Customs Duty Bill [B43-2013]; Customs and Excise Amendment Bill [B44-2013]; Customs Control Bill [B45-2013]: public hearings

Meeting report

SA of Oil and Gas Association submission
Mr Jean Pool, Senior Tariff Consultant at SAOGA, said that in response to a query from SAOGA, a letter from the Durban customs office showed that clients required approval before clearance could be granted and that the import procedure was manually done and turnaround time was approximately seven days. SAOGA suggested, as a possible solution, that the customs declaration be regarded as the customs clearance application.

SA Institute of Chartered Accountants Association (SAICA) submission
Mr Arthur Poulos, Chairperson of the SAICA subcommittee on Customs and Excise, said SAICA was not opposed to the Bill and had been involved in its formulation since 2010. SAICA was mainly concerned about the legal and policy elements of the Bill. One fundamental element was that SAICA was awaiting the subsidiary legislation, the rules and regulations where a lot of detail was still missing. It wanted to see these in advance to eliminate any unintended consequences as far as possible. On clause 614 of the Customs Control Bill, SAICA raised the issue of the period of validity of a registration certificate which had been set at three years whereas in the past there was no limit. This amendment would create an administrative nightmare and impact negatively on trade facilitation. On clause 86 and 191 of the Customs Duty Bill, the time limit on duty reassessments had been increased from two to three years and a fee would be payable.

Global Maritime Legal Services submission
Mr Mark Goodger, MD of Global Maritime Legal Services, said it had organised research by a consultant to do a report on the requirements of the customs declaration and its impact on trade as it was concerned about trade facilitation. It had tried unsuccessfully to have consultations with SARS. He said South Africa was a signatory to the Revised Kyoto Convention and its amendments and had acceded to the general annex but not to the specific annex of 2004. He said the SAFE framework, a global standard for security, was adopted in 2005 and this was sufficient to cover any concerns SARS might have in the context of risk management. SARS only allowed three days for customs clearance. For groupage carriers it meant that if one company was not compliant then all the others in that group would be negatively impacted. This would lead to job losses and the risk of fraud would increase. Regarding the Bills of Lading, if delivery was delayed, then the carrier had the right to terminate the carriage. The solution to this would be to allow for earlier declaration. GMLS felt that Section 18’s removal should be reviewed.

Discussion
Ms J Tshabalala (ANC) asked SAOGA whether it had issues with the time frame of participation on the Bill. She asked SAICA whether it felt that SARS could not administratively handle reapplications. She asked GMLS whether their chief concern was the acceptance of inland ports.

Mr T Harris (DA) said the meeting should focus on the issue of inland ports and on the two options SARS had proposed. He said there was no need to see regulations before legislation was passed. He asked whether there was international precedent for registration every three years. He wanted to know what process the duty reassessment would take. Could GMLS clarify the SAFE framework?

Ms Z Dlamini-Dubazana (ANC) asked GMLS to clarify their interactions with SARS

Mr Pool said there were two possible amendments in chapter 12 on the deposition procedure. One was that the import customs declaration was regarded as your application or alternatively the SAOGA proposal, which catered for the manual processing of applications. SAOGA were concerned about the removal of City Deep as an inland port, even though City Deep had been a concession where current legislation was not supported by customs rules. One possible solution would be to have clearance in advance of the stipulated three days.

Mr Poulos acknowledged that SARS had new administrative systems in place but questioned whether it was soundly structured. The flood of reapplications would not facilitate trade and would drain SARS’ resources.
He said the new Bills were voluminous and the existing 1964 Act had been difficult to navigate. As SAICA had not seen the rules and regulations it was difficult to indicate whether they should actually be in the Act. It had tried to have meetings with the Department of Finance but the meetings had been cancelled.

 Mr Goodger said they had requested consultations with SARS but could not meet with them. He said Incoterms was about delivery of the goods to its destination with no interruptions in-between while the SAFE framework included risk assessment.

SA Association of Freight Forwarders (SAAFF) submission
Ms Virusha Subban, Legal advisor to SAAFF, said a lot had transpired since their last meeting with SARS. Excellent progress had been made; there had been a lot of collaboration on the Customs Duty Bill, on the impact of the amendments and on penalties.

Mr Johan Marais, of SAAFF, said that in terms of the existing section 18 of the Act, a clearance declaration had to be made. Which SARS could deem to be a customs declaration?

Ms Subban said the first option was where information was passed on in advance and the second option was where section 18 remained in force. SAAFF and SARS had agreed on option 1 where information could be submitted electronically. Three main areas still in discussion were penalties, rules and the clearance process at the first port of entry. SARS had agreed a one year transition period to cater for any anomalies thrown up because of inland ports. On penalties, clause 876 still had to be negotiated and the issue of landlocked countries in SACU still had to be resolved. The practical implementation of the Customs Control Bill regarding transport to inland terminals still needed to be resolved.

Johannesburg Chamber of Commerce (JCC) submission
Mr Patrick Corbin, past president of the JCC and a Director of the International Chamber of Commerce, said losing inland port terminals were a critical issue because of the extensive unintended consequences. He said the SA Customs Union (SACU) was still an unresolved matter and the Bill made no mention of landlocked countries, with the SACU secretariat unaware of the possible change of status of inland ports. A big point of disagreement was where the border of South Africa was. It was clear that the border was the coast and that was where trade changed hands. If an intervention was required, as was now necessary with the customs declaration at the coastal port, then that would indicate that the coast was the border and that would be where the responsibility of the shipping carrier would end. The manifest would be terminated and everything would then have to be reconsigned to their inland destinations. Most of the goods to inland ports currently went by rail and Transnet was in the process of spending R14b on upgrading its rail infrastructure, yet if inland ports were terminated, a large portion of this rail traffic would switch to the roads. Both options SARS had presented required a customs declaration which in effect would place the border at the coast.

The World Customs Organization (WCO) at its meeting in December 2013 in Bali addressed the high logistics transaction costs and called for the further easing of border controls. In southern Africa, trade routing was being switched to the COMESA corridor. South Africa would be in contravention of the WCO Bali agreement regarding the ease of transit and reducing logistical costs.

He said the scrapping of inland ports would have consequences in reduced investments in South Africa, a decrease in employment in the industry, increased road movement of containers, port congestion which would result in carrier surcharges being imposed. There was no substantial evidence indicating that inland ports should be removed.

Business Unity SA (BUSA) submission
Dr Laurraine Lotter, of BUSA, said it had held discussions with SARS on the policy shift on inland ports but had been unable to reach common ground. The policy shift was aimed at decreasing customs fraud and illicit trade. The policy shift would be significant for importers, if importers had to take control of the goods at the coast. BUSA also wanted to know how the Bill would affect Special Economic Zones. BUSA said article 9 of the WTO buttressed BUSA's position. She said the provisions of section 18 regarding inland ports should be retained while at the same time accommodating the extra information that SARS wanted.

Discussion
Mr N Koornhof (COPE) asked all the presenters whether they were aware to what extent inland ports contributed to customs fraud. He also wanted to know whether SARS’ option 1 would result in the demise of City Deep as an inland port. He asked the JCC why Transnet was not present to support the JCC’s arguments.

Mr T Harris (DA) asked SAAFF whether they were happy that option 1 incorporating advanced clearance was acceptable and to BUSA he asked whether that would preserve the status of inland ports.

Mr Corbin said the transit between the coast and the inland ports currently was secure with locked and sealed containers. He said if this had been a problem, consignments would not have been insured by insurers. He said the Bill made no provision for an inland port.

Ms Lotter said that option 1 of SARS would not provide for the status of an inland port to City Deep.

Ms Subban said that option 1 had been tweaked and SAAFF had taken a pragmatic view where teething problems could be dealt with over a 12 month period.

There was consensus that City Deep was not an inland port but rather a licensed inland container terminal. The customs clearance declaration needed to provide full details regarding the tariff, value and origins of the consignment at least three days before its arrival. Traders therefore needed to plan their supply chain. The Customs Control Bill would not result in the demise of City Deep. She said penalties would be set out in an addendum

Mr Marais said SARS had realised that it had to take a balanced point of view instead of being an impediment to risk management. Originally goods had to be cleared within three days and would only be released once the vessel arrived. This was not the case and information could be provided electronically so that the movement of containers could be planned. This would facilitate the logistics of trade movement. He said the WCO Kyoto protocols were subject to the legislation of the sovereign state.

Ms Subban said it was still in discussion with SARS on groupage and on goods in transit.

Mr Corbin said the coast would be the border and that there would be no seamless movement of goods inland. The same would apply to exports.

The Chairperson said SARS would give a report back in the following week.

The meeting was adjourned.