Special Economic Zones Bill [B3-2013]: formal consideration

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Trade and Industry

30 July 2013
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Parliamentary and Departmental legal advisers led the Committee through two matters still of concern in the Special Economic Zones Bill [B3-2013]. This dealt with further clarifying the term Special Economic Zone in the instances where it referred to a geographic area and where it referred to a juristic person. The second matter dealt with the South African Revenue Service’s concern over the use of terminology which had a specific technical meaning and which would be inconsistent with its application in terms of customs law and requested that it be omitted. Members then presented amendments for consideration after which the B Bill was adopted.

The Committee then heard a briefing from the Committee researcher on matters relating to the horse racing industry. The South African Groomers Association (SAGA) had raised issues with the Committee and the Committee had tasked the National Gambling Board (NGB) with facilitating a meeting between the South African Groomers Association and the National Horseracing Authority, but this had deadlocked. A meeting had been scheduled for September to be attended by the Minister, the South African Groomers Association, the National Horseracing Authority, the National Gambling Board, the Jockeys Association and the Breeders Association and other stakeholders in an attempt to break the deadlock and to begin the process to regulate the horseracing industry.

The Committee received a status update on the Budget Review and Recommendations Report (BRRR) process.  The draft second quarter report from the Department would not be submitted in time and the BRRR report would effectively only cover 15 months’ operations by the department and not the required 18-month period.
Members said the Traditional Knowledge Bill had been introduced to Parliament and to the House of Traditional Leaders, and that the Committee was in possession of a Private Member’s Bill related to this. What was the status of the Private Member’s bill and what was the Chairperson intending to do with it? 

Meeting report

Special Economic Zones Bill [B3-2013]
The Chairperson said two matters would be introduced by the Parliamentary and Department of Trade and Industry (dti) legal advisers before moving on to the formal consideration of the Bill.

Adv Charmaine van der Merwe, Parliamentary Legal Adviser, said the first matter dealt with the terms ‘Special Economic Zone’ and ‘Special Economic Zone entity’ and aimed to further clarify the role players in an SEZ. The term ‘SEZ Board’ had been clearly clarified but it was felt necessary to distinguish more clearly between the two terms ‘Special Economic Zone’, being the geographic use of the term and ‘Special Economic Zone’, where the term was being used to denote a juristic person. This referred to the entity that managed the geographic zone. The licensee appointed the SEZ Board that oversaw the SEZ entity, which in turn operated and managed the SEZ. There were a number of Clauses which referred to the financial statements of the SEZ zone at times and at other times to the SEZ entity and it was not always clear to which one it was referring to and this needed to be rectified. She presented a list where the term appeared but no amendments were necessary (p7 of presentation) and also presented a list of Clauses which could cause confusion. These were Clauses 25(5), 26(3), 27(a), 27(b), 28(1)(d)(i), 28(1)(d)(ii), 28(2)(a), 29(1)(c) and 29(3) of the B Bill.   

The State Law Adviser was of the opinion that Clause 25(6) indicated clearly that the Board must manage the SEZ entity, which in turn managed the zone, and that this was sufficient.

She was of the opinion that all of the latter Clauses should be cleaned up and the term ‘entity’ be added after the word ‘Special Economic Zone’ as in Clause 25(5) and all similar Clauses.

Adv Johan Strydom, dti legal adviser, said that the other matter dealt with the use of the term ‘transhipment’. On the topic of the designation of SEZs on p11 line 45 of the B Bill, Clause 24(5)(a) spoke about the definition of a free port where goods ‘may be unloaded for valued added activities’. Here the South African Revenue Service (SARS) had a reservation because in the context of customs, ‘transhipment’ had a specific technical meaning of goods being offloaded and on-loaded. In terms of customs regulations the term ‘transhipment’ could not be used as it had no link to added value and should be omitted.

Similarly in line 49 the term was used in the definition of a free trade zone, namely a duty free area offering storage and distribution facilities for value adding activities for subsequent transhipment and re exporting.  SARS said that re exporting had a very specific meaning, namely that goods were imported for a specified period and for a specified purpose only.

SARS thus requested that the terms ‘subsequent transhipment’ in line 47 and ‘transhipment or re’ in line 51 should be omitted.

Mr B Radebe (ANC) said he supported the position of the parliamentary legal adviser on the first matter. On the second matter he asked how far Treasury and the Department had consulted on the request from SARS.

Mr Tumelo Chipfupa, dti DDG: The Enterprise Organisation, said that the dti’s position on the second matter was that it was comfortable with this as it was a technical amendment making it compliant with other legislation. 

Dr W James (DA) agreed that the second matter was not problematic.

The Committee then considered the B Bill Clause by Clause.

Mr Radebe proposed an amendment to delete the term ‘subsequent transhipment’ in Clause 24(5)(a).

Mr Radebe proposed an amendment to delete the term ‘transhipment or re’ in Clause 24(5)(b).

Mr Radebe proposed an amendment to add the word ‘entity’ after the word Special Economic Zone in the following Clauses: 25(5); 26(3); 27(a); 27(b); 28(1)(d)(i); 28(1)(d)(ii); 28(2)(a); 29(1)(c); 29(3) in both lines 37 and in line 38.

All proposals were seconded and the report was adopted.

Mr Radebe said that there were mistakes in the previous Hansard report on the issue of the Freedom Charter and he wanted those mistakes corrected.

The Committee Secretary said a corrected transcript would be submitted to Members.

Status report on matters relating to the horse racing industry
The Chairperson said that the issues raised by the South African Groomers Association (SAGA) cropped up every year and that the industry gave commitments which were not met. All parties agreed that the industry needed to be cleaned up.

Ms Margot Herling, Committee Researcher, gave a background report on SAGA and the National Horseracing Authority (NHA). In 2012 the Committee had considered the Gambling Review Commission’s report. As part of that process it had heard submissions from stakeholders including SAGA. SAGA presented the key challenges they were facing which were a lack of transformation within the industry; trainer abuse of grooms; apprenticeships; labour related matters pertaining to the Unemployment Insurance Fund (UIF) and payslips; development and training agreements with the NHA and the establishment of a recognition agreement between the NHA and SAGA.

The management committee had met with SAGA several times to facilitate an agreement. The National Gambling Board (NGB), which had facilitated meetings between SAGA and the NHA, had said that there was a deadlock (see reasons for deadlock on slides five and 6). The NGB had recommended that non-financial support be given to SAGA and that financial support to facilitate governance structures for grooms would be explored with the dti and the Department of Labour. It said that the Minister and the Committee should consider a regulatory framework that would facilitate socio-economic development for grooms and that a proper review of gambling legislation be conducted, as horse racing was not covered by this legislation. A meeting had been scheduled for September to be attended by the Minister, SAGA, NHA, NGB, the Jockeys Association and the Breeders Association.

The Chairperson asked why SAGA lacked legitimacy in the eyes of other stakeholders and whether there were other committees other than Labour that needed to be alerted.  She said it was a sector that had not undergone any transformation. She said there was nothing governing the working conditions of the grooms. She said the horseracing industry was valued as a job creation industry and it had economic value through horse exports.

Mr Radebe replied that the NHA itself had requested that the industry be regulated and all should enjoy the industry value chain. All stakeholders needed to be present at the meeting. He said the portfolio committee on sports needed to be alerted.

Status Update on the Budget Review and Recommendations Report (BRRR)
A Committee Researcher said there were some challenges to the quarterly BRRR. The report outlined the Committee’s assessment of the dti’s financial and non-financial performance over an 18-month period and whether it was in line with the Departments mandate. The BRRR comprised the annual report for the year 2012/13 and the first quarter report and the draft second quarter report of the current year. The challenge was that the draft second quarter report would only be received from the Department by mid-October, which was when the BRRR had to be handed in by the Committee and therefore it would be covering a 15-month period and not the 18-month report as required.

The Chairperson said the timing of the budget process should be changed and aligned. As it was the last year of this administration the review should look back at the whole term.

Dr James said the legacy for the next administration should be that of more aggressive trade globally and that the Department should be geared to do that. On another matter he said that his Private Member's Bill, the Protection of Traditional Knowledge Bill [B-2013] had been introduced to Parliament and to the House of Traditional Leaders. The Committee was in possession of a Private Member’s Bill, what was the status of the Member’s Bill and what was the Chairperson intending to do with it. 

The Chairperson said she had raised a question of clarification in terms of process. The question was that a Bill had been passed in the National Assembly but had not yet been adopted, as it had not yet gone through the National Council of Provinces (NCOP). What was the situation when one Bill was still in the parliamentary process and there was a second similar bill? She had not yet received a response from the law advisers and asked that she be allowed to respond the following day.

This was agreed to and the meeting was adjourned.


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