The International Trade Administration Commission of South Africa (ITAC) has published guidelines explaining how agricultural safeguard duties on certain products from the EU and the UK will be implemented.
National Agricultural Marketing Council (NAMC) spokesperson David Mohale said these developments did not pose a threat to the value chain actors in the region, but the purpose was to safeguard the sector, including consumers, from any injury caused by external factors emanating from trade.
“The ITAC are responsible for ensuring that international trade complies with the protocols of the World Trade Organization and other trading partners,” he said.
Donald MacKay, the founder and CEO of XA Global Trade Advisors, yesterday explained this latest development.
“Because of the sensitivity of agricultural products, most trade agreements make provision for safeguard measures to be imposed on certain agricultural goods if the import volume exceeds a threshold volume. Although we have separate agreements with the EU and the UK, the guidelines are the same and so the commentary in this post applies to both,” MacKay said.
He said the guidelines were published for implementation, and not comment, which meant safeguard duties could be implemented immediately and without warning on the products within the scope as identified below.
According to Article 35 of both agreements, a safeguard duty may be applied if the imports of the list of designated products exceeds the reference quantity in the agreement.
“The duty implemented may not exceed 25% of the WTO bound rate (the maximum level a given duty on product can be raised to). If the bound rate on the product is 15% and the bound rate is 25%, then this means the bound rate can be breached, but only up to 25%. But, if the duty in place for countries not inside the trade agreement is 20%, then the safeguard duty will be capped at 20%. Practically, this means the safeguard duties will be taken up to the general rate of duty, as this rate is already not allowed to exceed the bound rate.”
The safeguard duties were not a permanent fixture and could only remain in place to the end of the calendar year or for five months, whichever was the longer.
MacKay said an agricultural safeguard duty cannot be imposed on top of a bilateral safeguard under the agreement. “Bilateral safeguards allow countries to impose a duty, if because of the implementation of the agreement, the import volumes surge. They also can’t be imposed on top of a ‘normal’ safeguard duty or a special safeguard measure under the Agreement on Agriculture (a ‘normal’ agricultural safeguard).”
XA Global said there was no industry application or investigation with this agricultural safeguard duty. It said the Southern African Customs Union (Sacu) member states monitored the import volumes from the EU or the UK under each tariff code in scope, and if the import volumes exceeded the reference volume for the given year, they would notify the ITAC. “Within five days of being notified, ITAC must request the Minister of Trade, Industry and Competition (Minister of Trade) to increase the duties for the product to the general rate of duty for the maximum period (five to 12 months). The Minister of Trade will then ask the Minister of Finance to apply the safeguard duties. In other words, the first time someone will find out about the duties is after they have been implemented.”
Sacu must notify the EU or UK within 10 days of implementing the duties and provide them with the relevant data concerning the measure. If the EU or UK requests, Sacu would consult with them about the application of the measure. Sacu also needed to notify the Trade and Development Committee within 30 days after such imposition. The Trade and Development Committee is a formally established body under both agreements containing members from the signatory trade blocs.
Any of the member states to the Trade and Development Committee can review the data which gave rise to the measure being implemented. “This works in much the same way as the dollar-based reference price duties on sugar and wheat, where no investigation takes place. In those cases it should take less than a month from when the trigger is hit to when the duties change. In reality it often, but not always, takes longer,” the consultancy said.
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