4 February 2013

Ghana: Trade Ministry Mad At Customs

The Ministry of Trade and Industry has denied a claim by the Customs Division of the Ghana Revenue Authority (GRA) that the ministry issued directive to halt the sale of 31 containers of ferrous scrap metals, which were seized at Tema, almost a year ago.

The Acting Director, Communication and Public Affairs at the Ministry of Trade and Industry, Nana Akrasi Sarpong, made the denial in a press release and interview with Maritime and Port News on Oman FM on Wednesday.

Customs recently told the media that it was compelled to truncate the disposition of the 31 containers of ferrous scrap metals which were seized by the division at the Tema Heavy Industrial area early last year, ready for export as a result of an order from the Ministry of Trade and Industry.

According to Nana Sarpong, Customs has no justification to say that the ministry halted the auction of the scrap metals because the only correspondence from the ministry to Customs, in connection with the detained items was dated 9th August 2012.

In that correspondence, the director claimed the ministry rather directed Customs to dispose of the metal scrap and not the other way round.

The Ministry, he said, is surprised to learn that Customs is blaming the sector for its inability to auction them.

The closest Customs got to dispose of the items was in November last year when it invited bids from the local steel companies only to halt the process in the eleventh hour after asking the winner of the bid to evacuate the metals from the scrap yards.

Nana Akrasi Sarpong's full statement

The attention of the Ministry of Trade and Industry has been drawn to an article published in Enquirer Newspaper dated Thursday, January 24th, 2013, and other print and electronic media with the headline; Dark Clouds over 31 Containers of Seized Scrap Metals, and wish to react as follows.

For the avoidance of doubt, a correspondence was received from Customs Division of the Ghana Revenue Authority seeking our opinion and we responded as follows through a letter dated 9th August, 2012.

As you may be aware ferrous scrap metal is a major raw material used by the local steel mills and foundries. Its exportation has been restricted by an administrative order since the late 1980s to reduce the foreign exchange spent on the importation of billets as raw materials for the steel mill.

The Ministry issued a notice on the temporary ban on Export of Ferrous Scrap Metal to Exporters as far back as 20th May, 2002 to protect the local steel industry. The Commissioner of Customs, Excise and Preventive Service (CEPS) was duly informed.

In 2008, some flexibility was introduced to allow some quantities of ferrous and non-ferrous scrap metals to be exported. Every potential exporter was required to submit an application and some specific documents on the operations of the exporting company for consideration before any permission was granted. This process was preceded by a directive issued to potential exporters in the dailies in June 2008.

Subsequently, the Ministry decided to further streamline the process by developing a legislative instrument to govern the export of non-ferrous scrap metals. Through the Legislative Instrument, L.I. 1969 which banned the export of ferrous scrap metals was passed in 2010, a process has been defined to regulate the export of non-ferrous scrap metals, while the ban on the exportation of ferrous scrap metals still remains in force.

The L.I 1969 specifically warned exporters not to add iron or carbon steel scraps to the non-ferrous scrap metals for export, failure of which constituted a punishable offence which could lead to payment of a fine and confiscation of the products to the state. Therefore even the provisions of L.I 1969 provide the legal basis for the ban on the export of ferrous scrap metals.

Apart from the contents of the L.I 1969, sufficient notice to the general public has been made available by the Ministry through advertisements in the national dailies to guide exporters of scrap metals as to the permissible scrap metals that qualified for export under the legislative instrument.

The restrictions contained in L.I. 1969 can be legally extended to cover "ferrous" scrap metals as the term ferrous includes "iron and carbon steel".

From the background we have provided, it is clear that there has been an administrative ban on the export of "ferrous' scrap metals from the 1980s. For reasons of public policy, it is a ban that the Ministry continues to endorse.

Significant investment has been made locally to process scrap for the production of metal products, especially for the construction industry as such we think it is in the interest of the public and the country to ensure that such businesses have sufficient raw materials for production provided that they do not engage in price fixing activities and are ready to pay the market value for the scrap.

A legislative instrument (L.I) banning the export of ferrous scrap metals will soon come into being as processes for its promulgation are far advanced. The draft Legislative Instrument has been reviewed and approved by cabinet, and is currently being finalised for gazetting and subsequent submission to Parliament by the Attorney General's Department and Ministry of Trade and Industry.

Even though section 12 of L.I. 1969 appears cumbersome to enforce, in the circumstances it is the means that is available to deal with infractions of the law. Therefore it should be enforced until such time that other legislative measures are put in place.

With regard to who will be responsible for the prosecution, the Ministry is of the view that the Attorney General's Department with the assistance from the impounding Agency i.e. Customs should take charge of that matter. On the other hand Customs may discuss this further with the Attorney General's Department to have the appropriate guidance on the matter.

Concerning the action needed to be taken on the seized scrap metals, we informed CEPS that the detention be converted to seizure under Customs law and the Commissioner disposes of the goods in accordance with Customs procedures.

However we are also of the view that as public officers once a law has been passed or a legislative instrument comes into force, it is not for any public officer to decide how convenient or otherwise it is to implement any legislation in force.

The issue to be addressed is to determine the steps that need to be taken to enforce the law effectively. We are, therefore, urging Customs to discuss the issue of enforcement and the conduct of prosecutions with the Attorney General's Department as a matter of urgency.

A second look will have to be taken at L.I.1969 regarding how efficiently and expeditiously its provisions can be implemented without impeding legitimate trade and even the Ministry has requested CEPS to bring their suggestions for amendment.

As already mentioned very soon an L.I. to ban the export of Ferrous Scrap Metals will be laid before parliament as the process has reached an advanced stage, and we believe that will make the issues of the ban on the export of such and the sanctions for non-compliance much clearer.

We hope this information responds adequately to the concerns that have being raised in a section of the media.

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