Launch Of Free Trade Protocol In South Africa
12 November 2008
Posted by: Author: Nelisa Mali
Launch of Free Trade Protocol In South Africa
The launch of the Free Trade Area in South Africa on 17 August 2008
formalises the elimination of trade tariffs among Southern African Development
Community (SADC) member states, enhances economic integration and creates
bigger regional markets.
Angola, Botswana, the Democratic Republic of the Congo, Lesotho, Malawi,
Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania,
Zambia and Zimbabwe are SADC member states.The introduction of the Free Trade
Protocol is intended to phase down tariffs by South Africa within eight years
of accession. Most tariffs will be zero per cent in a period of four years.SADC
states have a period of twelve years within which to reduce tariffs to zero per
The introduction of the SADC Free Trade Agreement encompasses a lot of
issues; among them being customs administration and compliance.As we move
towards the free tariff lines, there is a great need to enhance customs
compliance in order to avoid abuse of trade agreements by smugglers and for the
honest trader to enjoy the benefits of the free trade area.
The opening of trade lines does not necessarily mean that customs
clearance will be relaxed or disappear.Actually now is the time that traders
must be seen to comply.Traders need to have full appreciation of the Free Trade
Area Protocol.Each and every trade agreement has rules of origin peculiar to
it.It is in the rules of origin where the do’s and don’ts of accessing the
benefits of trade agreement are prescribed.The rules of origin for products to
be traded between the member states of the SADC prescribe various methods of
qualification for tariff free trade.
To serve as an illustration, the general requirement for origin
criteria is that goods shall be accepted as originating in a member state if
they are consigned directly from a member state to a consignee in another
member state and: (a) they have been obtained in any member state incorporating
materials which have not been wholly produced there, provided that such
materials have undergone sufficient working or processing in any member state.
The Free Trade Protocol goes on to explain what ‘produced or wholly
produced’ means and the kind of evidence needed to support the facts.The claim
that goods shall be accepted as originating from a member state, in accordance
with the provisions of the annex to the protocol, shall be supported by a
certificate given by the exporter or their authorised representative.The
certificate shall be authenticated with a seal by an authority designated for
this purposes by each member state.
Every producer, where such producer is not the exporter, shall in
respect of goods intended for export, furnish the exporter with a written
declaration to the effect that the goods qualify as origination in the member
state under the provisions of protocol.
The competent authority designated by an importing member state may
request, in exceptional circumstances and notwithstanding the presentation of a
certificate issued in accordance with the rules of the protocol required in
case of doubt, further verification of the statement contained in the
The importing member state shall not prevent the importer from taking
delivery of goods solely on the grounds that it requires further evidence, but
may require security for any duty or other charge which may be payable;
provided that where goods are subject to any prohibitions, the conditions for
delivery under security shall not apply.
The above requirements highlight few of the areas of compliance the
customs administrations will be looking at in order to have one’s goods cleared
for customs purposes.
In terms of the Free Trade Protocol, the following shall be regarded as
wholly produced in the member states:
(a) Mineral products extracted from their ground or seabed;
(b) Vegetable products harvested there;
(c) Live animals born and raised there;
(d) Products obtained there from live animals;
(e) Products obtained by hunting or fishing conducted there;
(f) Products of sea fishing and other products taken from the sea by their vessels;
(g)Products made on-board their factory ships
exclusively from products referred to in sub-paragraph (f)
(h)Use articles collected there only for the recovery of of raw materials;
(i) Waste and scrap resulting from manufacturing operations
(j) Products produced there exclusively from one or both of the
(i) products specified in (a) to (i) above;
(ii) materials containing no element imported from outside the member
states or of undermined origin.
Of importance in the Free Trade Protocol is that sugar and automobiles
are excluded irrespective of their originating status.In order to avoid the
abuse of any trade agreement, customs administrations always ensure that
goods smuggling does not take place as way of getting around the ‘rules of
origin’. More often than not this exercise has the effect of impacting on the
honest trader.However, the customs administrations are moving towards building
mechanisms to appreciate the compliant trader, among them being accreditation
and granting of Authorised Economic Operator status (AEO).
The AEO status will assist the trader towards mutual recognition with
the aim to move the trader’s cargo faster than when the goods and clearance
documents are supposed to be double checked in both the export and import
country.When the export country is satisfied of certain pre-clearance
quality standards, the import country will be in position to clear the
goods without stricter requirements.
It is to the benefit of the trader to comply with the customs requirements.The
goods will be free of import duties; that on its own will benefit the trader in
that it assists the trader with a cash flow rather than the trader having to
pay duties on importation and later having to recover his expenses when the
goods are sold.
Source: By Nelisa Mali (TaxTALK)