Chairman's Desk

Chemexcil Activities

Chemexcil’s Participation in Beauty World Middle East Exhibition held in Dubai, UAE during 8th to 10th May 2018

Exim Updates

GST (Policy Wing) - Clarifications on refund related issues

CBIC - Web-help service is now available on www.cbec-gst.gov.in for query resolution

Very Imp. - Sanction of pending IGST refund claims where the records have not been transmitted from the GSTN to DG Systems

Imp - Details of embedded taxes across various states in the export value of the product which remain non-refunded

Banking issues / Financial problems faced while doing business with Russia

ADD - Imposition of Definitive Anti-Dumping Duty on imports of Saturated Fatty Alcohols originating in, or exported from Indonesia, Malaysia and Thailand

CBIC - Applicability of IGST on goods supplied while being deposited in a customs bonded warehouse

Air Cargo Complex, Sahar, Mumbai Exporters whose Validation of Bank accounts by PFMS is still pending

DGFT - Maintenance of Annual Average Export Obligation under EPCG Scheme

US GSP Details of Key Importers in USA

RBI EDPMS - Date for implementation of caution list extended till 30-Sep-2018

JNCH:- Important Public Notices issued (Pilot implementation of paperless processing under SWIFT/ Increase in the validity period of Chapter 3 Scrips/ Modification in the procedure of the Container Movement Permission etc)

Major problems which you are facing on export of your items to LAC countries?

FSSAI / JNCH Additional list of HS Codes of Non-Food/ Out of Scope items (as per JNCH PN no. 71/2018)

e-Way Bill Grievance Redressal Officers (CBIC and State / UT Governments) for e- way bill system under rule 138D of Central / State GST Rules, 2017

Imp - Suggestions on WTO Compliant Export Incentives in lieu/ fine tuning of existing export promotion measures under FTP 2015-20 and Department of Commerce

US GSP - Review of US GSP benefit on exports from India

e-Way Bill Notification regarding e-Way Bill for Intra-state Movement of Goods in Maharashtra

News & Articles

Fair Trade and the World Trade Organization

India must become globally competitive in manufacturing to boost merchandise exports

Utilising Free Trade Agreements for what they mean to business

India tops list of fastest growing economies for coming decade: Harvard study

View: India must tread carefully on free trade agreements

Specialty chemical sector may double market size by FY25: Report

Suresh Prabhu asks officials from different Ministries to prepare action plan within next fortnight on boosting exports

EXPORT STRATEGY- SOUTH AFRCIA

GST
(Policy Wing)
Clarifications on refund related issues

CBIC - Web-help service is now available on www.cbec-gst.gov.in for query resolution

Very Imp. - Sanction of pending IGST refund claims where the records have not been transmitted from the GSTN to DG Systems

Imp - Details of embedded taxes across various states in the export value of the product which remain non-refunded

Banking issues / Financial problems faced while doing business with Russia

ADD - Imposition of Definitive Anti-Dumping Duty on imports of Saturated Fatty Alcohols originating in, or exported from Indonesia, Malaysia and Thailand

CBIC - Applicability of IGST on goods supplied while being deposited in a customs bonded warehouse

Air Cargo Complex, Sahar, Mumbai Exporters whose Validation of Bank accounts by PFMS is still pending

DGFT - Maintenance of Annual Average Export Obligation under EPCG Scheme

US GSP Details of Key Importers in USA

RBI EDPMS - Date for implementation of caution list extended till 30-Sep-2018

JNCH:- Important Public Notices issued (Pilot implementation of paperless processing under SWIFT/ Increase in the validity period of Chapter 3 Scrips/ Modification in the procedure of the Container Movement Permission etc)

Major problems which you are facing on export of your items to LAC countries?

FSSAI / JNCH Additional list of HS Codes of Non-Food/ Out of Scope items (as per JNCH PN no. 71/2018)

e-Way Bill Grievance Redressal Officers (CBIC and State / UT Governments) for e- way bill system under rule 138D of Central / State GST Rules, 2017

Imp - Suggestions on WTO Compliant Export Incentives in lieu/ fine tuning of existing export promotion measures under FTP 2015-20 and Department of Commerce

US GSP - Review of US GSP benefit on exports from India

e-Way Bill Notification regarding e-Way Bill for Intra-state Movement of Goods in Maharashtra

May is World Trade Month, a time to recognize and echo the importance of global trade, particularly fair trade. As we kickoff World Trade Month here at USDA, it’s important to acknowledge that trade is on our minds not only during May but every single day of the year. Our work supporting fair trade is a 24-hour job as few industries depend more upon – and benefit more from – trade than American agriculture.

It’s not an understatement to say that the gains from trade are powerful. When people produce what they are best at, and trade it for things they are less adept at producing, both sides benefit. Historically, economic integration in the post WWII era delivered immense benefits. Trade is not the only reason, but it is a major factor in helping the number of people living in extreme poverty fall to record lows and become dwarfed by the number of people not living in extreme poverty.

For U.S. agriculture, this success story is also a profitable one. Our farmers are the best in the world and we produce way more than we can consume. For many commodities, a significant share of U.S. production is exported. Without customers overseas, we would have huge surpluses, which would drive down prices, and result in hardships for our farmers that would ripple throughout the rural economy.

For me, these data raise two questions. First, since trade is good, what can we do to encourage more of it? Second, while trade is clearly good, how can we ensure it is fair? More specifically, while society as a whole benefits from access to foreign customers and the availability of imported goods, what can we do to protect particular industries from losing out to unfairly traded goods from foreign competitors? After working on trade policy for over 25 years, my view is that the answer to both of these questions is the same – a strong set of rules operated through a multilateral institution.

Importance of the WTO

Fortunately, we have a strong set of rules paired with an effective institution to both lay down rules for trade and enforce them – the World Trade Organization (WTO). WTO rules have been agreed to by 164 countries, including all the important trading nations, and have helped reduce barriers to trade that have powered the impressive growth in trade and expansion of world income. The core rules of the WTO are straight-forward and intuitively fair.

You may wonder how did these rules come about? Following the great depression and WWII, leaders in the United States recognized the importance of guarding against trade restrictions and wanted to expand trade to rebuild the world’s economies and foster closer diplomatic relations. Working initially with a small group of like-minded countries, a set of trade rules were agreed to in 1947, called the General Agreement on Tariffs and Trade (GATT). These rules were so successful that over time more countries joined the agreement, committing to follow the rules for trade among members of the GATT and also finding ways to negotiate reductions in trade barriers, principally tariffs. Building on this success, in 1994 the GATT was converted to the WTO, with further rules agreed to and, importantly, a binding dispute settlement system established.

The GATT, and now the WTO, have both helped expand trade and have established a set of rules that define ‘fair trade.’ So, what are those rules?

Key Rules Supporting Fair Trade

When I was a guppy government worker my former colleague Kevin Brosch once summarized the core rules for fair trade to me: three-and-a-half rules of the GATT. They are both strong rules to guard against trade restrictions and are also manifestly fair. They promote fair trade by limiting government restrictions and legitimizing the trading system. Here in a nutshell are the key rules:

1. Don’t discriminate across suppliers. The first article of the GATT ensures ‘Most Favored Nation’ treatment for all members. Basically that means that an importing country can’t treat one supplier less favorably than the treatment it provides its most favored supplier. For example, if the United States imposes a 5 percent tariff on mango imports from the Philippines, and that is the lowest tariff it applies on mangoes, India is ensured that it will not be subject to a tariff higher than 5 percent. Or, if the United States requires imported peaches from Argentina to be allowed in without fumigation, we can’t require imported peaches from Chile to be fumigated prior to entry. This ensures fair treatment across supplying countries.

2. Tariffs are the only justifiable tool for protecting domestic markets. The second article of the GATT says non-tariff measures like quotas, bans, and variable import restrictions are prohibited. Countries can however use tariffs, but they are set at maximum levels (for example the U.S. tariff on beef cannot exceed 26.4 percent). By establishing tariffs as the basis for regulating trade, the rules ensure more transparency and predictability and also facilitate negotiations between countries to bring down trade restrictions. It is really as simple as a negotiation over numbers!

3. Don’t discriminate against imports. The third article of the GATT protects imported products from facing requirements or taxes that are less favorable than those imposed on domestic products. For example, if the United States imposes a 15 percent excise tax on U.S. whisky, it can’t impose an excise tax higher than 15 percent on imported products. Or, if the United States says U.S. beef can be sold in grocery stores, convenience stores, and wholesale markets, imported Korean beef cannot be restricted to just be sold through convenience stores. This ensures imports are not restricted arbitrarily from the market. A key exception is tariffs (imports can be taxed while domestic products are not), which is covered next.

3.5 Subsidies. The WTO rules on subsidies are weaker, so I call it a half rule. Subsidies are permitted, with some exceptions. For example, export subsidies (which are government payments that help exporters win sales in international markets) are banned. While some subsidies are permitted, if an importing country shows that the subsidies are leading to increased imports from the subsidizing country, and injuring the importing country’s domestic industry, it can ‘remedy’ the situation by imposing restrictions –counter-vailing duties. Similarly, if a country is selling its product at a less than fair value, an importing country can restrict imports through anti-dumping duties. This rule recognizes that subsidies are pervasive instruments of government policy, but aims to control the negative impacts. This is easier said than done. China’s unjustified use of these trade remedies to unjustifiably restrict U.S. sorghum exports this year shows how these rules can be twisted for protectionist purposes.

Exceptions to the Rules and Enforcement
Is that it? Not quite. The WTO rules run for hundreds of pages and these three-and-half rules account for less than 1 percent of all the rules. The rest of the rules are exceptions to these rules. For example, countries agree to not discriminate across suppliers, however, if there is a threat to health or safety from imports, the trade rules allow the importing country to discriminate against imports from the impacted country. For example, if an exporting country is suffering from a disease outbreak that could spread to an importing country, a country may ban imports of the dangerous product from the exporting country, even as it imports from another supplier and continues to allow domestic commerce of the same product. The rules do lay out provisions to ensure this ‘health and safety’ exception is not abused: before imposing a trade restriction the importing country must complete a scientific risk assessment and it can’t arbitrarily impose overly restrictive measures. This can be pretty complicated!

Similarly, there are exceptions that allow countries to discriminate across supplies by forming Regional Trade Agreements. This allows the United States to eliminate tariffs on Mexican and Canadian imports, while maintaining them on other countries, like the European Union. There are conditions that a Regional Trade Agreement must substantially cover all trade to guard against arbitrary commercial preferences aimed at disadvantaging other countries. This rule has allowed countries to enter Free Trade Agreements which have helped boost global trade and expand incomes.

There are tons of these exceptions: goods made from prison labor can be banned, countries can impose technical standards, in times of a currency crisis countries can restrict imports to protect foreign currency reserves, and many more. My main point is these are good rules. If we were going to start from scratch today and try to identify a set of trade rules, I believe we could not do better than the ones agreed to through the GATT and WTO process. The proof is in the pudding – despite shortcomings, global trade has boomed under this system, and these rules have protected against abuse of the trading system by protectionist interests.

One last comment regarding fair trade, rules are only as good as their enforcement provisions. The WTO agreement of 1994 set up a dispute settlement system to give the rules real teeth. If a country believes a trading partner is violating the rules, it can request a panel of experts to here the merits of the case and render a judgement. If the policy is found to be inconsistent with trade rules, the offending country needs to resolve the violation. If it does not, the injured country can impose trade sanctions to retaliate.

The WTO dispute process has been very successful for U.S. agriculture. The threat of litigation keeps countries honest for the most part and has helped us negotiate reforms in other countries when they have caved to the temptation to cheat. The United States has initiated numerous WTO cases and in all instances we have either successfully negotiated a settlement or have prevailed in litigation. This has led to policy reforms by our trading partners, and kept markets open for our products. Even when countries have found it politically impossible to reform, such as the infamous EU hormone ban, we have been able to send a strong signal to other trading partners to not imitate bad behavior, and even in the EU we have negotiated compensatory import access. Other countries have also challenged some of our policies, but much less frequently than we have used the litigation option, and they have not challenged core U.S. farm or trade policies. We currently have two important disputes on China’s grain policies working their way through the WTO now – a positive outcome should give us leverage to encourage market-oriented reforms in China.

The WTO rules have served U.S. agriculture well. There are important areas were improvement is needed: too many high tariffs restrict trade, too many countries use very distorting price supports and input subsidies, and rules need to be strengthened with respect to unjustified non-tariff measures. Additionally, some countries have been circumventing WTO obligations for protectionist purposes, undermining the trading system. What U.S. agriculture, and the world, needs is a stronger and more useful global trading system.

(Source: https://www.fas.usda.gov/newsroom/fair-trade-and-world-trade-organization dated 1st May-2018)

As the government never fails to point out, India is the fastest growing major economy, and expects to grow even faster in the coming years. It has liked talking about record FDI inflows, and how India is one of the most attractive investment destinations. What it doesn't like talking about is its dismal track record on merchandise exports.

In 2013/14, India's merchandise exports stood at $314.4 billion. In the next year, it fell to $310.3 billion. And the next year, 2015/16 saw a further fall to $262.3 billion before it improved marginally to $275.9 billion in 2016/17. This financial year, it has clocked $302 billion, which is still lower than what it was four years ago.

Some bit of the export drop can be blamed on falling crude prices. Petroleum products including high speed diesel forms a biggish chunk of Indian exports, and when crude prices fall, so do exports. But beyond that, India's merchandise exports are still in gems and jewellery, agriculture & allied, textiles, chemicals and transport equipment and machinery and base metals. Of these, exports of gems &jewellery, transport equipment and textiles actually fell in the current year.

In the past two years, India has not been able to take advantage of rising world trade. The disruptions caused by demonetisation first, and later the hiccups during the roll out of GST, have been blamed for hitting small exporters in a number of sectors.

The bigger problem though, in my opinion, is India's failure to get become globally competitive in manufacturing. So far, most countries that have grown rapidly have depended on globally competitive manufacturing to power them to high growth. In Asia, especially, Japan showed the way initially when its manufacturing techniques powered it to become a global manufacturing powerhouse in sectors ranging from autos, to consumer durables to imaging. Later the Asian Tigers, especially Taiwan and South Korea grew rapidly because of their engineering and manufacturing competitiveness. Then came the rise of China, which became the production base for all sorts of products from steel to solar panels, and from mobile phones to computers.

India has never managed to get its manufacturing act right despite many tries. At different times, the reasons proffered have ranged from higher raw material and electricity costs, low productivity of labour, difficulties in setting up greenfield factories because of land acquisition and government clearances, and other sundry reasons.

The problem has always been that India has always been proud of its small and medium industries and the jobs it created. For a long time, a range of products were reserved for the SME sector. Thankfully that reservation has gone now, but the natural inclination to look tilt on the side of SMEs and not large scale manufacturing has remained. Even this government continues that mindset probably because of the assumption that SMEs will continue to create more jobs than bigger manufacturers.

There are multiple problems with that assumption. SMEs are generally not globally competitive when it comes to production of high value products. Economies of scale and productivity problems plague them. But merchandise exports will not go up unless the products are globally competitive and can take a bite out of the global market. And that is where the policy makers need to focus on when they unveil the new industrial policy, which has been in the works for some time.

Focusing on giving benefit packages for exporters in textiles, and other such sectors will not make India a big merchandise exporter. And that is something this government will have to keep in mind when it finalises the policy.

(Source:-https://www.businesstoday.in/opinion/prosaic-view/india-must-become-globally-competitive-in-manufacturing-to-boost-merchandise-exports/story/276100.html dated 2nd May-2018)

Free Trade Agreements (FTAs) are rising in prominence, abeit laden with challenges. A cursory glance into the origin and evolution of FTAs over the past centuries would explain how and why. A specialised and updated information system designed for storage and processing of all the important information pertaining to FTAs is essential to overcome the various challenges in effectively utilising them.

FTA is an agreement facilitating trade between countries by reducing or even eliminating various tariff and non-tariff barriers to trade. It opens up new markets for industries to expand their sales outreach to. FTAs can also include in their scope or sphere of influence, areas such as foreign investment, economic growth, employment, infrastructure development, intellectual property rights, protectionism and international competition among others. Hence the different forms and terms, other than FTA, associated with Trade Agreements namely, PTA (Preferential Trade Agreement), CECA (Comprehensive Economic Cooperation Agreement), CEPA (Comprehensive Economic Partnership Agreement), Trading Bloc, Customs Union, Economic Union, Common Market, and so on.

For India alone, the various trade agreements and treaties, both in force as well as under negotiations, involve countries across regions as far-flung as Asia, Central America and South America. Of late, mutual efforts in advancing FTAs between India and a vast variety of countries and regions have been gathering speed, particularly with Nordic countries, South Korea, Egypt, European Union, Canada, Poland, Switzerland, France, Israel, United States, Great Britain, Mauritius, Singapore and Vietnam.

In the aftermath of World War II, a new global economic order was created by General Agreement on Tariffs and Trade (GATT) in 1947, forcing economic powers out of protectionism and globally institutionalising the idea of multilateralism.

Countries became independent and so did their economic decision-making. There came about an increase in awareness of their trade interests which could be served by FTAs. WTO (World Trade Organization) replaced GATT in 1995. Signed by 123 and currently with 162 member states, it is the largest international economic organisation in the world regulating trade in goods, services and intellectual property by providing a framework for negotiating trade agreements. As a result, FTAs started proliferating on the strong principles of bilateralism and multilateralism. This not only guided trade negotiations, but also made FTAs complex, particularly their conclusion and effective utilisation. For there needed to be a mechanism which could track the changes in tariff headings resulting from value addition on inputs, a system of rules to calculate the extent of value addition in regions concerned and a set of criteria to determine if the goods so converted could be considered as originating from that particular country to be eligible for an import or export consignment under FTA.

Apart from various economic, political and legal challenges, several surveys clearly bring out lack of information as the biggest obstacle in utilising FTAs. There are other challenges like low margins of preference, complications in interpreting Rules of Origin (ROOs), non-tariff measures (NTMs) inhibiting exports, other exemption schemes easier to use than FTAs, etc. However, at over 35 percent, lack of information tops the list of challenges.

Evidently, therefore, the considerable under-utilisation of FTAs despite their high utility value is attributable to the inability to access, manage and process the immense amount of information that is integral to it. Manual control on any of these activities is simply out of question. Tracking of developments on FTAs being negotiated or signed by governments, analyses of the different articles therein and important information about inclusion and exclusion of tariff lines with their HS (Harmonised System) classification codes, changes in tariff classification, Most Favoured Nation (MFN) duty rates, interpretation of the Rules of Origin (ROOs), actual duty exemptions or concessions, safeguard measures, procedure and authorised agencies for obtaining Certificate of Origin, Mutual Recognition Agreements (MRA) and non-tariff measures (NTMs) namely, customs, licensing and inspection procedures, documentation and comparative analysis of tariff concessions by different FTAs, and so on, is quite crucial to effectively utilising them.

And the furious proliferation of these FTAs only exasperates the pressing need for organisations to have an advanced information management system as the only way to store and process all this information. More specialised this system is in its design and more integrated it is with the other participating systems in the supply chain trading partner ecosystem including the government agencies, more effectively would it help organisationsutilise the various FTAs applicable to their business geographies. For all the cost advantages and the business benefits that FTAs are intended to bring in, this investment, which comprehensively covers automation, documentation, integration and compliance, is most likely to pay back large dividends.

References:

• Frequently Asked Question (FAQ) Free Trade Agreements: Indian Trade Portal
• Free Trade Agreements – A brief history: European Student Think Tank, Sep 2016
• International Trade Agreements: Ministry of Commerce and Industry, Dept. of Commerce, Govt. of India
• What is an FTA and what are the benefits: Article by Matthew Grimson, ABC News, Apr 2014
• Asian FTAs: Trends, Prospects, and Challenges: ADB Economics Working Paper Series, Oct 2010
• Thomson Reuters-KPMG International Annual Global Trade Report 2017

NEW YORK: India tops the list of the fastest growing economies in the world for the coming decade and is projected to grow at 7.9 per cent annually, ahead of China and the US, according to a Harvard University report.

The Centre for International Development (CID) at Harvard University said in new growth projections yesterday that countries that have diversified their economies into more complex sectors, like India and Vietnam, are those that will grow the fastest in the coming decade.

The researchers also find India ranks the best on the criteria termed the Complexity Opportunity Index (COI), which measures how easy it is to redeploy existing knowhow to enter new complex products.

"India's existing capabilities have not only diversified its exports, but also allow for easy redeployment into related products that depend on those capabilities, making further diversification relatively easy," it said.

China is projected to grow at 4.9 per cent annually to 2026, the US three per cent and France 3.5 per cent.

The top ranking in COI means India has many "unrealised opportunities" to diversify into related, high-value sectors to continue to drive productivity growth and job creation.

"Up to now, that potential remains unrealized, however, as India's complexity has not changed over the past decade. The rapid growth that is predicted is effectively capitalizing on previous gains in complexity," the report added.

It stressed that ensuring the long-run potential of India's economic growth will rely on realizing diversification into related products. The other major challenge will be to ensure the inclusive nature of this productive transformation, as the gains made in new chemical, vehicle and electronics exports are highly concentrated in specific localities of the subcontinent.

"Whether that knowhow can be disseminated into new areas of India will in part determine whether rapid growth can be sustained in the long-term," it said.

Director of CID, professor at Harvard Kennedy School (HKS) and the leading researcher of The Atlas of Economic Complexity, Ricardo Hausmann said that Southeast Asia continues to dominate the global growth landscape, driven by the diversification of economies into complex manufacturing, but the leading countries have shifted within the region, with the Philippines, Vietnam, Indonesia, and Thailand poised to lead growth in the coming decade.

The researchers further point out that many low-income countries, including Bangladesh, Venezuela, and Angola have failed to diversify their knowhow and face low growth prospects.

"Others like India, Turkey, and the Philippines have successfully added productive capabilities to enter new sectors and will drive growth over the coming decade," said Sebastian Bustos, a lead CID researcher in trade and economic complexity methods.

(Source: https://economictimes.indiatimes.com/news/economy/indicators/indias-7-projected-growth-rate-amazingly-fast-adb/articleshow/64049171.cms dated 4th May-2018)

By VK Saraswat, Prachi Priya & Aniruddha Ghosh

Trade theory has consistently been a strong proponent of free trade of goods, services, capital and labour. However, a growing wave of protectionism has dominated global trade of late. While it is difficult to assess whether this will lead to a significant shift in the global trade paradigm, a review of India’s existing free trade agreements (FTAs) before negotiating new ones is necessary.

India is a fairly open economy with overall trade (exports plus imports) as a percentage of GDP at around 40%. Its exports have diversified both in terms of markets and products in the past two decades. Indian exports have gradually found their way into new markets and the export sector has moved up the value chain, leading the way with high-value products like industrial machinery, automobiles and car parts, and refined petroleum products.

India’s exports to FTA countries have not outperformed overall export growth, or exports to rest of the world. Both have grown at a commensurate rate of 13% y-o-y. FTAs have led to increased imports and exports, although this has widened the trade deficit. For example, India’s trade deficit with Asean (Association of Southeast Asian Nations), South Korea and Japan has doubled to $24 billion in FY2017 from $15 billion in FY2011 (with the signing of the respective FTAs) and $5 billion in FY06.

Also, India’s exports are much more responsive to income changes as compared to price changes. So, a tariff reduction or elimination does not boost exports significantly. Utilisation rate of regional trade agreements (RTAs) by exporters in India is very low. Most estimates put it at less than 25%. Lack of information on FTAs, low margins of preference, delays and administrative costs associated with rules of origin, non-tariff measures, are major reasons for under-utilisation.

When it comes to the India-Asean FTA, there is a deterioration of the quality of trade. Apart from the surge in total trade deficit due to tariff cuts, sectorwise trade flows also paint a grim picture. As per the UN’s Harmonised System of Product Classification, products can be grouped into 99 chapters, and further into 21sections like textiles, chemicals, vegetable products, etc. India has experienced a worsening of trade balance (deficit increased or surplus reduced) for 13 out of 21 sectors.

This also includes value-added sectors like chemicals and allied, plastics and rubber, minerals, leather, textiles, gems and jewellery. Sectors where trade balance has improved include animal products, cement and ceramic, arms and ammunitions. Sectors where trade deficit has worsened account for approximately 75% of India’s exports to Asean.

So, there are genuine concerns of trade asymmetry when India signs up new FTAs because of past FTA experience. However, FTAs are instrumental in creating seamless trade blocs that can aid trade and economic growth. Here are some suggestions while going forward with future FTA negotiations.

Before getting into any multilateral trade deal, India should review its existing FTAs in terms of benefits to various stakeholders like industry and consumers, trade complementarities and changing trade patterns in the past decade. Negotiating bilateral FTAs with countries where trade complementarities and margin of preference is high may benefit India in the long run.

Also, higher compliance costs nullify the benefits of margin of preference. Thus reducing compliance cost and administrative delays is extremely critical to increase utilisation rate of FTAs. Proper safety and quality standards should be set to avoid dumping of lower quality hazardous goods into the Indian market.

Circumvention of rules of origin should be strictly dealt with by the authorities. Well-balanced FTA deals addressing the concerns of all the stakeholders is the need of the hour.

(Source: https://economictimes.indiatimes.com/news/economy/foreign-trade/view-india-must-tread-carefully-on-free-trade-agreements/articleshow/64055496.cms dated 7th May-2018)

The specialty chemicals sector registered double-digit growth over FY13-FY17, supported by subdued oil prices and strong domestic and export demand.

The domestic specialty chemical sector is expected to grow by about 10 per cent annually to almost double the market size by FY25, driven by growth in end-user industries, a report said.

"The Indian chemicals sector is a market worth about USD 160 billion, with specialty chemicals representing about 20 per cent of the value. We expect the specialty chemical sector to grow by about 10 per cent annually to almost double the market size by FY25," India Ratings report on 'FY19 Outlook: Specialty Chemicals' said here.

The specialty chemicals sector registered double-digit growth over FY13-FY17, supported by subdued oil prices and strong domestic and export demand.

Ind-Ra expects FY19 to be a strong year for the domestic specialty chemicals sector on anticipation of a continued increase in demand from end-user industries and tight global supply due to stringent environmental norms in China.

Specialty chemical end-use industries such as textile, automotive, personal care, construction chemicals and agrochemicals, as w ell as application-driven segments such as surfactants, paints, coatings and colorants, to experience high growth in the medium-term.

The governments focus on affordable housing, agriculture and increased expenditure on infrastructure development will further spur demand for performance-enhancing chemicals. Ind-Ra expects strong growth across the key segments of specialty chemicals.

However, per capita chemical consumption in the country remains low compared with that in developed countries and emerging economies such as China, indicating latent demand potential in the Indian market, the report said.

The implementation of strict environmental norms in China has reduced the competitive advantages for Chinese firms, especially inefficient smaller firms that became unviable.

In 2017, an estimated 40 per cent of the chemical manufacturing capacity in China was temporarily shut down for safety inspections, with over 80,000 manufacturing units charged and fined for breaching permissible emission limits.

Ind-Ra expects the supply of major chemicals from China to remain subdued in FY19, favourably impacting volume and pricing for Indian exporters.

Higher-than-expected growth in demand, along with stable feedstock availability at low prices and ability to comply with regulatory norms, may further strengthen operating profile of the sector, according to Ind-Ra.

However, the agency believes that sharp changes in oil prices due to an unfavourable macroeconomic scenario, uncertainty about feedstock procurement and an uptick in global capacity expansion may have a negative impact on the sector.

(Source:-https://auto.economictimes.indiatimes.com/news/industry/specialty-chemical-sector-may-double-market-size-by-fy25-report/64072614 dated 8th May-2018)

New Delhi, May 9 (KNN) Commerce & Industry Minister Suresh Prabhu has asked secretaries and senior officers from different Ministries and Departments to prepare an action plan with short term targets on boosting exports and send it to his ministry within the next fortnight.

Prabhu, on Tuesday, addressed secretaries and senior officers in the first inter-ministerial meeting on Sectoral Export Promotion Strategy.

The meeting was attended by Secretaries to Government of India from Department of Commerce, DIPP, Electronics and IT, Animal Husbandry and Dairying and MSME, besides senior officers from about 14 other administrative Ministries/Departments including Agriculture, Textiles, Petroleum, Food Processing Industries, Pharma, Chemical and Petrochemical, Defence production and MEA which are concerned with various product groups which comprise a substantial part of India’s merchandise exports.

Commerce Minister asked all officers to prepare an action plan on boosting exports of products being handled by their respective Ministries and send it to the Department of Commerce within the next fortnight.

He stressed that the action plan should also have short term targets which are achievable in the next two months and the Department of Commerce will take the assistance of Ministry of External Affairs to implement the action plans through its commercial missions abroad.

Minister informed that the Union Cabinet has accorded approval of Rs. 5000 crores to promote export of services in champion sectors and the Department of Commerce (DoC) is organizing the next Global Exhibition on export of Services at Mumbai on 15th May 2018.

He told the respective Ministries and Departments that DoC as well as the ITPO can organize road-shows and exhibitions for their sectors and products.

Minister stated that a holistic approach to manufacturing and exports is the need of the hour as protectionist approach may actually have a negative impact on value added items of export. We need to push the idea of looking for new markets as well as exporting new products.

Ministries should work out the strategy, and after receiving the plans, DoC will organize further meetings with export promotion councils, trading houses as well as major exporters. A ‘Best Exporting Ministry/Dept. Award’ will also be announced.

The Minister advised the EXIM bank to prepare an action plan to alleviate the financial difficulties being faced by exporters. Similarly the FPI sector can take the help of NABARD for financing their projects. The Minister announced that the arrangement for having inter-ministerial meetings to boost exports with concerned administrative ministries will be institutionalized by DoC.

Minister of State, Commerce & Industry, CR Chaudhary invited attention to stagnating exports in gem and jewellery, textiles and leather sectors and exhorted the Departments to come up with new proposals to boost exports in these areas.

Commerce Secretary, Rita Teaotia informed the officers that while there has been a 10% growth in merchandise exports in the current year, our share in global trade is static at 1.7% in merchandise exports and 3.4% is services exports. We need to look at new markets. While we have done well in US and Europe there has not been adequate focus on fast emerging markets in Asia. We need to focus more on exports to China, Latin America and Africa.

DGFT AlokChaturvedi observed that India’s share of exports is high in goods which are less traded and low in goods that are traded more in the world. This needs to be realigned.

DG highlighted the sectors where the export share of the sector in India’s exports is less compared to the share of the sector in world exports. These were identified as potential sectors.

(Source: http://knnindia.co.in/news/newsdetails/sectors/suresh-prabhu-asks-officials-from-different-ministries-to-prepare-action-plan-within-next-fortnight-on-boosting-exports dated 9th May-2018)

During transport corrosive substances pose health hazard, physical hazard or combination of both. Primary safety concern is of course health hazard however, leakage of corrosive substances may materially damage the cargo transport unit or the vessel itself and when in contact with other cargo they may cause dangerous reactions resulting in explosion and fire.

What are corrosive substances? Any solid or liquid which will cause severe damage when in contact with living tissue or will materially damage or destroy other goods or means of transport are corrosive substances of Class 8.

Properties of corrosive substances There are varying properties for different corrosive substances which may cause severe health or physical hazard.

If a substance poses severe personal damage then IMDG Code in column 17 of dangerous goods list will state “causes (severe) burns to skin, eyes and mucous membranes”.

If IMDG Code states “corrosive to most metals” it means that any metal likely to be present in a ship, or in its cargo, may be attacked by the substance or its vapour.

“Corrosive to aluminium, zinc, and tin” implies that iron or steel is not damaged in contact with the substance.

Some of these substances can corrode glass, earthenware and other siliceous materials. Many corrosives substances only become corrosive after having reacted with water, or with moisture in the air.

How are the health hazards determined for corrosive substances?

Corrosive substances are divided into three packing groups according to their degree of hazard.

• Packing group I: Very dangerous substances and preparations;
• Packing group II: Substances and preparations presenting medium danger;
• Packing group III: Substances and preparations presenting minor danger.

Assignment of packing group on basis of above table must take account of human experience in instances of accidental exposure and in absence of human experience assignment of packing group must be as per data obtained by experiments in accordance with below standards

• OECD Guideline for the testing of chemicals No. 404, Acute Dermal Irritation/Corrosion, 2002.
• OECD Guideline for the testing of chemicals No. 435, In Vitro Membrane Barrier Test Method for Skin Corrosion, 2006.
• OECD Guideline for the testing of chemicals No. 430, In Vitro Skin Corrosion: Transcutaneous Electrical Resistance Test (TER), 2004.
• OECD Guideline for the testing of chemicals No. 431, In Vitro Skin Corrosion: Human Skin Model Test, 2004.

BRIEF OF COUNTRY SOUTH AFRCIA

South Africa the Republic of South Africa is called the ‘Rainbow Nation’. This is because of its multicultural diversity, after different groups came here in previous centuries. The country's more recent history of apartheid is better known. Now people can live anywhere if they have the right opportunities, such as a good education. Total Population of South Africa is 50.5 million (UN, 2011 estimate). Capital Pretoria (executive), Bloemfontein (judicial), Cape Town (legislative).

Geographical area is 1.219,089 sq km (470,693 sq miles), 11 official languages - Afrikaans, English, Ndebele, Pedi, Sotho, Swati/Swazi, Tsonga, Tswana, Venda, Xhosa and Zulu. Main religions: Christianity, Islam, Hinduism.

Dutch traders landed at the southern tip of modern day South Africa in 1652 and established a stopover point on the spice route between the Netherlands and the Far East, founding the city of Cape Town. After the British seized the Cape of Good Hope area in 1806, many of the Dutch settlers (Afrikaners, called "Boers" (farmers) by the British) trekked north to found their own republics, Transvaal and Orange Free State. The discovery of diamonds (1867) and gold (1886) spurred wealth and immigration and intensified the subjugation of the native inhabitants. The Afrikaners resisted British encroachments but were defeated in the Second South African War (1899-1902); however, the British and the Afrikaners, ruled together beginning in 1910 under the Union of South Africa, which became a republic in 1961 after a whites-only referendum. In 1948, the Afrikaner-dominated National Party was voted into power and instituted a policy of apartheid - the separate development of the races - which favored the white minority at the expense of the black majority. The African National Congress (ANC) led the opposition to apartheid and many top ANC leaders, such as Nelson MANDELA, spent decades in South Africa's prisons. Internal protests and insurgency, as well as boycotts by some Western nations and institutions, led to the regime's eventual willingness to negotiate a peaceful transition to majority rule.

The first multi-racial elections in 1994 following the end of apartheid ushered in majority rule under an ANC-led government. South Africa has since struggled to address apartheid-era imbalances in decent housing, education, and health care. ANC infighting came to a head in 2008 when President Thabo MBEKI was recalled by Parliament, and Deputy President Kgalema MOTLANTHE, succeeded him as interim president. Jacob ZUMA became president after the ANC won general elections in 2009; he was reelected in 2014. His government has been plagued by numerous scandals, leading to gains by opposition parties at the municipal level in 2016.

ECONOMY OF SOUTH AFRCIA

South Africa is a middle-income emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors; and a stock exchange that is Africa’s largest and among the top 20 in the world.

Economic growth has decelerated in recent years, slowing to an estimated 0.7% in 2017. Unemployment, poverty, and inequality - among the highest in the world - remain a challenge. Official unemployment is roughly 27% of the workforce, and runs significantly higher among black youth. Even though the country's modern infrastructure supports a relatively efficient distribution of goods to major urban centers throughout the region, unstable electricity supplies retard growth. Eskom, the state-run power company, is building three new power stations and is installing new power demand management programs to improve power grid reliability but has been plagued with accusations of mismanagement and corruption and faces an increasingly high debt burden.

South Africa's economic policy has focused on controlling inflation while empowering a broader economic base; however, the country faces structural constraints that also limit economic growth, such as skills shortages, declining global competitiveness, and frequent work stoppages due to strike action. The government faces growing pressure from urban constituencies to improve the delivery of basic services to low-income areas, to increase job growth, and to provide university level-education at affordable prices. Political infighting among South Africa’s ruling party and the volatility of the rand risks economic growth. International investors are concerned about the country’s long-term economic stability; in late 2016, most major international credit ratings agencies downgraded South Africa’s international debt to junk bond status.

CHEMICAL INDUSTRY IN SOUTH AFRCIA:

Chemistry is the science of matter, its structure, composition, properties and interactions of substances. It draws on the language of mathematics and the laws of physics to describe the world around us. It is this science that forms the basis of the chemical industry, making it highly technical. Due to the hazardous nature of the chemical industry, all spheres of Government have strict regulations on consumer and environmental protection, occupational health, chemical processes, transport and management of chemicals.

The South African chemical sector is of considerable economic significance to the country, with the export and import values of industry products amounting to approximately R41 billion and R75 billion respectively in 2012 (Quantec Research (Pty) Ltd, www.quantec.co.za). This equates to a trade deficit of about R34 billion. It contributed 25% to the manufacturing sector and 4% to GDP (Quantec, 2012) and impacts on the development of other industrial sectors such as agriculture, healthcare, clothing and textile. The chemical sector employment figures (formal and informal) for 2012 were 145684 (Quantec, 2012). According to the Chemical Industries Education and Training Authority (CHIETA) Workplace Skills Plan (WSP) submissions, June 2012 employment figures in the chemical sector were as follows: petroleum 44 371; base chemicals 22 466; specialty chemicals 15 381; surface coatings 8 261; fertilizers 5 651; and explosives 5 287.

The Department of Trade and Industry (the dti) has classified the sector into 11 sub-sectors, namely: liquid fuels; commodity inorganic chemicals; commodity organic chemicals; fine chemicals; pure functional and speciality chemicals; bulk formulated chemicals; pharmaceuticals; consumer formulated chemicals; rubber products; plastics products; and primary polymers and rubbers. This is the most appropriate classification of the sector in terms of strategic and business perspectives. The Standard Industrial Classification (SIC), which is generally used for statistical reporting, is not user friendly in providing information for chemical sector development. Pharmaceuticals, Plastics and Cosmetics are standalone directorates within the dti to better focus on the ARVs, higher numbers of people employed per capital expenditure and diverse yet interrelated numbers of business lines respectively. The chemicals sector desk therefore excludes these standalone directorates.

The chemical industry can be classified into two broad categories, i.e. upstream and downstream. Upstream is generally technology intensive in the manufacture of basic chemicals as raw materials/feedstock, while downstream turns these raw materials into intermediate and final products. The capital-intensive operations of the upstream chemical sector tend to be automated to ensure that products meet the required quality and specification consistency. The upstream sector is not well structured to accommodate either high numbers of employment or the development of Small or Micro Enterprises (SMEs).

The downstream chemical sector has operations that are typically labour intensive and consists of formulation production processes. It has greater potential to contribute significantly to large numbers of employment and the development of SMEs. It is within the downstream sector that the incubator programme of Government can have a positive impact in creating vibrant SMEs.

(Source:http://www.thedti.gov.za/industrial_development/sec_chemicals.jsp)

POTENTIAL STRATEGIC OPPORTUNITIES

South Africa exports most of its fluorspar mineral resource in an unbeneficiated form. This is contrary to Government policy to beneficiate the country's abundant natural resources. Beneficiation adds more value to domestic mineral resources ahead of export to provide the country with greater economic value and increased numbers of people employed. This is necessary for industrialisation, inclusive growth and poverty alleviation.

thedti has commissioned market research on potential opportunities in downstream fluorochemicals, with an aim of establishing a globally competitive fluorspar beneficiation industrial cluster in South Africa. This is to take advantage of South Africa's largest single fluorspar reserves globally and to manufacture fluorochemicals that are critical in the production of agrochemicals, pharmaceuticals, semi-conductors for the electronics industry as well as domestic and industrial refrigeration and air-conditioning.

The possibility of shale gas exploration and exploitation in the Karoo provides South Africa with a possible game changer. Although the potential extent of the Karoo shale gas reserves are not yet known, the chemical industry may be one of the huge beneficiaries, considering that two South African companies, Sasol and PetroSA, operate world-scale facilities to produce liquid fuels, chemicals and electricity from natural gas.

If shale gas is proven to be commercially viable, urea is one chemical that has the potential to immediately attract investment in manufacturing facilities in South Africa. Currently, urea is not manufactured in the country, but is imported by big players in the fertiliser industry due to huge import barriers including the smallest viable shipload requirement (with urea being a scarce product globally and supply being dependent on the availability of ships).

SOUTH AFRICAN CHEMICALS INDUSTRY HAS GROWTH POTENTIAL

The South African chemicals industry contributes 5% to the country’s gross domestic product (GDP), while the local petrochemicals sector is the largest sector contributor to the chemicals industry in South Africa, with a contribution of 55%.

However, analyst notes that the South African chemicals industry is expected to have moderate growth of between 3% and 4% over the next five years, through innovation and increased operation efficiency, making the chemicals industry more competitive and attractive.

“Petrochemicals growth will be driven by the demand from end-users, such as the paints and coatings, automotive, mining and construction sectors, where large amounts of chemicals are still procured locally, as the local refinery capacities meet the bulk of local demand.

“The market for petrochemicals is expected to grow at a compound yearly growth rate of close to 2%, owing to limited investment in local refineries and old technology limiting efficiency,” Analyst asserts.

She notes that the greatest potential for growth in the chemicals industry lies in the plastics sector, with moderately high growth expected, amidst the slow GDP growth and market maturity.

Also, the demand for additives used in fuels is expected to increase as the local Clean Fuels II regulation, which aims to lower the sulphur content of fuels, is expected to come into effect in 2017. In addition, the biofuels-based legislation for fuels, to be implemented in 2015, will impact on this demand. This legislation requires all diesels produced to have a 5% blend of biodiesel, and ethanol to have a bioethanol blend of between 2% and 10%.

Meanwhile, Analyst points out that the local chemicals market is becoming increasingly competitive, owing to intensified regulations on emissions and waste, which puts chemicals manufacturers and end-users under pressure.

“The biggest challenges in the South African chemicals market are the large volumes of raw chemical materials that continue to be imported and are subject to exchange rate fluctuations. “Delays at ports when importing chemicals, and strikes, add to the costs of chemicals, which are, in most cases, absorbed by the manufacturer to remain competitive, resulting in lower profit margins,” she asserts.

Analyst adds that another challenge is the outdated technology and processes used to refine and produce chemicals in South Africa. As a result, the chemical products manufactured are not competitive, compared with similar international goods, lowering demand for locally produced chemicals.

“Upgrading technologies requires high capital investments, which are not easily accessible in South Africa, owing to product cost implications. However, more investment could potentially result in more efficient production processes and lower operating costs,” Analyst says.

Currently, there are limited research and development activities in the local chemicals industry. She explains that technological advances are primarily driven by multinational corporations as they want to maintain their global brand image and standards, which results in these corporations adopting foreign technologies, thereby advancing the local chemicals manufacturing sector.

“The local chemicals industry offers major input materials, such as solvents and polymers, to the manufacturing sector,” Analyst outlines.

There has, however, been slow growth over the past two years and the sector is expected to continue being a slow-growth market for the chemicals industry,” she posits.

Analyst suggests that government’s emphasis on the local development of pharmaceuticals will help drive advocacy for local input materials, such as excipients and active pharmaceutical ingredients, through tenders.

“The agricultural chemicals sector is also expected to register significant growth, though future regulations could potentially slow down the increase in the supply of crop-protection chemicals,” Analyst concludes

(Source:http://www.engineeringnews.co.za/article/south-african-chemicals-industry-has-growth-potential-2014-03-21 )

MARKET CHALLENGES-SOUTH AFRICA

• There is serious, growing concern about a host of political, economic and regulatory factors that affect foreign businesses adversely. These include increasingly persistent reports about corruption and ineptitude in high government circles, significant unemployment, violent crime, insufficient infrastructure and poor government service delivery to impoverished communities. The increasingly rhetorical political debate over the direction of economic policy has been exacerbated by very low economic growth and a governing party reeling from setbacks in local government elections in August 2016.
• Overseas firm entering this market must contend with a mature and competitive market marked by well-established European and Asian competition. A trade agreement with the European Union enables many European products to enter South Africa duty-free or at lower rates.
• The volatile rand-dollar exchange rate can complicate planning especially for smaller or new-to-market firms. Although forward cover is readily available, and the rand is one of the most heavily traded currencies in the world, the cost does reflect interest rates, which tend to be higher than in United States and developed markets because of South Africa’s relatively higher historical rates of inflation.
• Broad-Based Black Economic Empowerment (B-BBEE) policies aim at redressing economic imbalances among historically disadvantaged communities to facilitate socio-economic transformation, specifically to increase the number of black South Africans that either own or manage companies. B-BBEE requirements demand due consideration by all firms planning to do business with the South African Government, but also within the general business community. New, more ambitious ascriptive requirements were introduced in 2013 and continue to be tightened up in order to induce improved economic opportunities by awarding more points in the equity/ownership requirement than previously. As in the past, entities gain credits if they include in their upstream and downstream supply chain partnering with other entities that qualify as being compliant on employment equity and other criteria. B-BBEE fronting that creates the appearance of regulatory compliance is a criminal offense and may lead to a fine of up to 10% of an entity’s turnover or up to 10 years’ incarceration by directors and complicit staff. A few foreign companies have addressed the ownership element of B-BBEE by implementing “equity equivalent” programs that emphasize training and development of local companies, although it can be difficult to get government approval for these proposals. Also see Selling to the Government below.
• For new-to-market overseas exporters, these ascriptive trading requirements have encouraged low-exposure market entry modes by teaming up with qualified local importer-resellers and service providers who act as the prime contractor to the South African Government and large economic players. The South African Government is continuously changing the mandatory industrial localization requirement for foreign suppliers that often view this as a cost and risk factor for doing business in South Africa.
• Since 2012, the South African government has announced plans to tighten labor and foreign ownership laws and mandated industrial localization. Sectors of specific concern have included the extractive industries, security services and agriculture. It remains uncertain in which direction government will go to address rigidities in labor regulations in the face of popular discontent around unemployment, poverty and inequality.
• Despite current uncertainties, as the most advanced, broad-based economy on the continent, South Africa still offers exporters and investors a diverse and mature economy with vibrant financial and other service sectors, as well as preferential access to export markets in the United States, the European Union and the Southern African Development Community (SADC).
• Commercial standards are generally similar to those in most developed economies, overseas investors find local courts fair and consistent, and institutions are well-developed. Similarly, democratic life is well-established with transparent and contested elections, an appreciation for the rule of law, and citizens maintaining significant pride in the constitution and the peaceful formation of the post-Apartheid state.
• Despite socio-economic and political uncertainties, South Africa is still a destination largely conducive to overseas investment, and should remain so as the dynamic business community is highly market-oriented and the driver of economic growth. South Africa offers ample opportunities and continues to attract investors seeking a location to access the rest of the African continent.
• Despite increasing unemployment (while the nominal rate is 26%, most observers find the broader definition including those who have given up looking for a job, which is currently 37%), skilled labor can be difficult to find in many, if not most, technical and professional segments, due to the poor state of the public education system. In addition, HIV/AIDS affects approximately one in ten South Africans with unfortunate implications for labor availability, productivity and healthcare costs. Annual labor negotiations have been marked by violence in previous years, although the last two years have been relatively peaceful.
• 2016 saw a 104-year record drought in the central and northeastern part of the country come to an end, but water scarcity will remain a major concern for agriculture, power generation and human consumption. The Western Cape currently has an unrelated significant water crisis that has led to a declaration of emergency that severely limits water supply.

• South Africa is a country of 55 million people, enjoying relative macroeconomic stability and a largely pro-business environment.
• South Africa is a logical and attractive option for overseas companies seeking to enter the sub-Saharan Africa marketplace. The country covers 1.22 million square kilometers and is the world’s largest producer of platinum, vanadium, chromium and manganese.
• South Africa is the most advanced diversified and productive economy in Africa. However, its actual growth does not match that of other African economies.
• In 2016, its gross domestic product (GDP) grew by 0.5% to an estimated $ 736.3 billion (based on purchasing power parity – ppp, or $350 billion in the more widely used standard GDP definition). The mature nature of the South African economy is reflected in the mix of economic sectors:
  a) Primary (including agriculture, fishing and mining): 10%.
  b) Secondary (manufacturing, construction and utilities): 21%.
  c) Tertiary (trade, transport and services): 69%.
• The tourism sector has experienced above global average growth, capitalizing on South Africa's natural beauty, wildlife reserves and good infrastructure. The sector is a major foreign exchange earner, along with minerals, agricultural products and some niche, high-tech sectors.
• The country's urban areas boast well-developed infrastructure, comparable to OECD standards. Its growing service sector is a major employer, and the private, corporate side of the economy is well-managed, although facing slow productivity gains. The banking and financial services sector is stable and weathered the 2008 financial crisis well. The Johannesburg Stock Exchange (JSE) ranks among the top emerging market exchanges in the world.

South Africa is well integrated into the regional economic infrastructure as formalized by membership in the Southern African Development Community (SADC). In addition, the Southern African Customs Union (SACU) agreement with Botswana, Namibia, Lesotho and Swaziland facilitates commercial exchanges. South Africa is a member of the World Trade Organization (WTO), the G20, and BRICS (Brazil, Russia, India, China and South Africa).

The African Growth and Opportunity Act (AGOA), renewed for a final 10-year period in 2016, provides duty-free access to the U.S. market for most sub-Saharan African countries, including South Africa. The United States and South Africa signed a new Trade and Investment Framework Agreement (TIFA) in 2012. The United States and SACU concluded a Trade, Investment and Development Cooperation Agreement (TIDCA) in 2008.

Five reasons why overseas companies should consider exporting to South Africa:

1) South Africa remains a must-consider country in sub-Saharan Africa when new-to-market (NTM) companies consider location options; the logistics infrastructure, English language and benign legal processes make this a low entry-threshold country.

2) The business management environment (legal, publicity, marketing, accounting, forensics, process outsourcing, etc.) is arguably the best in Africa.

3) South Africa is a business incubator for NTM ideas; as the middle class in Africa grows, business models launched in and from South Africa will find easier acceptance in other sub-Saharan Africa markets.

4) The penetration of South African companies and agencies into Africa makes finding the right partner to collaborate with in third markets a low-risk business development model.

5) South African companies are receptive to various partnering arrangements with overseas companies; these range from agency, to licensing, to JV’s, to mergers and acquisitions.

(Source: https://www.export.gov/article?id=South-Africa-Market-Overview)

SOUTH AFRICA - MARKET OPPORTUNITIES

Several factors benefit overseas exports:

• Sophisticated financial services, legal and business services sectors;
• Transportation infrastructure;
• South Africa’s position as an entryway to other countries and markets in sub-Saharan Africa;
• The strong reputation enjoyed by overseas branded goods and
• A few, centralized South African government-owned / sponsored capital expenditure programs with partly secured funding.

• Electricity Power Systems and Renewable Energy;
• Oil and gas supplies and equipment;
• Transportation Infrastructure;
• Pollution Control Equipment;
• Medical Equipment and Healthcare Services;
• Telecommunications; and
• Inforation Technology.

(Source: https://www.thedti.gov.za/trade_investment/ited_trade_agreement.jsp )

SOUTH AFRICA - IMPORT REQUIREMENTS AND DOCUMENTATION

South Africa has a complex import process. The South African Revenue Service (SARS) defines approximately 90,000 product tariff codes that are strictly enforced on all imports. New-to-Market overseas exporters are actively encouraged to engage the services of a reputable freight forwarding/customs clearance agent well versed in South African convention.

Customs South Africa (Customs SA), a division of SARS, requires that an importer register with its office and obtain an importer’s code from SARS. This impacts many importers and may cause delays to clearance of goods.

SARS uses a Single Administrative Document (SAD) to facilitate the customs clearance of goods for importers, exporters and cross-border traders. The SAD is a multi-purpose goods declaration form covering imports, exports, cross border and transit movements.

The following is required for shipments to South Africa:

• For customs purposes in South Africa, one negotiable and two non-negotiable copies of the Bill of Lading are required. The Bill of Lading may be made out either "straight" or "to order".
• A Declaration of Origin Form, DA59, is to be used in cases where a rate of duty lower than the general rate is claimed as well as for goods subject to antidumping or countervailing duty. DA59 is a prescribed form with stipulated format, size and content. This form does not require Chamber of Commerce certification. One original signed copy of the form must be attached to the original commercial invoice covering goods, which require such a declaration.
• Four copies and one original Commercial Invoice are required. Suppliers must give, in their invoices, all data necessary for the importer to make a valid entry and for the South African Customs to determine value for duty purposes.
• Invoices from suppliers will not be accepted as satisfying the requirements of the customs regulations unless they state, in addition to any proprietary or trade name of the goods, a full description of their nature and characteristics together with such particulars as are required to assess the import duty and to compile statistics.
• One copy of the insurance certificate is required for sea freight. Follow the importer's and/or insurance company's instructions in other matters.
• Three copies of the Packing List are required. Data contained in this document should agree with that in other documents.

To reduce the likelihood of a dutiable assessment of samples, the shipper must state the following:

“Sample: Of no commercial value / Value for customs purposes is USD xxx.”

Zero-value invoices are not accepted by South African customs authorities; the correct value must be stated of the shipment in question.

Import licenses are required for restricted items. Importers must possess an import permit prior to the date of shipment. Failure to produce a required permit could result in the imposition of penalties. The permit is only valid in respect of the goods of the class and country specified. It is non-transferable and may only be used by the person to whom it was issued. Import permits are valid only for the calendar year in which they are issued.

Import permits required for specific categories of restricted goods are obtainable from the Director of Import and Export Control at the Department of Trade and Industry. These categories have been reduced, but still must be obtained for most used / second-hand items.

Department of Trade and Industry
International Trade Administration Commission (ITAC)
Import Control
Private Bag X753
Pretoria, 0001
Tel: +27 (0)12 394 3590/1; Fax: +27 (0)12 394 0517

(Source:https://www.export.gov/article?id=South-Africa-import-requirements-and-documentation ).

GDP (purchasing power parity): $757.3 billion (2017 est.),$752.1 billion (2016 est.),$750 billion (2015 est.)

Industries: - Mining (world's largest producer of platinum, gold, chromium), automobile assembly, metalworking, machinery, textiles, iron and steel, chemicals, fertilizer, foodstuffs, commercial ship repair.

Exports: - $78.25 billion (2017 est.),$75.16 billion (2016 est.)

Exports Commodities: - Gold, diamonds, platinum, other metals and minerals, machinery and equipment.

Exporting Partners: - China 9.2%, Germany 7.5%, US 7.4%, Botswana 5%, Namibia 4.8%, Japan 4.6%, India 4.3%, UK 4.2% (2016)

Imports: - $80.22 billion (2017 est.),$74.17 billion (2016 est.)

Import Commodities: - Machinery and equipment, chemicals, petroleum products, scientific instruments, foodstuffs.

Import Partners: - China 18.1%, Germany 11.8%, US 6.7%, India 4.2% (2016)

(Source:https://www.cia.gov/library/publications/the-world-factbook/geos/sf.html )

CHEMEXCIL’S COMMODITYWISE EXPORTS TO SOUTH AFRICA

DYES-TOP ITEMS EXPORTS TO SOUTH AFRICA

DYE INTERMEDIATES-TOP ITEMS EXPORTS TO SOUTH AFRICA

List of supplying markets for a product imported by South Africa

INORGANIC CHEMICALS-TOP ITEMS EXPORTS TO SOUTH AFRICA

List of supplying markets for a product imported by South Africa

ORGANIC CHEMICALS-TOP ITEMS EXPORTS TO SOUTH AFRICA

List of supplying markets for a product imported by South Africa

AGRO CHEMICALS-TOP ITEMS EXPORTS TO SOUTH AFRICA

List of supplying markets for a product imported by South Africa

COSMETICS AND TOILETRIES-TOP ITEMS EXPORTS TO SOUTH AFRICA

List of supplying markets for a product imported by South Africa

ESSENTIAL OILS-TOP ITEMS EXPORTS TO SOUTH AFRICA

List of supplying markets for a product imported by South Africa