INTRODUCTION
South Africa has been facing persistent problems in terms of growth and has been unsuccessful at contributing significantly to global exports. Despite a wide array of trade reforms undertaken to integrate the country into the international community, South Africa's performance in international trade has remained dismal, primarily due to its customs procedures and documentation, coupled with resulting high transaction costs. These factors have in turn made businesses less efficient in international markets. While world trade has accelerated rapidly, accounting for economic efficiency and better standards of living among the international community, South Africa does not seem to have gained much from this experience. This can be demonstrated by the fact that, while global exports increased to 6.2 per cent per annum in the decade since 1994, South Africa's export performance reduced drastically to 5.6 per cent per annum during this period.Footnote 1 In addition, its contribution to world trade in terms of exports has also shrunk from 0.7 per cent to 0.5 per cent since 1994.Footnote 2 Since then, the country's contribution to global exports has been minimal, with a share of merely 0.51 per cent.Footnote 3
The facilitation of trade and integration into the international community has therefore been a challenging issue for South Africa. The country is currently endeavouring to augment trade facilitation through its Customs Modernization Programme (the CM Programme) that in turn facilitated the enactment of the Customs Control Act, 2014 (CCA),Footnote 4 the Customs Duty Act, 2014 (CDA)Footnote 5 and the Customs and Excise Amendment Act, 2014 (CEAA).Footnote 6 The new acts will subsequently replace the current Customs and Excise Act, 1964 (the 1964 Act)Footnote 7 in order to facilitate streamlined and simplified customs procedures.Footnote 8 Notwithstanding the fact that there has been a surge in trade facilitation measures that are also being implemented through regional trade commitments of which South Africa is a member, the overlapping nature of these measures and commitments makes it vital that they are addressed at a multilateral level.
In this respect, the World Trade Organization's (WTO)Footnote 9 Agreement on Trade Facilitation (TFA),Footnote 10 which was negotiated during the ministerial conference that took place in Bali in 2013, could purportedly have some promising outcomes to offer South Africa in terms of a more sophisticated customs environment. The TFA is currently open for accession and requests members to notify the obligations that they will implement nationally before the agreement comes into force (category A notifications).Footnote 11 However, developing countries like South Africa also benefit from the special and differential treatment that in turn permits such members to notify provisions that they will only implement after a transitional period (category B notifications).Footnote 12 The mandate of the proposed agreement therefore includes facilitating transit between nations by easing customs related rules and procedures. The agreement thus promises tangible effects, in as far as acceptance of its Protocol of AmendmentFootnote 13 could potentially ease customs related rules and bring applicable South African laws into line with internationally recognized standards. However, South Africa has not yet notified any category A commitments. The TFA will be of vital interest to South Africa, considering that the cost of trade in the country has been particularly high in comparison to that of its export partners,Footnote 14 coupled with its low level of participation in trade in value-added. It is predicted that the TFA will be able to address these issues in order to integrate South African products into global markets.
This article endeavours to assess how far South Africa's CM Programme and customs legislation will eventually fit within TFA obligations once they come into force. South Africa has neither accepted the Protocol of Amendment nor notified any commitment that it is in a position to undertake by the time the TFA comes into force. Hence this article explores the extent to which the country will be ready to embark upon category A notifications, after the operationalization of its new customs legislation. Considering the rapid transformation of the South African customs regime, the author expresses the view that the republic would indubitably be in a position to undertake a host of category A notifications, albeit with the commencement of the new customs legislation. The author would hence propose the obligations that the country should notify as such and would also recommend those that it should notify under category B, obligations it will implement after a transitional period.
WHAT IS TRADE FACILITATION?Footnote 15
Trade facilitation has been a vital aspect of international trade, given that the mere reduction of tariffs alone would not achieve the essential objectives of globalization. Hence, when impediments to trade more commonly exist in the form of non-tariff barriers, these impediments are often exacerbated when they come in the form of high transaction costs that occur due to arduous and costly customs procedures or corruption at the border, among others factors. It is in this respect that the significance of addressing these issues has long been understood and hence been included in the work programme of various international organizations and conventions.Footnote 16
The World Bank opines that there is no standard definition of trade facilitation.Footnote 17 The concept has been defined extensively by international organizations in their endeavour to promote fair trade practicesFootnote 18 and is commonly understood to mean “the simplification and harmonization of international trade procedures”, which in turn involve “the activities, practices and formalities in collecting, presenting and processing data required for the movement of goods in international trade”.Footnote 19 It is in this context that the concept is most generally understood to incorporate the procedures and controls that seek to regulate the movement of goods across national borders while reducing costs and improving efficiency.Footnote 20
In general, therefore, trade facilitation includes the simplification of customs rules and procedures in a harmonized manner, so that trade transaction costs (TTCs) are reduced. Portugal-Perez and Wilson defined TTCs as the costs included for the purpose of exportation and importation when the goods reach the final consumer, such as costs related to border issues, transportation, behind-the-border matters and costs essential for complying with the rules of origin.Footnote 21 The absence of simplified customs rules and procedures, high transportation costs and the presence of corruption at borders in turn lead to low international competitiveness and consumer welfare, increasing the cost of the final merchandise.Footnote 22 Consequently, these factors tend to increase the cost of starting a business in countries where customs rules are complicated and not harmonized with international standards, making the objective of international trade rules defunct. Hence, even while the presence of high tariffs acts as an impediment to free and fair trade, the presence of high trade costs is indeed more detrimentalFootnote 23 and can most effectively be addressed with the harmonization of rules and standards in this regard.Footnote 24 Against this backdrop, the harmonization of procedures that reduce customs barriers and corruption among other things is currently one of the most deliberated topics in international trade.
TRADE FACILITATION AND THE WTO
Trade facilitation has historically been part of the WTO to some extent; see articles V, VIII and X of the General Agreement on Tariffs and Trade (GATT), 1994. Given the limitations of these provisions, a Negotiating Group on Trade Facilitation was formed in 2004 to debate the practicality of a prospective TFA and consequently draw on these provisions in an attempt to provide further clarification in a more comprehensive manner. Hence, the TFA elucidates procedural formalities in order to achieve an improved customs environment and reinforces the significance of improved customs procedures and formalities, which can be better achieved when these are published so as to be public knowledge.
Currently, the mandate of trade facilitation, ie the TFA, is part of annex 1A of the WTO Agreement. Accordingly, the TFA is open for ratification and will enter into force once it has been ratified by two thirds of WTO members. In the meantime, as mentioned above, WTO members have already begun to notify the agreement's “category A notifications”, obligations they will be in a position to implement when the TFA comes into force.Footnote 25
Consequently, the WTO's universal membership, with a blend of countries at different stages of development, makes it a unique forum to address this issue. While the viability of the practicalities of a TFA had been a part of the WTO's mandate since the first ministerial conference in SingaporeFootnote 26 and subsequently as part of the Doha Development Agenda in 2001,Footnote 27 the WTO was unsuccessful in concluding a TFA. Consequently, as part of the Bali ministerial conference in December 2013, the organization's work agenda underscored the necessity “to ensure the expeditious entry into force of the Agreement and prepare for the efficient operation of the Agreement after such entry into force”.Footnote 28
While a host of WTO members have already incorporated measures to facilitate trade, these measures have more or less been unilateral. Some regional attempts have been made to this effect, but problems arise when countries that are a part of such regional initiatives have overlapping memberships. Hence, at some stage multilateral initiatives do assume relevance. The proposal of the Bali ministerial conference to negotiate the modalities on trade facilitation became important in this sense, because it would solve these issues and address the mandate more harmonious and comprehensively. In this respect, the obligations in the TFA would come into force in a phased manner as the Preparatory Committee receives notifications from members regarding the provisions they would be able to implement immediately (category A notifications),Footnote 29 those they will implement after a transition period (category B notifications), and lastly those they will implement after a transition period coupled with an implementation capacity (category C notifications).Footnote 30
The proposed benefits of the WTO's TFAFootnote 31
One of the most promising benefits of the TFA is that the world economy would apparently be boosted by $1 trillion as a result of the simplification and harmonization of customs related rules,Footnote 32 and consequent reduction of TTCs by 10–15 per cent.Footnote 33 Reductions in TTCs could consequently lean towards export diversification in favour of emerging economies, when exporters would be willing to export to countries with the lowest trade costs.Footnote 34 For this reason, even trivial cutbacks in TTCs by means of trade facilitation measures could contribute two thirds of global welfare in favour of emerging economies.Footnote 35
Research thus demonstrates that the lack of trade facilitation that causes a delay of even one day in goods leaving the factory, especially in emerging economies, impedes growth in such countries by 1 per cent.Footnote 36 A study by the Organization for Economic Co-operation and Development (OECD) highlights that potential impacts due to these inefficiencies may thus be in the form of directFootnote 37 or indirectFootnote 38 costs.Footnote 39 Customs and transit procedures are less developed in emerging economies and this hampers the integration of such countries in global value chains.Footnote 40 Studies underscore on the other hand that implementing trade facilitation measures through national reforms could provide traders with a benefit equivalent to 0.8 per cent of ad valorem duties.Footnote 41
Implementing trade facilitation measures would have a greater impact on small and medium sized enterprises in particular and the private sector in general,Footnote 42 given that the former are more susceptible to inefficiencies in customs procedures.Footnote 43
While these are the predicted outcomes that the TFA endeavours to address, it seems that South Africa is currently not enjoying these benefits fully, given that the reduction of TTCs remains a daunting task for the republic. The World Bank's Doing Business Report (2015) demonstrates that South Africa ranks at 100 out of 189 with respect to the ease of doing business with the republic.Footnote 44 Accordingly, international trade with this country becomes arduous given the cost and time taken to import and export to and from the republic.Footnote 45 Trade facilitation thus plays a key feature in improving and sustaining this country's relations with the international community.Footnote 46
South Africa and the World Trade Organization
The election of the democratic government in 1994 and South Africa's consequent inclusion as a member of the WTO in 1995Footnote 47 brought positive changes in the country's attempts to liberalize its domestic trade policy and integrate itself into the global economy.Footnote 48 Furthermore, the country's increased participation in regional trade agreements provided an impetus to its agenda to liberalize trade, and improve market access and international competitiveness for its products.Footnote 49
Despite the fact that South Africa participated in the WTO negotiations as a developed nation,Footnote 50 with its lack of comparative advantage except in unskilled labour, particularly in agriculture and mining, its firms have been struggling to compete internationally.Footnote 51 Significant relaxations in tariffs since the 1990s,Footnote 52 the absence or lack of complementary policies and enhanced coordination have kept South Africa away from mainstream international trade.Footnote 53 In a similar context, even though South Africa has bound 96.1 per cent of its tariffs (on all products),Footnote 54 as against 18 per centFootnote 55 by virtue of becoming a member of the WTO during the Uruguay Rounds, the contribution of tariff reductions at the international level towards growth has been rather slow in comparison.
Where do South Africa's endeavours to facilitate trade stand today?
Currently, at the national level, the South African Revenue Service (SARS)Footnote 56 is responsible for the facilitation of trade in the form of customs clearance in the country. SARS is thus endowed with the responsibility of regulating various industrial and trade policies for the purpose of customs and administration. Hence, while customs regulation in a country promotes international trade with that country, the failure to address these concerns at the domestic level would also expose the country to risks of corruption and under-valuation and, needless to say, increase TTCs.
Understanding that tribulations pertaining to documentation related formalities continue to confront the country's endeavours to facilitate trade, South Africa has been embarking on the implementation of its customs management system since 2013, as part of the CM Programme.Footnote 57 The modernization process therefore seeks to provide a legislative basis to its mandate to enhance customs efficiency, which is why the 1964 Act will eventually be replaced by the CCA, the CDA and the CEAA in order to facilitate the implementation of the CM Programme.Footnote 58 This new legislation embarks upon making customs clearance in South Africa easier, replacing manual paper based administration with automated procedures. These acts are largely modelled on the Revised Kyoto ConventionFootnote 59 and make South Africa the first African country to come in line with international best practices for customs administration, as set forth in the convention. Of these, the CCA attempts to facilitate trade, with its provisions on, inter alia, efficient release and clearance, expedited shipments and enhanced border co-operation.
The paradigm shift in South Africa's import substitution strategies that has occurred with the introduction of more progressive outward looking policies has to some extent resolved problems pertaining to trade liberalization, but even so has not completely rectified the issue. That said, these problems could mostly be traced to the difficulty in performing and sustaining trade relations in the country owing to the high level of transaction costs. Efforts to improve trade facilitation assume immense significance for South Africa in its attempts to integrate into world markets. Hence, even while lacunae in the country's infrastructure operate as a serious impediment to trade relations with other countries in the international community, most of the challenges that South Africa has been facing result from hurdles in administrative procedures that involve lengthy customs procedures, excessive red tape and clearances.Footnote 60
At the same time, research to explore the implementation of trade facilitation measures in South Africa has been rather sporadic. The OECD delineates certain criteria in the form of trade facilitation indicators,Footnote 61 with the objective of evaluating the extent to which efforts to facilitate trade have been undertaken at the national level; customs and other related formalities in South Africa are mostly aligned with these. Nevertheless, aspects such as documentation formalities, procedural formalities and fees and charges have remained challenging for South Africa, and South Africa's performance in implementing measures in these areas has been markedly lower in comparison to that in other areas. Its performance (in 2014) in terms of trade facilitation can be represented thus:
This graph analyses the facilitation of trade in South Africa vis-à-vis the OECD indicators.Footnote 62 While the OECD divides “border co-operation” into two separate variables of internal co-operation and external co-operation, the author has for the purpose of this discussion clubbed them into one, and expressed them on the basis of the average of both. As per the analysis, performance has been measured on a scale of 0–2, with 2 being the best performance. World performance indicates the average performance of the countries in the OECD database.
As depicted in figure 1, South Africa's performance in terms of appeal procedures, automation and border co-operation (including both internal and external co-operation) is modernized in comparison to global performance. At the same time, in terms of parameters that indicate information availability, advance rulings, procedural formalities and good governance, trade facilitation in South Africa is more or less at the same level as in the rest of the world. On the other hand, some of the most significant variables that impact the facilitation of trade to the greatest extent, such as formalities involving documentation and fees, have been the country's greatest weakness. Simplification of documents, problems relating to harmonization with international standards, the absence of single window systems that would permit the streamlining of documents with the help of single submission points, and the lack of improvements in the area of fees and charges regulating imports and exports remain South Africa's most contentious issues.
Figure 1. Facilitation of trade in South Africa (2014)
Despite a wide array of reforms in South African customs procedures by means of its CM Programme and customs management system discussed above, problems pertaining to complicated documentation formalities and the lack of single window systems have continued. On the other hand, the CM Programme has contributed significantly to the country's endeavour to streamline its customs related processes by means of automated procedures and a reduction in the time required for processing.
With the successful commencement and implementation of the acts that form part of the CM Programme, the country will be able to notify various (if not all) obligations outlined in category A. Accordingly, the next section highlights the proposedFootnote 63 trade facilitation efforts at the national level in South Africa and indicates the extent to which they would correspond to those set forth in the WTO's TFA.
TRACKING SOUTH AFRICAN TRADE FACILITATION OBJECTIVES IN THE LIGHT OF THE TFA
The discussion in this section is limited to assessing South Africa's trade facilitation mandate in the light of those obligations in the TFA which could be implemented by members at the domestic level when the agreement comes into effect.
In general, obligations listed in category A of the TFA are similar to the OECD indicatorsFootnote 64 that measure a country's performance in terms of the measures it takes to facilitate trade at the border.Footnote 65 Section I of the TFA contains the commitments set out in category A and extends to articles 1 to 12 of the agreement. These provisions expand the scope and ambit of articles V, VIII and X of GATT, 1947 which also pertain to trade facilitation.
South African trade facilitation provisions on transparency and fairness
The TFA clarifies the mandate of article X of GATT, 1947 that pertains to increasing transparency in international trade. Accordingly, articles 1–5 of the TFA require the publication of information relating to the import and export of goods, customs valuation procedures and rules, duties and related penalties.Footnote 66 The agreement furthermore underscores the need for the prior publication of laws and regulations that govern the movement and clearance of goods,Footnote 67 advance rulings,Footnote 68 and also the classification and origin of goods for the purpose of import and export.Footnote 69 Besides, in order to ensure fairness in international trade, the TFA obligates members to provide a procedure for appeal against administrative decisions of customs authorities.
At the domestic level, the CCA recognizes the significance of trade facilitation and hence addresses the related issues and challenges. For this reason, the South African government encourages predictability and transparency in customs related procedures. In order to achieve the WTO's objective of augmenting transparencyFootnote 70 in international trade, customs related procedures involving inter alia importation,Footnote 71 exportation,Footnote 72 required documents,Footnote 73 transit,Footnote 74 duties,Footnote 75 fees, classification, appeals, regional trade agreements involving the facilitation of tradeFootnote 76 and administration of tariff quotas are duly published in the Government Gazette for the benefit of other governments and traders.Footnote 77 Information regarding these procedures is also published on a timely basis on the SARS website.Footnote 78 SARS also answers queries on customs related procedures and documents from governments, traders and interested parties, therefore boosting transparency in light of the relevant TFA provisions.Footnote 79
Article 2.1 of the TFA imposes an obligation on members to provide “opportunities coupled with an appropriate time period to traders and other interested parties to comment” on the proposed customs legislation or an amendment to it. In this regard, SARS conducts workshops with stakeholders on a timely basis in order to receive comments from them on the proposed implementation of the acts.Footnote 80 At the same time, with respect to the obligation expressed in the TFA relating to the prior publication of laws relating to customs related procedures to provide traders and interested parties with reasonable time to become acquainted with them,Footnote 81 South African legislative enactments pertaining to customs are published in advance on the SARS website. Accordingly, the CCA, the CDA and the CEAA have been published in the Government Gazette, even though they are to come into operation at a later date after being proclaimed by the president.Footnote 82
Moreover, South Africa has modified the existing 1964 Act to incorporate the TFA obligation that members must issue an advance ruling when requested by another member in writing, in order to obtain a decision on the treatment provided to imported good(s) regarding the tariff classification and the Rules of Origin.Footnote 83 Accordingly, by virtue of the CDA, the concept of advance ruling has been duly incorporated in keeping with international standards and also to bring domestic customs legislation in line with the TFA. Consequently, the CDA provides for advance ruling in the form of advance tariff, advance valuation and advance origin rulings.Footnote 84 Chapter 10 of the act regulates the application of these types of advance rulings,Footnote 85 and determines aspects such as the application,Footnote 86 validity,Footnote 87 binding value,Footnote 88 clearance of goods under the rulings,Footnote 89 amendmentFootnote 90 and withdrawal of advanced rulings.Footnote 91 The act requires the customs authorities to determine the valuation or re-determination, on the basis of advanced tariff ruling, advanced valuation ruling or advanced origin ruling, as the case may be.Footnote 92 In a related vein, the act also permits a person to self-determine or re-determine the customs tariff, value and / or origin on the basis of the advance ruling.Footnote 93 Although the provision for advance rulings has been dealt with in the CDA, the relevant provisions are not proposed to come into force in the first phase of the act's commencement.Footnote 94
The CCA also provides a right to a person aggrieved by the decision of a customs authority or SARS official to appeal against the decision;Footnote 95 this is in line with TFA obligations on members to provide the right to administrative appeal.Footnote 96 Consequently, the CCA provides for administrative appeals against decisions by or on behalf of customs authorities or SARS officials,Footnote 97 except when the appeal is against a decision that was subject to alternative dispute resolution or judicial proceedings.Footnote 98 Administrative decisions provided under the CCA provisions are also reasonedFootnote 99 and applicable to border agencies other than customs,Footnote 100 and are therefore in line with the TFA obligations.Footnote 101 The CDA provides a similar right to administrative appealFootnote 102 to persons aggrieved by duty assessment or reassessment,Footnote 103 tariff, value and origin determination and redetermination with respect to the imposition of customs duties.Footnote 104
The TFA also mandates the application of “other measures in order to enhance impartiality, non-discrimination and transparency”.Footnote 105 These measures pertain to the application of sanitary and phytosanitary (SPS) measures,Footnote 106 detentionFootnote 107 and test procedures.Footnote 108
At the domestic level, South Africa embraces the imposition of SPS measures via the regional economic communities of which it is a member. For instance, South Africa is a member of the Southern African Development Community, whose Protocol on Trade mandates that its members base such measures on international standards and best practices set out in the WTO's SPS Agreement.Footnote 109 In this respect SPS measures are also regulated in the republic through the coordinated efforts of the Department of Agriculture: Forestry and Fisheries, National Phytosanitary Regulatory Services of South Africa, the Department of Agriculture South African Food and Quarantine Inspection Services, and the National Plant Protection Organisation.Footnote 110
On the other hand, the CCA imbibes upon the TFA's obligation promptly to inform the importer when goods have been detained by the customs authority or another competent authority.Footnote 111 With respect to the application of test procedures, while the TFA obligates a member either to publish the requisite details of the test laboratory or provide them to the importer, the CCA merely confers on the customs officer the right to inspect goods for carrying out tests or analysing them,Footnote 112 and for this purpose to take a sample.Footnote 113 Hence, the CCA is silent on aspects such as the opportunity to request a second test when the result of the first test is adverse,Footnote 114 and also to consider the results of the former for the purpose of the release and clearance of goods.Footnote 115
South African trade facilitation provisions on procedural formalities
Articles 6–12 of the TFA regulate issues pertaining to procedural formalities, and clarify and expand upon the scope of articles V and VIII of GATT, 1994.
Article 6 of the TFA pertains to issues regarding fees and charges, other than those that take the form of import and export duties or taxes within the purview of article III of GATT, 1994.Footnote 116 Such fees and charges can hence only be applied after information about them has been published in accordance with the principles in article 1 of the TFA. Accordingly, information regarding fees and charges, the authority that is responsible for these and also the mode of payment must be published.Footnote 117 Article 6 also mandates members to regulate the imposition of penalties for a breach of its customs laws and regulations.Footnote 118 As seen in the graph above, South Africa's performance with respect to the enforcement of provisions on fees and charges is average compared to that of the rest of the world.Footnote 119 In this respect, the author finds that provisions in this regard are indeed less developed. While the CCA does provide that the SARS commissioner is the authority responsible for regulating the fees applicable to goods stored at licensed premises,Footnote 120 much work remains to be done when it comes to providing transparency in the provisions connected with fees and charges. With respect to the application of penalties, these are regulated by chapters 39 and 40 of the CCA in the form of administrative penaltiesFootnote 121 and penalties for judicial offences.Footnote 122
Article 7 of the TFA pertains to procedures that are required for customs clearances and draws on similar principles incorporated in the Revised Kyoto Convention. Article 7 of the TFA therefore underscores the following factors that must be considered as pre-requisites for liberalizing trade by means of efficient customs procedures: the ability to permit documentation and other formalities in an electronic manner before the goods arrive at the destination of the importing country, in order to hasten the customs evaluation process;Footnote 123 electronic payments in order to ease import and export procedures, thus making international trade more user-friendly for traders;Footnote 124 the incorporation of risk management that regulates random customs checks, thus allowing low risk consignments to clear more quickly;Footnote 125 and the need for post-clearance audits making it mandatory for traders to submit their clearance reports to customs authorities for verification of compliance.Footnote 126
In taking into account the fact that the international movement of goods involves the transport of goods, many of which need to be delivered on an urgent basis or as an utmost priority, article 7 mandates the adoption of procedures taking into account these concerns, especially to accommodate the interests of global value chains which require the speedy delivery of intermediates.Footnote 127
In order to ensure efficient procedures for the clearance and release of goods, the CCA positively embarks upon the mandate of permitting the submission of import documents before the arrival of goods (pre-arrival processing).Footnote 128 It also permits the electronic submission of documents for such processing.Footnote 129 Moreover, electronic payments will also be recognized as a mode for paying duties under the CDA.Footnote 130 At the same time, South Africa duly incorporates risk management procedures into its new customs legislation by means of automation. Therefore, by virtue of its CM Programme, South Africa is now replacing paper based customs applications with electronically submitted documents.Footnote 131 The CM Programme therefore makes use of electronic data interchange along with the customs risk engine. In this regard, in keeping with the TFA's requirement to provide for the expedited release of low risk consignments, the CCA duly incorporates this mandate by permitting such goods to move with relatively few restraints while still imposing strict verification on high risk products.Footnote 132
In order to improve efficiency in trade facilitation measures, the CM Programme duly focuses on conducting post-clearance audits. Accordingly, the annual SARS report for 2013 demonstrates a 59 per cent success rate with respect to risk audits or those incorporating invalid tariffs or valuations, and a 57 per cent success rate in terms of regulatory audits or those involving customs storage and warehousing.Footnote 133
South Africa also subscribes to the World Customs Organization's time release study, which studies the average release times taken by countries. In this respect South Africa individually and as a member of SACU undertakes to perform a time release study.Footnote 134 Chapters 24 and 30 of the CCA also make provision for the simplification of procedures that regulate trade facilitation measures for authorized operators.Footnote 135 In a similar context, South African customs authorities also permit the expedited release of goods when persons apply under chapter 24 of the CCA, which provides for and regulates such release.Footnote 136 However, the CCA merely provides for prioritising perishable goods in terms of their inspection; it does not specifically subject such goods to speedy release, as provided for in article 7.9 of the TFA. Further work is therefore needed in this respect.
Article 8 of the TFA endeavours to boost efficiency in procedural formalities in international trade by obligating enhanced co-operation among border agencies for the purpose of customs evaluation. At the domestic level, border agency co-operation in South Africa is regulated by means of chapter 32, part 7 (sections 744–48) of the CCA. Border co-operation is thus augmented by the CM Programme, as a result of which the Border Control Operational Coordinating Committee was established to foster enhanced border control and co-operation. The committee functions in collaboration with various agencies, including the Departments of Home Affairs, Health, Agriculture, Forestry and Fisheries, Transport, Trade and Industry, Public Works and Environmental Affairs, SARS, and the South African Police Service.Footnote 137
Article 12 of the TFA appears in a related context and underlines customs co-operation. As seen in the graph above, South Africa excels in terms of both external and internal co-operation, and its border co-operation is indeed better than the global average.Footnote 138 Customs co-operation thus remains an integral part of South Africa's international relations with other countries with the aim of promoting the exchange of information, in turn debilitating the flow of illicit information.Footnote 139 Consequently, South Africa embarks upon enhancing customs co-operation with countries under the auspices of various regional agreements (in the form of customs mutual assistance agreements) of which it is a member, including with the members of BRICS,Footnote 140 Zimbabwe,Footnote 141 the European UnionFootnote 142 and CanadaFootnote 143 to name a few.
At the same time, article 9 of the TFA underlines the requirement that members regulate the movement of imported goods at the domestic level, in order to facilitate the release and clearance of such goods. Movement of imported goods is facilitated in South Africa by virtue of the obligations set forth in the preamble of the CCA, which in turn entails securing movement of goods into the republic for the purpose of facilitating trade. In this respect, the CCA empowers the SARS commissioner to make rules that would indeed facilitate the movement of such goods within a customs controlled area.Footnote 144
The TFA also implements trade facilitation rules that in particular address nuances such as formalities and documentation requirements, the acceptance of copies, the use of international standards, single window, pre-shipment inspections, use of customs brokers, common border procedures, provisions for rejected goods, and the temporary admission of goods and inward and outward processing.Footnote 145
While South Africa seems to have addressed some of these issues, the CM Programme is silent on the adoption of single windows. Consequently, where on the one hand the TFA encourages the use of “single window systems”Footnote 146 on the basis of best practice in countries that are already incorporating this system,Footnote 147 South Africa has been largely resistant to this.Footnote 148 To this end, the non-adoption by South Africa of single window systems is by and large one of the major impediments to its trade facilitation goals.
With respect to formalities and documentation requirements, although the CCA makes provision for the rapid release and clearance of goods, it does not per se address urgency with respect to perishable goods.Footnote 149 However, the country's customs legislation enacted to implement the CM Programme is based on international standards laid down in the Revised Kyoto Convention, which forms a basis of the former's “import, export and transit formalities and procedures”.Footnote 150
Article 10 of the TFA disapproves of the use of pre-shipment inspections for the purpose of tariff classifications and customs valuation, primarily because they cause undue delays, thus impeding the implementation of the TFA. In general, pre-shipment inspections are regulated by the WTO's Agreement on Pre-shipment Inspection.Footnote 151 Pre-shipment inspections are predominantly used by emerging economies; they rely on the services of private companies to inspect prospective imports and provide accurate information on the quality, quantity, price, exchange rate, customs valuation and financial terms, relevant to the goods being imported. Neither the CCA nor the CDA makes pre-shipment inspections a pre-requisite for tariff classification or customs valuation.
With respect to the use of customs brokers,Footnote 152 the CCA duly incorporates the TFA requirements, thereby addressing the lacuna of the 1964 Act. Accordingly the CCA permits customs brokers to submit clearance declarations of behalf of a person entitled to submit them, and delineates the measures in its customs procedures with regard to the use of such brokers.Footnote 153 At the same time, sections 633 and 646 of the CCA regulate the licensing of customs brokers.
In addition, South Africa applies common border procedures and documents required for the release and clearance of goods throughout the republic, thus complying with paragraph 7 of article 10 of the TFA. On the other hand, while the CCA authorizes the SARS commissioner to make rules in respect of measures that permit the temporary admission of goods that are required to be re-exported, the act does not mention any such measure. However, South Africa is a member of the Convention on Temporary Admission (also referred to as the Admission Temporaire / Temporary Admission Carnet or ATA Carnet), which permits the temporary duty free admission of goods without the need for them to be declared, provided such goods are re-exported,Footnote 154 in turn complying with the TFA obligation. For the purpose of inward and outward processing of goods, the CCA incorporates this obligation in its chapters 18 and 20.
To this end, South African customs legislation does, to some extent, already incorporate the obligations in article 10 of the TFA, but nevertheless requires much improvement, especially in terms of single window systems and the acceptance of copies which are the very crux of trade facilitation reforms in the current era.
Another facet of enhancing trade facilitation via customs related procedures is through freedom of transit, underscored in article 11 of the TFA. This provision entails augmenting this freedom by prohibiting the maintenance of voluntary restraintsFootnote 155 and fees or charges unrelated to transit.Footnote 156 The mandate thus calls for, inter alia, non-discrimination,Footnote 157 use of special lanes,Footnote 158 transparencyFootnote 159 and procedural fairness.Footnote 160 At the domestic level, transit is regulated in South Africa by virtue of chapter 9 the CCA, which regulates national and international transit, and for this purpose outlines the procedural formalities for clearance. At the same time, the WTO's obligation to ensure freedom of transit is also regulated by means of various international and regional conventions to which South Africa is a party.Footnote 161 Interestingly, studies have shown that, while on the one hand WTO provisions that pertain to trade facilitation merely underscore the significance of simplifying trade procedures, regional commitments have gone further by additionally addressing aspects such as transport and the quality of infrastructure.Footnote 162
OBSERVATIONS AND CONCLUSION
In light of the analysis of the proposed customs reforms, the author finds that South Africa, under the auspices of its CM Programme, would be in a position to notify an array of provisions that it would be able to implement as category A notifications, provided the new legislation comes into force before the commencement of the TFA.Footnote 163 Implementing the provisions of the new acts would in turn require substantial changes to the country's customs environment and legislation, appreciating that the existing 1964 Act is obsolete and fails to keep pace with modern technological requirements. Nevertheless South Africa has done a commendable job in attempting to bring its customs procedures into line with the WTO's much awaited TFA. Consequently, the author believes that the republic would be able to notify several provisions of the TFA, should the new customs legislation enter into force prior to the commencement of the TFA (see table below).
TFA notifications that South Africa could make
Consequently, South African customs procedures are indeed better placed than the global average in many respects, as also highlighted by the OECD research on trade facilitation indicators in South Africa.Footnote 164 The three new acts (the CCA, the CDA and the CEAA) would certainly prove advantageous in facilitating trade in the republic.
