they are suffering due to lower priced imports, i.e., the local producers of the “dumped product”.
[1] http://www.itac.org.za/pages/services/trade-remedies.
