dtic: Withdraws China Import Safety Certificate, Easing Trade Rules

• South Africa's Department of Trade Industry and Competition (dtic) has withdrawn a directive requiring a mandatory Certificate of Conformity for Chinese imports.
• The directive, gazetted on March 20 and set for September implementation, aimed to ensure fair trade and consumer safety for goods like electrical products and cosmetics.
• The measure faced criticism for exclusively targeting China, South Africa's largest trading partner, leading to World Trade Organization (WTO) involvement and concerns about potential breaches of international trade law.
• Importers and customs experts had raised significant concerns about the directive's implementation, citing potential port blockages and challenges in regulating e-commerce.
• The withdrawal, announced by Minister Parks Tau on September 22, alleviates an immediate compliance burden for importers but highlights ongoing issues regarding product safety and fair trade, particularly for online imports.

The Department of Trade Industry and Competition (dtic) has officially withdrawn a controversial ministerial directive that would have mandated a Certificate of Conformity for a broad spectrum of Chinese imports into South Africa.

South Africa's Department of Trade Industry and Competition (dtic) has officially withdrawn a controversial ministerial directive that would have mandated a Certificate of Conformity for a broad spectrum of Chinese imports into South Africa. This directive, initially gazetted on March 20, was slated for implementation in September and specifically targeted goods originating from China, which stands as South Africa's largest trading partner. The stated objective of the measure, according to dtic documents, was to safeguard consumers, ensure product safety, and promote fair trade practices within the market.

The now-rescinded directive would have required a wide array of potentially unsafe goods, including electrical products, toys, cosmetics, and firefighting equipment, to meet official South African National Standards before entering the country. The list of items subject to this certification was extensive, encompassing everything from hair dyes and skin lightening creams to crayons, glues, non-electric camping stoves, frying pans, cash register receipts, solar panels, and laminated flooring. Importers would have been compelled to secure a Certificate of Conformity for these products prior to their shipment to South Africa, adding a significant new layer of customs compliance for businesses engaged in trade with China.

Minister of Trade Industry and Competition Parks Tau formally announced the withdrawal of this directive on September 22. This decision followed a temporary suspension of the scheme in July by the South African Bureau of Standards (SABS), in collaboration with the dtic. The SABS communicated this suspension through a letter distributed to various industry stakeholders, including associations, retailers, exporters, importers, customs clearing agents, regulators, and conformity assessment bodies. The letter acknowledged feedback received from both industry players and the World Trade Organization (WTO), and it extended an invitation for further consultation on the matter.

The directive's singular focus on China quickly drew international attention, leading to the involvement of the World Trade Organization. Customs expert Clifford Evans, from clearing and forwarding agent Berry and Donaldson, highlighted that the proposed implementation method had already sparked considerable concern among importers. Donald Mackay, CEO of XA International Trade Advisors, explicitly stated that isolating a single country in such a trade measure constitutes a breach of WTO law. He elaborated that while standards can be applied, they must be applied equally to all countries to be sustainable under international trade regulations.

According to Mackay, the only exception to this principle is if the targeted country itself is in violation of a WTO rule, and the measure is designed to offset that specific breach. Evans speculated that China likely perceived the directive as unfair targeting and subsequently approached the WTO. He suggested China's argument would have centered on the perceived inequity, given that China permits South African exports to enter its market mostly duty-free, while South Africa was now demanding pre-shipment verification of product conformity to its standards. This context is particularly relevant as China had implemented zero tariffs on most imports from 53 African countries as of May 1.

Beyond the legal and international trade implications, the practicalities of implementing the directive presented substantial challenges. Clifford Evans acknowledged the legitimate concerns regarding certain goods entering South Africa that might not meet safety standards. However, he warned that the proposed system would have created significant enforcement difficulties, potentially leading to severe disruptions. Evans projected that the directive's strict application would have effectively blocked South African ports, causing all shipments originating from China to be detained and halted, thereby crippling trade flows.

Evans further identified two primary issues exacerbated by the directive: fair trade and the burgeoning challenge of e-commerce. He illustrated this disparity with an example: a registered importer bringing in perfume through a port might be required to provide documentation if requested by port health authorities. In stark contrast, the same perfume, if sent privately to an individual via courier from an e-commerce provider in China, would not face the same scrutiny. This highlights a significant regulatory gap, as e-commerce poses a substantial challenge to legitimate trade, and customs authorities globally, including in South Africa, are grappling with how to effectively regulate it. Despite these difficulties, Evans maintains that there remains scope for proper regulation of goods.

The dtic's decision to withdraw the mandatory Certificate of Conformity for Chinese imports immediately alleviates a significant new compliance burden for South African importers. This move is expected to prevent the severe logistical disruptions and potential port blockages that customs experts had warned would arise from the directive's implementation. For consumers, the immediate effect of this withdrawal, as noted by Donald Mackay, is likely to be lower costs, as the additional compliance expenses would have inevitably been passed on.

However, the withdrawal does not resolve the underlying issues that the directive aimed to address, namely product safety, consumer protection, and fair trade practices, especially in the context of rapidly expanding e-commerce. While the specific measure was deemed problematic due to its WTO non-compliance and implementation challenges, the concerns about goods violating safety standards remain. The ongoing struggle for customs authorities to effectively regulate online imports from China suggests that while this particular hurdle has been removed, the broader challenge of ensuring safe and compliant products in the South African market, particularly from e-commerce channels, will require future, more carefully structured regulatory efforts.

Lawyers and compliance officers advising importers of Chinese goods into South Africa should note that the mandatory Certificate of Conformity requirement has been officially withdrawn, alleviating a significant new compliance burden. However, they should remain vigilant for future, WTO-compliant regulatory efforts to address product safety and fair trade concerns, especially regarding e-commerce imports.

Source: Original reporting via Business Day