Chamber of Mines goes after UNCTAD over faulty trade misinvoicing report

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]

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UN launches global campaign targeting the criminal counterfeit trade

UNODC Anti-Counterfeit ImageThe World Customs Organization (WCO) welcomes the new global campaign launched by the United Nations (UN), under the auspices of the UN Office on Drugs and Crime (UNODC), to raise awareness among consumers on the dangers of counterfeit goods and their link to organized crime.

The campaign – ‘Counterfeit: Don’t buy into organized crime’ – is centred around a Public Service Announcement, entitled ‘Look Behind(click hyperlink to view), which will be shown on the NASDAQ screen in New York’s Times Square and will be aired on several international television stations, starting from 14 January.

With the aim of urging consumers to consider who and what lie behind the production of counterfeit goods, the campaign is a bid to boost understanding of the multi-faceted repercussions of this illicit trade, which according to the UNODC is worth 250 billion US dollars a year.

UNODC Executive Director, Yury Fedotov, noted that, “In comparison to other crimes such as drug trafficking, the production and distribution of counterfeit goods present a low-risk/high-profit opportunity for criminals.”

Fedotov further noted that, “Counterfeiting feeds money laundering activities and encourages corruption, and there is also evidence of some involvement or overlap with drug trafficking and other serious crimes.”

Counterfeiting is a crime that affects us all, from exploited labour being used to produce counterfeits, through to the harmful and potentially deadly dangers attached to these goods, and the links that these illicit goods have in potentially funding cross-border criminal and organized crime activities.

“With a long history of fighting counterfeiting and piracy at the national, regional and international level, the global Customs community is ready to support its United Nations partners in their efforts to raise awareness about this illicit trade activity,” said WCO Secretary General, Kunio Mikuriya.

Mikuriya further stressed that, “The WCO is firmly committed to countering the relentless attack on consumers by criminals involved in counterfeiting, as their illicit and even dangerous goods which are flooding markets across the globe pose a huge risk to public health and safety.”

Fraudulent medicines also present a serious health risk to consumers, as criminal activity in this area is big business, with the UNODC reporting that the sale of fraudulent medicines from East Asia and the Pacific to South-East Asia and Africa alone amounts to some 5 billion US dollars per year.

Criminals use similar routes and modi operandi to move counterfeit goods as they do to smuggle illicit drugs, firearms and people; in 2013, the joint UNODC/WCO Container Control Programme detected counterfeit goods in more than one-third of all seized maritime containers.

The WCO expends enormous resources on combating the counterfeit trade using a variety of means, including the organization of global enforcement operations and the introduction of IPM, a WCO tool which promotes cooperation and the sharing of information between Customs and rights holders.

Of particular relevance to the campaign is the WCO’s theme for 2014 which highlights the importance of communication and the sharing of information for better cooperation, which is highly instrumental in the fight against counterfeits in tandem with the Organization’s public and private sector partners.

Concluding, Secretary General Mikuriya took the opportunity to commend the UNODC on its latest initiative, offered his full support for the UN campaign, and urged WCO Members and Customs’ stakeholders to continue raising awareness about the perils of buying and trading counterfeit goods. For more information visit the WCO Website. Source: WCO

SARS – SA trade statistics will in future include trade data with BLNS countries

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

 

South African Human Trafficking Bill Signed Into Law

PREVENTION AND COMBATING OF TRAFFICKING IN PERSONS BILLThe Prevention and Combating of Trafficking in Persons Bill has now been signed into law, giving South Africa, for the first time, a single statute that tackles human trafficking holistically and comprehensively. The legislative framework dealing with this issue had until now been fragmented.

The legislation dealing with sexual offences addresses the trafficking of persons for purposes of sexual exploitation only, while the Children’s Act addresses the trafficking of children specifically.

Besides creating the main offence of trafficking in persons, the new legislation also creates offences such as debt bondage, possessing, destroying or tampering with travel documents, and using the services of victims of trafficking, all of which contribute to innocent persons becoming victims of this modern-day form of slavery.

Penalties for these offences were appropriately severe, as a deterrent to would-be perpetrators. The main offence of trafficking in persons, for instance, attracts a maximum penalty of R100-million or life imprisonment or both in the case of a conviction. Compensation is furthermore payable by the perpetrators to their victims.

In addition to creating very specific offences that have a bearing on trafficking in persons, the legislation also focuses on the plight of the victims, providing them with protection and assistance to overcome their traumatic experiences. The new legislation gives effect to South Africa’s international obligations in terms of a United Nations Protocol.

While the legislation has been signed into law, its operationalization is dependent on regulations that are required to be made by a number of role-playing departments such as Home Affairs. Source: SAnews.gov.za

Kenya’s Mukhisa Kituyi tipped to lead UN trade agency

bd-MukhisaKituyiFormer Trade minister Mukhisa Kituyi is set to become the next head of the United Nations Conference on Trade and Development (UNCTAD), taking over from Thailand’s Supachai Panitchpakdi who beat him four years ago.

A statement posted Thursday at the UNCTAD’s website said UN Secretary-General Ban Ki-moon formally nominated Dr Kituyi to head the 194-country member body when Dr Panitchpakdi’s second four-year term ends in August.

If confirmed by the UN General Assembly, Dr Kituyi’s first four-year term as Secretary-General will start on September 1, putting Kenya at the zenith of global trade and investment policy advocacy. For a man widely celebrated for reigniting developing countries’ activism against perceived domination by rich nations during his term as Trade minister, the UNCTAD is likely to benefit immensely from Dr Kituyi’s experience.

The UN agency established in 1964 has a responsibility of promoting development-friendly integration of developing countries into the world economy by ensuring that domestic policies and international actions are mutually supportive in bringing about sustainable development. It is the UNCTAD that publishes the annual world investment reports which show that global investment capital has largely shun African countries except those with abundant natural resources such as minerals and oil.

As head of the UNCTAD secretariat, Dr Kituyi is expected to play up these concerns in his interaction with member Governments, UN agencies and regional commissions. He is also expected to popularise perfectives of poor nations in his interactions with governmental institutions, non-governmental organisations, the private sector, including trade and industry associations, research institutes and universities worldwide. Source: Business Daily Africa

Mozambique – Huge Heroin Seizure with South African Connection

00013ee0-314The Mozambican police claims that it has seized almost 600 kilos of heroin, at Namoto, in the northern province of Cabo Delgado, on the border with Tanzania.

The drugs were found on Sunday in the possession of two citizens of Guinea-Conakry, who are now under detention in the Cabo Delgado, provincial capital, Pemba. The drugs are being stored in the warehouses of the provincial attorney’s office.

According to Malva Brito, the spokesperson of the provincial police command, cited in Wednesday’s issue of the Maputo daily “Noticias”, the final destination of the heroin was South Africa.

Brito said the drug was concealed in an otherwise empty seven tonne pick-up truck. The Guineans had improvised a type of hold within the truck’s bodywork. But alerted by a strange smell and the odd size of the stowage area, the police searched the truck, and found the heroin in 118 plastic bags of about five kilos each (which is a total of 590 kilos).

When the heroin was found, the Guineans first claimed that it was fertilizer that they were taking to South Africa. When that didn’t work, they tried to bribe the frontier guards, offering them 60,000 US dollars. The bribe was not accepted.

The Guineans had started their journey in the Kenyan capital, Nairobi, last Friday, and crossed Tanzania before entering Mozambique. The Toyota pick-up bore a number plate from the Democratic Republic of Congo, and supposedly belongs to a Congolese named Sidiki Sano, who is resident in Mozambique. The owner of the heroin is believed to live in Johannesburg.

If the police figures are accurate, this is an enormous drugs bust. According to the United Nations, heroin was selling in South Africa in 2012 for 35 dollars a gram. So 590 kilos would sell in Johannesburg for 20.65 million dollars. Source: Mozambique News Agency (Agência de Informação de Moçambique).

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.

EU ‘green tax’ will hit South African exporters

At the expense of coming across a bit cynical – what exactly is the aim of the ‘carbon emission’ movement? We know it’s a United Nations initiative; that many politicians, ex presidents, scientists and climatologists warn against the use traditional energy sources and preach of cataclysmic consequences if we do not need heed their call; that it has become the latest excuse for more government imposed taxes; that the very mention of CO2 conjours up animosity between the rich and poor nations in much the same way as the mention of the WTO. Lets not forget there’s even a ‘Green Customs Initiative’ just so that we can all feel mutually inclusive.

An article just published by IFW-net.com suggests that exporting from South Africa could become even more expensive if the country’s free-trade deal with the European Union (EU) is brought to an end and replaced by a shipping tax next year. The current trade deal removes tariffs on 98% of South Africa’s exported goods. Trade between the two regions creates around R400 billion (US$48bn) a year. Seems like taxation is the West’s latest answer to the failing WTO overtures on free trade!

At the United Nations conference on climate change in Durban, the EC will announce plans to tackle emissions. The proposed shipping tax, aimed at lowering carbon emissions, is expected to dramatically increase the cost of imports into the EU.

The EU’s envoy to South Africa, said shipping and aviation was a main contributor to carbon emissions.“That is why we are quite persistent that a shipping and aviation tax must be included in any deal that hopes to limit carbon emissions.” he said.

The EU has also sparked controversy over its plan for Emissions Trading Scheme that will apply to all airlines flying through its airspace from 1 January 2012.

One way or the other, SARS gets the monopoly on collecting the tax, regardless of its form.

For an alternative view on ‘green stuff’ read “The Recession Hits the Green Movement“. It’s perhaps a lot closer to the truth than all the ‘saving-the-planet’ stuff being dished up by the mainstream media.