Overview of ITAC

From the middle 1920s, South Africa adopted a trade strategy based on import substitution as a means to pursue industrialisation. The import substitution strategy required relatively high tariff walls and a complex tariff structure with various kinds of duties (ad-valorem; specific; compound; and formula duties) to develop, protect, and nurture domestic industries. In 1924, a permanent Board on Trade and Industries (BTI) was established and assigned the function of advising government on the implementation of this strategy.

Although the tariff policy adopted in 1924 also applied to agricultural products, the government support to the agricultural sector was driven through the Agricultural Marketing Act of 1937 and the Co-operatives Act of 1939. The government intervention in terms of these measures virtually eliminated foreign competition through the application of import and price controls.

Basic commodities continued to dominate South Africa’s exports. The first signs of change to the inward-looking strategy through tariff and trade reform began in the early 1970s, which was necessitated by a perceived need to diversify exports. Towards the mid-1980s, import substitution possibilities were exhausted and exports were increasingly seen as the vehicle to growth. Several studies recommended reform of the customs tariff policy aimed at reversing the anti-export bias inherent in a protected economy with its high cost structures.

The recommendations and subsequent reforms included implementation of structural adjustment programmes for selected sectors based on customs and excise duty rebates and drawback of duties, and export incentives. For example, the General Export Incentive Scheme (GEIS) was introduced to offset the price disadvantage experienced by exporters due to the cost-raising effects of protected intermediate inputs. Quantitative import controls were removed and replaced by import tariffs and a more flexible exchange rate was adopted to facilitate and cushion the effects of trade integration.

To support these changes, the mandate of the BTI was revisited. A new Board on Tariffs and Trade (BTT) was established, through the Board on Tariffs and Trade Act, 1986. The BTT was given a wide brief. It was to show a stronger commitment to liberalisation in a policy shift to be stricter in assessing requests for protection. It was also assigned the additional task of devising the structural adjustment programmes for selected industries with a view to export promotion. Later, the mandate of the BTT was narrowed through the enactment of the Board on Tariffs and Trade Amendment Act, 1992. In future, the BTT was to concentrate on import tariffs only.

The most significant changes to South Africa’s trade policy followed from the obligations South Africa undertook in the Uruguay Round of multilateral negotiations that culminated in the General Agreement on Tariffs and Trade (GATT 1994) and the establishment of the WTO in 1995. Impetus for additional changes came from the regional and bilateral trade agreements South Africa engaged in, following the establishment of the new democratic government in 1994.

In 2003, ITAC became operational as the successor to the BTT. The establishment of ITAC was meant to rationalise, streamline and modernise an organisation with a history that dates back to the 1920s. ITAC adopted a strategic use of international trade instruments in its alignment to prevailing trade and industrial policy imperatives.
ITAC executes its mandate within a set policy framework. The New Growth Path (NGP),