Annual Report (2013/2014) Presentation to the Portfolio
Committee on Economic Development
28 October 2014
Siyabulela Tsengiwe
Chief Commissioner
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Contents
1. Introduction.
2. Key Strategic Objectives, Performance Areas & Services.
3. Trend Analysis of import tariff increases and reductions from 2003 to 2013.
4. Tariff Investigations.
5. Anti-Dumping Investigations.
6. Import and Export Control.
7. Judicial Reviews.
8. Corporate Governance.
9. Auditor General’s Report.
10. Financial Performance.
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Introduction
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•
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South Africa’s producers of industrial and agricultural goods will continue to
experience cost pressures and global market distortions.
ITAC support must be complemented by measures that seek to address
competitiveness constraints and promote exports.
Post the economic crisis, the year 2012/13 that preceded the year under
review saw the highest number of tariff increases. A peak was reached in
2012/13 and we are now seeing a downward trend.
Although the global economy is recovering it is not yet robust, which has a
negative effect in weakening demand for our exports. This necessitates
addressing domestic challenges a priority.
The Commission follows a developmental approach to tariff setting for both
industrial and agricultural goods.
The Commission’s recommendations are evidenced based and conducted on
a case-by-case basis. A pragmatic approach, focussing on the outcomes:
domestic production, investment, job retention and creation as well as
international competitiveness.
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Key Strategic Objectives,
Performance Areas & Services
International Trade Instruments
Ensure contribution to
employment creating growth
and development through
effective delivery of
international trade instruments
Ensure strategic alignment and
continued relevance with the
Department of Economic
Development and national
agenda
What will be pivotal in improving
the provision of customs tariffs,
trade remedies, and import and
export control will be the quality
and turnaround times.
International Trade Technical
Advice
ITAC will become more proactive
in the provision of technical inputs
and contributions to trade and
industrial policy implementation,
as well as trade negotiations at
bilateral, regional and multilateral
levels.
Customs Tariff Investigations
[Increasing Duties, Reducing Duties, &
Creation of Rebates]
Trade Remedies Investigations
[Antidumping, Countervailing & Safequards]
Import & Export Control
[Permits & Enforcement]
Technical Inputs on Trade and
Industrial Policy , including Sector
Strategies
Technical Inputs on Trade
Negotiations
[WTO, SADC & SACU] ;
Bilateral Agreements
[EU, EFTA, MERCOSUR, & INDIA]
Business Support Services
Ensure organisational efficiency
and effectiveness of ITAC
The performance of the institution will
be driven through appropriate business
solutions, efficient and effective
utilisation of material, human and
information technology resources.
oHuman Resources
oFinance
oInformation Technology
oLegal Services
oPolicy and Research
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Trend Analysis of import tariff increases
from 2003 to 2013.
Chart 1: Number of increases recommended by the Commission
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Trend Analysis of import tariff reductions
from 2003 to 2013.
Chart 2: Number of reductions recommended by the Commission
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Tariff Investigations
Completed During 2013\2014
APPLICANT
PRODUCT
APPROVED AMENDMENT
TYPE OF AMENDMENT
SAPPI Southern Africa (Pty) Ltd
Coated fine paper
Free - 5%
Increase
South African Sugar Association
Dollar based reference price for sugar
US$358/ton - US$566/ton
Increase
South African Poultry Association
Whole bird
Boneless cuts
Bone-in portions
Offal
Carcasses
27% - 82%
5% - 12%
18% (220c/kg) - 37%
27% - 30%
27% - 31%
Increase
Self-initiation
X-ray film
Status quo at 15%
Increase
Safripol (Pty) Ltd
High density Polyethylene
Declined
Increase
Dunrose Trading (Pty) Ltd
Wire and pointed screw nails
5% - 15%
Increase
RIC Manufacturing CC
PTFE tape (Non-stick coating)
10% - 20%
Increase
Vaal Sanitary Ware (Pty) Ltd
Ceramic sanitary ware
Declined
Increase
Graftech South Africa (Pty) Ltd
Graphite electrodes
Free - 10%
Increase
Libra Bathrooms (Pty) Ltd
Acrylic baths, sinks and wash basins
Declined
Increase
CBC Fasteners (Pty) Ltd
Certain screws, bolts and nuts
10% - 20%
Increase
Viking Plastics (Pty) Ltd
Blades for windscreen wipers
Declined
Increase
GEA Aircooled Systems (Pty) Ltd
Heat exchange units
Free - 15%
Increase
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Tariff Investigations
Completed During 2013\2014
APPLICANT
PRODUCT
APPROVED AMENDMENT
TYPE OF AMENDMENT
Bravo Group Manufacturing (Pty) Ltd
Woven impregnated fabrics and rubberised
textile fabrics used for the manufacture of
upholstered furniture
Approved
Rebate
Beaches Clothing cc
Knitted fabric for swimwear
Declined
Rebate
Nyathi Textiles cc
Cotton fabric for impregnation or coated
fabric under 52.09
Declined
Rebate
3M South Africa (Pty) Ltd
Polyurethane flat shapes and silicone
elastomeric and natural rubber straps for
the manufacture of dust masks
Approved
Rebate
Self-initiation
Worn overcoats
Approved quota
Rebate
Fast Fox Footwear t/a Little Slipper Company
Pile fabric for bedroom footwear
Approved
Rebate
Unilever (Pty) Ltd
Methyl ester Sulphate for washing
preparations (detergents)
Approved
Rebate
Ceres Fruit Juices (Pty) Ltd
Pear juice concentrate for fruit juice
Declined
Rebate
Ceres Fruit Juices (Pty) Ltd
Grape juice concentrate for fruit juice
Declined
Rebate
Ceres Fruit Juices (Pty) Ltd
Cranberry juice concentrate for fruit juice
Approved
Rebate
Ceres Fruit Juices (Pty) Ltd
Passion fruit juice concentrate for fruit juice
Declined
Rebate
Ninian & Lester (Pty) Ltd
Include sleep shorts under rebate item
311.40
Approved
Rebate
Self-initiation
Aluminium slugs for impact extrusion in the
manufacture of aerosol cans
Approved
Rebate
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Tariff Investigations
Continued
APPLICANT
PRODUCT
APPROVED AMENDMENT
TYPE OF AMENDMENT
Sime Darby Hudson & Knight
(Pty) Ltd
Refined but not fractioned palm oil used as oil
blend in the manufacture of edible fats or oils
Approved
Rebate
The Department of Trade and
Industry
Review of the wording of rebate item 316.17 for
televisions to allow the import of incomplete or
unassembled televisions under the rebate
Declined
Rebate
Eveready (Pty) Ltd
Non-linear glass tubes used in the assembly of
Compact Fluorescent Lamps
Declined
Rebate
Eveready (Pty) Ltd
Amendment of rebate item 316.08/8504.10/01.06
on fluorescent lamps
Approved
Rebate
Economic Development
Department
Review of the Rebate item 317.03 APDP
Regulations and Guidelines
Approved
Rebate
The Department of Trade and
Industry
Amendment to Schedule 3 to allow enterprises in
a Customs Controlled Area (CCA) of the Industrial
Development Zone (IDZ) to use Schedule 3
rebates
Approved
Rebate
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Tariff Investigations
Continued
APPLICANT
PRODUCT
APPROVED AMENDMENT
TYPE OF AMENDMENT
Masstores (Pty) Ltd
Tents of synthetic fibre
Declined
Reduction
National Clothing Retail Federation
Clothing
Declined
Reduction
FX Veneers cc
Phenolic resin
10% - free
Reduction
Llumar Films (Pty) Ltd
Polyethylene Terephthalate (PET) film
10% - free
Reduction
BLSA (Pty) Ltd
TCIA & SDIC
Declined
Reduction
Cathay Industries
Chrome oxide green
Declined
Reduction
Control Chemicals (Pty) Ltd
Calcium Hypochlorite
Declined
Reduction
General Mills SA (Pty) Ltd
Haagen Dazs ice-cream
Declined
Reduction
Masterparts (Pty) Ltd
Engine CV joints
20% - free
Reduction
Engineering Process Control CC
Expanding plug valves
Declined
Reduction
Home Of Living Brands (Pty) Ltd
Electric frying pans
Declined
Reduction
Home Of Living Brands (Pty) Ltd
Stainless steel pressure cookers
Declined
Reduction
Home Of Living Brands (Pty) Ltd
Electrical smoothing irons
Declined
Reduction
Specialised Europe BV External Profit Company
Carbon fibre bicycles
Declined
Reduction
National Auto Glass (Pty) Ltd
Polyvinyl Butyral (PVB)
10% - free
Reduction
Hudaco Trading Pty Ltd
Wheel hubs
Declined
Reduction
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Administration of MIDP & APDP
MOTOR INDUSTRY DEVELOPMENT PROGRAM (MIDP)
AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAM (APDP)

On 01 January 2013 the APDP replaced the MIDP. The APDP is a customs-based
programme comprising a tariff component, production incentive (PI), volume assembly
allowance (VAA) and automotive investment scheme (AIS). The AIS is administered by
thedti. The objective of the APDP is to create an enabling environment for the domestic
industry to significantly grow production volumes and local value addition, leading to the
creation of additional employment opportunities across the value chain. Whereas the MIDP
was export-oriented, the APDP is based on production.

thedti is the policy making authority for the MIDP/APDP & ITAC administers the program.
 Certificates issued under the MIDP:
 Import Rebate Credit Certificates (IRCCs) – 94% of the 1 213 certificates within set timeframe.
 Productive Asset Allowance Certificate(PAAs) – 36% of the 71 PAA certificates within set timeframe.
•
Certificates issued under the APDP:
Eligible Production Certificates (EPCs) – 68% of the 105 EPC certificates within set timeframe.
Production Rebate Credit Certificates (PRCCs) - 87% of the 776 certificates within the set timeframe.
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Trade Remedies
ORIGINAL INVESTIGATIONS
Product
Country
Applicant
Type
Status and Duties
Potato chips (x2)
All
McCain foods
Safeguard
Duties imposed
Soda Ash
USA
Botash
Anti-dumping
Provisional measures imposed
Frozen bone in portions
Germany, Netherlands,
SAPA
Anti-dumping
In progress
United Kingdom
Graphite Electrodes
PRC and India
GrafTech
Anti-dumping
Withdrawn
Coated fine paper
PRC
Sappi SA
Anti-dumping
No duties
Unframed mirrors
PRC
PFG Building Glass
Anti-dumping
Duties imposed
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Trade Remedies
REVIEWS
Product
Country
Applicant
Type
Status and Duties
Picks, spades and
PRC
Lasher Tools
Sunset Review
Duties maintained and
shovels
Wire ropes and
increased
Germany
Scaw SA
Interim review
Duties maintained
China
Scaw Metal Chain
Sunset review
In process
cables
Welded link chain
Products
Tall Oil Fatty Acids
Sweden
Oleochemical Products
Sunset review
In process
Gypsum
Indonesia and
St Gobain
Sunset review
In process
Plasterboard
Thailand
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Trade Remedies
ORIGINAL INVESTIGATIONS CARRIED FROM PREVIOUS YEAR
Product
Country
Applicant
Type
Initiation date
Outcome
Coated fine paper
PRC
Sappi SA
Anti-dumping
25/01/13
No duties
Unframed mirrors
PRC
PFG Building Glass
Anti-dumping
02/11/12
Duties
SUNSET REVIEW INVESTIGATIONS CARRIED FROM PREVIOUS YEAR
Product
Country
Applicant
Type
Initiation date
Status and Duties
Picks, spades and
PRC
Lasher Tools
Sunset Review
26/10/12
Completed. Duties maintained
shovels
and increased
SAFEGUARD INVESTIGATIONS CARRIED FROM PREVIOUS YEAR
Product
Country
Applicant
Type
Initiation date
Status and Duties
Frozen Potato Chips
All
McCain Foods
Safeguard
08/03/2013
Completed. Duties imposed.
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Import and Export Control
IMPORT PERMITS ISSUED
 During 2013/2014 import permits issued amounted to 17 332. The target was 13 500.
 Majority of the permits were for the following imported products:
Marine Resources
Mineral fuels and oils
Chemicals
Rubber and tyres
Metals
Mechanical Appliances
Automotives
EXPORT PERMITS ISSUED
 Export permits issued in 2013/2014 amounted to 10 013. The target was 7 500.
Chapter
Description
Permits Issued
Chapter
Description
Permits Issued
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Ore, slag and ash
8
75
Nickel waste and scrap
12
27
Mineral fuels
446
76
Aluminium waste and scrap
1034
28
Inorganic chemicals
792
78
Lead waste and scrap
125
29
Hydrocarbons
962
79
Zinc waste and scrap
90
30
Human blood
3
80
Tin waste and scrap
3
47
Paper waste
82
81
Other base metal waste and scrap
116
72
Ferrous waste and scrap
1571
85
Waste and scrap batteries
36
74
Copper waste and scrap
1239
87
Used motor vehicles
3494
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Controls on scrap metal
PRICE PREFERENCE SYSTEM FOR SCRAP METAL EXPORTS (PPS)
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The Minister of Economic Development issued a policy directive in terms of Section 5 of the
International Trade Administration Act, directing ITAC to:regulate the exportation of ferrous and non-ferrous waste and scrap;
not allowing ferrous and non-ferrous waste and scrap to be exported unless first offered to the
domestic consumers of scrap metal for a period determined by ITAC and at a price preference
determined by ITAC.
The policy intent being to promote scrap metal beneficiation and to reverse the decline in the metal
fabricating consuming industries. To allow the domestic industry to have access to affordable quality
scrap and to supply inputs into governments infrastructure programme.
ITAC published guidelines on 16 September 2013 in terms of which ferrous and non-ferrous waste and
scrap must be offered to local consumers for a period of 15 working days and at a price preference
calculated monthly by ITAC before exportation.
ITAC published amended guidelines on 12 September 2014 to strengthen the administration of the
PPS.
ITAC published the intention to review the preferential rates for information and comment on 19
September 2014 to have differentiated rates for the different types of scrap metal.
It is the intention of ITAC to conduct an impact study a year from now.
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Judicial Reviews
•
Different and conflicting interests in the value chain of each
investigation may lead to court challenges by parties that stand to
loose.
•
In respect of court cases, ITAC appeared in domestic courts 24 times
(High, Supreme and Constitutional courts) since its establishment.
•
Out of the 24 cases, 16 were ruled in favour and 8 against ITAC
(the eight were mostly in the early days of ITAC).
•
Other jurisdictions face similar challenges, although in differing
degrees.
•
There is also the WTO Dispute Settlement Mechanism within which
government to government disputes are addressed.
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Corporate Governance
COMPLIANCE & INTERNAL CONTROLS
•
ITAC adheres to all applicable regulations governing the operations of
public entities. The policies are developed to ensure effectiveness of
corporate governance strategies in terms of applicable legislations or
guidelines which include amongst others the following: PFMA; Treasury
Regulations; PPPFA and relevant SCM regulations; etc. The checklists
have been developed to assist in enhancing compliance and any identified
non-compliances are addressed.
•
ITAC maintains effective internal controls which are designed to ensure
that risks are reduced or managed and that the organisation is able to
meet its objectives. ITAC’s internal control measures include amongst
others the risk management activities, internal audit activities, the relevant
committees (Risk and Audit) and other internal governance structures.
•
The internal controls are continuously monitored throughout the year by
Management, Internal Audit and by other relevant Committees. All
identified gaps are referred for correction to relevant officials.
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Corporate Governance
Continued
RISK MANAGEMENT
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ITAC has risk management unit that
conducts risk assessment continuously and
then present the risk register to the Risk
Management Committee (RMC) for review.
Those risks whose status has changed are
referred to the Internal Audit Unit to perform
independent test of whether the Risk
Register is a true reflection of the
organisational risks before the RMC can
recommend it for approval by Chief
Commissioner (CC).
ITAC Executive Committee monitored the
internal
controls
and
relevant
risk
management processes for 2013/2014
financial year and is satisfied with their
effectiveness.
The RMC played the role of reviewing the
organisational
risks
and
made
recommendations for improvement on risk
management activities implemented by
management.
AUDIT COMMITTEE REPORT
•
The Audit Committee (AC) held four
normal meetings and one special
meeting in the year under review.
•
According to the Audit Committee report:
 The system of internal control
applied by ITAC over financial risk
and risk management is effective,
efficient and transparent.
 The AC is satisfied with the content
and quality of monthly and quarterly
reports
prepared
by
ITAC
management.
 The AC is satisfied that the internal
audit function is operating effectively
and that it has addressed the risks
pertinent to ITAC in its audit.
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Auditor General Report
IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE
•
Irregular Expenditure for ITAC in 2013/2014 amounts to R391 621.00, of which

R 185 640.00 is the recognition of the irregular expenditure identified by AGSA in
2011/2012 audit for the actual expenses of continuing contracts where evaluation criteria
was not specified when requesting quotations. The contracts will end in the financial year
2014/2015.

During 2013/2014 ITAC an incurred irregular expenditure of R205 981.00 which relates to
awarding of BEE Contribution points to a service provider who did not submit a BEE
Certificate when quoting and for the submission of a copy instead of an original Tax
Clearance Certificate. The break down of this irregular expenditure amount (R205 981.00)
is as follows:1. R147 690.00 in relation to procurement without a BEE Certificate.
2. R58 291.00 in relation to procurement with a copy instead of an
original tax clearance certificate.
•
In 2013/2014 ITAC did not incur any fruitless and wasteful expenditure.
•
The Chief Commissioner has approved the condonation of the above mentioned irregular
expenditures and relevant correspondence has been sent to the National Treasury and AG’s
Office as required by SCM regulation.
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Auditor General Report
Continued
OPINION OF AUDITOR GENERAL
•
ITAC has obtained an unqualified opinion in 2013/ 2014 financial year.
IMPLEMENTATION OF AUDIT RECOMMENDATIONS
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•
•
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ITAC has developed an Audit Action Plan template with clear actions to be taken to
address the audit findings relating to compliance as identified by AGSA.
Some of the findings have already been addressed and progress is being reported on
other outstanding findings.
Internal Audit Unit has been given the responsibility to examine as part of its audit
process the Audit Action Plan to test whether the proposed or implemented actions
will or have addressed the AG findings.
The Executive Committee also plays the role of monitoring the implementation of the
action plan through a report presented on Action Plan progress on implementation.
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Financial Position
OPERATING RESULTS – TOTAL ASSETS FOR 2013-2014
•
•
ITAC has a sound financial position as assets are more than its liabilities. Total assets
amount to R33.8 million and total liabilities amount to R12.6 million
The graphic presentation of total assets of R33.8 million is reflected below.
Total Assets
2%
8%
Accounts Receivables
Fixed Assets
Cash and Cash equivalent
90%
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Financial Position
Continued
OPERATING RESULTS – TOTAL LIABILITIES FOR 2013-2014
•
The graphic presentation of total liabilities of R12.6 million is reflected below.
Total Liabilities
30%
36%
Non-Current Liabilities
Accounts Payable
Other Current Liabilities
34%
23
Financial Performance
OPERATING RESULTS - REVENUE AND EXPENSES
•
ITAC’s total revenue amounts to R82 million and total expenditure amounts to R82.9 million
and there was a deficit of R890 163 in 2013-2014. The expenses above budget which
resulted in deficit were financed from approved retained surplus.
Revenue
Exependiture
2%1%
1%
25%
Personnel Costs
Government Grants
Operating Expenses
Interest Received
Depreciation
Other Income
74%
97%
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Thank You
Office Contact Details:
012 394 3713
Cell: 082 454 8979
stsengiwe@itac.org.za
www.itac.org.za
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