ITAC rejects process delay criticism

21 Aug 2023

20 August 2023
Business Day
by Khulekani Magubane

The International Trade Administration Commission (ITAC) has hit back at criticism by trade consultancy XA Global Trade Advisors that delays in import duty determinations have cost the economy up to R4bn. ITAC spokesperson Thulakanyo Nangammbi said that while the numbers cited by the company seemed “compelling”, they “further fudge rather than illuminate the issues”. XA Global Trade Advisors this week issued its third report on the import tariff adjudication process.

CEO Donald MacKay said that by June this year, the average time taken by ITAC to adjudicate applications for duties had stretched to 25 months — five times what it was five years ago. MacKay said the adjudication period, as stipulated by ITAC itself, should be six months at the most. “We know about the six months because this has been published by ITAC for a decade now. Before 2007, ITAC had a 12-month duration period for cases and we were told they wanted to bring that down.

That’s how we know how long the period should be, and we have known that this has not always been a problem,” he said. The company’s report said some cases had taken as long as 52 to settle, which was “just silly”. “The quantifiable cost of these delays is R2.6bn in duties paid where there is no local producer and R4bn not collected in duties where protection has been requested,” the report said. Nangammbi said ITAC — which regulates trade and advises on duties — would study the XA Glorbal Advisors report. But he said the commission “undertakes tariff investigations speedily and with rigour”; these were concluded within four months for sectors in distress and six months for normal investigations.

“There may be instances where an investigation envisaged to unfold over six months may take longer. This is in no way irregular and may be attributable to a wide array of reasons, including but not limited to the submission of deficient applications, several requests for extensions on the part of applicants, and investigations being referred back to obtain additional information, inter alia,” Nangammbi said.

He said it was a mystery where the trade consultancy had come by its time frame of 52 months for conclusion of an adjudication process. “The XA report’s computation of the alleged costs of ‘indecision’” appeared persuasive but was not helpful, Nangammbi said. “The assertion that an investigation would be considered overdue if it is more than six months old is utterly misleading.”

An adjudication process occurs either when a business or the government wants an adjustment to a duty imposed on imports. Businesses may want a duty tightened because they can’t compete with cheap imports or because the goods they need to produce their products are too expensive due to duties. MacKay said while the goods are not housed in a warehouse during the adjudication process, they continue to enter the market under outdated duties; so ITAC would lose revenue if the duties were too low, and businesses would overpay if the duties were too high.

“If we take the current period where cases are open and we count to June, there is R2.6bn that should be collected on products that you can’t source locally and R4bn that should be collected on duties where protection has been required,” MacKay said. The XA report said the delays occurred in the office of the minister of trade, industry & competition — which receives ITAC’s determination for confirmation — and in the office of the minister of finance, which approves the final decision. ITAC recently imposed duties on imported chicken from Brazil, Denmark, Ireland, Poland and Spain, which it said was being dumped and was causing material harm to the local industry.