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Customs in a clean age

9th May 2025

By: Riaan de Lange

     

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If you are involved in the renewable energy value chain – specifically the solar PV value chain, wind energy value chain, and battery energy storage system (BESS) value chain – then your participation in the review of the customs tariff structure for input materials, components and final goods used in these sectors should be a given. So, grab your calendar and circle May 15, the final day for comments.

If you are uncertain about whether you should participate, then here is a reminder of the respective value chains: the solar PV value chain encompasses the entire process of creating and deploying solar panels and systems, from raw material extraction to installation and end-of-life management; the wind energy value chain encompasses the complete process from resource extraction to end-use, involving material sourcing, component manufacturing, turbine assembly, project development, installation, operation and maintenance, and, ultimately, decommissioning and disposal; and the BESS value chain encompasses the entire process from raw material extraction to battery recycling, including manufacturing, assembly and end-use applications.

This is an International Trade Administration Commission of South Africa (Itac) self- initiated review pertaining to interested parties – domestic manufacturers and importers, in Botswana, Eswatini, Lesotho, Namibia, and South Africa (the BeLNS countries). These are all Southern African Customs Union member countries. The review’s focus is on 156 tariff subheadings, with 66 (42.31%) pertaining to the solar PV value chain, 44 (28.21%) to the wind energy value chain, and 46 (29.49%) to the BESS value chain.

Three reasons were cited for the review: global decarbonisation commitments, which present new opportunities for the growth of a strong South African supply base of renewable- energy components and finished products, battery storage units, and green consumer goods; the domestic demand trajectory, raw materials resource base, technological capacity and manufacturing experience, which, combined, place South Africa in a potentially strong position to become a key player in regional and international supply chains; and the fact that, when carefully balanced, an improved tariff structure will increase the demand for, and supply competitiveness of, locally manufactured products and components – this will further enable export market opportunities and enhance the competitiveness of the local renewables value chain.

Should you be interested in participating, Itac’s guidance is that your comments should be in respect of the following: the possibility of increasing ordinary customs duties on some of the tariff subheadings listed in the review of their respective World Trade Organisation bound rates, to the extent that there is capability or potential to manufacture them domestically in order to improve the overall tariff structure and the effective rate of protection, or EROP; the possibility of creating rebate items for some of the products on this list to the extent that they are input materials to downstream manufacturing activities and are not manufactured domestically; the potential discontinuation of the rebate item that makes provision for the duty-free importation of solar PV panels, provided that installed domestic capacity reaches at least 50% of domestic demand, in order to incentivise further investments in the domestic assembly and manufacturing industry; and proposals on the identification of additional products in the renewable energy value chain to be subjected to local content requirements. This is to be done in collaboration with the Department of Trade, Industry and Competition under the framework of the new Public Procurement Act, 2024, once the regulations for the policy have been developed.

Comments may also be submitted in respect of the potential relaxation of import control regulations for any critical minerals, or any other product, used as input material in downstream manufacturing activities in the renewable-energy industry, particularly in battery storage technologies, to the extent that this would incentivise domestic manufacturing and investment, and the potential introduction of export control regulations for any critical minerals, or any other product, used as input material in downstream manufacturing activities in the renewable- energy industry, particularly in battery storage technologies, to the extent that this would ensure security of supply and incentivise domestic manufacturing and investment.

If you are interested in obtaining more information on the review, please consult Government Gazette notice 3142 of April 17, which is also referred to as ‘Customs Tariff Applications – List 04/2025’.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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