Southern African Customs Union (SACU) Agreement of 2002 to Institutionalise SACU Summit: consideration of Amendments

Meeting report

 Annex on institutionalisation of South African Customs Union (SACU) Summit
Ms Xolelwa Mlumbi-Peter, Deputy Director General, Department of Trade and Industry (DTI), presented the Annex on the Institutionalisation of the SACU Summit to the Committee, highlighting the background, the 2002 SACU Agreement, the Heads of State and Government decisions, the objectives of the Annex, the role of the Summit and the procedural and legal implications.
 
South Africa was a signatory member of the Southern African Customs Union (SACU), which was the world’s oldest customs union since 1910. After it was reviewed, it gave rise to the 1969 Agreement. The SACU Agreement was then re-negotiated and signed in 2002 and entered into force on 15 July 2004. The highest decision-making institution in the 2002 Agreement had been the Council of Ministers. It had established a Secretariat in 2004 which was hosted by Namibia. The first meeting of SACU Heads of State and government took place on 22 April 2010, and it was at this meeting that Heads of State and Government decided that SACU should have a Summit that would be the highest decision-making body, and that it would provide political and strategic guidance. The Annex to institutionalise the Summit was developed and adopted by Council in 2012, and was signed by the Heads of State and Government at a meeting held in Botswana in 2013.
 
The summit aimed to facilitate the cross-border movement of goods between the territories of the member states; create effective, transparent and democratic institutions which would ensure equitable trade benefits to member states; promote conditions of fair competition in the common customs area; substantially increase investment opportunities in the common customs area; enhance economic development, diversification, industrialisation and competitiveness of member states; promote the integration of member states into the global economy through enhanced trade and investment; facilitate equitable sharing of revenue arising from customs, excise and additional duties levied by member states; and facilitate the development of common policies and strategies. 

The main objective of the annex was to make provision for the establishment of the Summit as an additional institution of SACU in terms of Article 8(8) of the 2002 SACU Agreement. It would also provide an opportunity for Heads of State to provide strategic and political guidance to the Council of Ministers. The role of the Summit was to provide political and strategic direction to the SACU, to deliberate on some of the reports of the Council of Ministers that required strategic direction, to meet from time to time to assess the status of implementation of SACU agreements, policies, strategies and work programmes, to provide strategic oversight in the implementation of the five-point plan; and to strengthen unified engagement in trade negotiations.
 
The DDG outlined the proposed amendments to the Committee:

Article 1 - amends Article 1 (Definitions) of the 2002 Agreement, by providing for the definition of Summit.

Article 2 - amends Article 6 (Admission of new members) of the 2002 Agreement by making a provision for the admission of any state as a member of SACU upon approval by a unanimous decision of the Summit, deleting 6(3) and making a provision for it to be included in the functions of Council, as provided for in Article 8, which states that the Council shall determine the procedures and criteria for the admission of new members.

Article 3 - amends Article 7 (SACU Institutions) by inserting Heads of State and Government as one of the institutions of SACU under (a) and addressing the numbering.

Article 4 - amends Article 7 (Summit) by inserting a new 7A, which entails the roles and responsibilities of Summit.

Article 5 - amends Article 8 (Council of Ministers) by deleting “and shall be the supreme decision making authority of SACU matters” in 8(1), inserting “decision making” in 8(2), which would now read: “The Council shall be responsible for decision making on the overall policy direction and functioning of SACU institutions, including the formulation of policy mandates, procedures and guidelines for the SACU institutions,” and adding 6(3) as 8(9) – “The Council shall determine the procedures and criteria for the admission of new members.”

Article 6 - amends Article 10 (Secretariat) by inserting in 10(2) and 10(9) the word “Summit” before Council, and the new articles would read as follows: “The Secretariat shall coordinate and monitor the implementation of all decisions of the Summit, Council and the Commission. The Secretariat shall perform such other duties as may be assigned to it from time to time by the Summit, Council and the Commission.”

Article 7- amends Article 13 (Tribunal) by inserting the word “Summit” in 13(4). The Tribunal shall, at the request of the Summit or the Council, consider any issue and furnish the Council with its recommendations, and inserting through the Council in 13(6): Member States party to any dispute or difference shall attempt to settle such dispute or difference amicably before referring the matter to the Tribunal through the Council.

Article 8 - amends Article 43 (Amendments) by deleting “and decision” and substitutes “Council” with “Summit.” Any Member State desirous of amending this Agreement shall put forward its proposal for such amendment, together with its submissions in motivation of the proposed amendment, to the Council for consideration. An amendment of this Agreement shall be adopted by a decision of the Summit.

Article 9 (Entry into force) provides that the amendments shall enter into force thirty (30) days after the deposit of the instruments of ratification by all the member states.
 
In terms of the legal implications, the Annex had been referred to Departments of Justice and Constitutional Development and International Relations and Cooperation for opinion and advice. The Departments had advised that the Annex be ratified by Parliament, in line with Section 231(2) of the Constitution, while the Cabinet had approved that the Annex be tabled before Parliament. The Department would act as the competent authority to oversee the implementation of the Annex on behalf of the government.
 
Ms Mlumbi-Peter’s was interrupted twice, firstly by Mr B Mkongi (ANC) and secondly by the Chairperson. Mr Mkongi pointed out that despite all the recording facilities in place at the venue of the meeting, it seemed that the meeting was not being recorded. The Committee Secretary, Mr Andre Herman, and the Chairperson explained that all meetings were recorded but not all were recorded for live broadcast. The Chairperson however interrupted again a while later and reiterated that this meeting was an important one, and should have been recorded for live broadcasting.      
 
Discussion
Mr Mkongi was satisfied with the presentation. He pointed out, however, that caution should be taken in the use of abbreviations, because there was a section in the document where “Review the RSA” had been itemised as one of the roles of the Summit. He wanted to know why RSA was used here as the abbreviation, knowing full well that it could mean the Republic of South Africa.
 
Mr N Koornhof (DA) asked why the competent authority for the implementation of the Annex had previously been the Treasury, but now it was being moved to the DTI -- or was it just the Summit? Have the other Members of Parliament adopted the amendments already?
 
The Chairperson indicated that as much as the Committee was aware that five countries were involved in SACU, how many permanent members of the Secretariat were in place in Namibia? What was the cost of maintaining the Secretariat and operations in Namibia? What was the configuration of who the permanent members were? How did the Head of Administration work? Was it on a rotational basis?
 
Ms Mlumbi-Peter said that RSA in this context meant the “Revenue Sharing Arrangement” and not the “Republic of South Africa”. She indicated that clarifications were always made to ensure that no mistake was made in this regard. The other member states had already ratified and submitted their instruments of ratification, making South Africa the last member to ratify. The agreement would enter into force 30 days after SA had submitted its instrument of ratification. With regards to the competent authority, the Treasury had never been the competent authority. It had always been the DTI, because the SACU agreement was a trade agreement. The Secretariat had only about 22 members, with support staff who were Namibians. Professional staff had been appointed, based on expertise and competence, so anyone who was a citizen of any of the five-member states could apply for any position. The cost of funding the Secretariat for a year was about R40 million, and this amount was borne out of the revenue sharing arrangement. She emphasised that the implementation of the new work programme was a critical issue that needed the Summit so that strategic oversight could be provided.
 
Mr Mkongi added that the issue of the agency and plan for ratification were to be noted. Would there still be enough time for the ratification in Parliament this year, based on the parliamentary programme?
 
The Chairperson responded that ratification was just a formality which should take only few minutes. She pointed out that the concerns that had always been raised by South Africa were on the revenue formula, which obviously had not been tabled at this particular meeting for discussion. She reiterated that the Committee welcomed the proposed amendments but looked forward to the revenue formula being changed to a much fairer plan.  
 
The Chairperson formally read out the agreement made by Committee on the Annex on the institutionalisation of SACU.
 
The agreement was moved for adoption by Mr G Hill-Lewis (DA), and seconded by Mr Koornhof and Mr Williams (ANC).          
 
The DDG was thanked for the presentation and was excused from the meeting.
 
PBill Update
The Chairperson asked Mr Andre Hermans, the Committee Secretary, if Creda (Creda Communications is a publishing company) was still on track.
 

Mr Hermans confirmed that he would receive the A-list today from the state law advisor and hoped that by the end of business the A and B Bills would be submitted to Creda.

From state
 
Status report on Committee activities
The Chairperson asked Ms Margot Sheldon, the Content Adviser of the Committee, to give a brief status report on the Committee activities. The Committee Members were to take the report along with them and give their feedback at the next meeting. 
 
The Content Adviser took the Committee briefly through the status of Committee activities in relation to its 2015/16 annual performance plan as at 27 October 2015. (See attached report)

The Chairperson expressed appreciation to Ms Sheldon for the report presented to the Committee. She had previously asked Mr Hermans to reproduce the five-year strategic plan for 2015/16 - 2019/20 to redistribute to the Members -- especially for Mr J Esterhuizen (IFP), who was a new member of the Committee. This information would be particularly needful when the Committee adopted the end of year report around 17 November, or the closest day to the last working day of Parliament. She indicated that the joint meeting that had been held previously was actually more than a joint meeting, because the Departments of Mineral Resources, Economic Development, Small Business Development and Public Enterprises had been present at the meeting. Therefore these concerns should be noted and added to the report. Furthermore, at the last meeting, she had informally raised concerns regarding the study visits and would appreciate it if all the Members would go through the report on the status of activities in order to ensure that all programmes that had been carried out had been included in the report. This process would assist all Members to identify the programmes which had not been yet been carried out by the Committee.
 
She referred to three issues that the Committee should take note of: the concerns around gambling, the Centurion Aerospace Village and the report. The third quarter Parliamentary programme had started on 20 October and would end on 20 November. She had previously proposed that an enquiry be made at the end of October, and that Mr Hermans should draft a letter to the Minister to find out when the Committee would receive feedback. The Centurion Aerospace Village has been scheduled for 4 November, so all members should endeavour to be at the meeting. She understood that in her absence, there was a Palestinian petition which had been jointly referred to about five or six committees, including Trade and Industry. There would have to be consultation among the chairpersons of these several committees to decide which committee’s chairperson would lead the process. The decision would be communicated to the Committee Members by the following week.          
 
Mr D Macpherson (DA) proposed that the Committee should confirm with the Minister as to whether he would be available on 4 November, so all the contradictions over the Centurion Aerospace Village, and what the report did or did not entail, could be tackled. If the Minister was not available, it would hinder proper engagement over the increasing political concerns of the parties.
 
The Chairperson was in agreement. She asked Ms Emcy Garner, Deputy Director, Parliamentary Liaison Officer, DTI, to establish the availability of the Minister on 4 November 2015.
 
Mr Mkongi proposed that in future, Committee meetings involving entities should be held at the site of the oversight visits. This step would assist greatly in dealing with contentious issues. This proposal was supported by some of the Members and was noted by the Chairperson.
 
Mr G Hill-Lewis (DA) referred to the programme schedule, and said that consideration of the Promotion and Protection of Investment Bill, which had been scheduled for 3 November, may not be feasible. He was of the opinion that the two hours scheduled for the meeting may not be enough, because the plenary started at 11am. Secondly, he could recall that the last agreement by the Committee in respect of the Remote Gambling Bill had been that a sub-committee of the Committee would have an initial meeting that would consider both the policy and the bill, so the 18 November scheduled for the meeting was not practicable. It was also important to get the policy from the DTI before the meeting. He also asked why the update on the African Growth and Opportunity Act (AGOA) out-of-cycle review was scheduled for 17 November, when the review had already been completed. There were indications that the outcome would be disseminated within the next few days. He therefore suggested that the date for AGOA consideration be brought forward.
 
The Chairperson appreciated the suggestions made on the draft programme. She reminded the Members that in Mr Mkongi’s absence, it had been decided by the Committee he would head a sub-committee which would hold Friday morning meetings.  She emphasised that a sub-committee meeting must be held so that the terms of reference could be agreed upon. This initial meeting would be a technical one before getting into substantive issues. It was crucial that all political parties must be duly represented in the sub-committee. The briefing by the Minister on the Tenth Ministerial Conference in Nairobi would be rescheduled so as to give more time for engagement on AGOA. The outstanding minutes could also be adopted on the same day. She asked Mr Hermans to note all the concerns that had been raised by Members regarding the programme and to check the possibility of AGOA being considered on 10 November. 
 
Mr Williams urged that adequate time should be allocated for engagement on crucial issues.     
 
Mr Macpherson suggested that the DTI’s quarterly financial and non-financial report could be removed from a Tuesday and AGOA brought in so that the Minister would be available, and the Committee would have adequate time to engage on the matters arising.
 
The Chairperson pointed out that in the past, 30 minutes had been allocated for the Committee to engage with each entity, but the time had been increased to 45 minutes. Therefore, the two hours scheduled on Wednesday per entity should be more than enough.  
 
Mr Hill-Lewis said that instead of the back and forth deliberation, feedback should be received from the Minister as to when he would be available for briefing on the Centurion Aerospace Village, as the Committee could then include AGOA on the agenda on the same day, and the Minister could attend to both concerns. He wanted to know why there had to be a briefing to the Committee on weapons of mass destruction, since South Africa was not planning on building more nuclear bombs.        
 
The Chairperson agreed with this view, but said there was a need for a courtesy briefing so that the Committee could be brought up to date on the happenings in the entity. When issues were left unattended, it could result in major problems. 
 
Mr Mkongi called the Committee’s attention to the concern on medicines for HIV and Aids. He said that this issue must be included into the Committee’s programme.
 
The Chairperson responded that the Members should inform Mr Hermans of any other concerns they may have regarding the draft programme.   
 
 Planning of Oversight Visits
 Mr Macpherson proposed that the Centurion Aerospace Village should be scheduled for oversight.  The essence of oversight was to ensure that the programmes of government were being implemented and to hold the government accountable, so the focus of the Committee should also be placed on industries like agro-processing, which had shown job increases in the last 12 months. The manufacturing sector and the ports should also be scheduled for oversight.
 
The Chairperson replied that the Centurion Aerospace Village concern had been tackled and the Committee was just waiting for the Minister’s availability to provide a report. She added that the three sectors mentioned by Mr Macpherson had been previously pegged down for oversight visits. What the National Regulator for Compulsory Specifications (NRCS) was doing, and the integration of the different systems at the ports, must be looked into. The Committee Secretary, the Content Adviser and the Chief Economist for DTI should create time to look into these issues.

She added that Parliament preferred that when oversight visits were conducted, more than one entity should be visited. Therefore, when the Committee went on the next oversight, it would be tackling not only the gambling issue, but also the Lever Brothers and tyre issues in KwaZulu-Natal (KZN). She pointed out that KZN was one of the provinces that the Committee had not spent adequate time on regarding oversight visits.

She reiterated that all the Members should send an email to Mr Hermans regarding issues for oversight visits. These suggestions would be sent to all the Members by email and a decision had to be made by Wednesday at the latest, because it would take three weeks for processing. The Members should also indicate if there was any item that had been previously agreed upon by the Committee in the five-year strategic plan, but had not been extensively dealt with.  Overseas trips may not be practicable until around July or August next year because political parties were unlikely to release their members for global travelling because of the local government elections.
 
The meeting was adjourned.