8th World Trade Organisation (WTO) Ministerial Conference Outcomes by DTI & Business Unity South Africa; Arms Deal Offsets Audit Report

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Trade and Industry

21 February 2012
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee had been asked by the Democratic Alliance to deal with information contained in a confidential audit report about the Arms Deal offsets. Some Members felt that they needed to see the document, even though some of its contents had been made public already, but also that any document presented to the Committee should go through due parliamentary process. A legal opinion would be obtained about the confidentiality of the report.

The Department of Trade and Industry briefed the Committee on the preparations for and events at the 8th Ministerial Conference of the World Trade Organisation. A broad consultation process had preceded the conference, and South Africa had taken a wide range of interest groups as part of its delegation. The Minister had addressed the conference and had made South Africa's standpoint clear. South Africa supported the principle of multilateral and bilateral agreements. Developing countries were not being assisted by the developed world and new approaches were not in favour of the least developed countries. South Africa was of the opinion that the Doha Round impasse must first be addressed before new approaches were adopted.

In response to questions, Members were told that the African Growth Opportunity Act had not been discussed. Regarding the recent disagreement with Brazil over poultry dumping, it was normal to introduce anti-dumping tariffs when local industries were threatened. The process of accession to the World Trade Organisation was particularly onerous for developing nations. South Africa did not support the concept of pluralism.

Business Unity South Africa supported the government's stance at the conference. They agreed that a mixture of multilateral and bilateral engagements would be in the country's best interests. They disagreed with any form of coercion into pluralist arrangements. In response to questions from Members, it was made clear that the organisation represented a wide spectrum of business enterprises. There was often resistance from local companies and workers to imports of foreign goods.

Meeting report

Confidential document discussion
The Committee discussed a confidential document which an opposition Member had applied for the Committee to have sight of. Legal opinions had been obtained. The principle of attorney-client privilege was at play. It was recommended that the Committee treat the document as confidential. A copy of the report could be requested from the client of the legal company concerned.

Ms S van der Merwe (ANC) understood that the Committee served as a proxy for the Speaker. Any new document should go through the Speaker's Office. She asked what the origin of the document was, and if it had been tabled before Parliament. The Committee was open to the public and its confidentiality might be compromised if presented to the Committee without going through this process.

Mr G Hill-Lewis (DA) said the matter should be taken up with Mr D Maynier (DA). The contents of the document had been published in the press soon after it had been discussed.

Mr B Radebe (ANC) said that the Committee should not be used as a lobbying point.

Dr W James (DA) said that his party could not support the recommendation of the state legal advisor. There was an implication that the Committee would leak information. Members needed to see the document.

The Chairperson asked that the matter be deferred for discussion later in the day. She was still waiting for a legal opinion. There was still some uncertainty over which Members were representing the minority parties.

[Later in the meeting, the Chairperson had still not been able to obtain an opinion on the confidential document, and said it was unlikely to be forthcoming as it was the day of the budget speech. This opinion would be provided later in the week. The Parliamentary legal adviser later provided an opinion that the Committee should treat the audit report as confidential, and until the Committee has received permission to use the report, it was not recommended that the Department of Trade and Industry be required to answer to the report.].

8th World Trade Organisation Ministerial Conference: briefing by Department of Trade and Industry
Mr Xavier Carim, dti Deputy Director-General:
International Trade and Economic Development,  said that a full report had been submitted on the 8th Ministerial Conference (MC8) of the World Trade Organisation (WTO), held in December 2011.

Mr Carim said that there was ongoing consultation with the National Economic Development and Labour Council (NEDLAC). A conference had been held in Johannesburg to prepare for the conference. The South African delegation had included Members of Parliament as well as representatives of business, labour and community organisations. South Africa was unique in having such widely representative delegations. There had been a meeting with the Southern African Customs Union (SACU) to develop common positions on the issues involved. There had been a historic meeting of the Brazilian, Russian, Indian, Chinese and South African bloc (BRICS). There had been a meeting of the G20 “Friends of Development” agricultural bodies. This was an alliance of more than a hundred developing countries. There was a large degree of consensus on the issues before the Conference. Minister Davies had held fifteen bilateral meetings in Geneva.

Mr Carim emphasised that MC8 was not a negotiating session for the Doha Round, although it was recognised that there was an impasse. Many developing nations wanted to see a pluri-lateral approach on a limited number of issues. The same nations also identified new issues for negotiations.

Mr Carim said that the main reason for the Doha impasse was the way in which the developed countries attempted to erode the Doha development mandate. There was an attempt to hinder the growth of emerging countries such as India. Their opinion was that the developed world had already contributed enough. Minister Davies delivered South Africa's statement, with a clear stance on Doha. There were three working sessions on the future of the Multilateral Trading System, Trade and Development, and the Doha Development Agenda. It was clear that there was a profound divide between developed and developing nations. It was uncertain when the Doha Round would resume. The Director-General of the WTO proposed convening a multi-stakeholder panel to consider the future of the WTO and the Doha Round. A number of decisions were addressed.

Mr Carim said that the first of these decisions was the accession of new members Russia, Montenegro, Vanuatu and Samoa. The second related to extension of waivers for e-commerce and TRIPS non-violation complaints. While the least developed countries (LDCs) still did not have to implement the trade-related aspects of intellectual property rights (TRIPS) agreement, they would be given assistance in this regard. The WTO work programme on Small and Vulnerable Economies (SVEs) was reaffirmed. Greater technical and capacity support was needed for LDC accession. Services waivers would be given to LDCs. There would be continued surveillance of trade and investment measures. South Africa had called for a broader understanding of protectionism. Finally, the pluri-lateral government Procurement Agreement had been updated.

Mr Carim said that South Africa remained committed to concluding the Doha Round on the developmental mandate agreed in 2001. This mandate remained relevant. A core element was reforming trade rules regarding agriculture. The country remained committed to the principles of multilaterism, transparency and inclusiveness. These principles might be undermined by pluralism.

Mr Carim said that new approaches aimed to extract greater access into the markets of emerging developing countries. Emerging economies were rising and dynamic, but still had profound development challenges. Proposals to introduce new issues in the WTO were premature while there was still unfinished business from Doha. New approaches were unfair, not mandated and anti-development. A package was needed for the LDCs.

The Chairperson said that Members had been given a valuable opportunity to attend the MC8.

Mr G McIntosh (COPE) asked if the African Growth Opportunity Act (AGOA) had come up for discussion, and if there had been any negotiations with the United States of America (USA). He asked if South Africa's status had been moved to something between developed and developing.

Mr Carim said that AGOA had not been discussed. The issue would be raised in the future. For the last four or five years South Africa had pursued all avenues, including bilateral and multilateral forums. Various deals had been negotiated. He hoped to see more progress. The focus of the DTI would be on developments in the WTO. He was looking to negotiations with BRICS and better relations with India. A tripartite arrangement would create a free trade area throughout Africa. The developmental agenda would be kept alive through Doha.

Mr Hill-Lewis said that the Minister's input seemed to be more fruitful than negotiations at Doha. More progress could be made through such forums. South Africa had recently entered BRICS but was already in dispute with Brazil over chicken dumping. A special tariff had since been imposed. Brazil might raise a complaint with the WTO. He asked if there had been any attempt to resolve this dispute amicably.

Mr Carim said that the process of initiating anti-dumping tariffs was based on imports coming into the country below the normal price. If the trade commission believed that there was a case worth pursuing it could introduce preliminary duties. This would be a measure to protect the local industry. A thorough investigation would be undertaken. It seemed that the International Trade Administration Commission of South Africa (ITAC) had found that dumping had occurred and had therefore imposed the duty. This happened between all countries. As economies opened up, there might be more such actions.

Mr Radebe echoed the Chairperson's comments on the conference. It was pleasing to see the respect which South Africa enjoyed in this sphere. South Africa could be proud of the team assembled by the DTI. There was an ideological war going on at the WTO. Developed countries wished to preserve the status quo of the developing countries being not much more than a source of raw materials. He asked if South African industries were buying into the principles. There would be trouble in the absence of such a commitment. He asked how Russia's admission to the WTO would extend world trade. He had read an article on how Japan and Germany had been devastated during the Second World War while Britain was left victorious but bankrupt. This had enabled the USA to become dominant in world trade, but their strength was decreasing.

Mr Carim thanked Members for their supportive words. His reading of the situation with the business world was that there was a great deal of consensus with the DTI's stance. Russia had formally joined the WTO, but there was still an internal process to be completed. He expected that it would be complete in the first half of 2012. Russia would explain its position later in the year. The accession process was extremely onerous, and the process had lasted some fifteen years. Many laws regarding trade had to be reviewed and updated. There would be benefits to Russia in that the country would enjoy the same access to markets as other countries, but they would have to open their markets as well.

Ms van der Merwe asked how the Doha Round impasse could be solved. She asked how the Friends of Development could be organised. It sounded unwieldy. She asked for a definition of pluri-lateralism. She asked what could be achieved by parliamentary intervention.

Mr Carim said that there was debate about the status of Doha. Developed countries argued that a new mandate was needed. Emerging developing countries had to accept the same conditions as their developed peers. The same dynamic was playing itself out in climate change negotiations. South Africa's response was that it was true that developing countries were growing and were sources of trade and investment. On the other hand, on a range of criteria, the amount of high value added products was still very different to the more developed nations. Developing countries would take up a larger share of international trade in the future. The mandate was still valid and relevant, but some further reflection would be needed. It was an ongoing debate in Geneva.

Mr Carim said that pluralism referred to agreements within or outside the WTO with a limited number of issues between a limited number of countries. This is what the USA would refer to as coalitions of the willing. Poorer countries were excluded from many of these discussions. This was opposed to the principle of multilateralism on which the WTO was based. South Africa opposed this concept.

Mr Carim said that the Friends of Development had been developed to counter the threat to the developing world. Their agenda was based on issues such as multilateralism and a common stance on new approaches. There was a great deal of common understanding.

Mr N Gcwabaza (ANC) asked what threat the current turmoil in the Euro zone posed to Doha, and how countries like Greece might revive themselves at the expense of developing nations. Europe was South Africa's largest trading partner.

Mr Carim said that the European Union (EU) had always been in the forefront of supporting the Doha Round. There had been reform in agriculture as part of a common reform process. They wished to see this locked into the WTO. The EU was prepared to make unilateral changes. The Euro crisis would not prevent the EU from backtracking on agricultural reforms. Further cut-backs might be needed.

Mr Carim said that the DTI would have to formulate a policy on the new approaches.

Business Unity South Africa (BUSA) comments on MC8
Mr Augustine Mandigora, Executive Director: Trade Policy at BUSA, said that one of the points highlighted by the DTI was the deadlock at Doha. MC8 had been an eye-opener and they were grateful for the chance to attend. Business was fully in support of South Africa's stance on the issues raised. The multilateral system would still be the best approach. A small country could still take on a giant and be heard although some resources were needed. The WTO had played a critical role in overseeing the system but imbalances had arisen. The Doha Round was still about correcting imbalances. Any attempt to erode the developmental mandate would not be acceptable to developing countries.

Mr Mandigora said that there had been a common view on what should be put forward at MC8. It was instructive to see the dynamics at play at the conference. It was also important that South Africa had been represented so broadly. The opportunity to engage formally and in detail on certain issues had been valuable. In trying to craft a package to suit LDCs, there had been a need for clarity on unintended consequences. Another issue was the relationship with other trading partners. Their opinion was that South Africa's trade relationships were healthy enough to face future challenges.

Mr Mandigora said that business, government and labour were in constant discussion at NEDLAC. Many of the documents from NEDLAC were based on consensus. He hoped that BUSA could have a similar relationship with Parliament. Parliament played a critical role on trade issues. Another way forward was for the various constituencies within the country to make their voices heard. Developing countries were being more vocal, and organisations within these countries were also more outspoken. A high-level strategic discussion was needed on trade priorities involving business, labour, government, Parliament and civil society.

Dr James was curious on BUSA's views on greater private sector involvement in infrastructure development as outlined by the President.

Mr Radebe appreciated the opening up regarding the views of BUSA. When policy positions were taken by Parliament, such decisions were preceded by wide consultation. When South Africa went to international forums, the views expressed should be clearly articulated so there was an understanding of what the country needed. He asked how broadly the voice of business was heard by BUSA.

Mr X Mabasa (ANC) asked how multilateral platforms could be mixed with bilateral negotiations. Members appreciated the position put forward by BUSA. Engagement would make the country richer. He asked if BUSA did much regarding co-operatives. He noted the effects of actions by USA-led “coalitions of the willing” had made on countries like Iraq and Libya.

Mr Selau asked how BUSA interpreted the term “business”. He asked if Mr Mandigora was representing BUSA as a whole or just one aspect.

Mr McIntosh commented on how open the South African economy was to international trade. He had a bottle of Appletiser in his hand and noted that it had been made in Spain.

Mr Mandigora said that it was important to get the private sector involved. Partnerships were needed in terms of funding rather than relying on government funds. Business had strong feelings on reviving the manufacturing sector. Not all of BUSA's initiatives had been communicated. ITAC had caused suffering due to an influx of manufactured goods and dumping. The system had to work well so that issues could be dealt with quickly. Business had given strong support to the Proudly South African campaign. BUSA had been vocal where trade concessions had been sought that could have harmed South African industries.

Mr Mandigora said that BUSA had a membership of more than sixty associations, and several Chambers of Commerce. Small business were the primary members of the Chambers of Commerce. He felt that the views of BUSA were as a result broadly representative of all aspects of business in the country. There had been a conscious effort to involve small, medium and micro-enterprises (SMMEs). There was a dedicated resource working on their issues.

Mr Mandigora said that the mixture of multilateral and bilateral systems would be quite acceptable to business. One should not put all one's eggs in the same basket. He complimented government on consultative initiatives. The structure of BUSA made provision for specific project desks, the occupants of which were specialists in their fields. He would therefore prefer not to comment on the work of a different policy desk.

Mr Mandigora agreed that the economy was open. There was almost a backlash from business and labour. These organisations were less willing to accommodate imports. BUSA supported a fully inclusive multilateral system including all members of the WTO. BUSA had made a statement on compulsory participation in plurilateral systems. They opposed this concept strongly.

Mr Mabasa asked if there was ever an agenda point during their meetings to cover co-operatives.

Mr Mandigora could not answer this question but would submit a written response.

The Chairperson had been surprised to hear an individual businessman speaking in Geneva purporting to represent business. His views were contrary to those expressed by BUSA. Members of both the ruling party and the opposition attending MC8 had been taken aback. She would provide BUSA with more details and requested Mr Mandigora to do some investigation. While the Committee's schedule was very busy she would welcome more interaction with BUSA. There were a number of pieces of legislation to come before the Committee. Some meetings might be needed outside the normal hours of Parliament.

The meeting was adjourned.

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