Cc

Abstract

Keywords

Safeguard measures; AfCFTA Protocol on Trade in Goods; Customs and Excise Act; International Trade Administration Act; WTO Agreement on Safeguards; Amended Safeguard Regulations; extension of safeguard measures; ITAC.

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1 Introduction

According to Article XIX of the General Agreement on Tariffs and Trade (1994) (GATT), a "safeguard measure" is imposed if, as a consequence of unforeseen developments and of the effect of the obligations incurred by a contracting party under the GATT, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers of like or directly competitive products in that territory. The contracting party may, in respect of such a product, and to the extent and for such time as may be necessary to prevent or remedy such an injury, suspend the obligation in whole or in part or withdraw or modify the concession. 1

* Clive Vinti. LLB cum laude LLM PhD. Associate Professor, Oliver Schreiner School of Law, University of the Witwatersrand, South Africa. Email: clive.vinti@wits.ac.za. ORCiD: https://orcid.org/0000-0002-3823-2400. This paper was presented at the National University of Lesotho and World Trade Organisation (WTO) Chairs Programme 2nd Annual Conference: "The Political Economy of Regional Integration and International Trade in Africa" held on 5-6 October 2023 and was published as part of the Conference Proceedings.

1 Article XIX.1 of the General Agreement on Tariffs and Trade (1994) (GATT).

These "safeguard measures" can manifest as either a duty or a quota or a combination of these two. Internationally the substantive and procedural aspects of the imposition of safeguard measures are provided by the Agreement on Safeguards (AGS), which augments Article XIX of the GATT. In this regard South Africa is a member of the World Trade Organisation

(WTO). 6

6 International Trade Administration Commission v SCAW South Africa (Pty) Ltd 2012 4 SA 618 (CC) ("SCAW") para 2.

While the AGS provides for the right and the criteria to extend safeguard measures, it does not provide the procedure for the extension of safeguard measures. The AGS does not explain how a safeguard measure can be "extended" beyond its "initial" four-year period of imposition. This discretion is conferred on the contracting parties to the AGS. This ambiguity was then transplanted into the SGR.

Recently, the International Trade Administration Commission of South Africa (ITAC) published the Amended Guidelines and Conditions Relating to the Extension of Safeguard Measures. 15

15 Amended Guidelines and Conditions Relating to Extension of Safeguard Measures (N 542 in GG 45131 of 10 September 2021).

This issue has not been resolved by the Agreement Establishing the African Continental Free Trade Area (AfCFTA) Protocol on Trade in Goods ("Protocol"), which delegates this matter to its Annex 9 on Trade Remedies ("Annex 9") and its Guidelines on Implementation of Trade Remedies ("AfCFTA Guidelines"), Article XIX of the GATT and the AGS. The Protocol and its Annex 9, like the AGS, are silent on this issue. The AfCFTA Guidelines are not yet in existence. Thus, this gap leads the current regime for the extension of duties under the AfCFTA circuitously back to the unhelpful AGS. Therefore, unlike the regime for anti-dumping, there is no clarity on when exactly the extension investigation commences, amongst other issues. Do the safeguard measures continue to be applied pending the decision on the extension? If they are not kept, does the two-year moratorium post initial imposition apply? How long is the extension investigation? When is this extension investigation initiated? Does the extension investigation period get added to the overall period of imposition? In light of this uncertainty, this paper reviews the extension of a safeguard measure in South African law within and outside the context of the AfCFTA. This inquiry is prompted by the aborted litigation in Macsteel Services Centre SA (Pty) Ltd v ITAC ("Macsteel"), which challenged the legal validity of the purported "extension" of the safeguard duties on hot-rolled steel by ITAC. 16

16 Macsteel Services Centre SA (Pty) Ltd v ITAC (Case No 55450/20).

1.1 Background of the Macsteel safeguards dispute

It is apposite here to outline the peculiar facts leading to the litigation in the Macsteel case to set the scene for this discussion on the extension of safeguard measures. Initially, after a safeguard investigation, ITAC had made a finding on 12 April 2017 that it would be in the public interest to apply safeguards of 12% ad valorem on certain flat hot-rolled steel products for all exporters excluding imports originating from a developing country member that met the requirement for the exclusion. 17

17 ITAC 2017 https://www.itac.org.za/upload/document_files/20190527103852_ Report-No.-551.pdf (ITAC Investigation Report No 551).

recommended that the duties be imposed for a period of three years and be liberalised as follows: Year 1-12%; Year 2-10%; Year 3-8%. Year 3 would end on 10 August 2020, at which point the duty should have been removed, in terms of the original decision.

Thereafter, on 24 July 2020, ITAC published an Initiation Notice indicating that the expiry of the safeguard duties on the imports of the products in question would likely lead to the recurrence of serious injury. 18

18 Notice of Initiation of the Investigation into the Extension of Safeguard Measures on Imports of Certain Flat-Rolled Steel, Products of Iron, Non-Alloy Steel or Other Alloy Steel (Not Including Stainless Steel) (N 392 in GG 43542 of 24 July 2020) (the "Notice of Initiation").

2 An evaluation of the legal framework for the extension of safeguard measures in South African law within and outside the context of the AfCFTA

2.1 Extension of safeguard measures in South Africa outside the framework of the AfCFTA

2.1.1 The place of the AGS in South African law

This discussion must commence with a review of the place of the AGS in South African law, since it is an underlying issue. The place of South Africa's WTO obligations in South African law has been the subject of much litigation

and academic debate. First the Supreme Court of Appeal (SCA) explained that the WTO Agreement, which includes the AGS, had been approved by Parliament on 6 April 1995 and was therefore binding on South Africa in international law but it had not been enacted into municipal law. 22

22 Progress Office Machines para 6 and fn 14.

However, Progress Office Machines explained that the adoption of the ITAA and its regulations is "indicative" of an intention to give effect to the provisions of the treaties binding on South Africa in international law. 26

26 Progress Office Machines para 6.

In Glenister, it was held that a treaty becomes law in South Africa when it is promulgated into law by national legislation. 29

29 Glenister para 90.

Significantly, the court in Glenister explained that the adoption of a treaty by a resolution of Parliament is not a "merely platitudinous or ineffectual act". 32

32 Glenister para 96.

Stubbs argues that the decision in Glenister breeds uncertainty, while SCAW is in accordance with the Constitution. 37

37 Stubbs 2011 CCR 165.

Phooko asserts that the decisions in Louis Karel Fick v Government of the Republic of Zimbabwe ("Fick") 40

40 Louis Karel Fick v Government of the Republic of Zimbabwe 2013 5 SA 325 (CC) ("Fick") paras 31,59.

However, as held by the apex court in SCAW, the obligations under the WTO Agreement, including the AGS, must be "honoured". 45

45 SCAW para 2.

2.1.2 Evaluation of the extension of safeguard measures in South African law outside of the AfCFTA framework

The investigation on the extension of safeguard measures is conducted by ITAC in accordance with sections 16 and 26 of the ITAA and the SGR read with the AGS. To this end the SGR regulates the imposition of "definitive general safeguard measures". A "definitive general safeguard measure" may be applied only where ITAC finds firstly that the product in question is being imported into the SACU in such increased quantities, absolute or relative to SACU production; secondly, that it is under such conditions as to cause or threaten to cause serious injury to the SACU industry that produces like or directly competitive products; thirdly, that it is as a result of unforeseen developments and of the effect of the obligations incurred by the Republic or SACU under the WTO; fourthly, that such measures are required to facilitate adjustment in the SACU industry; and finally, that the SACU industry has submitted a detailed plan showing how it will adjust to meet import competition or has submitted proof of the restructuring that is being undertaken as provided by section 1.2 read with section 21.1.

According to section 21.5 of the SGR, ITAC may recommend a definitive safeguard measure in the form of either a customs duty, or a quantitative restriction, or a combination of these two measures. As per section 21.6 of

the SGR, a definitive measure may "remain in place" for a period not exceeding four years, unless extended in terms of section 21.7. To this end section 21.7 of the SGR then provides that any definitive safeguard measure may be extended by a period of up to six years where ITAC "finds" that the lapse of the safeguard measure imposed in terms of section 21.6 of the SGR is likely to lead to the recurrence of serious injury, and there is evidence that the SACU industry is adjusting. This means that a safeguard measure can be imposed for a maximum period of 10 years when sections 21.6 and 21.7 are read together.

Furthermore, section 21.8 of the SGR provides that where a definitive safeguard measure is imposed for a period exceeding one year, ITAC shall recommend how the measure should be liberalised at regular intervals over the period that the measure is applied. Where the application of a safeguard measure is extended in terms of section 21.8, the safeguard shall continue to be further liberalised over the period of its application as provided by section 21.9. Section 21.9 of the SGR then states that where the application of a safeguard measure is extended in terms of section 21.8, the safeguard shall continue to be further liberalised over the period of its application. Section 21.10 of the SGR provides that where a definitive safeguard measure is imposed for a period exceeding three years, ITAC shall self-initiate a review of the measure at the halfway mark of its application to determine whether its continued application is required, whether it cannot be liberalised at an increased pace and whether the SACU industry is implementing its adjustment programme. Thus, this framework does not explain the process of extending a safeguard measure.

Consequently, and presumably prompted by the litigation on this point in Macsteel, on 21 August 2020 ITAC published the Guidelines and Conditions Relating to Extension of Safeguard Measures to purportedly address this issue. 49

49 Guidelines and Conditions Relating to Extension of Safeguard Measures (N 447 of 21 August 2020 in GG 43636).

South African law in terms of the procedure for the extension of safeguard measures.

Section 3.1 of the Amended Guidelines provides that the SACU industry should submit a properly documented application to request an extension of the safeguard measure to ITAC no later than 12 months before the lapse of the existing measure. This means that the application for the extension of safeguard measures would not be filed 17 days before the safeguard measure lapses, as was done in the Macsteel matter.

The Guidelines further require that the SACU industry to bring an application to ITAC containing information on the subject product relating to the likelihood of the recurrence of serious injury and or the threat thereof caused by increased imports and evidence that the SACU industry is adjusting. A public file will be available for inspection at ITAC's offices by all interested parties, by appointment, and interested parties are encouraged to inspect the public file regularly.

Section 3.11 of the Amended Guidelines requires that the application must contain injury information for the period when the safeguard measure was in place and an estimate should the safeguard measure lapse. The application must contain information on how the industry is adjusting as contemplated in the adjustment plan and a detailed explanation where the adjustment is not according to plan. In terms of section 3.13 of the Amended Guidelines, ITAC will, after considering the merits of an application made on behalf of SACU industry, decide to initiate an investigation if it is satisfied that there is prima facie proof of the likelihood of the recurrence of serious injury should the measures lapse. To this end, section 4.1 of the Amended Guidelines then provides that an investigation shall be formally initiated through the publication of an initiation notice in the Government Gazette. Section 4.3 of the Amended Guidelines states that a period of 20 days from the date of publication of the initiation notice will be provided for interested parties to submit comments to ITAC. The investigation shall consist of a single investigation phase which will allow for oral hearing. Section 5.1 of the Amended Guidelines requires that all participating interested parties will be informed of the essential facts to be considered by ITAC in making its final determination. All participating interested parties will receive seven days from dispatch of the essential facts letter to comment in writing on the essential facts.

According to section 6.2 of the Amended Guidelines, in the final determination, ITAC will consider if the lapse of the safeguard measure imposed in terms of subsection 6 is likely to lead to the recurrence of serious injury and if there is evidence that the SACU industry is adjusting. Under section 6.3 of the Amended Guidelines, ITAC's final recommendation will be forwarded to the Minister of Trade, Industry and Competition for final

determination. Section 6.4 of the Amended Guidelines requires ITAC to make available a final report on the reasons for the conclusions reached on issues of fact and law considered by it once the Minister's determination has been published. It is self-evident that these steps were not complied with in the Macsteel matter when the duty was "maintained" without a completed investigation as outlined above.

However, there are numerous issues posed by the Amended Guidelines. First, they do not provide that the extension investigation must be completed prior to the lapse of the safeguard measure. They merely require that the investigation must not commence beyond 12 months of the lapse of the safeguard measure. This is in contravention of Article 7.2 of the AGS and section 21.7 of the SGR, which require that the four year period mentioned in Article 7.1 of the AGS may be extended provided that the competent authorities of the importing Member have "determined" or "find" in conformity with the procedures set out in Articles 2, 3, 4 and 5, that the safeguard measure continues to be necessary to prevent or remedy serious injury and that there is evidence that the industry is adjusting, and provided that the pertinent provisions of Articles 8 and 12 are observed. Article 7.2 and section 21.7 are couched in the past tense in that the investigation to extend the safeguard measure must be completed before it is re-imposed.

Furthermore, according to Article 7.5, a safeguard measure cannot be imposed "again" for a period of time equal to that during which such measure "had been previously applied" provided that the period of non-application is at least two years. Section 21.16 of the SGR provides that re-imposition can happen only after half the life of that measure has passed, provided that the period of non-application is at least two years. The import of Article 7.5 and section 21.16 is that once the measure has lapsed, it can be reimposed only after the two-year moratorium. This entrenches the urgency of completing the extension investigation before it lapses. The drafters of the AGS did not see it fit to accord the right to extend a fair-trade remedy during its undetermined period of investigation. That would lead to countries potentially conducting safeguard investigations in such a manner that they would subvert the eight- to ten-year maximum period of imposition contemplated in the guillotine clauses in Articles 7.3 and 9.2 of the AGS and section 21.7 of the SGR. By rule of construction, the Appellate Body has held that provisions of the WTO Agreement, which includes the AGS, must be interpreted in such a manner that they "give meaning and effect to all the terms of the treaty". 50

50 WTO Panel US - Gasoline WT/DS2/AB/R (adopted 20 May 1996) 21.

interpretation of this "inseparable package of rights and disciplines" has to be one that "gives meaning to all the relevant provisions" of the relevant WTO Agreement. 52

52 WTO Appellate Body Report Argentina - Footwear EC WT/DS121/AB/R (adopted 12 January 2000) para 81.

Additionally, in the South African context it can be read into section 21.7 of the SGR that the investigation period must be completed before the measure lapses in terms of section 21.6 to give effect to section 21.7. This approach has been unequivocally endorsed by South African courts, which have held that "words cannot be read into a statute by implication unless the implication is necessary in the sense that without it effect cannot be given to the statute as it stands and that without the implication the ostensible object of the legislation cannot be realised". 54

54 Minister of Water and Sanitation v Lotter; Minister of Water and Sanitation v Wiid; Minister of Water and Sanitation v South African Association for Water Users Associations 2023 4 SA 434 (CC) para 30.

Furthermore, section 21.7 of the SGR does not provide for any of the procedural safeguards provided by Article 7.2 of the AGS, which requires that it must comply with Articles 2,3,4 and 5 of the AGS. These provisions essentially require a duly completed investigation and duration of such measures. A "reasonable interpretation" of section 21.7 of the SGR would favour a construal of this provision that incorporates these procedural safeguards required by Article 7.2 of the AGS. This is the approach that was followed by the apex court in SCAW, which rejected a construal of WTO obligations in a manner that countenances "inelastic term of duties", which would lead to a "routine breach of WTO obligations". 55

55 SCAW paras 26-40 and 80.

extraordinary nature" of safeguard measures. 57

57 Final Report of the Arbitration Panel Southern African Customs Union – Safeguard Measure Imposed on Frozen Bone-In Chicken Cuts from the European Union (3 August 2022) para 316.

Second, the Amended Guidelines do not clarify whether the safeguard measure continues to apply during the tenure of the extension investigation, as is the case with anti-dumping duties under Article 11.3 of the Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 in respect of sunset reviews. Ultimately the inherent defect of the Amended Guidelines is that they are not binding on either ITAC or the courts, and they can be deviated from as per section 60(2)(b) of the ITAA. Therefore, they offer no permanent solution in respect of the extension of safeguard measures in South African law for trade outside the AfCFTA. Thus, it is recommended that section 60(2) of the ITAA could be amended to stipulate that the Guidelines promulgated under this section are binding. In the alternative, the Minister could promulgate these Guidelines as "regulations" which are binding, but with the necessary amendments in line with the AGS as suggested in the preceding discussion. This would provide some legal certainty in this area of law. In the recent extension investigation on threaded fasteners, ITAC employed the Guidelines but cautioned that it was "giving due regard" to it in the same manner it does with the AGS, but it was clear that the investigation was conducted "in accordance" with the ITAA and the SGR. 58

58 ITAC 2023 https://www.itac.org.za/upload/document_files/20231031051802_20230 721035845_Report-No-715.pdf (ITAC Investigation Report No 715).

In line with the approach of the apex court in SCAW and the SCA in Bridon, the paper seeks interpretive guidance from the AGS. This approach is also directly justified by the only other litigation on safeguard measures, Degussa, where the High Court held that the AGS is binding on South Africa and directly applied it to the issue of the imposition of provisional payments under the SGR. 59

59 Degussa 152-156.

evidence that the industry is adjusting and that the pertinent provisions of Articles 8 and 12 are being observed. There is no WTO jurisprudence on Article 7.2, the extension clause of the AGS.

From the aforementioned it is unclear from the AGS and the SGR how the process of extending safeguard measures is to be conducted. To this end, in Macsteel the actual term that can be used to describe the measure that was imposed by the Deputy Minister of Finance on 7 August 2020 is unclear. 60

60 Customs and Excise Act 1964: Amendment of Schedule No 2 (No 2/3/43) (GN R866 in GG 43597 of 7 August 2020).

First, Article 7.2 of the AGS does not allow ITAC to "extend" a safeguard measure without a completed investigation, since that provision requires an investigation completed in terms of Article 3, as outlined above. Therefore, ITAC had no right to impose the safeguard measure, let alone "extend" it without a completed investigation. Thus, the so-called "duty" was not in law a "definitive safeguard duty". It was certainly not a "provisional safeguard measure" as per Article 6 of the AGS, because that can be imposed only prior to a definitive safeguard duty and it must last for only 200 days. As per the Gazette of 7 August 2020, the Deputy Minister of Finance "extended" the safeguard for at least another year. Thus, this is not a "provisional safeguard measure". In any event, a provisional safeguard measure requires a preliminary finding. This was not done and ITAC had received only a prima facie case that triggers the initiation of an investigation, but that is not the same as a preliminary finding contemplated in section 18 of the SGR. There was no ITAC Report of a Preliminary Finding, which is what ITAC would normally publish in all trade investigations, including safeguard measures. In short, the purported "duty" reimposed on 7 August 2020 had no legal definition or legal basis. It is likely that this purported extension of the safeguard duty was prompted by the fact that these measures would lapse before the ITAC investigation was concluded. Once the duties had lapsed, they could not be reimposed on the same product unless a period equal to half that during which such a measure had been previously applied has lapsed. This period of non-application must be at least two years, as stipulated by section 21.16 of the SGR read with Article 7.5 of the AGS. This would essentially prevent the imposition of a safeguard duty on hot-rolled steel until 24 months has lapsed from the expiry of the initial period of imposition. Section 21.16 contradicts Article 7.5 of the AGS, which requires

that the period of non-imposition must be the same as the period of initial imposition, and such a period must be at least two years. Regardless, the measure imposed on 7 August 2020 would not have met the lower threshold of 18 months of non-imposition as set out in section 21.16 of the SGR.

Secondly, the Macsteel matter was compounded by the SARS Correction Notice of 28 August 2020, which purported to correct the apparent error in the Notice by the Deputy Minister of Finance on 7 August "extending" the safeguard duty. 61

61 Correction Notice: Customs and Excise Act, 1964 Amendment of Schedule No 2 (2/3/46) (GN R939 in GG 43661 of 28 August 2020).

In any event, a duty if it could be "maintained" as stated in the Correction Notice Gazette, would require that the duty to continue at the very least be "progressively liberalised" as required by section 21.4 of the SGR and Article 7.4 of the AGS. Article 7.4 of the AGS provides that in order to facilitate an adjustment in a situation where the expected duration of a safeguard measure as notified under Article 12.1 is over one year, the Member applying the measure shall progressively liberalise it at regular intervals during the period of application. If the duration of the measure exceeds three years, the Member applying such a measure shall review the situation not later than the mid-term of the measure and, if appropriate, withdraw it or increase the pace of liberalisation. A measure extended under Article 7.2 must not be more restrictive than it was at the end of the initial period, and must continue to be liberalised.

To this end the WTO Panel in Ukraine - Passenger Cars held that "regular intervals" within the meaning of Article 7.4 of the AGS meant "uniform

intervals", but that Article 7.4 did not specify how long such regular intervals should be and that the duty of "progressive liberalisation" also prohibits the importing Member from back-loading liberalisation, i.e. not taking any liberalisation steps until a late stage in the period of application of a safeguard measure. 63

63 WTO Panel Report Ukraine - Passenger Cars WT/DS468/R (adopted 20 July 2015) paras 7.362-7.363.

Therefore, the purported extension of the safeguard measure at the same level of 8% by ITAC violates sections 21.8-21.10 of the SGR and Article 7.4 of the AGS. Even if ITAC was authorised to extend this measure, at the very least the AGS and SGR require that the duty should then be liberalised. Thus, the Correction Notice of 28 August 2020 did nothing to save the safeguard duty on hot rolled steel as it had no legal basis in either the AGS or even the SGR. In effect, the duties on hot rolled steel which were terminated on 10 August 2021 by settlement before the court should have entitled the affected parties to the refund of all duties paid from 7 August 2020. The effect and design of the measure imposed on 7 August 2020 effectively "extended" the measure for at least another year.

The other related fundamental issue of ITAC was that the purported extension would have required a mid-term review at the 18-month mark by ITAC for it to be extended for another year, as required by section 21.10 of the SGR and Article 7.4 of the AGS. It is common cause that this mid or half term review was never conducted by ITAC. This procedural error is fatal to the purported extension of the safeguard duty on hot rolled steel. Thus, the unprecedented catalogue of administrative missteps in ITAC's purported "extension" or "maintenance" of the safeguard measures on hot-rolled steel aptly captures the problem caused by the lack of a binding procedural framework for the extension of safeguard measures in South Africa under the regime of the SGR and the AGS. 66

66 See the discussion on pages 6-9 of this paper.

actually specify the length of the investigation. Thus, ITAC is free to do the investigation for as long as it needs to establish the need for the safeguard measure. This situation is untenable and promotes routine breaches of South Africa's international law obligations on "account of the laxity or tardiness of domestic authorities" as cautioned by the apex court in SCAW. 67

67 SCAW para 80.

2.2 Extension of safeguard measures in South Africa within the AfCFTA framework

Article 8 of the AfCFTA states that the Protocol and its associated Annexes and Appendices shall, upon adoption, form an integral part of the AfCFTA and it shall form part of the single undertaking, subject to entry into force. Pursuant to this, the AfCFTA has been ratified and incorporated into South African municipal law. 68

68 Amendment to Insert Part 8 to Schedule No 10 to Give Effect to the Implementation of the Agreement to Establish the African Continental Free Trade Area (AfCFTA) (GN R1433 in GG 44049 of 31 December 2020).

Article 18 of the Protocol provides for global safeguard measures, whose implementation of this Article shall be in accordance with Annex 9 and the AfCFTA Guidelines, Article XIX of GATT 1994 and the AGS. Article 19 of the Protocol then states that in respect of preferential safeguards, State Parties may apply safeguard measures to situations where there is a sudden surge of a product imported into a State Party, under conditions which cause or threaten to cause serious injury to domestic producers of like or directly competing products within that territory. The implementation of this instrument must be in accordance with the provisions of Annex 9 to the Protocol and the AfCFTA Guidelines. It is apposite to note here that the terms global safeguard measures and preferential safeguards are not defined. It is assumed that global safeguards refer to those applied on countries which are not party to the AfCFTA and the latter apply to safeguard measures imposed between countries which are party to the AfCFTA. This is as far as the Protocol goes, offering no guidance on the extension of safeguard measures.

Article 6.3 of Annex 9 to the Protocol requires a State Party to immediately notify all State Parties of such initiation of the investigation according to the AGS in global safeguard investigations. However, under Article 6.4 of Annex 9 to the Protocol, in preferential safeguard investigations a State Party shall

immediately notify such initiation according to this Annex and the AfCFTA Guidelines. Article 2 of Annex 9 to the Protocol then provides that State Parties may, with respect to goods traded under the provisions of this Annex, apply safeguard measures as provided for in Articles 17-19 of the Protocol, this Annex and the AfCFTA Guidelines in accordance with the AGS. This leads the regime for the imposition and extension of safeguard measures back to the AGS. This formulation suggests that Article 2 is not a typical interpretation clause, which would apply only in case of uncertainty. 69

69 Erasmus 2021 https://www.tralac.org/blog/article/15407-what-lies-ahead-for-the-afcfta-trade-remedies-and-safeguards-regime.html.

Article 4.6 of Annex 9 to the Protocol states that the preferential safeguard measure shall be applied only to the extent necessary to prevent or remedy serious injury or the threat thereof and to facilitate adjustment following an investigation by the importing State Party under the procedures established in this Annex and the AfCFTA Guidelines. Article 4.7 then provides that preferential safeguard measures shall not exceed a period of four years and shall contain clear indications of their progressive elimination at the end of the determined period. The preferential safeguard measure may be extended for another period not exceeding four years, subject to justification by the Investigating Authority under Article 4.7. Thus, Annex 9 to the Protocol does not provide any guidance on the process of extending a safeguard measure beyond the four-year mark save for saying that there must be clear proof of progressive elimination, and a justification must be provided. Therefore, global and preferential safeguards must be applied and extended in accordance with the AGS, as stated by Article 2 of Annex 9 to the Protocol. As established above, the AGS does not provide the

procedure for the extension of safeguard measures. This uncertainty mirrors the application of safeguard measures outside of the AfCFTA.

The Southern African Development Community (SADC) Protocol on Trade, the Revised Treaty of the Economic Community of West African States (ECOWAS Treaty) and the East African Community Customs Union (Safeguard Measures) Regulations are also silent on the procedure for the extension of safeguard measures. 73

73 Articles 25.5-25.6 of SADC Protocol on Trade (1996); Art 49.2 of the Revised ECOWAS Treaty (1993); Regulation 19 of the East African Community Customs Union (Safeguard Measures) Regulations.

3 Conclusion and recommendations

South African law remains unclear on how to extend a safeguard measure, on when the investigation should be triggered, the duration of such an investigation and whether there is an obligation to pay the duty during the tenure of the extension investigation.

The non-binding Amended Guidelines adopted by ITAC also do not adequately address the gap, although they have value in that they confirm that there is indeed a gap in South African law. In short, the Amended Guidelines do not require that the extension investigation be completed before the safeguard measures lapses. The Amended Guidelines also do not provide for any of the procedural safeguards postulated in the AGS during an extension investigation and thus do not require a duly completed application in accordance with the structures of the AGS. The Guidelines also do not resolve the question of whether the safeguard measure applies during the course of the extension investigation. The Amended Guidelines do not even specify the length of the extension investigation. So even with this purported solution, the problems in the safeguard extensions framework remain unresolved and entrenched. Therefore, the issue of the extension of safeguard measures within and outside the context of the AfCFTA leads one back to the AGS. The AGS is not useful in this regard, since this power is delegated to the Member States of the AGS.

It is against this backdrop that the recommendations to follow are developed. Firstly, section 60(2) of the ITAA must be amended to stipulate that the Guidelines promulgated under this section are binding. Alternatively, the Minister must promulgate these Guidelines as "regulations" which are binding, but with the necessary amendments in line with the AGS, as discussed above. Secondly, the SGR must actually be amended to provide for the procedure for the extension of safeguards for both AfCFTA and non-AfCFTA trade, the timing and duration of the extension investigation and whether the duty remains extant during such investigation. Thirdly, the AGS must also be amended to address this contentious issue, particularly since it is a fair-trade remedy with grave financial consequences for affected parties. Finally, the yet to be promulgated AfCFTA Guidelines must also address these issues. The futility of the ITAC Guidelines is self-evident, since they are non-binding on ITAC and the courts.

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Glenister v President of the Republic of South Africa 2011 3 SA 347 (CC)

Government of the Republic of South Africa v Grootboom 2001 1 SA 46 (CC)

International Trade Administration Commission v SCAW South Africa (Pty) Ltd 2012 4 SA 618 (CC)

Law Society of South Africa v President of the Republic of South Africa 2019 3 SA 30 (CC)

Louis Karel Fick v Government of the Republic of Zimbabwe 2013 5 SA 325 (CC)

Macsteel Services Centre SA (Pty) Ltd v ITAC (Case No 55450/20)

Minister of Water and Sanitation v Lotter; Minister of Water and Sanitation v Wiid; Minister of Water and Sanitation v South African Association for Water Users Associations 2023 4 SA 434 (CC)

Progress Office Machines v SARS 2008 2 SA 13 (SCA)

S v Makwanyane 1995 3 SA 391 (CC)

Tata Chemicals South Africa (Pty) Ltd v International Trade Administration Commission (48248/2020) [2023] ZAGPPHC 295 (28 April 2023)

WTO Appellate Body Report Argentina - Footwear EC WT/DS121/AB/R (adopted 12 January 2000)

WTO Appellate Body Report India Patent Protection for Pharmaceutical and Agricultural Chemical Products WT/DS50/AB/R (adopted 16 January 1998)

WTO Appellate Body Report Indonesia – Iron or Steel Products WT/DS490/AB/R, WT/DS496/AB/R (adopted 27 August 2018)

WTO Appellate Body Report United States Standards for Reformulated and Conventional Gasoline DSR 1996:I 3 (adopted 20 May 1996)

WTO Appellate Body Report US Subsidies on Upland Cotton WT/DS267/AB/R (adopted 20 June 2008)

WTO Panel Report Argentina - Footwear EC WT/DS121/R (adopted 12 January 2000)

WTO Panel Report Canada - Dairy WT/DS103/AB/R, WT/DS113/R (adopted 27 October 1999)

WTO Panel Report Indonesia - Iron or Steel Products WT/DS490/R, WT/DS496/R (adopted 27 August 2018)

WTO Panel Report Ukraine - Passenger Cars WT/DS468/R (adopted 20 July 2015)

WTO Panel Report US - Gasoline WT/DS2/AB/R (adopted 20 May 1996)

Legislation

Board on Tariffs and Trade Act 107 of 1986

Constitution of the Republic of South Africa, 1996

Customs and Excise Act 91 of 1964

International Trade Administration Act 71 of 2002

Government publications

Amended Guidelines and Conditions Relating to Extension of Safeguard Measures (N 542 in GG 45131 of 10 September 2021)

Amended Safeguard Regulations (GN R662 in GG 27762 of 8 July 2005)

Amendment to Insert Part 8 to Schedule No 10 to Give Effect to the Implementation of the Agreement to Establish the African Continental Free Trade Area (AfCFTA) (GN R1433 in GG 44049 of 31 December 2020)

Correction Notice: Customs and Excise Act, 1964 Amendment of Schedule No 2 (2/3/46) (GN R939 in GG 43661 of 28 August 2020)

Customs and Excise Act 1964: Amendment of Schedule No 2 (No 2/3/43) (GN R866 in GG 43597 of 7 August 2020)

GN R829, R830 and R831 in GG 41038 of 11 August 2017

Guidelines and Conditions Relating to Extension of Safeguard Measures (N 447 of 21 August 2020 in GG 43636)

Notice of Initiation of the Investigation into the Extension of Safeguard Measures on Imports of Certain Flat-Rolled Steel, Products of Iron, Non-Alloy Steel or Other Alloy Steel (Not Including Stainless Steel) (N 392 in GG 43542 of 24 July 2020)

International instruments

AfCFTA Protocol on Trade in Goods (2020)

Agreement Establishing the African Continental Free Trade Area (2018)

Agreement on Safeguards (Contained in Annex 1A of the Agreement Establishing the World Trade Organisation) (1995)

Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (1995)

Annex 9 on Trade Remedies: AfCFTA Protocol on Trade in Goods (2020)

East African Community Customs Union (Safeguard Measures) Regulations (2004)

General Agreement on Tariffs and Trade (1994)

Revised Treaty of the Economic Community of West African States (1993)

SADC Protocol on Trade (1996)

Safeguards - Report by the Chairman of the Council to the Fortieth Session of the Contracting Parties WTO Doc MDF/4, 31S/136 MDF/4, 31S/136 (1984)

Internet sources

Erasmus 2021 https://www.tralac.org/blog/article/15407-what-lies-ahead-for-the-afcfta-trade-remedies-and-safeguards-regime.html

Erasmus G 2021 What Lies Ahead for the AfCFTA Trade Remedies and Safeguards Regime? https://www.tralac.org/blog/article/15407-what-lies-ahead-for-the-afcfta-trade-remedies-and-safeguards-regime.html accessed 21 January 2024

ITAC 2017 https://www.itac.org.za/upload/document_files/20190527 103852_Report-No.-551.pdf

International Trade Administration Commission 2017 Investigation Report No 551: Investigation into Remedial Action in the Form of a Safeguard Against the Increased Imports of Certain Flat Hot-Rolled Steel Products: Final Determination https://www.itac.org.za/upload/document_files/2019 0527103852_Report-No.-551.pdf accessed 3 December 2024

ITAC 2023 https://www.itac.org.za/upload/document_files/2023103105 1802_20230721035845_Report-No-715.pdf

International Trade Administration Commission 2023 Investigation Report 715: Investigation into the Extension of a Safeguard Measure Against the Increased Imports of Threaded Fasteners of Iron or Steel: Bolt Ends and Screw Studs, Screw Studding and Other Hexagon Nuts (Excluding Those of Stainless Steel and Those Identifiable for Aircraft): Final Determination https://www.itac.org.za/upload/document_files/20231031051802_20230721035845_Report-No-715.pdf accessed 3 December 2024

List of Abbreviations