International Tradt} Administration Commission South of Africa

FAIR

TRADE

The International Trade Administration Commission herewith presents its Report No: 34 REDUCTION IN THE DUTY ON HAND- KNOTTED AND WOVEN CARPETS AND HAND- WOVEN RUGS, with recommendations.

CHIEF ..-""~...~:

COMMISSIONER

PRETORIA ..~.'":1. .1..t .'2-./2003

FAIR

TRADE

INTERNA TIOAL TRADE ADMINISTRA TION COMMISSION OF SOUTH AFRICA

REPORT NO 34
REDUCTION IN THE DUTY ON HAND-KNOTTED AND WOVEN AND HAND-WOVEN RUGS CARPETS

SYNOPSIS
The Oriental hand-knotted Rug Dealers and Importers and woven Association of SA, representing rugs applied importers of

carpets and hand-woven

for a reduction

in the

duty on hand-knotted subheadings

and woven

carpets and hand-woven

rugs classifiable

under tariff to 5

570 1.10, 5701, 90 and 5702.10

from a level of 30 per cent ad valorem

per cent ad \'alorem. be justified,

A major reason for the appl ication is that the current duty cannot in SACU. It was also stated that the

as these carpets are not manufactLIred Llnder-invoicing

lower duty would discourage

and smuggling.

The application parties

was published

in the Government

Gazette in order to allow Federation

interested to the a

to comment SARS

on the application. indicated that they

The Textile would

did not object

application.

have some difficulty of hand-knotted

to administer

system where the provision hand-woven However, differentiate

tor the importation to a lo\ver

and \voven carpets and carpets.

rugs are subject the Commission

rate of duty that SARS

than machine-made officials

is of the opinion

should be enable to rugs and machineand tariff under-

between hand-knotted

and woven carpets, hand-woven provided

made carpets given the amount hand-woven headings. carpets The SARS

of training

and the fact that hand-knotted international six-digit

are classifiable should

under

well-defined

also be able, given

the resources,

to deal with

invoicing

The Commission woven 5701.90

~'alo'.em,

therefore

decided

to recommend

that the duty on hand-knotted under tariff subheadings to 5

and

carpets

and hand-wo\'en be reduced

rugs classifiable from 30

5701.10;

and 5702.10
as these carpets

per cent ad valorem

per cent ad

are not made domestically.

THE APPLICATION
The Oriental

AND THE TARIFF

Rug Dealers and

POSITION
Association of SA, representing for a rugs a level

Importers

importers reduction classifiable of 30

of hand-knotted

and woven carpets and hand-woven and woven

rugs applied

in the duty on hand-knotted under tariff subheadings

carpets and hand-woven and 5702.10 from

5701.10,5701.90

per cent ad \'alorem were:

to 5 per cent ad valorem.

The reasons for the

application

Hand-knotted known will

and woven

carpets

and hand-woven

rugs also commonly in SACU nor and

as ..oriental

carpets and rugs" are not manufactured

they be in future due to the high costs involved that manufacture of hand-woven

and the tradition

culture of the people in countries

these carpets carpets are made in SACU

.2

Although

a very small

number

these cannot be compared

in cost or otherwise

to the oriental

rugs.

The current high duty encourages under-invoicing.

2.

The Commission enable

decided to publish carpet

the application

in the Government

Gazette to on the

machine-made

manufacturers

an opportunity

to comment

application.

" .).

The tari ff structure

of carpets and other textile floor coverings

is as follows:

TABLE I: T.-\RIFF POSITIO'

4.

The application

was published

as follows:

Reduction woven

in the rate of duty on hand-knotted classifiable under tariff

and woven carpets and hand 5701.10, " 5701.90 and

rugs

subheadings

5702.10.from

30 per cent ad valorem

to 5 per cent ad valorem

THE INDUSTRY

AND MARKET

5,

According

to the applicant

an extremely

small number

of hand-woven

carpets are carpets

made in SACU.

These carpets however cannot be compared design

to the "oriental

and rugs" as they are ofa unique African

6. The main imports

under volume tariff

of hand-knotted

and woven

carpets and hand-woven During

rugs are

subheadings

570 1.10 and 5702.10.

the year 2002 the total m2and 208082 m2 of

of imports

under these headings amounted dLIring the first

to 110410

respectively. imports

However,

six months

of 2003 the total volume while imports

Llnder item 5701.90

increased sLIbstantially

under the other

two items declined

by almost 50 per cent over the same period.

7. The main countries

months

of origin

are Iran, Pakistan, India and China. During the first 6 of hand-knotted and woven carpets and hand-woven from India and Iran

of 2003 the volume under tariff

rugs imported

subheadings

5701.90

and 5702.10

increased appreciably.

8. The price per m 2 of hand-kn,otted and woven carpets and hand-woven

\yere lower during the first six months

rugs imported

of 2003 than the price per m 2 of these

carpets during the year 2002, also due to exchange rate movements.

COMMENTS TO THE APPLICATION

9. The Textile
members

Federation commented that none of the carpet manufacturers are , of the Federation. They do not object to the application but wished to attention to the fact that the duty on other carpets could other carpets as hand-knotted and woven

draw the Commission's possibly be circumvented

by clearing

manufacturers

ofmachine-made

carpets did not comment

on the application.

CONSIDERA TION

10. The carpets concerned are exclusively hand-knotted and woven carpets and handk woven rugs and are commonly called "oriental carpets or rugs" These carpets are clearly distinguishable from carpets that are manufactured in the SACU which are

mainly of African

design.

II. The Oriental consists of invoicing

Rug Dealers and Importers 19 importers.

Association

of South Africa

(ORDIASA)

The Association

has raised some concern about under-

and smuggling

to avoid the 30 per cent duty.

12. The Commission

noted the fact that SARS is reluctant

to administer

a system where rugs is lowered. to SARS

the duty on only hand-knotted However, ofticers the Commission that would

and woven carpets and hand-woven concluded that enough training

is provided

enable them to differentiate

between these carpets and machineand smuggling.

made carpets as well as to deal with the issue ofunder-invoicing

RECOMMENDA

TION

13. The Commission woven 5701.90

decided to recommend

that

the rate of duty on hand-knotted under tari ff subheadings

and

carpets and hand-woven and 5702.10

rugs classifiable from

5701.10,

be reduced

30 per cent ad valorem

to 5 per cent ad

valorem.