The International Trade Administration Commission of South Africa (ITAC) has announced the outcome of National Garden’s application for an increase in the ‘General’ rate of customs duty on frozen mixed vegetables classifiable under tariff subheading 0710.90, from 10% ad valorem to the World Trade Organization (WTO) bound rate through a publication in the Government Gazette.
The investigation was initiated in the Government Gazette of 22 February 2019. A full-scale investigation culminated in the Commission’s final recommendation on Nature’s Garden’s application, and this recommendation was subsequently forwarded to the Trade, Industry and Competition minister for his consideration. The minister referred the matter back to ITAC, after which ITAC provided clarification and expanded on certain aspects relating to the proposed increase in the rate of customs duty on frozen mixed vegetables.
The minister raised concerns with regard to the matter of pricing. In particular, he remained concerned that an increase in the rate of customs duty on frozen mixed vegetables may have a detrimental impact on South African consumers.
Given the negative impact that food price inflation can have on the South African economy and on financially hard-pressed consumers, the minister requested ITAC to investigate his concerns relating to the impact of any potential increase in the duty on the Lower Segment Market and the possible impact on food inflation. ITAC’s findings were submitted to the minister for his consideration.
He subsequently communicated to ITAC that he had taken into account a number of issues, such as the current context of high food prices that affects both poor and middle-class consumers, continuing pressures on household incomes from external shocks to the economy, the decline in the level of imports of frozen vegetables from 2020 onwards, the likely impact on aggregate jobs and industrial output in the economy, in deciding whether to impose or decline a tariff increase weighed against other policy objectives.
The minister also considered the fact that food prices in South Africa, and globally, are currently rising rapidly and that the impact of the rise in inflation on not only the poor but also the middle class is well documented.
Considering all information at his disposal, the minister also considered various options that may mitigate the impact of a tariff increase on consumers but, weighing up all the circumstances, decided to reject the application for an increase in the duty on frozen mixed vegetables.
However, he acknowledged that circumstances may change in the future, in particular if current geo-political tensions subside and food prices stabilise as the global economy recovers from the impact of COVID-19.
In light of the aforementioned, the minister directed ITAC, in terms of the International Trade Administration Act, 2002, to review the customs duty on frozen mixed vegetables in nine (9) months and submit a report with recommendations for his consideration.
Enquiries may be directed to the investigating officers, Amina Varachia on avarachia@itac.org.za or Khosi Mzinjana on kmzinjana@itac.org.za