International Trade Administration Bill: briefing

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Meeting report

ECONOMIC AND FOREIGN AFFAIRS SELECT COMMITTEE
18 October 2002
INTERNATIONAL TRADE ADMINISTRATION BILL: BRIEFING


Chairperson:
Mr MW Moosa (ANC)

Documents handed out:
International Trade Administration Bill [B38B-2002]
Presentation on ITA Bill by DTI

SUMMARY
The International Trade Administration Bill was at a crucial stage in its enactment. The SACU Agreement would be signed on 20 October 2002, and this agreement was important to the Bill. It provided for a new agency, which would in some ways replace the current Board of Tariffs and Trade (BTT). The Bill provided for import and exports control, as was currently the case with the Import and Export Act and customs duties amendments within the framework of the SACU agreement. The purpose of the Bill was to foster economic growth and development in the Republic and SACU.

With respect to trade policy, the Bill allowed the Minister of Trade and Industry to determine trade policy and provided for an interface with SACU institutions. The Bill recognised SACU as a juristic person in South Africa and therefore, SACU decisions would have legal effect in South Africa. The Bill further established a commission and repealed the BTT Import and Export Control Act. The Bill has been referred from the National Assembly.

MINUTES
The Chair noted that while the Department of Trade and Industry would give a briefing on the Bill, there were also certain amendments that the Department needed to make which would also be addressed. Since amendments were required the Bill would have to go back to the National Assembly.

Mr Tshediso Matona (DTI) commenced by stating that they were at a crucial stage in the enactment of this Bill. The SACU Agreement would be signed on 20 October 2002, and this agreement was important to the Bill.

He commenced with an overview of why there was a need for such a Bill. There had been changes to South Africa's trade policy over the past years and certainly after 1994. The ANC government had adopted a reform programme, which they had clarified and which had now become an integral part of trade policy. They had inherited a very complicated tariff regime and therefore, part of the reform was to simplify the tariffs and reduce them for the purposes of achieving competitiveness in industry. Currently trade administration was governed by several pieces of legislation and this Bill intended to streamline all of them together and put them in one Act. One of the reasons why they had a complicated tariff regime was because the very people that processed the applications were the people that decided on it, which therefore, opened up a wide room for corruption. They were, therefore, separating the administrative functions and decision-making functions in relation to tariffs.

He noted that South Africa was a member of a customs union, SACU, and it was therefore necessary that they share decision making with the other members of the customs union, which had not been the case in the past. With the democratisation of South Africa the SACU member states had requested an amendment to the Agreement on this aspect and therefore, any legislation on trade had to take this into account.

In terms of the scope of the legislation, it provided for a new agency, ITAC, which would in some ways replace the current Board of Tariffs and Trade (BTT). The Bill provided for import and exports control, as was currently the case with the Import and Export Act and customs duties amendments within the framework of the SACU agreement. The purpose of the Bill was to foster economic growth and development in the Republic and SACU.

With respect to trade policy, the Bill allowed the Minister of Trade and Industry to determine trade policy and provided for an interface with SACU institutions. The Bill recognised SACU as a juristic person in South Africa and therefore, SACU decisions would have legal effect in South Africa. The Bill further established a commission and repealed the BTT Import and Export Control Act.

On the issue of the relationship between ITAC and SACU institutions, the investigations for tariffs and anti-dumping would still be in the domain of the national bodies. It was foreseen that, unlike in the past, all the other countries within the customs union would have the capacity to conduct these investigations, as they would be having similar institutions that would conduct the investigations. Any industry seeking relief or tariff clarification would make an application to the commission, who would go through the application, investigate it and make its recommendations. The tariff board would then recommend to the Ministers as to whether to uphold the application or reject it. Trade policy would have greater co-ordination and co-operation at SACU level. SACU decisions would become law in South Africa after the Minister had referred the decision to the Minister of Finance. He also commented that SACU had been provided with a secretariat. Mr Matona then moved on to discuss the transitional arrangements, as outlined on the attached presentation.

Discussion
The Chair asked as whether there were any specific questions, so that they could get a sense of where the issues and concerns lay.

Mr Durr (ACDP) asked whether they had taken into account the proposals made in the submissions given by the interested parties, and if so, to what extent.

Mr Matona stated that the important thing to recognise was that all along, as they were drafting the legislation, they were consulting with business and labour through Nedlac and they had had extensive debates around the legislation. It was, therefore, a product of the consultative process.

There were obviously disagreements in certain areas and some of the proposals would have made it trade policy legislation. There had been other amendments and concerns that had nothing to do with trade administration in South Africa but concerned how they dealt with their SACU neighbours, which could not be addressed in that forum.

Mr Kolweni (ANC) asked how they synchronised the Bill with provincial activities.

The Chair stated that the provinces did not get involved with tariffs and customs issues. When as a country they decided on tariffs and so forth, they put them forward as a country and as a SACU member state. This all happened at a national level. The reason why the Bill was before them was because this was a S76 Bill. Though the provinces were not really involved, this could affect some provinces which had key sectors that needed to be protected. Therefore, if the tariff structure was not right, it could affect that province. Therefore, in that respect, this Bill was important for the provinces to understand how it could affect them.

Mr Durr stated that for this to work there needed to be good co-operation and structures, as well as a competent customs and excise component in the various participating countries. He wanted to know what sense the Department had of the upgrading of skills and competency levels in the various participating countries.

Mr Motana stated that customs co-operation and upgrading of customs systems was on top of the agenda of co-operation with the members of the SACU and SADC, and he hoped these States would put resources into upgrading and ensuring that it worked well as it was in their national interests.

Proposed Amendments
Mr Johan Strydom (DTI) stated that they proposed the following amendments:
-On page 5 in the definition section there was no definition for 'countervailing measures' they felt that there was a need to insert this definition, because there was a definition for safeguard measures and customs duties. It will therefore, be inserted after the definition of 'confidential information'.

-With respect to the definition of 'safeguard measures', there was a problem and they needed to remove the phrase ' Tariff Board Guidelines' and the reference to 'dumping'.

-On the definition of 'dumping' they needed to the word 'export' so as to read ' …at an export price' the word 'export' being important as dumping had to do with an export price and if the word export is not there they would not be talking of dumping.

-With respect to Clause 6 (3)(g) &(h), these sub-clauses (g) &(h) did not belong in the section but should be inserted in S6 (2) after S6 (2) (f).

-They suggested that Clause 4(6) should read 'The Minister may refer any decision of the SACU council of Ministers that concerns customs duties or other measures…' This would therefore, enable them to deal with antidumping, countervailing, customs duties.

-With respect to Clause 14 (5) (a), (b), there needed to be a rephrasing of the wording to ensure that they did not encounter any problems in the future. The Department did not feel that, as stated, it eliminated the possibility of being challenged in court. This Clause was held in abeyance for them to consult wit the State drafter to see how they could clarify it.

- On Clause 21(1)(a), reference had been made to a 'regulatory authority' and then in Clause 21(b) (I) reference to a 'regulatory agency'. This should also be changed to 'authority'.

- On Clause 32(1) (a), in the definition section 'exports' had been defined as 'to send'. In this clause it was defined as 'to bring'. To clarify this they stated that the export price of anything should be our import price, therefore despite what 'export' has been defined as in the definition section this is what it means in the contexts of this section.

-On Clause 45 they stated that was a numbering problem and should be Clause 45(2).

The meeting was adjourned.

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