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The Commission received a Policy Directive (the “Directive”) from the Minister of Trade, Industry and Competition (the “Minister”) in line with section 5 of the International Trade Administration Act 71 of 2002 on 04 August 2021. The directive was to review the used overcoat rebate as part of the implementation of the Retail-Clothing, Textile, Footwear, Leather (“R-CTFL”) Masterplan, where one of the objectives of the Master Plans relates to reviewing the rebate provisions for the importation of second-hand clothing. The products eligible for importation under the rebate are car-coats, raincoats, anoraks, ski-jackets, duffle-coats, mantles, three-quarter coats, greatcoats, hooded caps, trench coats, gabardines, padded waistcoats, and parkas. Particularly in the cold winter months, making these items accessible to poor, working class households in South African population. During its deliberations and in arriving at its recommendation, the Commission considered information at its disposal, including comments received during the investigation period as well as oral representations. The Commission found that: i. Illegal imports of second-hand and worn clothing also threaten to undermine the objectives of the R-CTFL Masterplan and the nearly 70 000 new manufacturing jobs which the plan hopes to create. ii. The rebate creates an administrative burden for SARS and ITAC as the goods are imported in compressed bales, making it very difficult to verify what type of products are imported. iii. Information received from four local manufacturers, namely Durban Overall, Icebreaker General Trading, Leo Garments and Kingsgate, indicates that South Africa has productive capacity to manufacture overcoats, raincoats, anoraks, three-quarter coats, trench coats, padded waistcoats, and parkas. Considering the forgoing, the Commission recommended the following: a) That rebate item 460.11/00.00/01.00 for used overcoats be maintained at a quota level of 3 836 376kg and the validity period be limited to January – July as the original purpose of the rebate item was to provide affordable used overcoats during the winter season. It is further proposed that the rebate item be phased out over the next 3 years by reducing the quota by 10% annually, to allow the industry to re-purpose their operations over this period to avoid immediate job losses. However, it is proposed that the quota for importers with 20 000kg allocation remain at the same level for the next 3 years until the end of the phase-out period; and that no new importers be allowed to participate during the phase-out period. b) That the R-CTFL Masterplan, should include under its localization objectives; thus, exploring how to scale up domestic production of warm winter clothing broadly, including but not limited to overcoats and related products. Please click on the links below to access the full Report 721 and revised Guidelines and Application form: Amended Guidelines and Application form
ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA
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