2015/16 ANNUAL REPORT ON THE PREFERENTIAL MARKET ACCESS PROGRAMME IN TERMS OF THE SA-EU TDCA, WTO AGREEMENT AND AGOA
Directorate: Marketing
2015/16 ANNUAL REPORT ON THE PREFERENTIAL MARKET ACCESS PROGRAMME IN TERMS
OF THE SA-EU TDCA, WTO AGREEMENT AND AGOA Page 16
Table of contents
TABLE OF CONTENTS I
ACRONYMS II
DEFINITIONS iii
1. INTRODUCTION AND BACKGROUND 1
1.1 SA – EU Trade, Development and Cooperation Agreement (TDCA) 1
1.2 WTO Marrakech Agreement 2
1.3 Africa Growth and Opportunity Act (AGOA) 4
2. OBJECTIVES OF THE PREFERENTIAL MARKET ACCESS PROGRAMME 4
3. APPLICATION PROCEDURE FOR THE PREFERENTIAL MARKET ACCESS PROGRAMME 5
3.1 Eligibility 5
3.2 Method of allocation 6
3.3 Permit fee 6
4. KEY DELIVERABLES FOR 2015/16 6
5. ANALYSIS OF FILL RATES 13
5.1 SA-EU TDCA export quota utilization 13
6. CHALLENGES 16
Acronyms
SA–EU: South Africa – European Union
TDCA: Trade, Development and Cooperation Agreement
AGOA: Africa Growth and Opportunity Act
WTO: World Trade Organization
MFN: Most Favoured Nations
USA: United States of America
SAPA: South African Poultry Association
USAPEEC: USA Poultry and Egg Export Council
NCC: National Chicken Council
DAFF: Department of Agriculture, Forestry and Fisheries
DTI: Department of Trade and Industry
ITAC: International Trade Administration Commission of South Africa
BBBEE: Broad-Based Black Economic Empowerment
HDIs: Historically Disadvantaged Individuals
SAFVCA: South African Fruit & Vegetable Canners' Association
SARS: South African Revenue Service
WOSA: Wine of South Africa
SA: South Africa
Q: Quarter
FTA: Free Trade Area
DEFINITIONS
“AGOA” is part of the Trade and Development Act of 2000 of the USA that provides 37 beneficiary countries in sub-Saharan Africa with liberal access to the USA market for a list of selected products.
“Anti – dumping duties” means the anti-dumping duties in force on Bone in cuts originating in or imported from the United States of America as listed in Schedule No.2 part 1 to the Customs and Excise Act.
“Customs and Excise Act” means the Customs and Excise Act, 91 of 1964 (as amended) and indicates a reference to the Customs Duty Act, 30 of 2014 after it came into force.
“Agri-BEE” is a sector code as defined in section 12 of the Broad-Based Black Economic Empowerment act 53 of 2003
“Free Trade Area” is a group of two or more countries or economies, customs territories in technical language, that have eliminated tariff and all or most non-tariff measures affecting trade among themselves. Participating countries usually continue to apply their existing tariffs on external goods.
“HDIs” mean historically disadvantaged individuals as defined in the Broad Based Black Economic Empowerment Act, 53 of 2003 (as amended).
“Most Favored Nations” is the tariff applied by WTO members to goods from other WTO members. In the case of WTO non-members, the application of these rates may be a requirement of a bilateral trade agreement.
“Products” means specified agricultural products under the three trade agreements (WTO, TDCA and AGOA).
“Permit fee” means the fee payable as prescribed by DAFF annually through the Government Gazette Notices.
“Utilization rate” means the actual usage of quota received
“Rate of duty” means tariff levied on importation of goods and services
“Rebate” means a partial refund to someone who has paid too much for tax, rent, or a utility.
“Tariff” means a tax imposed by government on goods or services which are imported into the country
“TDCA” is a trade agreement between South Africa and the EU whereby the EU has liberalized approximately 61% of agricultural imports from SA and granted tariff quotas for certain agricultural products at preferential tariff rates (ranging from 50% to 100% of MFN.
“Wine online system” is a web based system controlling the local export certification of liquor products; the system is governed and prescribed by the Liquor Products Act and the regulations pertaining to it.
“Quota” means a limited quantity of a particular product which under official control can be produced, exported, or imported.
2015/16 ANNUAL REPORT ON THE PREFERENTIAL MARKET ACCESS PROGRAMME IN TERMS
OF THE SA-EU TDCA, WTO AGREEMENT AND AGOA Page 16
1. Introduction and background
The Directorate Marketing is routinely involved in the administration and issuing of negotiated market access import and export quotas and permits for a range of selected agricultural products. The trade agreements which are involved for this preferential market access programme are the South Africa – European Union (SA – EU) Trade, Development and Cooperation Agreement (TDCA), World Trade Organisation (WTO) Marrakech Agreement and the Africa Growth and Opportunity Act (AGOA). Importers in South Africa pay a reduced rate of duty on certain selected products in terms of the WTO and AGOA. On the export of certain products, the importers in the European Union (EU) receive a rebate on the tariff rate. These enable exporters with quotas to export their products at more favourable prices to EU countries. The objectives of these agreements are to enhance trade between the countries and ensure increased market access to importers and exporters.
1.1 SA – EU Trade, Development and Cooperation Agreement (TDCA)
The TDCA between the EU and South Africa has been established and entered into force on 01 January 2000. This agreement provides for the establishment of a Free Trade Area (FTA) between the EU and South Africa in accordance with the WTO rules and the strengthening of EU development assistance to South Africa.
In terms of the Agreement the EU has undertaken to liberalise approximately 61% of agricultural imports from South Africa and further granted tariff quotas for certain agricultural products at preferential tariff rates, ranging from 50% to 100% of the Most Favoured Nations (MFN) tariff. These quotas make up approximately 13% of agricultural trade with the EU, implying that in total 74% of South African exports to the EU are subject to some form of preferential trade access.
As part of the concessions provided for in terms of this agreement, tariff preferences were granted on limited quantities of selected products in the form of tariff quotas. The Department of Agriculture, Forestry and Fisheries (DAFF) administers the EU agricultural quotas. Export permits are issued for the access quantities at reduced levels of duty payable by the importers in the EU countries. Detailed information on the procedures regarding applications for these quotas is published annually in a General Notice in the Government Gazette. The following table shows quota (volumes) and products which can be exported to the EU under the agreement.
Table 1: Quota (volumes) and products exported under the SA-EU TDCA
Products / Quota (Volumes) (Annual Tonnage) / Quota allocated(Tons) /
Cut flowers / 3 895 / 1 565
Frozen strawberries / 377.5 / 0
Canned fruit (pears, apricots, peaches, mixtures of fruit) / 60 866 / 59 050
Canned Mixtures of fruit, other than tropical fruit / 27 102.4 / 20 000
Canned Mixtures of tropical fruit / 2 960 / 0
Apple juice / 3 700 / 1 950
Pineapple juice (concentrate) / 3 700 / 3 000
Frozen orange juice / 1 036 / 1 036
Products / Volumes (Annual Litres) / Quota allocated (Litres)
Wines of fresh grapes (sparkling wine, white wine, red wine) / 49 067 000 / 49067 000
Source: DAFF, Directorate Marketing
1.2 WTO Marrakech Agreement
In order to fulfil South Africa’s commitments under the WTO Marrakech Agreement regarding market access, quotas are issued for various products that can be imported at reduced rates of duty subject to an import permit. Detailed information regarding the procedures for the submission of applications for these permits is published annually as a General Notice in the Government Gazette. Applications are invited quarterly, half-yearly and annually as stipulated in the Notice for the specified products. The following table (table 2) shows quotas and products which can be imported under the WTO agreement.
Table 2: Quota (volumes) and products imported under the WTO Agreement
Products / Volumes (Annual Tonnage) / Quota allocated (Tons) /Dried beans / 11 063 / 11063
Food preparations / 3 109 / 3109
Malt extract / 6 119 / 0
Pasta / 1 749 / 1749
Wines and spirits / 9 572 405 / 1220 500
Dried vegetables / 860 / 860
Frozen vegetables / 583 / 583
Peas / 263 / 0
Bird’s Eggs / 9 000 / 0
Beef / 26 254 / 26254
Mutton / 6 002 / 6002
Dried fruits / 349 / 339.5
Cotton / 17 101 / 0
Tobacco / 16 773 / 16773
Butter / 1 167 / 1167
Butter milk / 213 / 107
Whey / 2 786 / 2186
Cheese and curd / 1 989 / 1989
Buckwheat / 145 / 0
Maize / 269 000 / 269000
Wheat & Meslin / 108 279 / 108279
Dried grapes / 397 / 0
Dried chickpeas / 5 184 / 0
Source: DAFF, Directorate Marketing
1.3 Africa Growth and Opportunity Act (AGOA)
The South African and Unites States of America (USA) governments, in consultation with the South African Poultry Association (SAPA) and the USA Poultry and Egg Export Council (USAPEEC) and National Chicken Council (NCC) agreed on an annual quota of 65 000 metric tons (the quota) of bone-in chicken pieces, classifiable under tariff subheading 0207.14.9, that can be imported into South Africa without payment of the applicable anti-dumping duty as listed in Schedule 2, Part 1 to the Customs and Excise Act, 1964. This was done to address the concerns raised by the USAPEEC and NCC and the USA government during the Africa Growth and Opportunity Act (AGOA) renewal process. To facilitate the implementation of the agreement, the Department of Trade and Industry (the DTI), DAFF and the International Trade Administration Commission of South Africa (ITAC) developed guidelines that were published for public comments on 30 October 2015 and finally gazetted by the DTI on 18 December 2015.
It was agreed that the government of South Africa will implement the agreement referred to above through the creation of a Rebate Provision. It was further agreed that the quota will increase with annual growth factor based on the annual average growth of production and consumption figures of poultry meat as published by DAFF in March of each year. The quota will be terminated or suspended if South Africa’s beneficiary status under AGOA changes.
2. Objectives of the preferential market access programme
· To enhance agricultural trade of goods and services between South Africa and the rest of the world;
· To ensure increased market access to South African importers and exporters;
· To administer the allocation of quotas on three trade agreements through fair and equitable allocation; and
· To monitor the utilization of quotas under the three trade agreements and reallocate where necessary.
3. APPLICATION PROCEDURE FOR THE PREFERENTIAL MARKET ACCESS PROGRAMME
The application processes under all agreements begins by invitations being forwarded to all interested parties through the publication of a Government Notice in the form of a Government Gazette. The gazette is published annually on the departmental website and websites of various industry organizations after approval by the Director General. The gazette outlines all the terms and conditions regarding the application process.
3.1 Eligibility
In order to be considered for an import/export permit by DAFF under the quota, an applicant must:
· Be a South African citizen with a valid identity document or a legal entity with a valid certificate of registration/incorporation in South Africa;
· Have a valid South African Revenue Service (SARS) tax clearance certificate (failure to submit this will lead to disqualification);
· Be registered at SARS as an importer/exporter;
· Provide a valid BBBEE verification certificate from an accredited rating agency to confirm BBBEE status;
· Provide share certificates to confirm the HDI status in a business;
· Complete and sign an application form and an affidavit; and
· Provide proof of payment of the prescribed permit fee.
Both the SA – EU TDCA and WTO agreements have twenty percent of the quota reserved for HDIs whereas the AGOA agreement has a minimum of fifty per cent of the quota reserved for HDIs; in order to pursue the goals of transformation as enshrined in the Agri-BEE sector code under section 9(1) of the BBBEE Act 53 of 2003 (as amended).
The quotas allocated to exporters are provisional; the department assesses on an annual basis the utilization rate by the end of June after which there will be reallocation by the end of September.
3.2 Method of allocation
Quotas are allocated taking into account the following variables:
· The BBBEE status of applicants – obtainable from a BEE certificate issued by an accredited verification agency;
· The market share of applicants – derived from historical exports/imports data for the past three years. This is not a requirement for HDIs;
· Quota applied for by applicants;
· Number of applicants; and
· The total quota available.
3.3 Permit fee
The permit fee is determined in collaboration with the Directorate: Financial Services as prescribed by the National Treasury regulations. The fees payable for the quota is prescribed annually through the publication of the Government Gazette and in the departmental tariff manual. The following variables are taken into consideration when calculating the fee:
· The direct costs which are the operational cost (letterheads, stationery, toners, publication of the gazette etc.;
· The indirect cost i.e. labour cost (salary, percentage of time spent, number of personnel etc.); and
· The number of permits issued for that particular year.
The current fee (for 2015/16) is R703.00 per permit. The revised fee for 2016/17 will be R820.00 for a permit. Payments are made in a special standard bank account of the department, at cashiers of the department and/or internet.
4. Key deliverables for 2015/16
Notices relating to the allocation of the quotas for the 2015/16 period were published in the Government Gazette number 39275 in October 2014 (for the TDCA and WTO agreements). The department in collaboration with the DTI and ITAC published the guidelines in December 2015 for the application for a quota under the AGOA agreement. Notices relating to the allocation of the AGOA import quotas were published in the Government Gazette number 39643 in January 2016 to invite all interested parties to submit their applications for import permits. Tables 3 to 8 underneath illustrate the summary of the quota allocation under the WTO, TDCA and AGOA Agreements in 2015/16.