International Trade Administration Bill: public hearings

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE; ECONOMIC AFFAIRS SELECT COMMITTEE: JOINT MEETING
17 September 2002
INTERNATIONAL TRADE ADMINISTRATION BILL: PUBLIC HEARINGS
 

International Trade Administration Bill [B38-2002]
SACOB submission
COSATU submission

SUMMARY
The purpose of the meeting was to hear submissions from interested organisations. The Department of Trade and Industry made some comments before South African Chamber of Business and COSATU made their submissions. The purpose of the Bill as outlined by DTI is to create an administration regime for the conduct of trade and industry.

SACOB stated that the administration of the procedures under the present Act is already lengthy and this Bill will add substantially to the time of administration which will hamper competitiveness.

COSATU felt that the Bill should include explicit aims for trade policy, including net increases in regional employment and investment.

MINUTES
Commission on International Trade Administration (CITA) Bill
The Chair welcomed the members and extended his welcome to the representatives of the Department of Trade and Industry (DTI) and representatives from COSATU and SACOB. He stated that this was a S76 Bill, it had been introduced to the National Assembly but their NCOP colleagues would be having input on it for the first time. He commented that they had received six written submissions, but only two stakeholders were able to avail themselves to make the presentations. The DTI would first make their presentation on the Bill and then COSATU and SACOB would then make their submissions.

Mr. Tshediso Matona (Deputy Director International Trade and Economic Development - DTI) made some general comments on the Bill. He stated that the first thing to remember was that being a member of a Customs Union such as South Africa inevitably came with subjection to disciplines on what could be done and could not be done in the context of trade policy. The Commission on International Trade Administration (CITA) Bill created an administrative regime for the conduct of trade. This was an important distinction as it was not a trade policy statement. He commented that the Bill should be seen as a proper process of how a member of the Customs Union conducts its trade.

He noted as an example the European Union that comprised of 15 countries which each had been able to surrender their national policies on trade policy. The Southern African Customs Union (SACU) is a model peculiar to this region and safeguards a high degree of autonomy. The Bill should be viewed as a model of how trade will be conducted in South Africa in the context of the region. He added that it would be inappropriate to debate as to what would eventually become of the SACU Agreement, which still required the process of ratification - it would be on that occasion that they would deal with it. The CITA Bill, therefore, dealt with what would be the arrangement in South Africa.

He stated that the Bill sought to provide an institutional basis for the conduct of trade policy and application of customs tariffs in line with South Africa's commitment to international agreements, such as the WTO and SADC. He stated that what motivated the Bill was the changed role of customs tariffs, the world over. There has been the opening up of trade and the globalisation of tariffs. Tariffs, therefore, now play a different role and influence competitiveness. Currently there was a complex tariff system in. The Bill sought to correct and modernise this and open up greater scrutiny on the administration of tariff policy.

He then read out the key provisions of the Bill (see document).

Mr Matona noted that the objective of the Bill was imported from the existing legislation in respect of policy in administration of tariffs. The process of determining trade policy is complex. It arises as a result of interventions from outside, economic changes, lobbying by constituencies. But at the end of the day there are open structures. The Minister has to consult with NEDLAC, Cabinet etc in terms of the Constitution. Therefore existing structures remain.

Ms N Maimela (CITA) spoke of the regulations and relief in relation to anti-dumping laws. The provisional duty available as immediate relief for dumping or counterfeit trade imports is regulated by international trade law. It is an instrument that allows you to protect industry and investigate whether there is dumping and then decide what course of action to take. These investigations are lengthy (6 months to a year), but provisional payments are an option until a decision is made. Therefore the Bill affirms SA's ability to have an instrument to protect industry.

DTI was asked if it believed it had the capacity to deal with policing, adjudication and the courts in order to get around the problem of dumping?

Mr Matona's reply on how to deal with dumping was that so far they have done well with what was a limited institution - by increasing the number of investigations. There has always been dumping but because tariffs were high, it could be controlled. The concept of dumping is susceptible to abuse - it is not always the case that it is happening. The Bill will strengthen capacity for enforcement.

Ms Maimela noted the procedure for controlling dumping usually begins with a company saying that it is being hurt by dumping. It is then important to determine that in fact there is dumpling in terms of the definition. In most cases, investigation reveals that there is no dumping. If the company disagrees, it can take it to arbitration. However they have been successful so far as there has not been any cases where they have been taken to court

The presenters were then asked what kind of administrative processes are available. Secondly, in the USA, they have allowed companies to complain even when there is no dumping. How can SA avoid the same experience here and have measures been taken to determine this.

Mr Matona replied that the Bill is creating a national regime on how trade is to be administered.
CITA can be compared to the Department of Commerce in the US ( which controls anti-dumping) and its adjudication of cases. SA's approach is however different from the US as we are concerned with matters of equity, removal of trade barriers etc.

The Chair commented that this is a section 76 piece of legislation as international trade is a concurrent power. Therefore if Parliament does not frame this to include and accommodate provinces, some provinces could decide to draft their own which would be within the terms of the Constitution. As this was a problem that must be recognised, he flagged this for discussion the following day.

SACOB submission
Mr Jannie de Villiers (SACOB) stated that they would focus on the CITA Bill and defer on the provisions on SACU. He commented that from their experience in business, the administration procedures under the current BTT Act (Act 107 of 1986) took too long. The ability to perform administrative adjustments to tariffs and trade remedies directly affected the competitiveness of the industries. SACOB felt that the CITA Bill would further hamper administration rather than improve the competitive position. (See submission for detailed comments on clauses)

Discussion
In reply to Mr Moosa asking if SACOB generally approved of the Bill, SACOB responded that it did. Mr Moosa then commented that no suggestion had been made in the submission as to how the procedure could be shortened. He felt that it would have been useful if they could have stated their concerns and then outlined how they felt they could be addressed. On the issue of criteria in Article 26(2), he wondered if it would be possible for them to set out workable criteria.

Dr Davies asked if SACOB accepted that in this day and age the only viable way in which decisions could be taken was on a joint basis.

Mr Jannie De Villiers in response stated that to make the process quicker they needed to either exclude - or have one body where the final say would take place. He felt that they should learn from the EU which had such a system in place. On the issue of the performance schedule, he stated that there was no accountability if an application lay with the Board for over two years as it would only be the Board and the applicant who knew about it. SACOB felt that there should be a list stating when the application was made, when it was published in the government gazette and when it was concluded.

COSATU submission
Mr. Neil Coleman (COSATU) presented the submission. In summary the submission focused on the areas in the Bill that were problematic in relation to the draft SACU agreement. They felt that the Bill should include explicit aims for trade policy, including net increases in regional employment and investment. Trade policy and structures must ultimately be linked to coherent industrial strategy, and be designed to support a broader development strategy. Failing which negotiations between states over specific measures could deteriorate to a race to the bottom. They stated that these aims should be included in an amendment to the draft SACU agreement itself. Before elements of the ITA Bill were implemented, it needed to be ensured that there were efficient, effective and corrupt-free customs administrations in the BLS states and South Africa.
They also felt that the development of trade policy which the current Bill left entirely up to the Minister, should be made more open. In order to be consultative and accountable, there should be a requirement that trade policies be submitted to NEDLAC and Parliament for engagement. Further, the Minister must engage regularly with NEDLAC and Parliament on progress in implementing the policy.

Discussion
Prof. B. Turok (ANC) commented that they had been advised by the Department that this was an administration Bill and that policy consideration was not relevant. What COSATU seemed to have stated was in line with NEPAD. He wanted to know as to how they merged these two positions.

Mr Neil Coleman replied that they had tried in their submission to motivate as to why they felt that this was not a purely technical Bill. They felt that it would have been short sighted if they had taken a purely technical view, so they stated specific proposals and amendments to the Bill. Secondly their proposals on development in trade were to try and motivate the need to have this integrated.

Prof. Turok stated that he welcomed the idea that a process could run in parallel, though a lot of research would be required to go in depth into such a development, he was just worried that COSATU may be opposed to the Bill running in its present form.

Ms. F. Mahomed (ANC) commented that they had talked about the developmental agenda and job losses, she felt that they needed to know how this Bill would slot into the NEPAD agenda.

There being no further questions and the meeting was adjourned.