Strategic tariff cuts proposed

The International Trade Administration Commission (Itac) has completed a review of a clutch of chapters of the tariff book and has forwarded recommendations for strategic tariff cuts to the trade and industry minister.

The recommendations include a proposal to increase the duties on a number of locally-manufactured goods, but Itac would not be drawn on which duties.

The review — which is almost a year overdue — is in line with the trade and industry department’s industrial policy framework, which seeks to promote downstream beneficiation to boost jobs and exports.

The review entailed streamlining as much as 85 per cent of the tariff book relating to lead sectors identified by the industrial policy for intervention. With the policy, the state aims to drive down inputs into manufacturing in a bid to boost downstream beneficiation. The reduction of tariffs on upstream products is crucial to achieving this goal. The review may have significant implications for businesses that have to compete with cheaper imports.

Itac chief commissioner Siyabulela Tsengiwe said last week the body had completed the review after consultations with government agencies and industry associations, and forwarded recommendations to the minister.

The tariff structure for machinery and capital equipment was overhauled in the context of the government’s multibillion-rand infrastructure development programme. The investigation also covered durable consumer goods such as consumer electronics and white goods. However, car parts were excluded to preserve the integrity of the Automotive Production and Development Programme — the department’s industrial support programme for the automotive sector.

Part of the rationale for the review was to eliminate unnecessary cost-raising customs duties on products not manufactured domestically. But Itac confirmed it also looked at increasing duties for a number of products where an increase was “justified”.

It is not clear yet when the minister will make a decision on the recommendations.

Source:Mathabo le Roux, Strategic tariff cuts proposed, Business Day, January 27, 2009

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FMF Policy Bulletin/ 03 February 2009
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