Tag / WTO

by Mike Poverello

Zim-EU Agreement to Suffocate Trade

ZimbabweThe Interim Economic Partnership Agreement (IEPA) Zimbabwe signed with the European Union (EU) is set to suffocate the country’s trade and industrial development policies due to the removal of taxes, a regional non-governmental organisation has warned. Zimbabwe alongside Mauritius, Seychelles and Madagascar concluded the IEPA with the EU that would result in the removal of taxes between the African countries and the EU.

But in an analysis of the trade pact, the Southern and Eastern Africa Trade, Information and Negotiations Institute (Seatini) said the elimination of the export taxes is a blow to both the National Trade Policy (NTP) and Industrial Development Policy (IDP) meant to promote the trade and industrial revival respectively.

Last year, the Zimbabwean government launched the Industrial Development Policy 2012-2016 that advocates value-addition or beneficiation and the NTP to guide the country’s trade with the rest of the world.

“There is no doubt that for Zimbabwe to successfully implement the NTP and IDP it will need to use tools such as export taxes. However, Article 15 of the interim EPA agreement that Zimbabwe signed and ratified provides for elimination of export taxes, thereby suffocating the policy space Zimbabwe is referring to in its National Trade policy on the need for value-adding natural resources,” Seatini said in a discussion paper, Zimbabwe’s control over its natural resources in the WTO context.

Article 15 of the IEPA provides that for the duration of the agreement, the parties shall not institute any new duties or taxes on, or in connection with, the exportation of goods to any other party in excess of those imposed on products destined for sale. The organisation recommended that Zimbabwe “must exercise its right to develop its economy and protect the environment through the use of export taxes, until such a time when the economy can competitively trade with the rest of the world enabling it to then gradually eliminate the taxes on a product by-product basis”.

It also recommended that government should consult widely all relevant ministries and the private sector on its existing and proposed laws relating to any prohibitions and restrictions on the export of natural resources especially metals and minerals. Seatini warned that the use of export restrictions would be in violation of World Trade Organisation (WTO) rules.

Article XI:2(a) of the General Agreement on Tariffs and Trade does not allow WTO members to impose prohibitions and restrictions on the importation of any product, unless they (restrictions and prohibitions) are temporary, addresses critical shortages, relates to foodstuffs or other products and are essential to the exporting WTO member. It said it would be difficult for Zimbabwe to prove the critical shortage requirement. Source: The Standard – Zimbabwe

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by Mike Poverello

Ready for a cock-fight?

Brazil has taken the first legal step at the World Trade Organisation to challenge South Africa’s use of anti-dumping measures on shipments of Brazilian poultry meat, the global trade body said in a statement on Friday. Brazil has “requested consultations” with South Africa over South Africa’s accusation that Brazilian imports were “dumped”, or sold at an unfairly low price that damaged South Africa’s own poultry sales, the WTO said. If the consultations fail to resolve the issue, in 60 days’ time Brazil could ask the WTO to set up a panel to adjudicate.

The statement did not give any more details, but South Africa’s International Trade Administration Commission (ITAC) has imposed anti-dumping duties on frozen chickens and chicken meat imported from Brazil after investigating suspected dumping in 2008-2010. In 2010, Brazil accounted for 94.2% of South Africa’s total 26,916 tonnes of boneless chicken imports and 44.6% of the total 29,039 tonnes of whole chicken imports, ITAC’s investigation report said in January.

After calculating the extent of the unfair competition, South Africa put a provisional anti-dumping duty of 62.93% on whole chickens and 46.59% on boneless cuts from Brazil, except for boneless cuts from Aurora Alimentos, which would incur a duty of 6.26%.  The dispute is the first between Brazil and any African country and only the fourth brought against South Africa at the WTO.

All of the previous three cases, brought by India, Indonesia and Turkey, also concerned South Africa’s use of anti-dumping measures to protect its market from unwanted imports. None of those three disputes advanced to the panel stage. India and Turkey did not press their cases and Indonesia withdrew its challenge after South Africa withdrew its anti-dumping measures. Source: News24

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by Mike Poverello

Trade Facilitation Implementation Guide

UNECE-Trade Facilitation Implementation GuideHaving spent the better part of the last fortnight amongst customs authorities and implementors of Single Window, I’m compelled to share with you a site (if you have not already been there) which attempts in a simple but comprehensive way to articulate the concept and principles of Trade Facilitation and its relationship and connotation with Single Window. The UNECE Trade Facilitation Implementation Guide should come as a welcomed resource, if not a companion, to trade facilitation practitioners and more specifically Customs Authorities wishing to embark on a trade facilitation approach. Of course it is a very useful reference for the many avid scholars on customs and trade matters across the global village. Of particular interest are the case studies – two of which feature African countries (Mozambique and Senegal) – providing a welcomed introduction of trade facilitation and Single Window on our continent. It is good to note that Single Window has less to do with technology and more to do with inter-governmental and trade relationships and an understanding of how these are meant to co-exist and support one another  – Enjoy!

Trade facilitation is emerging as an important factor for international trade and the economic development of countries. This is due to its impact on competitiveness and market integration and its increasing importance in attracting direct foreign investments. Over the last decade, it has gained prominence in the international political agenda as part of the ongoing WTO multilateral trade negotiations as well as of wide international technical assistance programs for developing and transition economies.

The primary goal of trade facilitation is to help make trade across borders faster and cheaper, whilst ensuring its safety and security. In terms of focus, it is about formalities, procedures, and the related exchange of information and documents between the various partners in the supply chain. For UNECE and its UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT), trade facilitation is “the simplification, standardization and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payment”. Such a definition implies that not only the physical movement of goods is important in a supply chain, but also the associated information flows. It also encompasses all governmental agencies that intervene in the transit of goods, and the various commercial entities that conduct business and move the goods. This is in line with discussions on trade facilitation currently ongoing at the WTO. Source: UNECE

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by Mike Poverello

Economic sanctions and international trade

Despite global automation and harmonisation of trade, customs operations and procedures, the following article exemplifies the continued need and importance of knowledgeable trade practitioners and customs specialists. Human intellect and ‘expertise’ will forever play a critical role in the interpretation international trade law and national customs procedure.

Long used by governments to punish rogue countries, regimes, entities and individuals, trade and economic sanctions impact an ever-widening range of goods, technology and services. Recent developments in Iran, Syria and Libya, for example, resulted in far-reaching sanctions by Australia, Canada, the European Union and its 27 Member States, the United Nations, the United States and others. The complexity of sanctions and the speed with which governments implement them to address rapidly changing political situations create serious compliance challenges.

Companies are therefore well advised to implement compliance from management through all levels of sales, logistics and finance. The stakes are extremely high because compliance failures—even unintentional ones—can result in the imposition of substantial fines, debarment from government contracts, damage to public reputation and even imprisonment. Recent penalties illustrate the risks and the high governmental enforcement priority for trade sanctions. These include fines of up to US$536 million imposed by US and UK regulators against financial institutions and major businesses. Individuals may also be subject to prison sentences of up to 10 years in the United States and the United Kingdom.

Anyone involved in cross-border transactions therefore needs to determine if their conduct and that of persons acting on their behalf is regulated by trade sanctions. At a minimum, businesses must understand: which countries, regimes and individuals are targeted by trade sanctions; who is obliged to comply; which transactions are prohibited or restricted; and which authorisations may be available or required for any restricted action.

Businesses should also consider the long reach of US and EU sanctions. US sanctions generally apply to “US persons” wherever they are located in the world and to anyone located in the United States. Similarly, EU sanctions apply to “EU persons” wherever they are located in the world and to anyone located in the European Union. Adding to the breadth of coverage, US rules prohibit “facilitation”, which means neither persons nor companies subject to the rules may support a transaction undertaken by another party, including a foreign affiliate, from which a US person would be prohibited from engaging in directly. EU rules likewise prohibit covered persons from infringing sanctions rules indirectly – so much for economic freedom!

Law firm McDermott Will & Emery recommends that companies should take appropriate steps to minimise the risk of infringing trade sanctions by introducing the following safeguards:

  • Require due diligence in connection with all transactions. This should involve at least the screening of all counterparties against the ever-changing sanctions lists that identify the countries, regimes, entities and persons blacklisted. Trade sanctions can apply to goods, technology licensing and the provision of technical assistance, and to ancillary services such as financing, insurance and transport.
  • Establish internal procedures to ensure prompt legal review in the event a transaction with a sanctioned party is identified.
  • Check that the due diligence checklist for merger or acquisition transactions includes an assessment for compliance with trade sanctions.

Source: McDermott Will & Emery 

by Mike Poverello

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.

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by Mike Poverello

Update – DTI’s early warning system for exporters

The DTI, through the SA Bureau of Standards has formally launched an early warning system has been launched by government to help ensure South African export companies are aware of technical changes to export regulations. The system allows exporters to join a mailing list where weekly notifications on changes are sent to subscribers on Mondays. Companies can register on the SABS website:

https://www.sabs.co.za/forms/standards/wtomailsubscribe.php.

Source: www.ports.co.za – DTI launches system for South African exporters – 2011.03.07