The practice of exporting goods to a foreign jurisdiction and selling them at a lower price than that which they fetch in the country of origin is called ‘dumping’. Needless to say, dumping is considered ‘unfair’ because the producers of similar products in the country in which the dumping occurs cannot compete with the price of the imported goods.
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Anti-dumping duties are often levied by import destinations in order to neutralise the effect of the artificially low price.
In South Africa, the imposition of such duties is covered by Chapter Six of the Customs and Excise Act. However, this act does not provide for any ‘sunset’ or termination clause.
This is because, as a member of the World Trade Organisation (WTO), South Africa has entered into agreements and enacted statutes that provide for the ceasing of anti-dumping duties. These usually call for the lapse of the duty after five years.
In the Supreme Court of Appeal case of Progress Office Machines CC v SARS 2008 (2) SA 13 (SCA), for example, it was found that SARS had initiated measures for the extension of anti-dumping duties within five years of the date of promulgation of the duty, not within five years of the coming into effect of the duty. Thus, it appeared that the duty had lapsed prior to the implementation of a review thereof.
Farmers and sars on the same side
The interests of SARS and local producers were aligned then in the recent Supreme Court of Appeal case of Association of Meat Importers v ITAC [2013] ZASCA 108. This dealt with the question of whether the duties imposed under the second schedule to the Customs and Duties Act were still in force or not, given the effect of various international agreements.
Had the duties lapsed after their promulgation, the local industries would have been faced with the importation of cheap products, while SARS would have had to deal with the repayment of duties collected in the absence of enforceable anti-dumping duties. The judgement of the court was that the duties were still in force, and Regulation 53 of the International Trade Administration Act, not Article 11 of the WTO Agreement, governed the fate of the anti-dumping duties.
Duties still Valid
Following this, said the judges, it was clear that the duties had lapsed five years after their inclusion into the Second Schedule of the Customs and Excise Act. It was further held that the provisions referring to the imposition of the duties had related to the date that Schedule 2 of the Customs and Excise Act had been amended to cater for the payment of duties on the relevant products, not to the date the duties would be payable from, which was earlier.
Thus, the duties had been in existence at the time of their sunset review and were consequently still valid. This was good news for local producers and for SARS. The judgements contain excellent and lucid arguments. I strongly suggest that any producer in an industry where dumping is a threat read them.
Peter O’Halloran is head of tax at BDO, Gaborone.
