1.1. The Department of Trade and Industry (the dti) tabled a motivation for the Commission on International Trade Administration (CITA) Bill at a Chamber meeting held on 22 November 2001. At the same meeting the dti delivered a presentation on the Southern African Customs Union (SACU).

1.2. The Chamber agreed that a sub-committee be established to discuss both the SACU and the CITA Bill. A Nedlac report was submitted to Parliament on 22 September 2002.

1.3. Article 42 of the SACU Agreement, which was signed in October

2002 and is due for ratification in November 2003, states as follows'.

1.3.1. The Council may develop such annexes as may be necessary to facilitate the implementation of the Agreement.

1.3.2. All such annexes shall form an integral part of this Agreement.

2.1. The Chief Director of Multilateral Trade Negotiations, Xavier Carim, tabled the two Annexes listed below to the Teselico meeting at Nedlac on Thursday, 23 October 2003.'

2.1.1. Draft Annex B.' National Bodies

2.1.2. Draft Annex C'. Tariff Board

2.2. The Chamber agreed that in view of time constraints, constituencies should submit responses to the Nedlac Secretariat for the compilation of a Draft Nedlac Report. Such report would be discussed at the Chamber meeting held on 6 November 2003.

2.3Chamber meeting held on 6 November 2003 agreed that a task team be established to further engage on the Bill and to finalize the Nedlac Report. The Task Team members comprised of the following members:

Business: M McDonald

Labour: T. Van Meelis, M. Bennett

Government: Carim Z. Dingiswayo, S. Mogapi, C. Grove, P. Moitse

2.4. The Task Team meeting convened on Tuesday, 11 November 20'D3.

(The numbering follows that used in the respective Annexes)

[ ( )= deletion _____________

3.1. The parties agreed on the following:

3.1.(a) Should read: Every request, served in terms of each Member States' relevant legislation and regulation, for customs tariff changes, or other related SACU issues, received by it as contemplated in paragraph 1 of Article 14 on a monthly basis: and

Should read: Each Member State shall require its National Body as soon as possible to…

4(b) Should read: Report to the Tariff Board through the Secretariat on the investigation and evaluation contemplated in subparagraph (a) and recommend that the request be approved or, approved with amendments or rejected.

5(a) Should read: Require its National Body to provide within a reasonable period of time, information to the SACU Secretariat

5(b)(1) Should read: Request information from the SACU Secretariat, or one or more Member States, as permitted in terms of the SACU Agreement or in the spirit, or procedures established in terms of the SAXCU Agreement.

8.Consideration of alleged dumping and subsidized exports

The new heading should read as follows:

Consideration of imposition of Trade Remedies

8.2 Should read: Whenever a National Body receives an application for remedial action (anti-dumping, countervailing measures and safeguards) against the importation from outside the Common Customs Area of goods that are allegedly being dumped or subsidized, such National Body may decide whether it will initiate an investigation into the allegation. If it so decides, the National Body must notify the Secretariat of the application and its intention to investigate the matter.

Should read: It shall be the responsibility of the Customs Authorities of the different Member States to ensure that any amendment of the customs tariff is implemented, subject to the legislation in force in the different Member States.

10.Insert new Point 10.: Review Clause

Should read: Periodic reviews of this Annex shall be undertaken by the Member States in order to improve the functioning of this Annex in light of experience gained.

5.1(b) Should read. Have suitable qualification and/or experience in economics, accounting, law, commerce, agriculture, industry or public affairs.

7. Resignation and removal from office

7.3. Should read. The Council may remove a Member from office for -

8.7Should read: Decisions on recommendations regarding the customs tariff as provided for in paragraph 2 of Article 11, shall be made by consensus of the members present.

8.9 Should read: The Board must allow National Bodies to appear before it at its next meeting when a submission or report containing a recommendation on the customs tariff is considered.

8.10 Should read: The Board may make rules of order for its proceedings, but any such rules of order must be consistent with the spirit of the Agreement and accepted by Council at the earliest opportunity.

9.2.Should be deleted

9.4.Should read: The Board must monitor, review, report to the Council and advise the Council in respect of any matter referred to it by the Council that affects or might affect trade and industry in the Common Customs Area.

9.5. Should be deleted

9.6. Should read. The Board may not recommend to the Council that a customs duty be made retrospective, if such a recommended duty on goods is higher than the duty applicable to such goods immediately before the recommendation is made.

10. Communication. procedures and documentation related to the customs tariff

10.5. Should read: Member States shall within seven working days after having received notification from the Secretariat referred

10.10 Should read. In cases where a National Body submits a report with recommendations relating to remedial action against the exportation of goods from a country or territory outside the Common Customs Area into the Common Customs Area, the Board must meet and give a recommendation to the Council within 7 days and the Council will meet to take the final decision within the timeframe obligations of the WTO Agreement.

10.11 Should read. If a report is not of an urgent nature, does not contain adequate information and the Board is not able to make an informed decision on the matter, it may only once return the report to the National Body or National Bodies concerned and request more information concerning the matter being considered, or request the National Body or National Bodies involved to appear before the Board.

10.12 Should read: If a report is of an urgent nature, the National Body or National Bodies submitting the report must inform the Board of ~e urgency of the report with the necessary motivation. If no consensus can be reached on an urgent matter at the first meeting of the Board considering the matter. then provision made 8.8. of this Annex will apply.

10.16 Should read: The Council may allow the Board and/or National Bodies to appear before it when recommendations concerning the customs tariff are considered during a meeting of the Council.

15. Insert new Point 15.. Review Clause

Should read: Periodic reviews of this Annex shall be undertaken by the Member States in order to improve the functioning of this Annex in light of experience gained.

4.1.All parties agree that as a matter of urgency work be undertaken to develop common SACU policies and procedures which will facilitate the efficient operation of the National Bodies and the SACU Tariff Board.

· SACU must develop a common understanding and interpretation of trade remedies

Implementation of the SACU Council decisions SACU wide

SACU wide customs cooperation

Dispute settlement

5. CONCLUSION

5.1. This report therefore concludes consideration of the SACU Draft Annexes B and C and the report is submitted to the relevant Ministers in terms of Section 8 of the Nedlac Act, No.35 of 1994.

5.2. It is acknowledged that the Nedlac parties may continue to advocate their views in the public consultation and Parliamentary processes.

6.1. South African Customs Union Agreement

6.2. Draft Annex B. National Bodies

6.3. Draft Annex C. Tariff Board

7.4. Labor’s comments on Draft Annex B and Draft Annex C of the SACU Agreement

7.5. Business' comments on Draft Annex B and Draft Annex C of the SACU Agreement

The following are comments from the Business constituency in respect of the Sections indicated.

In terms of (a) a National Body shall notify the Secretariat of every request for customs tariff changes. According to par. 10.2 of the draft Annex C in respect o~ the Tariff Board National Bodies must notify the Secretariat only if it decides to investigate an application.. This is inconsistent. Business would prefer the latter.

Also refer to 3.1 above.

There should be clearer definition of applications I requests / preliminary investigation I merit assessment and investigation. This refers to the Annexes of both the Tariff Board and National Bodies.

In terms of 7.2 every National Body shall conduct an investigation or compile information in respect of every investigation and submit a report in respect of every investigation. This implies that the compiling such information and reports must be undertaken in irrespective of whether the particular Member State has any interest in respect of a particular investigation. Is this the intention?

1. Suggest "remedial action" .be defined.

2. At the end of the 3rd sentence, suggest you substitute: notification received from a National Body" for "application."

The Secretariat cannot notify those concerned within two days of the application, as the National Body concerned must first decide whether to initiate an investigation and then notify the Secretariat.

It will be a problem for the National Body of the RSA (ITAC) to have the responsibility to ensure that any amendment of the customs tariff is implemented as the SARS is the implementing authority.

In order to make this consistent with the corresponding section of the International Trade Administration Act (ITTA), this should be amended to read.

(a) Be an ordinary resident in the Common Customs Area.."

The ITAA does not require citizenship of a Member State.

Delete only" as it clashes with 7.2.

From the wording, it appears that the Tariff Board will not be able to function until such time as the Council of Ministers has determined guidelines and policies. Is this correct and when will that happen?

Suggest that consensus of the members present" be added.

Delete the commas after "and" and '"of".

In the last line, substitute "immediately" for 'just".

1. It is unlikely that all Member States will be able to publish applications within 7 working days of receipt of notification. The inclusion of timetables in the draft is a very positive aspect, although this could prove to be difficult in practice to achieve some of them..

2. It is unlikely that all 5 Member States will publish applications on the same day. The last sentence of 10.5 assume that this will be the case as comments received from all Member States have to be forwarded within 5 working days.

3. Is it the intention that all comments received be circulated to Members and National bodies within 10 days of the closing date, whilst the reports of National Bodies may be submitted at various dates weeks OF months later? What will they do with the comments until such time as they have a report(s)?

4. The issue of confidential information in comments has to be addressed. Should full comments or non-confidential versions be circulated? In Business's view, non-confidential versions should be circulated. Members will have access to confidential information through reports submitted by the National Body(s).

Suggest that "remedial action" should be defined.

The deadline for implementation of tariff changes of "the first Friday following two weeks after National Bodies have been notified…."is supported but we would question whether this is it realistic in practice.

The organized clothing industry has also submitted comment in respect the issuing of rebate permits or duty relief permits.

The clothing industry is very concerned that each Member State can issue rebate or duty relief permits independently. The industry is suggests that there should be some joint controlling body that confirms and checks each permit before issue. This is an area where there is the potential for a great deal of fraud or. potential fraud to occur, as the controlling mechanisms are extremely weak.

As South Africa is, by far, the major contributor to the Customs Pool, it should have a far greater controlling and/or checking role and ability.

The following comments and questions relate only to the draft Annexes B and C. Labor ‘s concerns regarding the SACU agreement had been raised previously and should be noted in the development of annexes.

2. .(b) notes that read a whole, a National Body may refer tariff and other related matters to the Board or any other SACU institution subject to "the rules that may govern the procedures of the relevant SACU institution". Our concern here is that there is alignment of the Annex and the relevant SACU institution.

3.2 (a). It may be useful to specify a time if possible, wherein a National Body should notify the SACU Secretariat of "every request for customs tariff changes, or other related SACU issues, received by it as contemplated in paragraph 1 of Article 14; and

3.1 .(b). The National Body’s disposition of each such request". Timely notification would enable another National Body to do its own research and make representation to SACU , if it so chooses, in an active manner.

Paragraph 4 should if possible include reference to a time period or have wording such as "soon as possible" in order to ensure expeditious dealings with tariff issues

Does the specification that the information must be relevant to the effective operation of SACU not pose an obligation on proving relevance? This may be a difficult obligation to meet if one does not have the information - our experience in requesting information in retrenchment processes is that it is very difficult to prove relevance if one does not have the information.

Would any domestic legislation referred to in 5.(b).(ii) result in it being impossible to share desired information?

Notification is dealt with in paragraph 3. National Bodies should be able to do investigations, compile information, evaluate a recommendation etc, even if not requested in terms of 7.1 (a) and 7.1.(b).

A National Body should notify the Secretariat of an application, whether it intends to Investigate the matter or not. A certain time period should be set wherein this notification takes place as well as notification regarding a decision to investigate or not. A time period should also be set for notification to the Secretariat of imposition of provisional payment.

Is there any legislation in force in Member States that would prevent or inhibit the country' from amending customs tariffs? Who are the relevant bodies responsible for implementation in Member States? In South Africa, ITAC has this responsibility so what is the implication of the Annex making the National Body responsible for implementation ?

5.1(b) Please see suggested change in wording as underlined. "Have suitable qualifications and/or experience "A person may have experience in industry for example, but not have the qualification such as a BCom.

The person should also have suitable qualification and experience in Labor, Labor markets and development to ensure that the impact of tariff changes is understood in its totality.

8.7 should read "by consensus of the members present". (underlined wording is Labor’s suggested addition).

8.9 allows for National Bodies to appear before the Board When a submission or recommendation is not supported by the Board or the Board needs additional information. National Bodies should also be allowed to appear before the Board if there are strong disagreements regarding recommendations made from other National Bodies. This could ensure that dialogue takes place and full information is shared prior to the Members not being able to agree on the basis of reports.

If the Board were to initiate investigation into a matter would it still report to and advise the Council (as provided for in 9.4)? Labor’s view is that it should be allowed to initiate investigations and advise Council.

Notification of an application should be made to the Secretariat etc even if a National Body decides not to investigate the application. Once the decision has been taken by the National Body whether to investigate or not, this decision should be relayed to the Secretariat. Adequate information must be provided to the relevant bodies.

In the event of the Board not reaching consensus on a matter, the Council may also allow National Bodies to appear before it

We are disappointed that the DTI and/or SARS has not yet tabled, NEDLAC, draft annexure to the SACU agreement which deals with Customs Co-operation( see Article 23 of the SACU agreement) .Labor would point out that the efficacy of any tariff regime – particularly one which has a (job) protective function – is in many ways ultimately determined not by the tariffs that are set but by the manner in which the customs and excise authorities carry out their duties. The fact that South Africa is part of a customs union with BLNS states means that if there are customs abuses within any one of the BLNS states then South Africa and regional jobs be in real jeopardy

Labor is of the view that the trade protocol should have an annexure more fully specifying " customs co-operation " . This annexure should contain the following elements:

that at the initiation of the SACU Agreement there should be an independent audit of each SACU member state's customs administration This audit should:

- Examine and make recommendations on the human resources required to run an efficient and corrupt free custom’s administration

- Examine and make recommendations on the physical infrastructure (e.g. Information Technology requirements at ports of entry (such as x-ray scanners; buildings, warehouse to detain goods, etc) required to run an efficient free customs administration

The funds required to for these investments should be drawn from each member states' revenue allocation that emanates from the shared the shared customs pool.

that a supra-national customs unit in SACU be established with officers in the unit being given the necessary powers to operate in any member state. The officers attached to this unit should have all the statutory powers enjoyed by customs officials in any state to investigate cross-border trade and tax related transgressions and to report any information thus obtained to matter. This will help to track down fraudulent trade deals to speed up investigations and to force member states into action Member states often complain that such cross-border actions infringe on their sovereign, but they ignore the fact that the Agreement (and the functioning of the various institutions) does make inroads into the sovereignty of member states. If a member state fails to take steps to correct inefficiencies and to act against corrupt officials, there should be some form of sanction which the other members can impose on the defaulting member. An effective form of punishment would be for payment from the customs revenue pool to be suspended until the defaulting member rectifies matters.

It is difficult to see why this annexure should define a person in the expansive terms that it does

This should be amended to provide that any national tariff body can recommend that a request be approved or rejected with or without amendment". Often our own national body essentially approves a request for a customs tariff adjustment—but with amendment(s)

It is not clear whether this clause deals with the exchange of confidential information. Domestic applicants may be reluctant to provide our National Body with confidential a information if this information will be disseminated in the BLNS states. A mechanism needs to be found to deal with

It should be considered whether this clause should also state that information should be not only' be disclosed in terms of "legislation ", but in terms of any "regulation".

The annexure should provide that information should be provided timeously provided It should be clearly ' spelt out that if any information is not provided within a reasonable time frame by any member state then the National Body can make a recommendation to the Tariff Board on the basis of available information. The Tariff Board / and the Council of Ministers should be made aware of the fact requested information was requested but not provided and that they should take this into account when it making a recommendation / final decision.

If any National Body is requested to do an investigation on the behalf of any member state then additional financial resources from the Customs Pool should be made available to undertake such an investigation

It should be stipulated that all national bodies should develop a common approach with regards interpreting W'TO agreements.

Par.8.2. It is stated that a National Body should "at the earliest possible time " impose provisional payments. This could be a bused. If should be stipulated that if any state does not impose such a payment that its share of the revenue pool should be reduced.

It is unfair - in the case of ITAC - to make it responsible to implement a decision. IN the KSA, this is the responsibility of SARS. In South Africa SARS sometimes takes its own lime to implement decisions.

Definition: "person"

It is difficult to see why this annexure should define a person in the expansive terms that it does. Does this mean that any SACU member state could be represented by a consultancy?

One of labors concerns with the SACU. agreement is the potential delays in the imposition of tariff; necessary to protect jobs. If a decision has taken unnecessarily long to take due to constant refer-backs by many SACU structures it may be necessary for decisions with retrospectiviy clauses to allowed.