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Unilever South Africa (Pty) Ltd, applied for the creation of a rebate facility on palm oil, for use in the manufacture of soaps and organic surface-active products and preparations, in the form of bars, cakes, moulded pieces or shapes.
As motivation for the application, Unilever submitted that, it is reformulating its soap bars to align with its sustainability strategy, which requires the use of palm oil that is currently subject to a 10% import duty. Since palm oil cannot be produced locally due to unsuitable environmental conditions, the Applicant requested a rebate on the duty to support local manufacturing and maintain competitiveness in the domestic market.
Amongst other findings, the Commission found that:
• Palm oil constitutes 36% of global vegetable oil supply while utilizing less than 9% of agricultural land dedicated to oil crops, producing 40% of global demand. Indonesia and Malaysia dominate
production, contributing over 80% of the 78 million tonnes produced globally in 2022/23, with further growth anticipated.
• The SACU region, including South Africa, relies entirely on imports due to unsuitable agronomic conditions for palm oil cultivation but produces other vegetable oils, such as sunflower and soybean oils.
• The Applicant’s production costs increased significantly between 2021–2022 due to rising raw material, input, and shipping costs, though import-related expenses eased in 2023.
• In terms of soap bar imports, it was found that there was a notable surge in the importation of laundry soap in 2020, marked by a substantial increase of 126.6%.
The Commission decided to recommend the creation of a rebate facility on palm oil, not fractionated, partly or wholly hydrogenated, whether or not refined, but not further prepared, classifiable in tariff subheading 1516.20.90, for use in the manufacture of soap and organic surface-active products and preparations, in the form of bars, cakes, moulded pieces or shapes, classifiable in tariff subheading 3401.1, in such quantities, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided that the goods are not available in the SACU.
A rebate facility provides a duty waiver for domestic industries not to pay full or partial customs duties on a specific product. It allows for sourcing of inputs at world competitive prices and promotes competitive pricing in the local and export markets.
Please refer to Report 739 for full details.
Also see Report 738 issued previously, related to the Unilever rebate application.
ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA
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