Yield to trade laws on spec­i­fied items

Non­com­pli­ance may re­sult in po­ten­tially se­vere con­se­quences

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - NKU­L­ULEKO KHU­MALO

IN SA, a plethora of laws gov­ern the man­u­fac­ture, pos­ses­sion, im­port, ex­port and use of cer­tain spec­i­fied items. Th­ese laws in­clude, but are not limited to, the Non-Pro­lif­er­a­tion of Weapons of Mass De­struc­tion Act No 87 of 1993 (Non-Pro­lif­er­a­tion Act); Na­tional Con­ven­tional Arms Con­trol Act No 41 of 2002 (NCAC Act); Nu­clear En­ergy Act No 46 of 1999 (Nu­clear Act); In­ter­na­tional Trade Ad­min­is­tra­tion Com­mis­sion Act No 71 of 2002 (ITA Act) and the Cus­toms and Ex­cise Act No 91 of 1964 (Cus­toms and Ex­cise Act).

When it comes to im­port and ex­port con­trols in par­tic­u­lar, the legal regime in SA is quite com­plex in that one has to deal with sev­eral reg­u­la­tory agen­cies em­pow­ered by var­i­ous pieces of leg­is­la­tion. It is there­fore un­sur­pris­ing for a com­pany or in­di­vid­ual to be in con­tra­ven­tion of some of the rel­e­vant laws and reg­u­la­tions and be un­aware of such breach, some­times, for some years.

To begin with, an en­tity must be reg­is­tered as a cus­toms client with, and there­after ob­tain an im­port li­cence from, the cus­toms and ex­cise di­vi­sion of the South African Rev­enue Ser­vice (SARS) in or­der to im­port or ex­port goods in SA.

The risk of non­com­pli­ance and its at­ten­dant con­se­quences (such as fines and im­pris­on­ment) be­comes a real con­cern mainly in re­spect of pro­hib­ited and re­stricted or reg­u­lated goods. The con­trol over the im­port and ex­port of cer­tain goods that are re­stricted or pro­hib­ited or sec­ond- hand in SA lies with the In­ter­na­tional Trade Ad­min­is­tra­tion Com­mis­sion (Itac). The In­ter­na­tional Trade Ad­min­is­tra­tion Com­mis­sion Act gives Itac the author­ity to con­trol the move­ment of goods into and out of SA by way of per­mit.

Im­port and ex­port con­trol mea­sures or re­stric­tions are ap­plied to en­force health, se­cu­rity and safety and tech­ni­cal stan­dards that arise from do­mes­tic laws and in­ter­na­tional agree­ments and are limited to those al­low­able un­der the rel­e­vant World Trade Or­gan­i­sa­tion agree­ments.

Chal­lenges of com­pli­ance be­come more acute when it comes to con­trols re­gard­ing the non­pro­lif­er­a­tion of weapons of mass de­struc­tion, con­ven­tional arms and dual-use goods. Con­trol over or reg­u­la­tion of nu­clear, bi­o­log­i­cal and chem­i­cal weapons, also re­ferred to as weapons of mass de­struc­tion, is glob­ally pur­sued through in­ter­na­tional agree­ments and ar­range­ments re­lat­ing to nu­clear, chem­i­cal and bi­o­log­i­cal weapons, their spe­cific means of de­liv­ery and dual-use items. SA sub­scribes to, sup­ports and par­tic­i­pates in most of th­ese agree­ments and ar­range­ments.

SA’s in­ter­na­tional com­mit­ments re­gard­ing the con­trol of weapons of mass de­struc­tion are im­ple­mented do­mes­ti­cally through the Non-Pro­lif­er­a­tion Act. The Non-Pro­lif­er­a­tion Act, among oth­ers, pro­vides for the estab­lish­ment of a coun­cil to con­trol and man­age mat­ters re­lat­ing to the pro­lif­er­a­tion of such weapons. There are sev­eral lists of con­trolled goods that have been for­mu­lated and pub­lished by no­tice in the Gov­ern­ment Gazette to give ef­fect to the pro­vi­sions of the Non-Pro­lif­er­a­tion Act.

Where con­ven­tional arms are con­cerned, SA is a sig­na­tory to and im­ple­ments the Wassen­naar Ar­range­ment on Ex­port Con­trols for Con­ven­tional Arms and Dual Use Goods and Tech­nolo­gies by in­cor­po­rat­ing it into the Na­tional Con­ven­tional Arms Con­trol Act . The author­ity re­spon­si­ble for the con­trol over trade in con­ven­tional arms and ren­der­ing of for­eign mil­i­tary as­sis­tance is the Na­tional Con­ven­tional Arms Con­trol Com­mit­tee, a statu­tory body that re­ports to par­lia­ment and con­sists of cabi­net min­is­ters and deputy min­is­ters.

In terms of the act, no per­son may trade in con­ven­tional arms or ren­der for­eign mil­i­tary as­sis­tance un­less that per­son is reg­is­tered with the Di­rec­torate of Con­ven­tional Arms Con­trol and is in pos­ses­sion of a per­mit au­tho­rised by the com­mit­tee and is­sued by the di­rec­torate. Per­mits are re­quired for ar­ma­ments devel­op­ment and man­u­fac­tur­ing, mar­ket­ing, con­tract­ing, ex­port­ing, im­port­ing or trans­fer­ring (con­veyance) of con­ven­tional arms, which in­cludes weapons, mu­ni­tions, ves­sels (land, sea and air) de­signed for war, ar­ti­cles of war and re­lated sys­tems, com­po­nents, tech­nolo­gies, dual-use goods or ser­vices.

Ap­pli­ca­tions for reg­is­tra­tion and per­mits are pro­cessed by the di­rec­torate, which refers them to var­i­ous de­part­ments for re­view and there­after is­sues per­mits as au­tho­rised by the com­mit­tee.

Con­trolled items in­clude dual-use items and th­ese can present dif­fi­cul­ties from a com­pli­ance per­spec­tive in that the user or posses­sor may not be aware of the item’s other uses be­yond the or­di­nary ev­ery­day uses. Dual-use items are goods, soft­ware and tech­nol­ogy nor­mally used for civil­ian pur­poses but which may have mil­i­tary ap­pli­ca­tions or may con­trib­ute to the pro­lif­er­a­tion of weapons of mass de­struc­tion. Dual-use im­port and ex­port con­trols af­fect a spec­trum of civil in­dus­tries such as aerospace, en­ergy, de­fence and se­cu­rity, lasers and nav­i­ga­tion, telecom­mu­ni­ca­tions, life sciences, chem­i­cal and phar­ma­ceu­ti­cal, ma­te­rial pro­cess­ing equip­ment, elec­tron­ics, semi­con­duc­tor and com­put­ing, med­i­cal and au­to­mo­tive.

Tri­ethanolamine is an ex­am­ple of a com­mon dual-use item. In ad­di­tion to its use as an in­gre­di­ent in lo­tions, hair sham­poo and dish­wash­ing liq­uid, it can also be used to pro­duce mus­tard gas (a chem­i­cal war­fare agent) which is why it is a con­trolled item.

Due to the dan­gers pre­sented by most of the con­trolled goods from an in­ter­na­tional trade per­spec­tive, var- ious statutes in SA and in other coun­tries spec­ify se­vere penal­ties for breaches which can in­clude a fine or im­pris­on­ment or both. For ex­am­ple, in the mat­ter be­tween The State v Asher Karni the Na­tional Pros­e­cut­ing Author­ity’s pri­or­ity crimes lit­i­ga­tion unit man­aged a South African Po­lice Ser­vices in­ves­ti­ga­tion into a Cape Town busi­ness im­pli­cated in the im­port and ex­port of trig­gered spark gaps. Trig­gered spark gaps are du­aluse items that can be used to det­o­nate nu­clear weapons or to sep­a­rate mis­sile stages, but which can also be used in lithotripters, med­i­cal de­vices used to break up kid­ney stones with­out surgery. This led to the ar­rest of the busi­ness owner in the US. In 2005, he pleaded guilty and was sen­tenced to a pe­riod of im­pris­on­ment.

It is in­cum­bent on those at risk of breaching the above­men­tioned laws (man­u­fac­tur­ers, im­porters and ex­porters) to en­sure they are com­pli­ant at all times. Non­com­pli­ance in re­spect of a par­tic­u­lar item may breach sev­eral statutes at the same time with po­ten­tially se­vere con­se­quences for the in­di­vid­u­als and com­pa­nies con­cerned (pri­vate per­sons, com­pa­nies and di­rec­tors or em­ploy­ees of a com­pany may be li­able in some cases). The need to en­sure com­pli­ance can­not be overem­pha­sised.

Dual-use items are goods, soft­ware and tech­nol­ogy nor­mally used for civil­ian pur­poses but which may have mil­i­tary ap­pli­ca­tions

Pic­ture: THINKSTOCK

DUAL-USE ITEMS PRO­HIB­ITED Th­ese items can present dif­fi­cul­ties from a com­pli­ance per­spec­tive in that the user or posses­sor may not be aware of the item’s other uses be­yond the or­di­nary ev­ery­day uses

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