Archives For trade statistics

Customs_&_Central_Excise_DKB

Are toilet seats bought by the kilogram or on a per piece basis? Should tableware or porcelain be measured by weight or as a unit? Likewise with a coffee table — weight or number? The answers may seem obvious but they’re not. Differences in commercial practices and customs guidelines on the measurement of some goods may have wreaked havoc with the country’s trade statistics, not to mention sparking a plethora of disputes and delays in the clearance of consignments.

The Central Board of Excise and Customs (CBEC), India has now begun a review of standard unit quantity codes (UQC) to address the issue and help improve the ease of doing business while reducing the scope for disputes. India has already identified ‘trade across borders’ as one of the areas where it can show substantial improvement in ease of doing business.

India is ranked 119 on this count in the World Bank’s latest rankings.

“There are issues particularly in some tariff lines… We are now looking at how we can bring about uniformity,” said a government official. For instance, UQC for products under Heading 6911— tableware, kitchenware and other household articles, and toilet articles of porcelain or china—is in kilogram.

However, the trade transacts in units or by number of pieces. Moreover, there is no uniformity in UQC declarations by traders. These are not the same for a particular item at different customs locations. The World Customs Organization has prescribed standard UQCs that are used internationally. India implemented mandatory standard UQCs from 2013 as part of export-import declarations.

There are inconsistencies in the way these have been applied. Variance in codes is approved by field officials, which makes the system subject to discretion and interpretation. CBEC has reached out to the industry to arrive at ways in which the matter can be addressed.

“Use of standardised UQC as prescribed in Customs Tariff Act, 1975, is a challenge at times faced by trade due to different market practices,” said Rahul Shukla, executive director, PwC.

“The same has been recognized by the customs authorities and they have supported the trade in resolving it as well on case-to-case basis. Shukla said the proposed move by CBEC to take another look at UQCs prescribed in the Customs Tariff Act and align them with practice was a positive move and in line with the continued commitment to trade facilitation.

“It will help if CBEC can consider allowing multiple UQCs for the same commodity or adopting a particular UQC which is used more frequently by trade,” he said. India jumped 30 places to 100 in World Bank’s overall ease of doing business rankings in the latest listing released in October after undertaking various reforms to improve the environment. Source: By Deepshikha Sikarwar, The Economic Times, India, 8 January 2018.

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Chamber of Mines

The report claimed there was widespread misinvoicing in primary commodities in developing countries, including South Africa.

The Chamber of Mines on Tuesday called on the United Nations Conference on Trade and Development (UNCTAD) to withdraw its report on trade misinvoicing and acknowledge its shortcomings, saying that the prestigious agency had failed to collect its data accurately.

This comes after the Chamber released the third and final report in a series commissioned to examine the July 2016 UNCTAD report that claimed there was widespread misinvoicing in primary commodities in developing countries, including South Africa.

Also read Maya Forestater’s blog post Misinvoicing or misunderstanding? for an incisive explanation regarding the UN’s claims in its recent report Trade Misinvoicing in Primary Commodities in Developing Countries.

The UNCTAD report titled “Trade Misinvoicing in Primary Commodities in Developing Countries: The cases of Chile, Cote d’Ivoire, Nigeria, South Africa and Zambia”, claimed to have found widespread under-invoicing which, it alleged, was designed by commodities producers to evade tax and other entitlements due to the fiscal authorities.

UNCTAD said some commodity dependent developing countries were losing as much as 67 percent of their exports worth billions of dollars to trade misinvoicing.

For South Africa, the report calculated cumulative under-invoicing over the period 2000-2014 to have amounted to U.S.$102.8 billion; which was U.S.$620 million for iron ore, U.S.$24 billion for silver and platinum, and U.S.$78.2 billion for gold.

UNCTAD revised the report in December, though its fundamentals remained unchanged.

The Chamber of Mines also commissioned Eunomix to compile its own reports which were published in December and February respectively, focusing on UNCTAD’s gold scenarios.

The third report, which was published on Tuesday, deals with the other commodities.

The Chamber said in terms of gold, the UNCTAD study methodology compared reported exports by product and country of destination with the reported imports of the products by those same countries, and did not use other widely available data, including that of Statistics SA and the Reserve Bank.

The Chamber also dismissed all other UNCTAD findings in terms of silver and platinum, and iron ore.

The Chamber said all the factors that UNCTAD did not consider reinforced the point made in the earlier Eunomix reports regarding the lack of rigour and unreliable methodologies used in UNCTAD’s report.

“This is extremely unfortunate given the levels of credence that tend to be given to reports of this UN agency. Accusations of extensive misinvoicing and other illicit financial flows are feeding a growing lack of trust between key stakeholders in the mining industry,” the Chamber said.

“The Chamber of Mines again calls on UNCTAD to withdraw this report and acknowledge its shortcomings.” Source: The Citizen, Business News, 22 Aug, 2017. [Picture: Chamber of Mines]

Import exportThe Minister of Finance has approved that South Africa’s trade statistics will in future include data in respect of trade with Botswana, Lesotho, Namibia and Swaziland (BLNS countries).

BLNS country-trade statistics have previously not been included in the trade statistics. This arose historically because of the free flow of trade from a customs duty point of view within the Southern African Customs Union (SACU).

BLNS merchandise trade however, has a material impact on South Africa’s trade balance. South Africa exported R103.8bn to and imported R21.5bn from BLNS countries. In the last full year (2012) this resulted in a positive trade balance of R82.3bn for trade with BLNS countries.

South Africa’s total trade deficit for 2012 was R116.9bn. Had the BLNS trade data been included, the deficit would have been R34.6bn.

The view is therefore that direct trade within the BLNS countries should be included in the calculation of the monthly trade statistics to provide a more accurate reflection of South Africa’s trade.

Furthermore, SARS’s customs modernisation programme has resulted in its systems moving to new technologically enhanced platforms that enabled better electronic capturing of trade data that was previously done manually. The modernised system greatly improves the accuracy of trade data and allows the reporting and analysis of trade data to be done in real-time.

SARS worked very closely with the National Treasury (NT) and the South Africa Reserve Bank (SARB) in preparing the trade statistics that includes trade with the BLNS countries.

The SARB has welcomed the revision of the trade statistics “as valuable additions to building block data used to compile South Africa’s balance of payments.”

“While the Bank has always included estimates of the trade between South Africa and this group of countries in its compilation of South Africa’s overall imports and exports, the new building block data will be incorporated in the balance of payments, leading to improved measurement. Previously published statistics will also be revised. The revised balance of payments data for South Africa will be finalised in the next few weeks and published in the Bank’s Quarterly Bulletin, due to be released on 3 December 2013,” the SARB said in a statement.

Although SARS is confident as to the accuracy of the BLNS trade numbers, it is SARS’s intention to approach the United Nations to review the treatment of South Africa’s trade data that will now include BLNS trade numbers.

In addition to the inclusion of the BLNS trade figures, SARS is also contemplating certain other revisions to improve the reporting of trade statistics in the future. Some of these include the following:

  • publishing of imports on both a Free On Board (FOB) and a Cost Insurance Freight (CIF) basis to align it with UN principles,
  • compiling statistics on the date when the goods are actually released into or from South Africa’s economy, rather than using the date on which the goods entered the customs’ system for ultimate release from or into the SA economy, and
  • publishing gold exports as recorded on the SARS system reflecting the physical export movement of gold as opposed to the current practice of reporting the SARB gold export data on the IMF change of ownership basis.
  • These changes will however, only be finalised and implemented after consultation with international experts and other relevant stakeholders.

For more details visit sars.gov.za