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Part B: Mineral Rights - Part B-6: Beneficiation - Processing, Trade & Transport - 35. Beneficiation – Processing, Trade and Transport - 35.13 Incentives for Processing, Trade and Transportation of Development Minerals | 35.13(c) Exoneration of Customs Duties on Regional Inputs

Customs duties on imported inputs that are necessary for the development of economic activity often have a negative effect on investment decisions because they must be paid when a plant is being built and before it is generating revenue. For this reason, it is not uncommon for countries to exonerate investors in certain targeted sectors of economic activity from the payment of customs duties on the imports that are essential to the development of their economic activity.

Exonerations from the payment of customs duties on regional inputs (i.e., development minerals imported from other member states of the AU) would be available only to the holders of Authorised Processing Facility licences and Authorised Trader/Dealer licences issued by the national Regulating Authority because they are the only licensees who would be authorised to purchase development minerals regionally under the licensing scheme envisaged by this Guiding Template.

35.13(c) Example

Article [_]

(1) Subject to the provisions of any binding international treaties or agreements on customs duties to which [Country]is a party, the holder of an Authorised Processing Facility licence or an Authorised Trader/Dealer licence issued by the national [Regulating Authority] shall be exonerated from the payment of customs duties on development minerals imported from other member states of the African Union unless the [Regulating Authority] certifies to the Customs Service that an adequate supply of development minerals for the domestic market exists nationally.

(2) Subject to the provisions of any binding international treaties or agreements on customs duties to which [Country]is a party, the holder of an Authorised Processing Facility licence or an Authorised Trader/Dealer licence issued by the national [Regulating Authority] shall be exonerated from the payment of customs duties on development minerals exported to other member states of the African Union unless the [Regulating Authority] certifies to the Customs Service that there is a shortage of supply of development minerals for the domestic market.

Annotation

The example establishes the straightforward principle that the licensees who are authorised to import development minerals under the licensing scheme set forth above (nationally licenced processing facilities and trader/dealers) would be exonerated from the payment of customs duties on their inputs of development minerals, in order to assure an adequate supply of such minerals for the domestic market. Likewise, they would be exonerated from any customs duties on exports of development minerals.

Because the customs exoneration on imports can be a double edged sword that can either shore up domestic supply or undercut domestic production on price, the example allows for the possibility that the exoneration can be lifted if the national Regulating Authority certifies to the customs authority that the exoneration is no longer necessary because domestic supply is adequate. Similarly, the example provides that the exoneration on exports can also be lifted if the Regulating Authority certifies that there is a shortage of supply for the domestic market.

The ability of the national administration to implement the exoneration of customs duties on regional inputs and exports may be limited by binding international treaties or agreements on trade that set the customs duties on development minerals within the customs union or trading block such that the individual member country cannot change them unilaterally. Hence the introductory language in the example provides that the exoneration provision is subject to any such treaties or agreements.