Department of Trade and Industry discussion with Committee on its Strategic Plan

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Trade and Industry

24 May 2011
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee engaged with the Department of Trade and Industry in discussions on the Committee’s strategic plan. The importance of Africa day was emphasised from the onset of the meeting. A brief background was given and it was emphasised that there was need for Africa to transform and guard its territorial integrity. The Members criticised international institutions, in particular the International Monetary Fund and the International Criminal Court for the discriminatory way they conducted their business. The Chairperson emphasised the importance of the strategic plan.
The Department of Trade and Industry responded to the Committee on progress with various pieces of legislation. The Committee was concerned about the Gambling Review Commission report that it had been promised and which it had not received as yet.

The Department responded that the report had been completed and it would be submitted very soon. The Committee was also concerned with the new Consumer Commission and the Companies’ Commission. The transfer of staff had been completed to the Consumer Commission and progress was being made. The new Consumer Commissioner was said to be very active and a number of road shows that were aimed at public participation had been conducted. The transfer of staff to the Companies’ Commission had not yet been completed as well as issues with information and communication technology. Concern was also raised by Committee Members in relation to the participation of people in rural areas and informal settlements. The Department unveiled to the Committee a plan which also included the establishment of a telephone line which could be used by individuals in rural areas to call and leave their comments. The Department also briefed the Committee on the Tripartite Free Trade Area agreement. Members noted that public participation on the Industrial Policy Action Plan 2 had been overlooked and asked for a meeting with the Banking Association of South on bank charges. The new Consumer Commission should be visited as part of the Committee’s oversight. The Department would be directly involved in specialised in-house training for Members. The Committee’s strategic plan was adopted.

Meeting report

Introduction
Mr B Radebe (ANC), the Committee’s whip, gave apologies on behalf of the Chairperson who was in a meeting with a parliamentary delegation from the People’s Republic of China and was to join the meeting shortly afterwards.

Mr Radebe said that the purpose of the meeting was to finalise the Committee's strategic plan.

Africa Day Discussion
Mr Radebe went on to give a brief background on Africa day. He stressed that here was need to ensure and guard the territorial integrity of all African states so that they could advance the development of Africa. Africa was still used as a playground for Western countries. In addition there was need to transform the multilateral institutions that governed the world such as the International Monetary Fund and the International Criminal Court (ICC).

Ms C Kotsi-Ramotsami (COPE) thought that the ICC seemed to target mainly African leaders as opposed to western leaders such as the former British Prime Minister Tony Blair and the former United States of America President George W Bush. The way some African leaders governed their countries was also condemned. In addition there was need to stand up and avoid being colonised by the new colonisers and avoid being dependant on foreign countries.
Mr G Selau (ANC) noted that in both Pakistan and Iraq not only were people killed but the sovereignty of these countries was undermined. He added that South Africa could be a victim in the future.
The Chairperson, who had now joined the meeting, stated that we were all Africans despite the colour of our skin and there was need for a clear understanding of what it meant to be Africans.

Committee’s Strategic Plan: discussions with the Department of Trade and Industry (DTI)
The Chairperson stressed that the Committee's strategic plan was very important. The Committee was overwhelmed last year with what it had planned due to the style of its work and the volume of the work that needed to be done, hence the Committee needed to be more strategic. The Chairperson stressed that the Committee's researcher would be responsible for the Budget Review and Recommendations Report (BRRR) and as such he would be asked to track the budget that had been passed and the quarterly reports and thereafter give the Committee a monthly report. The issue of specialised training was also raised. There would be three types of training, all of which would be on the job and in-house before Committee meetings started. The Department of Trade and Industry (DTI) would be directly involved.

Legislation
Mr Lionel October, Director-General, DTI, reported that the Co-operatives Amendment Bill was issued for public comment and it was currently with the National Economic Development and Labour Council (NEDLAC)  which was working on the proposed legislation. The Bill would be tabled by the end of September at the latest or even earlier. The bill to amend Broad-Based Black Economic Empowerment (BBBEE) legislation was with the advisory committee and it was sent to the cabinet committee and then back again to the advisory committee. The bill was currently with the lawyers who were working on draft amendments and there was a possibility that it could be tabled in August 2011. The bulk of the changes were to align growth in order to increase production and hence strengthen score cards that dealt with preferential procurement and enterprise development and so these would be given some extra weight.
The Chairperson noted that the issue of gambling placed undue strains of the relationship between the Committee and the Executive. Furthermore it was noted that the DTI had promised the Committee a report on gambling and as such the Committee was still waiting for the report. The Chairperson stressed that June 2011 was the deadline for the report to be received by the Committee.

Mr October replied that the report had been completed and the Minister had made a formal request to table it at the last meeting of the Ministers and Members of the Executive Council (MINMEC) in Parliament.
Ms Zodwa Ntuli, Deputy Director-General: Consumer and Corporate Regulation Division (CCRD), DTI, responded that the Gambling Review Commission had done the process professionally and the report had been completed. The report was submitted for tabling but the Minister was not present at the last Cabinet meeting hence the process could not be completed. The Department was going to prepare a recommendation in line with what the report had said. The national lotteries had a dependence on gambling and there were a few recommendations that dealt with the issue. The DTI was waiting for the report from the Gambling Review Commission to be published. Then the DTI would be able to assess the implications of some of the recommendations. The Department stressed that there was need to address the issue of distribution of funds.
Ms Ntuli said that the Estate Agency Act was a 1976 piece of legislation. There was no proper framework to regulate developers therefore there was a need to expedite this issue. The draft bill and a regulatory impact assessment had been done and all documentation had been submitted. Furthermore there were some elements that still needed to be ironed out. Once Cabinet had agreed the Department would need two months to wrap up the issue.
Ms Ntuli said that the National Credit Act amendments would be brought for consideration in 2012.
The Chairperson asked when the Department intended to finalise the Consumer Protection Act (CPA).
Ms Ntuli responded that the regulations had been finalised and the DTI would be available to discuss the regulations.
The Chairperson stressed that she would like to look at whether the companies’ legislation and CPA interfaced.
Mr X Mabaso (ANC) expressed his concern around the consultative processes that took on board communities. He asked whether there was a way of ensuring that the public was properly consulted since it was very easy for the Department to consult the haves. He added that he did not get a sense that poor people were being taken on board.
Mr Radebe asked whether there were any teething problems with the Consumer Commission, what challenges it was facing and whether or not it was able to come before the Committee.
The Chairperson asked whether everything was proceeding with the new Companies Act and whether there were any glitches.
Preferential procurement
Mr T Harris (DA) asked for a status update on preferential procurement

Mr October agreed that public awareness was a challenge and the DTI was trying to work on it. Furthermore he stressed that public awareness was an area that needed constant monitoring.

Consumer Commission, Companies Commission
In relation to the consumer commission things were going very smoothly and the new commissioner was a very active person. Provincial road shows had been done and a number of complaints had been received. The transfer of staff from DTI to the Consumer Commission had been completed and very competent people were in place. In terms of the Companies Act things were proceeding smoothly and the systems the DTI had put in place were capable enough. A full diagnostic on certain areas would be conducted such as the IT area. It was a big institution which had a number of functions and the DTI would be monitoring them. In relation to preferential procurement it was stressed that Cabinet had agreed and regulations were busy being drafted.

Ms Ntuli noted that the DTI had started a process of negotiating a MOU in order to get a structure to assist the DTI to get into rural communities. A telephone line would be established so that people could call and leave comments especially in areas where people could not attend public hearings. In relation to the two new commissions it seemed as if things were going well. The transfer of staff to the Companies’ Commission had not yet been completed and other issues had not been finalised because of the issues with information and communications technology (ICT).

Mr Mabaso expressed his delight with the efforts that were being made in consulting the rural communities. However he was worried when it came to townships and informal settlements which were not being properly consulted. He asked which two laws were instruments that could be availed to the poor. Lastly he added that the people were supposed to govern.
Mr Harris asked when the Consumer Commission website would become functional and when would the call centre become fully operational. He further asked the Department to clarify the contact details of the Commission.
Mr Radebe asked whether there were any people who were retrenched or downgraded when it came to the Companies’ Commission.
Mr October noted that the point that had been raised in relation townships and informal settlements was being taken on board. He added that there was need for a greater level of additional resources towards these communities.
Ms Ntuli responded that the transfer of staff was a section 197. Staff from other areas had been retained and no people had been downgraded. The consumer website was expected to be fully functional in June and their building would be ready. In addition she stressed that the contact details would be forwarded to the Committee. The issue on consultations would be improved. In terms of the CPA pamphlets had been translated into about six languages and the sixth language was Braille.
Mr Harris asked what the DTI would advise on dealing with complaints from the public.
Mr Mabaso urged the need to respect other languages such as Tsonga.
The Chairperson stressed that the issue on translations would be followed up. However the DTI was to be commended on the translations which it had started earlier.


Industrial Policy Action Plan (IPAP)
Mr October stated that the new IPAP had been adopted in April and there is a new version that was built on the old one. The automotive industry had been very successful. R13 billion had been secured as part of an investment and Toyota had agreed to localise the manufacture of taxis. The leather sector and the catalytic converters sectors were taking a lot of stress. The main aim was to create a level of local content into vehicle and targets had been set for the industry. Good progress was being made on business processes and the outsourcing service sector. There was a progress in the transport equipment sector and there were number of agreements with state owned enterprises. On the local level all of the buses were still being imported and this was the area where the DTI wanted to pursue the procurement dimension rigorously. It was further stressed that the exchange rate was a problem since the rand fluctuated extremely and it was very volatile. In addition, as soon as the rand strengthened, most people would go and buy overseas and local suppliers would be dumped and hence they had to face enhanced competition. The Director-General asked for the currency to be stabilized. He stressed that if people and businesses could not be helped with the exchange rate then other solutions had to be looked at in order to support the industries had help mitigate the effects. R100 million had been dispensed to the clothing industry as support in terms of IPAP. Beneficiation and industrialisation was one issue that affected both the DTI and the Department of Mineral Resources and both committees at Parliament. If beneficiation was not done then there would be no jobs for the young people and Africa would stay a continent of mine workers. Cheaper raw materials for downstream producers had to be made. All industries that had benefited had an advantage and an example of SASOL was given. Toyota was willing to make catalytic converters in South Africa if it was able to receive a 10% discount on platinum. In addition beneficiation was said to be important for the private sector and legislation was required.
Ms Kotsi-Ramotsami stated that prices that were internationally on board did not go hand in hand with what the Director-General had said. She added that there was more that needed to be said on the issue of clothing. South Africa was supposed to reconsider capitalising the Industrial Development Cooperation (IDC) and this would take a load off the Government. She asked whether the DTI had a plan to prevent buses from being procured overseas, especially by provincial governments, since this was no longer acceptable.
Mr Harris asked for suggestions from the DTI on how the Committee was supposed to deal with queries from consumers. In addition he stressed that there was need for the Committee to receive reports on key performance areas (KPAs) of the initial and the current Industrial Policy Action Plan (IPAP). Furthermore no report had been made available on the overview of industrial milestones.
Mr Mabaso noted the challenge of under spending in the country. He asked to what extent the DTI understood the role of small businesses and people.
Mr Radebe suggested that the Committee receive a report that was presented on IPAP 2 which said that a lot of jobs could be created and ethanol could be produced.
The Chairperson stressed that there was need to receive the report.
Mr Selau also noted that there was a report that related to the use of ethanol from Brazil.
The Chairperson acknowledged the importance of the report but she stressed that the focus was on jobs and the reduction of production costs.


Tripartite Free Trade Area agreement (FTA)
The Chairperson asked the DTI to brief the Committee on the Tripartite Free Trade Area agreement (FTA).
Mr October responded that the tripartite summit would be held in June and as South Africa, the Cabinet had adopted a position on how they were supposed to deal with the FTA. The DTI suggested that focus was supposed to be on two key areas such as trade in goods, removing barriers to trade and they would also focus on infrastructure and the position had been adopted. In relation to infrastructure there was work that was being done on the north-south corridor were a road network was being constructed from South Africa right through to the north. The fastest growing area for Africa was manufactured exports and as a result this opened major opportunities. The Director-General stressed that there was a tendency separating trade and production. No matter how much market access a country had as long as a product was not being made in the country that country would not benefit. The DTI intended to increase value added exports to BRICS (Brazil, Russia, India, China and South Africa) and the European Union (EU). The DTI was waiting for a proposal from the EU on improved market access. The EU had a highly protected agricultural sector and tariffs could be as high as 25%. Trade from Africa to the EU was only 2% of the EU's total trade hence even if Africa doubled their trade to 4% there would be little impact to the EU.

The Chairperson stressed that the broader objective of the roads had to be looked at.  The area of trade was a sensitive area.
Mr Harris asked for a confirmation list of agreements or protocols that were being negotiated and any key dates that were important.
Mr Radebe asked whether BRICS had overtaken India-Brazil-South Africa (IBSA). In addition he asked what role Members of Parliament could play in preventing unwanted goods from coming into the country.
Mr October responded that in terms of the summit was going to be in June and only then would a timetable be drafted for the conclusion of the FTA. Rules of origin were part of the FTA and this would prevent unwanted goods from coming into a country. It was also important that the whole of Africa industrialize since the more Africa produced the more Africa traded but the important thing was to trade amongst us as Africa. Thus the important things were to give ourselves as Africa preferences. IBSA had a range of definite programmes that were being worked on such as aerospace, defence and social dialogues and hence the programmes would be fully continued. The new opportunities in BRICS had to be explored. An offer had been made by the EU which the DTI was currently looking at but the Director-General pointed out that it seemed as if it was not a very good offer. It was noted that Parliament played a big role in trade especially with the EU where no trade agreement could be made without Parliament having agreed. The DTI was also in the process of identifying 10 products that they believed were supposed to be given preference in BRICS.
The Chairperson noted that the confirmation list that had been asked for by Mr Harris had been distributed but it would be redistributed again.
Mr October stressed that under IPAP there was a strong potential for sugar for ethanol and bio fuel. However there were two regulatory changes that needed to be made: there was need for a blending requirement were 10% of fuel was supposed to be bio ethanol fuel and as a result create a market for the producers. Secondly there was need for a tax of duty rebate. The EU was prepared to establish a quota for ethanol but most people were not prepared to produce for the EU since such privileges could be taken away at any given time.
Mr Selau asked what the difference would be in terms of the pricing of ethanol and that of fossil fuels.
Mr October responded that bio ethanol fuel could compete very favourably.


Conclusion
The Chairperson went on to highlight the fact that in terms of the BRRR a number of issues needed to be flagged. She added that there was supposed to be a clear understanding of what was happening at the Companies and Intellectual Property Registration Office (CIPRO). The Chairperson emphasised the importance of oversight. In addition there was a need to look at IPAP. There was also a need for specialised on the job training. The DTI was urged to communicate to the Committee what the Committee could access in regards to training and the response had to be given promptly.
Mr Radebe noted that the public participation on IPAP 2 had been overlooked. He also highlighted the fact that there was need to meet with the Banking Association of South Africa and engage with it especially with regard to bank charges. This was so especially in light of the fact that the banks charged people for depositing money, keeping money and even withdrawing money from banks. The new Consumer Commission was supposed to be visited as part of oversight so that the Committee could see the progress that it had made.
Mr Selau suggested that the programme that related to the National Credit Amendment Act be removed since the matter would be dealt with in 2012.
The Chairperson suggested that the matter was supposed to be removed as a priority but it had to be placed further down the list.
Mr Harris asked what the process was of including recommendations that were in the budget report in the strategic plan.
The Chairperson responded that the recommendations had to form part of the strategic plan.
The strategic plan was adopted by the Committee.
The meeting was adjourned.



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