The South African Association of Freight Forwarders (SAAFF) and National Regulator for Compulsory Specifications (NRCS) have added their support to the call by the Tyre, Equipment, Parts Association (TEPA), for stronger measures to curb the illicit trade of tyres which is threatening the sustainability of the industry and placing consumers at risk.
In March this year, TEPA, a proud association of the Retail Motor Industry Organisation (RMI), launched a whistle blower hotline where cases of illicit trading activity may be reported by both industry and consumers alike. This was strongly supported by both the South African Tyre Manufacturers Conference (SATMC), representing the four local tyre manufacturers in the country and the Tyre Importers Association of South Africa (TIASA).
Vishal Premlall, National Director of TEPA, says significant revenues are being lost as a result of certain traders at the bottom end of the supply chain who are bringing in parts (sometimes safety critical parts like brake pads and shoes), of very poor quality through compromised channels. These parts are not fit for purpose and do not adhere to local regulatory standards. “Not only does this impact on a struggling economy but it is also a safety hazard for unsuspecting consumers,” he notes.
Dr Juanita Maree, Chief Executive Officer of SAAFF, says the organisation is working proactively with South African Revenue Services (SARS) and other Government agencies offering shared insights in respect of international best practices, not only to enhance the facilitation of legitimate trade, but also to simultaneously remove illicit activities from the trading environment. “While we may differ in thinking around the likelihood, impact and severity of the risk, there is a need for an alignment in respect of the methodology to support the complete and collaborative eradication of illicit trade in the tyre industry,” she says.
Maree believes that SARS as the gatekeeper, needs to continue optimising their application in respect of two distinct risk management areas i.e., entity risk (supplier and importer) and transactional risk (origin, classification, and valuation) to support the identification and consequent removal of illicit international trade activity. She says SAAFF has further requested SARS to intensify their licensing criteria by enhancing the proposed Registration, Licensing and Accreditation system (RLA) framework. “This will ensure that directors of illicit companies subsequently liquidated are disallowed from being licensed as a traders with SARS again under the guise of a new organisation, through the linkage of their ID numbers derived from Companies and Intellectual Property (CIPC).”
Duncan Mutengwe, General Manager of Automotive at National Regulator for Compulsory Specifications (NRCS), says that the NRCS is committed to rooting out non-compliant products from the market and welcomes the stakeholder collaboration to ensure the compliance of tyres.
“This will augment the regulatory measures that we have put in place as the NRCS to ensure that all automotive products, where Compulsory Specifications apply, are subjected to the pre-approval process, commonly referred to as the homologation, which entails reviewing application forms received from businesses intending to sell regulated automotive products. Applications are evaluated to check against compliance with technical requirements as outlined in the Compulsory Specification and other relevant legislations. The approval process is implemented alongside the various other regulatory activities to ensure on-going compliance of products that are offered for sale, including market surveillance inspections, deployment of staff at points of entries and consumer awareness programmes. All this is done in congruence with the mandate of the organisation of ensuring the protection of public health, safety and the environment and to promote fair trade,” he emphasised.
Charl de Villiers, Chairman of TIASA emphasises the importance of a united front, bringing in all the various stakeholders. “Curbing illicit trade practices will be virtually impossible without the commitment from all industry players and their members at all levels of business.”
Nduduzo Chala, Managing Executive of SATMC, says the SATMC is also working behind the scenes with law enforcement agencies to identify and investigate cases of illicit tyre trade. “The tyre industry has witnessed a rise in the number of incidents of misdeclaration of tyre consignments and rerouting of imports through neighbouring countries to avoid tyre duties, environment levies and permits that we are looking to stamp out. It is for this reason that the SATMC is partnering with TIASA, SAAFF and TEPA to tackle illicit trade in the entire tyre industry value chain. We need to protect our industry and the livelihood this industry supports.
“The local tyre manufacturers have invested in excess of R29 billion in the last five years (2018 to 2022) and illicit trading is a real threat to the sustainability of our industry,” adds Chala.
Compliance is absolutely key, and TEPA will continue actively engaging the relevant compliance authorities to prevent these parts from entering the automotive aftermarket.