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Annual Report (2013/2014) Presentation to the Portfolio Committee on Economic Development

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Title: Annual Report (2013/2014) Presentation to the Portfolio Committee on Economic Development


1
Annual Report (2013/2014) Presentation to the
Portfolio Committee on Economic Development 28
October 2014 Siyabulela Tsengiwe Chief
Commissioner
2
Contents
  • Introduction.
  • Key Strategic Objectives, Performance Areas
    Services.
  • 3. Trend Analysis of import tariff increases
    and reductions from 2003 to 2013.
  • Tariff Investigations.
  • Anti-Dumping Investigations.
  • Import and Export Control.
  • Judicial Reviews.
  • Corporate Governance.
  • Auditor Generals Report.
  • Financial Performance.

3
Introduction
  • South Africas 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 Commissions 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.

4
Key Strategic Objectives, Performance Areas
Services

The performance of the institution will be
driven through appropriate business solutions,
efficient and effective utilisation of material,
human and information technology resources.
5
Trend Analysis of import tariff increases from
2003 to 2013.
Chart 1 Number of increases recommended by the
Commission
6
Trend Analysis of import tariff reductions from
2003 to 2013.
Chart 2 Number of reductions recommended by the
Commission
7
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 US358/ton - US566/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
8
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

9
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
10
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

11
Administration of MIDP APDP

12
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, United Kingdom SAPA Anti-dumping In progress
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
13
Trade Remedies
REVIEWS
Product Country Applicant Type Status and Duties
Picks, spades and shovels PRC Lasher Tools Sunset Review Duties maintained and increased
Wire ropes and cables Germany Scaw SA Interim review Duties maintained
Welded link chain China Scaw Metal Chain Products Sunset review In process
Tall Oil Fatty Acids Sweden Oleochemical Products Sunset review In process
Gypsum Plasterboard Indonesia and Thailand St Gobain Sunset review In process
14
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 shovels PRC Lasher Tools Sunset Review 26/10/12 Completed. Duties maintained 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.
15
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
26 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
16
Controls on scrap metal
PRICE PREFERENCE SYSTEM FOR SCRAP METAL EXPORTS
(PPS)
  • 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.

17
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.

18
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. ITACs 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.

19
Corporate Governance Continued

RISK MANAGEMENT
AUDIT COMMITTEE REPORT
  • 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.
  • 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.

20
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 AGs Office as
    required by SCM regulation.

21
Auditor General Report Continued

OPINION OF AUDITOR GENERAL
  • ITAC has obtained an unqualified opinion in 2013/
    2014 financial year.

IMPLEMENTATION OF AUDIT RECOMMENDATIONS
  • 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.

22
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.

23
Financial Position Continued
OPERATING RESULTS TOTAL LIABILITIES FOR
2013-2014
  • The graphic presentation of total liabilities of
    R12.6 million is reflected below.

24
Financial Performance
OPERATING RESULTS - REVENUE AND EXPENSES
  • ITACs 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.

25
Thank You Office Contact Details 012 394
3713 Cell 082 454 8979 stsengiwe_at_itac.org.za www
.itac.org.za
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