Department of Trade and Industry's Budget Vote 36: Committee's Report; minutes: consideration

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Trade and Industry

12 April 2011
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Portfolio Committee on Trade and Industry convened to consider the Committee's draft Report on the Budget Vote 36 of the Department of Trade and Industry and minutes. No minutes were adopted. Members made comments on the Draft Report on Budget Vote 36. They felt that there was a need to establish a unit within the Department of Trade and Industry that would look after the interests of small-micro enterprises; that a process of reviewing trade agreements should  be in place because some of the agreements were questionable; that the Department of Trade and Industry should appear before the Committee to present its plans on disbursement of funds; and that South Africa, in its effort to trade with China, was looking at gaining preferential access for its value added goods.

Meeting report

Minutes of 02, 09, 18, and 22 March 2011: consideration
The Chairperson took the Committee through the minutes. No minutes were passed as the documents still needed to be re-checked.

Mr T Harris (DA) wanted to know if the Chairperson had received the report of the Key Performance Area (KPA) on the Industrial Policy Action Plan 2 (IPAP2) intergovernmental task team on the Iron Ore and Steel industry.

The Chairperson confirmed that she had been promised the report and indicated that she had been assured that IPAP2 would be launched soon.

Ms S Van der Merwe (ANC) suggested that the Committee should re-convene to adopt the minutes as the Committee was not sure of amendments made.

Department of Trade and Industry’s Budget Vote 36: Committee's Report: consideration
Mr X Mabaso (ANC) suggested the first paragraph on the “Relations of the State of the Nation Address to the Department of Trade and Industry” should focus on quality and quantity, and a figure be included.

Mr Harris, regarding manufacturing and job creation, stated that the statement by President Zuma on R20 billion tax breaks should read “the President re-iterated” as that had been announced by the Minister.

The Chairperson commented that the IPAP2 promised to establish a cohesive relationship between micro and macroeconomic policies in regard to the policy context of industrialisation.

Mr B Radebe (ANC) suggested that the concept for the Industrial Policy Action Plan should be retained.

Mr Mabasa seconded Mr Radebe, and suggested that “export-led growth” should be changed to “export commodities and consumption-led growth”.

Mr Harris pointed out that the line “South Africa has shifted to export commodities and consumption-led growth” should read “South Africa needs to shift to export commodities and consumption-led growth” because the country “has not already shifted”.

The Chairperson, on the issue of industrialisation as a key to promoting economic development, indicated that it was better to state that “the previous budget adopted a policy to shift from a commodities and consumption-led growth”.

Ms Van der Merwe suggested that the line that started with “Internationally” on page 4 should be made a separate paragraph.

Mr Harris suggested that, in the paragraph that started with the “emergence of China...” on page3, the last two sentences were clumsy and needed to be changed.

Mr Mabaso pointed out that the third paragraph on page 4 should be re-worked and emphasis be put on Africa as a continent, and that South Africa should not just be seen as a conduit but a country that had an influence on matters affecting Africa.

2011/12 Financial Year
With regard to the Departmental Budget for 2011/12, the Chairperson suggested that the Committee should indicate that the R10m budget for the Consumer Commission needed to be reviewed by the Department because the Commission was a new entity.

Mr Radebe supported the Chairperson by saying that the Commission should be invited to appear before the Committee to present its strategic and business plans.

The Chairperson further said that the Department of Trade and Industry (the dti) should also be invited to present its practical plans, instead of requesting it to review its allocation to the Consumer Commission.

Mr Harris noted that the budget allocation to the Commission had doubled and that it was important that the Department of Trade and Industry came before the Committee to present its plans on disbursement of funds.

Mr Radebe stated that the issue of standards, quality assurance, accreditation and metrology should be taken seriously, especially regulations, so that they could be applied regionally. This was because some of the goods were going to find themselves in external markets, and if they were found to be inferior, then the country would be in trouble.

Also, commenting on steel industry matters, Mr Radebe noted that public hearings indicated that the ArcellorMittal monopoly should be minimized by introducing smaller steel plants, and that the export of iron ore without beneficiation should be capped.

Trade Policy
The Chairperson commented that a trade policy was passed last year, but nobody knew what was implemented. No tariff barriers should be mentioned, for example, standards and capacity at customs borders.

Ms Van der Merwe suggested that, in line 8, in paragraph one, the wording under “Trade Policy” should be changed to “the intention is to have free trade areas between Regional Economic Communities (RECs) within Africa to deepen integration, thereby expanding our market and improving our developmental objectives”.

Mr G Selau (ANC) agreed with Ms Van der Merwe by saying there was a difference in meaning between “free trade area” and “free trade agreements”. “Free trade area” should be retained.

Ms C Kotsi (COPE) stated that the Committee should start a process of reviewing trade agreements as some of them were questionable and were made around 1994, and that links with the dti on trade agreements signed should be strengthened.

Regarding trading with China, Ms Van der Merwe suggested that the document should read that South Africa was not pursuing free trade agreements with it but wanted to gain preferential access for its value added goods, and that the Committee was fully supportive of the pursuit of the dti of productive investments, skills and technology transfer and promoting the exporting of more value-added South African goods.

Small enterprises
The Chairperson suggested the inclusion of allocations, and that the Committee should obtain a briefing from the Black Economic Empowerment (BEE) Advisory Council. She noted she had not heard anything about co-operatives and micro enterprises.

Mr Mabaso added that there should be an establishment of a unit within the dti that would look at small-micro enterprises especially those that sold on the streets so that they could be encouraged to grow, instead of being in one place.

Ms Van der Merwe pointed out that she wanted to see what mechanisms the Department had in place in engaging with the small and medium enterprises (SMMEs), and associations that dealt with them, because as far as she was concerned there were no bodies that were representing them.

Ms Kotsi noted that during the visit of the Committee to the Eastern Cape it came to Members' attention that people who were leading the co-operatives did not want other people to intervene. She suggested that the concept of co-operatives should be reviewed, and that meant the provision of training and getting rid of perpetually providing money if the business was not profitable.

Mr Mabaso said that the Committee members and dti officials should criticise themselves. The co-operatives were not a priority to them, but the big businesses were because it was easy for them to summon them (big businesses) before the Committee unlike the co-operatives. He suggested the Committee and dti officials should go out to the co-operatives and engage with them so that they could be fully informed about challenges besetting co-operatives. They should not think of co-operatives as people who just need money, but people who had to be trained and mentored, and not be given funding alone. Finally, he emphasised that since 1994 the current crop of co-operatives had not been given sufficient support and money.

Mr Selau indicated that terms and conditions should be applied when dealing with the co-operatives. It was not good just to give out money. There should be a contract between the two parties. Business should not be run on sympathy. People who ran co-operatives should account for the money given to them.

The Chairperson noted there was insufficient time spent on budget consideration and she would ensure that the Committee was moving steadily with the process to do more on oversight; reasons for changes in programmatic budgets for 2009/10 should be brought forward; and there was a need to review the allocation made to the Consumer Commission.

Mr Harris highlighted that there should be justification for the increase in budgets, that inter-departmental coordination was a risk and needed to be resolved, and that solutions should be reflected in the budget.

Mr Mabaso noted that during the oversight visit of the Committee to overseas countries, he discovered that Africa had inadequate representation on trade bodies, but South Africa was better represented compared to the rest of the continent. He felt it was important to have a paragraph in the document to the effect that African countries should have an increasing representation and that South Africa had an influence when it came to matters affecting the continent.

Mr Radebe said that the Committee was in support of IPAP2, the beneficiation of iron ore, and was discouraging the huge export of iron ore and was looking forward to receive the Inter-Departmental Task Team (IDTT) Report.

The Committee further recommended sufficient funding for training of people to be posted to multilateral institutions such as World Intellectual Property Organization (WIPO) and World Trade Organisation (WTO), and better representation at missions to ensure that the developmental agenda was pursued.

The meeting was adjourned.


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