Mozambique One Stop Border Post almost there

One Stop Border Post (OSBP) agreement ready

moz flagGovernment has told parliamentarians that indications are that the Mozambique government will finally sign the final portions, or annexes, to the One Stop Border Post (OSBP) agreement between South Africa and Mozambique in the very near future.

Mr Kosie Louw told the standing committee on finance that an original document of intention was signed in September 2007 by both parties but now consensus on all issues had been reached between the two countries, covering all the departments affected by cross-border issues.

Two countries, one clearance

There were three annexes, Louw said, and indications were that the Mozambique Minister of Finance was signing immediately.  The benefit of the OSBP was that goods would be inspected and cleared by the authorities of both countries with only one stop, which would speed up the movement of goods in the interests of facilitating trade.

Background

Louw, who is chief legal officer at SARS, introduced the briefing by explaining the difference between bonded and state warehouses. The main purpose of bonded warehouses, he said, which were privately managed and licensed subject to certain conditions, was to allow imported goods to be stored temporarily in order to defer the payment of customs duties.

Duties and taxes were suspended for an approved period – generally two years, Louw said, but these had to be paid before the goods entered into the market or were exported.  The licensee bore full responsibility for the duty and taxes payable on the goods, which could be removed only after all the customs requirements had been met.

State gets the illicit goods

State warehouses, on the other hand, Louw said, were managed by SARS for the safekeeping of uncleared, detained, seized or abandoned goods.  They provided a secure environment for the storage of goods in which the state had an interest.

Goods that had not been cleared within the specified timeframes, for instance, had to be removed to a state warehouse; otherwise the ports would become clogged up.  Counterfeit and dangerous or hazardous goods were moved to specialised warehouses.

Storage was normally allowed to remain for 60 days and if the goods were not collected, after fulfilling all the legal requirements, they could be sold with the proceeds applied to any duties, expenses or other charges due.  Any surplus would be paid to the verified owner, but if it was not claimed, it would be paid into the national revenue fund, Louw said.

Where the goods go

Goods that were appropriated to the state, or that were condemned and forfeited, could be sold, destroyed, transferred to another state organ, or made available for disaster relief, basic human necessities for the poor, or for donation to any country in need of aid in such circumstances, Louw concluded.

MPs noted that had taken over six years for the Mozambique OSBP to be finalised, so would it be possible, with the experience gained to negotiate with other countries to obtain one stop agreements and move at a faster rate?

The response was from SARS that South Africa was looking at the establishment of more such posts and had already had two discussions with Zimbabwe.  It was hoped it would take less time to reach an agreement, as many lessons had been learnt through the Mozambique experience.  Because an OSBP involved South Africa and a foreign country operating in a specific area, the main issue was ensuring that South African law applied in the foreign country.  This was a difficult area at international law, Louw said, and explained that this was why the Mozambique process had taken so long.

What is earned as revenue

When asked by members what the average revenue per year was from import taxes, a figure was supplied of between R15bn and R20bn being generated by customs alone, while import VAT was well over R100bn, and the overall income generated annual was more than R150bn.  A substantial amount of the VAT income was refunded, however, because of the input-output system.

When asked about losses, Ms Rae Cruickshank, group executive, customs operations, SARS, said losses obviously occurred through customs avoidance and evasion, so it was consequently very difficult to provide an overall figure on customs duty not being paid as evasion was evasion. Estimates varied as well according to the different border posts but such losses could possibly be anything from 10% to 30%, depending on whether it was a developed or developing country that was transacting.

Short of staff

Avoidance again was about approximations, she said, and this involved the smuggling of goods such as narcotics, or copper, which could only be quantified on the basis of what had been seized.   Although SARS had 3,000 customs officers and 72 dogs, the prevalence of smuggling was very high.  It was not unusual to apprehend up to 10 kg of cocaine a weekend.

Ms Cruickshank said it was impossible to process all containers coming into the country, more than 4 million a year, through scanners alone.  A scanner’s maximum capacity was to scan six containers an hour and this translated into 52,416 containers a year.   More scanners were being considered for Durban, Cape Town and Beit Bridge, where cigarette smuggling in the last named case was a serious concern.

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