Category / South African Customs

by Mike Poverello

Special Economic Zones – how special?

Despite having burned its fingers with Industrial Development Zones (IDZs), which involved a few fiscal benefits (shrouded in legalese) and billions in infrastructure, Trade and Industry has gone into overdrive to push its new policy on special economic zones (SEZs). It has relaxed ‘locality’ for one, i.e. such zones need not be located in close proximity to an international port or airport. Moreover, SEZs are now being promoted to ‘compliment’ existing IDZs and not replace them as was erroneously suggested in an earlier post.

While the South African Department of Trade and Industry (the dti) is conducting public hearings on the matter, it is perhaps relevant to consider what the Free Market Foundation (FMF) – a think-tank on limited government and economic freedom – has to say on the matter. The content of the report might well attract support from some in the business community involved with manufacturing, distribution and logistics. Read the FMF’s evaluation of the dti’s SEZ Policy here!

While there are not many trade remedies available to local business many prospective requests have over the last decade been presented to establish so-called distribution centres/hubs and ‘virtual bonded warehouses’, which have not borne much fruit mainly due to the lack of a legal framework for their operation. Moreover, in government there is always a cautious resistance to liberalisation in customs and trade laws (they directly impact the fiscus) in the absence of viable risk mitigation strategies or remedies. Perhaps it has something to do with the dwindling public sector skills and experience levels available to conduct effective audits; although, the big audit firms would readily contest this and advocate the outsourcing of such function to the private sector. As the development of more sophisticated systems in SARS come on stream, ICT will no longer be an obstacle. Through increased automation comes the availability of additional human resources who can be up-skilled to perform audit work. Both Tax and Customs Modernisation programmes bare testimony to this.

The establishment of the IDZ programme (circa 2000) was fraught with inter-departmental tensions around the so-called benefits and concessions to be made available to foreign investors. The lack of a clear framework did not allow for much ‘liberalisation’ of controls and fiscal benefits. In fact the customs dispensation offered procedures and facilities to IDZs identical to that available in the national customs territory. Tax holidays and relaxed red tape are characteristic of some of the more successful SEZs around the world, as the article will attest. The dti’s latest SEZ Bill and Policy do not hint to any great length how things will be different this time round. There is however some firm calls within government to consider relaxed labour regulations – the test however lies in whether the policy makers have the appetite (or vision) to permit liberalisation in this area. I have a simple view on this matter – (i) create a favourable economic environment focusing development on SMMEs and entrepreneurship, and (ii) get the standard customs procedures and controls right through modernisation and there will be no need for ‘tax holidays’ and economic zones in this country!

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by Mike Poverello

WCO/SACU – IT Connectivity and Data Exchange

WCO-SACU IT Interconnectivity and Data Exchange Conference

On the occasion of International Customs Day, in January earlier this year, the World Customs Organisation dedicated 2012 as the year “Connectivity”, which encapsulates people connectivity, institutional connectivity and information connectivity among the members of the global Customs community.

Over the last week and a half delegates from the WCO, SACU, UNCTAD, SADC and COMESA have been hosted at SARS, Pretoria to discuss and deliberate over an approach to implement ‘IT connectivity’ within the Southern African region. During the first week representatives from UNCTAD, SACU and SARS were briefed on important developments at the WCO on IT-Interconnectivity and Information Exchange. We were privileged to have Mr. Satya Prasad Sahu, Technical officer from the WCO – a leading expert in all matters of ICT in international customs matters – present the developments towards finalisation of a future international customs standard called “Globally Networked Customs” (GNC). It entails a structured approach that will enable customs authorities to formulate and document bilateral or regional ‘standards’ on a variety of Customs-to-Customs topics, for instance Authorised Economic Operators, Cross Border Information Exchange, Risk Management, etc. A representative from UNCTAD presented a synopsis of the proposed ‘cloud computing solution’ which the Trans Kalahari Corridor (TKC) plans to pilot between Namibia and Botswana along the TKC route in the next few months. During the course of this week, delegates , under the guidance of Satya, prepared a proposed approach for information exchange between members of the Southern African Customs Region. This document is based on the GNC Utility Block structure (defined by the ad Hoc Committee on Globally Networked Customs at the WCO) and served as the basis for discussion for Week 2.

Mr. SP Sahu (WCO) and delegates from SACU SecretariatWeek 2 saw the arrival of customs and IT representatives from COMESA, SADC, UNCTAD, SACU as well as a delegation from Mozambique Customs. Mr. Sahu was invited to chair the session, given his vast experience on the subject matter as well as international experience in national and regional customs ICT programmes. Delegates were treated to various lectures on the GNC, a comprehensive overview of developments on ASYCUDA (Customs solution developed by UNCTAD), various updates from within the customs region – Botswana, Namibia, Lesotho, Swaziland, Mozambique and SARS. Beyers Theron informed delegates of ongoing developments of the SARS Customs Modernisation Programme as well as key implications for neighbouring countries. SARS presented a live demonstration of SARS’ Service Manager solution, navigating through all the functionality now available to SARS Customs officials. Of significant interest to all was the new iPod inspection tool. This technology is given prominent feature in the latest edition of WCO News.

A large portion of the week was, however, spent on deliberating the proposed scope and content of the draft Utility Block on Information Exchange in the Southern African Region. Significant progress was been made to attain first, a common understanding of the scope as well as the implications this has for participating countries. Delegates will return home with a product with which to create awareness and solicit support in their respective countries. Over the next few months SARS will engage both SACU and SADCOM (combined SADC and COMESA trading blocs) to establish firm commitments for information exchange with customs administrations in these regions. This conference is significant for SARS and South Africa as a whole as it provides a uniform, standardised and practical approach for engagement with other international trading partners. To view photographs of the conference please click here!

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by Mike Poverello

WCO News – February 2012 Edition

WCONews Edition February 2012Herewith a link to the latest edition of WCO News, providing a wealth of customs news and developments from across the globe. This edition focuses almost entirely on regional initiatives involving C-2-C information exchange. On pages 20 to 22 you’ll read about new developments emerging on customs inter-connectivity and information exchange in the Southern African Region. At this time, a conference lead by the WCO, involving representatives from UNCTAD, SACU, SADC and COMESA and SARS is taking place in Pretoria to establish a firm framework for introduction of customs information exchange. I will devote a dedicated article on these developments shortly, as this has implications for the business community as well. Also, don’t miss the feature on South Africa’s modernisation developments, pages 29 and 30. Besides the usual editorials this edition includes –

  • WCO Secretary General launches Year of Connectivity.
  • Evolving technology landscape and its impact on Customs.
  • Latest developments in Latin America, Southern Africa and Europe.
  • West Africa implements airport task forces to fight drug trafficking.
  • South Africa to roll out mobile Customs controls.
  • Operation “Short Circuit” successes and challenges.
  • WCO Tariff and Trade Affairs Directorate
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by Mike Poverello

SAD Story – Part 2

What is clear in regard to modern day business is the fact that ‘harmonisation’ in the international supply chain is essentially built around ‘data’. E-commerce has been around for decades, plagued by incompatibilities in messaging standards, and computer software, network and hardware architecture. However, one of the key inhibitors has been organisations and administrations having to adhere to domestic ‘dated’ legislation and so-called standard operating procedures – seemingly difficult to change, and worst of all suggesting that law has to adapt!

A lot has had to do with the means of information presentation (format) and conveyance (physical versus electronic) rather than the actual information itself. Standards such as the UN Layout key sought to standardise or align international trade and customs documentation with the view to simplifying cross-border trade and regulatory requirements. In other words, each international trade document being a logical ‘copy and augmentation’ of a preceding document.  This argument is still indeed valid. The generally accepted principle of Customs Administrations is to maximise its leverage of latent information in the supply chain and augment this with national (domestic) regulatory requirements – within a structured format.

The Single Administrative Document (SAD) was itself borne out of this need. The layout found acceptance with UNCTAD’s ASYCUDA which used it as a marketing tool (in the 1990’s) in promoting ‘What-You-See-Is-What-You-Get’ (WYSIWYG). It certainly provided a compelling argument for under-developed countries seeking first-time customs automation. Yet, the promise of compatibility with other systems and neighbouring customs administrations has not lived up to this promise.

Simultaneous to document harmonisation, we find development of the Customs data model, initially the work of the Group of 7 (G7) nations at the United Nations. Its mandate was to simplify and standardize Customs procedures Customs procedures. In 2002, the WCO took over this responsibility and after further refinement the G7 version became version 1 of the WCO Customs Data Model. Once more a logical progression lead to the inclusion of security and other government regulatory requirements. This has culminated in the recent release of WCO Data Model 3. Take note the word “Customs” is missing from the title, indicating that Version 3 gives effect to its culminating EDI message standard – Government Cross Border Regulatory (GOVCBR) message – an all inclusive message standard which proposes to accommodate ALL government regulatory reporting requirements.

Big deal! So what does this mean? The WCO’s intent behind GOVCBR is as follows –

  • Promoting safe and secure borders by establishing a common platform for regulatory data exchange enabling early sharing of information.
  • Helping co-operating export and import Customs to offer authorized traders end end-to to- end premium procedures and simple integrated treatment of the total transaction.
  • Contributing to rapid release.
  • Elimination redundant and repetitive data submitted by the carrier and the importer.
  • Reducing the amount of data required to be presented at time of release.
  • Reducing compliance costs.
  • Promoting greater Customs Co-operation.

Undertaking such development is no simple matter, although a decision in this direction is a no brainer! Over a decade’s work in the EDI space in South Africa is certainly not lost. Most of the trade’s electronic goods declaration and cargo reporting requirements remain intact, all be they require re-alignment to meet Data Model 3 standard. Over and above this, the matter of government regulatory requirements (permits, certificates, prohibitions and restrictions, letters of authority, etc.) will require more ‘political will’ to ensure that all authorities administering regulations over the importation and exportation of goods are brought into the ‘electronic space’. Some traction is already evident here largely thanks to ITAC and SA Reserve Bank willingness and capability to collaborate. In time all remaining authorities will be brought on board to ensure a true ‘paperless’ clearance process.

So, I digress somewhat from the discussion on the SAD. However, the bottom line for all customs and border authorities, traders and intermediaries is that ‘harmonisation’ of the supply chain operation follows the principal and secondary data required to administer ALL controls via a process of risk assessment, to facilitate release including any intervention required to ensure the compliance of import and export goods. As such even legislative requirements need to enable ‘harmonisation’ to occur otherwise we end up with a non-tariff barrier, uncertainty in decision-making, and a business community unable to capitalise on regional and international market opportunities. Positively, the draft SA Customs Control Bill makes abundant reference to reporting – of the electronic kind.

In Part 3, I will discuss regional ‘integration’ and the desire for end-to-end transit clearance harmonisation.

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by Mike Poverello

SAD story – Part 1

Die-hard SAD fan! (Tammy Joubert)We all suffer a little nostalgia at one or other point in our lives. Those die-hard legacy officials – the kind who have more than 20 years service – will most definitely have suffered, recoiled, and even repelled mass change which has occurred in the last 10-15 years in South Africa.  In the mid-2000’s the advent and replacement of the tried and tested DA500/600 series customs declaration forms by the Single Administrative Document – better known as the SAD – was unpopular to most customs officers although it was possibly welcomed by SACU cross-border traders.

A political coup had been won by some BLNS states compelling South Africa to harmonise its declaration requirements with those of fellow members, especially those operating ASYCUDA. At the time, SARS saw this compromise necessary to bring about alignment with Namibia and Botswana to facilitate the implementation of a new customs clearance dispensation for the Trans Kalahari Corridor (TKC).

The SAD is almost universally accepted by virtue of its design according to the UN Layout Key. However, why the fuss. A form is a form. Allied industry in RSA were used to the three decade old DA500/600 declaration forms which were designed infinitely better and more logical than the SAD.

None-the-less, South Africans are adaptable and accommodating to change. Following on from my recent post “SACU now a liability” it is now the SAD’s turn to stare death in the face. As it turns out, through wave upon wave of technological advances, we no longer need the SAD. At least in its paper form. In SARS case it no longer needs the SAD – period. A newer derivative (strangely not too dissimilar to the DA500/600) has now gained favour. It is known as the Customs Declaration 1 (Form CD1). However, unlike the DA and SAD forms, the CD1 will most likely never be required in printed format owing to SARS Customs preference for digitized information. Needless to say, if nothing else, the CD1 will provide a graphic representation of the EDI CUSDEC data for the customs officer. Next time, I’ll discuss the rationale behind ‘customs harmonisation’ and its non-dependency on document format. I feel for the die-hard SAD fan!

by Mike Poverello

Customs Modernisation Release 3 – SACU

Saturday 11 February 2012 sees the implementation of new modernised customs procedures and formalities at South Africa’s first SACU land frontier office – Kopfontein – border between South Africa and Botswana.  While enhancements are slanted more in terms of internal SARS customs procedure, SACU traders will no doubt experience some anxiety with the transition. For the first time SARS Customs Modernisation impacts directly on traders and neighbouring Botswana Customs operational procedures in a significant way, which will fashion operations at all remaining inland border posts of the Customs Union. Over the last few months SARS has worked with trade, the Botswana customs authority as well as the business chamber in Botswana concerning the intended changes and their impact on stakeholders. The implementation ushers in cross-cutting changes for customs staff operationally, new technology as well as legal and policy changes. In the case of the latter, a further element of the draft Customs Control Bill is introduced whereby foreign business operators (importers, exporters and road carriers) must be registered with SARS to perform customs transactions in South Africa. This is perhaps the single issue which has had ramifications for parties who regularly cross the border between Botswana and South Africa. Hopefully recent iterations of notices and explanations have helped clarify the SARS requirements. (See the SARS Customs Modernisation webpage).

Other modifications and changes include –

Elimination of paper clearance documents – this is a significant departure from traditional SACU processing where all member countries have relied on the Single Administrative Document (SAD) to facilitate intra-SACU clearance. With the bulk of clearances expected to be electronic, SARS will now only print a customs notification (CN1) which will specify the status and outcome for each clearance. This the trader will use in support of customs clearance in Botswana. SARS will therefore no longer stamp and authorise hardcopy SAD500 clearance documents. Of course, there is nothing which stops a trader printing the SAD500 for cross border purposes, only SARS will no longer attest these. As concerns SARS VAT requirements, arrangements will be made for traders to submit the CN1 for purposes of VAT returns. Details on this to follow.

Electronic supporting documents – already tried and tested at sea and airports across South Africa, traders no longer need to carry on their person hard copy clearance supporting documentation , i.e. invoices, worksheets and packing lists. These are only required should SARS indicate via electronic message that a consignment requires further scrutiny. Customs brokers and traders using EDI will in most cases have the SARS e@syScan facility available on their computer systems which makes it relatively simple and easy to scan, package and submit to SARS. In the event a trader cannot perform this electronically, he may approach any of the 4 Customs Hubs (Alberton, Cape Town, Durban, and Doringkloof) across the country, to have these scanned and uploaded by SARS. Alternatively, these can of course be delivered to the border post for manual processing and finalisation of a customs intervention. Supporting documents are linked to a unique case number which SARS notifies to the trader in the event of a risk.

Clearance processing – SARS has centralised its backend processing of clearances where goods declarations are now processed off-site at one of the 4 Hubs. No longer are clearances processed at customs branch office. All goods declarations – whether electronically submitted or manually captured – are routed to a central pool for validation, verification and assessment if flagged by the risk engine. In the case of land borders all clearances once successfully processed will receive a ‘Proceed-to-border’ message implying that the road carrier may commence delivery to the border. A key feature of the new clearance process is the availability of Customs Status Codes. These codes are initiated by the customs system at specified points in the process to alert the declarant of the status of his/her transaction. These status’s also indicate the follow-up required of the declarant to bring the transaction to a state of finality.

Automated Cargo Management (ACM) – All road carriers are now required to submit their road manifests electronically, via EDI, to the Customs ACM system. For now, SARS will not electronically match the manifest against the declaration, but will monitor compliance and data quality of electronic manifest  for a period of time before initiating real-time matching and acquittal. This will invoke a significant responsibility on both trader and road remover to ensure that they both provide credible data to customs otherwise delays will occur. Upon arrival of the cargo at the border, the driver presents a printout of his electronic manifest. The manifest number is ‘checked in’ by a customs official which in seconds brings up all associated goods declarations linked to the manifest number on the system. The customs officer is able to determine the overall risk status of the vehicle. Where no risks are present a status notification (CN1) is printed for each goods declaration, and a gate pass (CN2) is handed to the driver permitting him to exit the customs controlled area. The future real-time matching will comprise a combined risk assessment of both manifest and declaration information that will result in a single risk outcome. Such risk assessment will include both fiscal and security compliance features thereby bringing SARS in line with international supply chain security standards. Going forward, risk assessment will accommodate ‘all-of-government’ requirements ensuring that all regulatory measures and associated risks are administered in a single instance obviating the need for successive, time-consuming inspections and costly delays.

Automated Customs Inspection – Following its recent introduction at the Beit Bridge border post, the new hand-held inspection tool, conveniently developed on an iPod, allows the customs border control official to electronically access, capture and upload an inspection outcome to the central customs system. This significantly improves the efficiency for this time-intensive activity where the officer can initiate a status up date electronically at the inspection site, where previously the declarant would have to wait for the outcome of the manual inspection report and release note. What’s more, the customs officer has access to the underlying clearance data and can even activate the camera function and capture visuals of suspect cargo which can be appended to an inspection case for verification by higher authority or historical reference value.

There are additional features and functionality to be introduced at Kopfontein and all remaining border posts over the next few months. These relate to improved revenue accounting, new trader registration and licensing system offering online application and approval, and a new traveller and temporary import/export processing. More about this in a future post.  For traders, the benefits of the new solution at SACU land borders aim to remove random and unwarranted intervention by customs. All activities are risk driven via a secure ‘get next’ selection function ensuring that internal integrity is maintained and only ‘risk-related’ consignments/transactions are dealt with. Please visit the SARS Modernisation webpage for all the latest updates and notices on modernisation releases.

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by Mike Poverello

International Customs Day 2012

“Borders Divide, Customs Connects” is the theme for this years international Customs Day celebrations, highlighting the central and integral role of Customs administration in the global trade supply chain. As the World Customs Organization prepares to celebrate its 60th anniversary this year, it is only fitting that  this opportunity is used to acknowledge the heritage that the founders of the Customs Co-operation Council bestowed on us, namely the importance of cooperation, particularly the value of inter-connectedness among Customs and its partners. For the official WCO International Customs Day 2012 poster click here!

For the international Customs community, connectivity connotes a vision of arrangements worldwide that support the smooth and lawful flow of goods, services, people, technologies, capital, culture, and ideas. It galvanizes the establishment of partnerships, the preparation of research, the sharing of knowledge, and the delivery of capacity building. Connectivity thus paves the way for community protection, modernization, and economic development. Connectivity encapsulates strengthened coordination, cooperation, and communication between Customs administrations, with other government agencies and institutions, and with the private sector, at national, regional and international levels.

Because borders are synonymous with division, the main challenge for Customs administrations is to identify and pursue the best methods to increase connectivity, which refers to people-to-people, institutional, and information linkages, that underpin and facilitate the achievement of objectives.

In fact, Connectivity is a natural progression from previous International Customs Day themes: Knowledge in 2011, particularly the sharing of knowledge to enhance the effectiveness and efficiency of Customs authorities; Customs-Business Partnerships in 2010, with a focus on supporting and improving the connective, working relationships between Customs and the private sector; and Environment Protection in 2009, underscoring the need for coordinated border management to save our natural heritage.

It is, of course, important to emphasize that connectivity encompasses three main pillars:

  • people connectivity, which includes a partnership with the business sector, and knowledge and professionalism;
  • institutional connectivity, which includes Customs-to-Customs connectivity and Customs-to-other government agency connectivity; and
  • information connectivity, which acts as an enabler and includes Globally Networked Customs, the electronic Single Window, and technology and knowledge solutions.

Here at home in South Africa, SARS Commissioner Oupa Magashula confirmed SARS’ proud history as a “connected” organisation fulfilling its Customs mandate –

  • We connect with our partners in business, those who drive the international supply chain, to provide them with a world-class service offering that will enhance their competitiveness in the global marketplace.
  • We connect across Government administrations and agencies that collectively form the regulatory and physical frontline of this country, working towards enhanced facilitation and security for the country, its economy and society.
  • We connect with our counterparts in Customs administration around the world on matters ranging from the sharing of best practice to active cooperation on improved Customs administration to the combating of Customs fraud and illicit trade.
  • We connect within our region, on the continent and beyond to work towards greater integration and cooperation, ensuring that the benefits of global trade enhance the economic and social well-being not only of South Africa, but of our neighbours and the continent as well.

Sources: WCO and SARS.

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by Mike Poverello

Mobile Customs Control – Great minds think alike

Beitbridge inspection area6 December 2010 saw the rollout of a new electronic tool for customs inspectors at Beitbridge border post. The need for a hand-held device was identified following the rollout of a new workflow system, called Service Manager, to various Customs offices over the past few months. Although the changes introduced recently were aimed at moving Customs to a totally paperless environment, customs inspectors still had to print out their instructions on paper, manually write down the inspection results and then recapture these onto the system back in the office.

The use of an iPod by a Customs officer to conduct a physical inspection at Beitbridge this week introduces significant enhancements over the previous manual process. SARS has been liaising with iPod experts in various countries around the world over the past few months to develop this function and procure the devices.

The solution comprises an Apple iPod Touch which has been configured to operate SARS’ automated inspection workflow application – Service Manager. The introduction of a hand-held device therefore means that all the functions of Service Manager are now at the inspector’s finger-tips. Inspectors receive their instructions on the iPod, capture the results and make recommendations which then go to the finalisation/adjustment inspector. They can even take photographs with the iPod if they need further clarification on the goods they are inspecting. Inspectors no longer have to go back and forth to the office and their next job can be assigned to them on the spot. This is expected to substantially reduce the time spent on physical inspections and minimise human error.

Initially 34 iPods were procured for Beitbridge, WiFi technology was made available at the port and training of affected staff undertaken. All physical inspections at Beitbridge were being conducted with iPods and will be rolled out to the other Customs border posts throughout 2012.

While SARS’ solution is the first known Apple solution of its kind, similar solutions have been introduced recently within the US Bureau for Customs and Border Control and the Australian Border Control Agency offering varying types of functionality, including the integration of RFID technology by the Australians to monitor and track cargo movements. Life for Customs officers is a whole different and will continue to evolve if it expects to remain in touch with modern era fraud and scams.

by Mike Poverello

SARS “Trusted Trader” programme under the spotlight

With the implementation of the SARS Customs Modernization Program, accreditation has been revisited and SARS has taken a more robust approach.

South Africa is currently focusing on accreditation for customs procedures only. The Self-assessment Questionnaire was reworked and sent to a number of large importers, inviting them to participate in the “Preferred Trader Pilot Program.” Now more customs accreditation initiatives are underway.

In terms of a future focus on mutual recognition, bilateral discussion between EU and South Africa has commenced. The parties recently agreed to launch a customs project, financed under the Trade, Development and Cooperation Agreement (TDCA) facility, covering the implementation of the WCO SAFE Framework in South Africa. South Africa intends to align its Authorized Economic Operator (AEO) strategy with that of the EU to ensure that standards for both compliance and security match those of the EU.

The EU is South Africa’s main trading partner. The TDCA is the legal basis for relations between the EU and South Africa and provides the framework for cooperation in the social, economic, political and cultural field. Please click here for the full report – refer to  pages 32 -33 for South African AEO article. Source: Ernst & Young

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by Mike Poverello

Price of Modernisation – technology encroachment and people displacement

An interesting dynamic has developed with the introduction of ICT in business. In the customs and trade environment there are a few fundamental objectives around which technology has proven to be effective –

  • Elimination of tedious labour intensive paper delivery and manual distribution processes.
  • The ability to generate more work, in dramatically shorter timeframes thereby improving customer expectation and service delivery.
  • Seamless replication of a common message or instruction across a broad spectrum of stakeholder’s networks to enable better planning and execution of ‘the next steps’ in the supply chain process.
  • Rules driven automated processes that eliminate human intervention and more specifically, human intuition. Why? Because people make mistakes.

We see this everywhere. Electronic trading with your bank, customs broker, revenue service, or online shopping store. All these enterprises have developed (and to a large degree perfected) complex rules-based systems which work effectively 90% of the time. Your trouble occurs if your transaction happens to fall into the 10% category. Once again companies have recognised that there is a role for people to play. It also happens to be a conditioned environment based on the principle of tiers and handovers – the Call Centre. This is where the ‘customer’ generally encounters an ignoramus at first; and hopefully, through the process of escalation, finally speaks to someone with the knowledge to assist and resolve the enquiry. All the same, this is a faceless experience and the chances are you may never get to speak to that ‘consultant’ again, in the time of need.

In time the branch offices will close, with online facilities having become the way of life. No more need for the maintenance of real estate, storage vaults for paper records, and costly expenditure on people you once grew fond of as your local branch manager and friendly staff. Peace of mind has given away to convenience. The extent of technological advancement in many organisations is such that with payment mechanisms all being electronic, any impact or potential for disruption to day-to-day operations is virtually negated in the event of industrial action. The cost to business benefit of a new system far out-weighs the onerous responsibility of maintaining a traditional branch office – it’s a no-brainer!

In as much as man has been weary of progress since the invention of the wheel, so today, the average employee questions the rationale of it all, and where his/her future lies. And herein lies the dilemma – what to do with all the displaced people. In the private sector it’s rather simple (if not tragic) – just retrench the excess. For government departments and parastatal organisations, i.e. semi-autonomous branches of government, it’s not that easy. Nobody can be put out onto the street. It is therefore up to individual employees to consider their options. It’s time to wake up, you are still fortunate. Bursary programmes are available, so seek out an opportunity to improve your lot in life, perhaps in a totally different field from the one you have become accustomed to.

by Mike Poverello

Who’s data is it, anyway?

What with increased automation and the plethora of services becoming available to brokers, traders and specialist duty/tax recovery consultants, it would seem that the virtual nature of business has overlooked some key criteria which is cardinal for trader compliance with Customs. Lets deal with one of these – customs clearance (goods declaration) and cargo reporting (cargo manifest) information. Before I forget, as of June 2011, this also includes supporting documents. South African Customs law prescribes an obligation on traders to maintain documents (which includes any electronic transcription/version thereof)  for a statutory period of 5 years. This applies to all customs’ registrants and licensees.

While service providers (computer bureaus) provide a vital service in the provision and maintenance of software, hardware and communication services to the trade, site should not be lost of the fact that at any point in time, the trader may need to access, produce or submit documentation to support a claim or proof of their compliance in any customs matter. As one ‘provider’ recently exclaimed – since the inception of SARS’ electronic supporting document facility E@syScan, ‘gigabytes’ are now being transmitted over the internet. No doubt SARS endeavours have (or are) making service providers more profitable, but these also require a fair measure of support and ongoing maintenance to ensure such facility work at optimum performance. But, I’m digressing somewhat.

My point is that traders must have full rights, access and ownership of such data, including so-called product libraries. SARS has not imposed any view or directive on this matter, and has left it to the terms and conditions of the commercial agreement between the trader, broker and the service provider. Should a broker/trader wish to terminate his/her relationship with a service provider, the agreement should provide for a transfer of ‘customs transactional data’ from the service provider to the trade entity. There are no doubt instances of breach of contract which may cause either or both parties to sever the commercial relationship under a cloud. Nonetheless, my advice to the trader/broker is to ensure that their contractual agreement includes a clause which provides for the availability or transfer of ‘data’ to the trading entity in the event of a termination of the agreement. A ‘can’ of worms? Speak to me!

by Mike Poverello

Customs Status Codes – more visibility for traders

An update of Customs Modernisation Release 2 will be implemented at participating Customs branch offices on 24 September 2011. Amongst several enhanced features and bug-fixes, a set of new Customs status codes are included to provide improved visibility for traders as concerns the processing of their goods declarations on the Customs’ system. A year ago, few would have anticipated a fully automated process. This undoubtedly signals less and less human contact between trader and Customs with a gradual, but purposeful intention to re-focus Customs’ effort towards trader management and post clearance audit – in other words before and after the transaction. While some would contest the phasing out of customs human intervention and intuition, this is unfortunately trade-off that needs to be made in order to ensure that scarce resources and skills be freed up to address the new non-transactional facet of the modernisation programme. Another significant fact is that while all these changes occur on current existing systems. Future transition to a more modern integrated technology solution should therefore pose no significant impact to trade as the bulk of the work and effort is being accomplished in these early phases.

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by Mike Poverello

World Customs Tariffs – post World War 1

I came across a document prepared by the Canadian Reconstruction Association titled – Tariff Policies Throughout the World – published in 1921. It comprises a survey of tariff legislation since the armistice (end of WW1), which shows that every important country in the world was protecting its own industries and striving to reduce its dependence upon outside sources of supply, and that “Protection” is established and accepted as the fiscal policy of the nations of the world more generally and firmly than ever before.

The story told by these tariff developments is absolutely one-sided, a world-wide resort to tariff protection, recognition of the value of industrial development and of the home market, and a general strengthening of protective systems.

Two significant statements by the governments of the day bear testimony to this fact. The Spanish Government summarized cogently the world tariff situation at the time: “Many countries have taken and are taking measures to prevent the invasion of their markets by foreign goods; tariff barriers are being raised and other restrictive measures adopted on all sides; the situation is developing towards a worldwide tariff war. The new customs tariff is an instrument prepared for use in a tariff war, if necessary.” Not less worthy of heeding is a statement issued by the Australian government: “customs duties which are not high enough to be effective are worse than useless.”

What a strange contrast to today’s circumstances where the WTO seeks at all costs to ensure the dismantling of all barriers – tariff and otherwise. Now read what things were like in our own backyard.

SOUTH AFRICA

Conditions during the war were, in effect, such as would have obtained under an almost prohibitive tariff and as a result the industries of South Africa experienced a tremendous development. The Minister of Finance in his budget speech in 1920, stated that no less than 2,000 new factories had been established in that Dominion since the fiscal year 1915-16, that in the past four years industrial production had increased 50% and that the country was advancing rapidly in the direction of becoming self-supporting in respect of all the necessaries of life. Protectionist sentiment in the Union is strong.

The budget introduced into the Union Parliament on April 15, 1921, provided for an increase of various customs duties, and the Government has announced its decision to appoint an Advisory Customs Tariff Board which will be called upon, among its other functions, to report on “what steps may be necessary to assist and develop the industries of the Union.”

Two recent developments indicate the attitude of South Africa in regard to protection and encouragement of domestic industries. In the Spring of 1921, in order to protect the shoe manufacturing industry of South Africa, principally against competition from the United Kingdom, the Government prohibited the importation of leather footwear, except under license, with the provision that licenses should be issued only for the importation of such shoes as the South African manufacturers were unable to produce. By a proclamation of May 11, 1921, the Government brought certain goods within the scope of the “dumping” clause of the Union customs tariff and the “dumping” duty has now been made applicable to wheat, flour, and wheat meal imported from Australia, the amount of such duty to equal the difference between the price at which these products are sold for home consumption in Australia and the price for which they were sold for export to South Africa, except that, as under the Canadian Customs Act, the special or dumping duty must not exceed 15 %.

The policy of the present South African Government (circa 1921) is frankly to enable South African industries to continue in operation, to encourage new manufacturing industries and the utilization of the resources of the Dominion, and to prevent the Union from becoming a dumping ground for other countries. While the question of revenue is being kept in mind, the maintenance of South African industries is regarded as still more important in the interests of the country as a whole. Source: Internet Archive

by Mike Poverello

SARS honoured by WCO for World Cup work

SARS receives WCO Award

Acting Chairperson of the WCO Council, Zouhair Chorfi (left) with SARS Commissioner Oupa Magashula and WCO Secretary-General Kunio Mikuriya at the award hand-over

A special award was recently presented to SARS by the World Customs Organization (WCO) in recognition of SARS Customs’ commitment in the fight against counterfeiting and piracy, in particular before and during the 2010 FIFA Soccer World Cup. South Africa was flooded with counterfeit products, particularly clothing and footwear, in the run-up to the World Cup, and SARS Customs pulled out all stops to prevent these goods from entering the country. Approximately R350 to R400 million worth of counterfeit goods, including over 1.1 million Bafana Bafana shirts, were confiscated by Customs during this time. The award was handed over to the Commissioner of SARS at a WCO Council meeting in Brussels at the end of June. Source: SARS eNews

For more pictures of the WCO Council Session 2011, click here!

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