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Trading with regulated and prohibited goods

Trading with regulated or prohibited goods

Trading with regulated and prohibited goods

Each country has different requirements regarding what they classify as regulated, restricted or prohibited goods for import and export trade. For example, some countries might allow prescription medication or animal skin trade, while others do not. Sometimes, a country may prohibit a product for import, but only regulate it for export.

What is the difference between regulated goods and prohibited goods?

According to Customs, prohibited goods are goods that are not allowed to cross the border either out of or into the country. Attempting to import or export prohibit goods can lead to serious fines and even criminal charges.

Regulated goods are goods that are controlled by an import or export permit. These permits regulate either the quality or quantity of the goods. Quality permit restrictions are controlled by government departments such as the Department of Health, Department of Agriculture, or the Department of Environmental Affairs for example. Volume (quantity) permits are usually controlled by the Department of Trade and Industry (DTI) or the International Trade Administration Commission (ITAC).

For imports, some products need to be sampled and tested before the import permit is issued. An example of this is when the South African Bureau of Standards (SABS) is required to test a product for safety. The permit may only be issued once the SABS accepts the product as safe.

How do I know if my goods are regulated or prohibited?

The good news is that Customs has made it easy for importers and exporters to find out whether they are allowed to bring their goods into, or take them out of, the country.

Figure 1 below shows an excerpt from the Customs list of regulated and prohibited goods. An explanation of each section in the figure follows.

Excerpt from Customs Regulated Cargo List

Figure 1: Excerpt from the Customs regulated cargo list

  1. Heading: This is the 4-digit number or the first 4 numbers of the HS/tariff code.
  2. Designation of goods: The description of the goods according to the category they fall into.
  3. Prohibition or restriction: Stipulates how the goods are controlled for import or export.
  4. Authority: Stipulates the law (Act) that authorises regulation or restriction of the goods.
  5. Action required/Detained for: Lists the authority that must be notified if the importer or exporter is stopped.
  6. Competent authority: The authority responsible for issuing the import/export permit.
  7. Customs mandate requirement: Outlines what Customs must look for when checking the imports/exports.
  8. Document requirement: States what Customs must see on the permit provided.

If the importer/exporter is not in possession of the applicable permit, then the regulated and prohibited goods will not be allowed into or out of the country. Should Customs need to store the goods for the duration it takes to obtain the necessary permit, the importer/exporter will accrue storage costs. Delays in Customs clearance due to incorrect documentation may also result in business losses due to lack of availability of the goods. It is therefore very important to make yourself aware of any restrictions and obtain a permit before Customs clearance.

You can look up prohibited or regulated items in our lookup guides below. Our office can obtain most permits for you.

For assistance with permits, enquire online or call 0861 0 TRADE (87233).

Arbitration: Settling disputes without burning bridges

Don’t burn bridges. You’ll be surprised how many times you have to cross the same river. – H. Jackson Brown Jr.

Imagine dragging your friends or family members off to court every time you have a disagreement. You would most certainly do untold damage to your relationships in no time. Instead, it is more likely that you would call in a friend or family member that wasn’t involved in the conflict to help solve the problem. This is the function of arbitration in a trade context.

We definitely don’t call upon our lawyers for every minor personal relational grievance – and it isn’t necessary to do so for minor business disagreements either.

Arbitrators are independent individuals or professional bodies appointed to settle disputes. They aim to promote fairness and unity in business dealings, and help settle grievances without involving lawyers and courts. This means that you can settle disputes in a way that doesn’t damage your trade relationship with the other party. Arbitration is a key role of both local Chambers of Commerce (CoC), and the International Chamber of Commerce (ICC).

Protect yourself before engaging in trade

Before you decide to partake in any trade – local or international – you can ask your trade partner if they belong to their local CoC, and if not, whether they wouldn’t mind joining. This will help ensure that both of you are on the same page in terms of fair procedures for dealing with disputes should a misunderstanding arise. If the trade partner refuses to join their local CoC, heed this as a warning sign. A trading partner that refuses to join an organisation geared toward promoting fairness and unity in business dealings can quickly become a difficult opponent should they find cause for disagreement.

How arbitration works

Arbitration is a three-step process:

  1. Assigning blame: The arbitrator must first decide which party is to blame for the perceived loss or broken business promise. They must also decide whether the blame is singular (one party’s fault), or proportional to the parties involved.
  2. Restoring the relationship: After the guilty parties are identified, the arbitrator must help determine what can be done to help get the business relationship back on track.
  3. Putting preventative measures in place: The arbitrator must assist the involved parties to determine what measures can be put in place to prevent a similar dispute from arising again.

Make the most of your CoC membership

To make sure that you benefit from the CoC’s policies, simply become a member of a local CoC and include the following statement in your correspondence and/or trading conditions:

“As members of the Chamber of Commerce, we accept the ICC arbitration rules regarding any disputes in our business transactions.”

If you are unhappy with the arbitration outcome, you can still choose to go to court. However, once you’ve resolved the dispute in partnership with your CoC using principles that promote fair business practice, court is a highly unlikely option.

Maintaining good business and trade relationships is fundamental to long-term business success. Our advice to you – don’t risk burning bridges and incurring exorbitant legal fees. Rather join your local CoC (or an international CoC if necessary) for a small fee, and reap the benefits of constructive dispute resolutions that preserve trade relationships.