South African Council for Non-Proliferation of Weapons of Mass Destruction briefing; Promotion & Protection of Investment Bill [B18-2015]: Committee Report

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Trade and Industry

04 November 2015
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee met to hear a presentation on the mechanisms in place to regulate the trade of controlled goods that could be used to make weapons of mass destruction, whether those weapons are nuclear, chemical, or biological. The presentation explained the structure of the Non-Proliferation Council (NPC), which many government agencies contribute to and the Department of Trade and Industry oversees. The NPC also ensures that South Africa complies with its international agreements on non-proliferation and promotes capacity building on the African continent.

Members asked questions about the NPC’s work with other agencies such as the police, to better understand the complex nature of the NPC structure and to alleviate concerns about potential disaster scenarios.

The Committee rescinded its Committee Report on the Promotion and Protection of Investment Bill as it did not confirm with the National Assembly Rules as it provided a separate minority report. The minority views needed to be incorporated into the Committee Report. This was done and the new report adopted.

Meeting report

Presentation on Non-Proliferation of Weapons of Mass Destruction

Ms Xolelwa Mlumbi-Peter, DDG: International Trade and Economic Development (ITED), in her opening remarks, said that since 1994, South Africa has consistently promoted a view that the continued existence of Weapons of Mass Destruction is a threat to international peace and security. As a result, South Africa has joined a number of international treaties, which will be covered in the presentation, to ensure that South Africa is able to manage the trade of items that are on the control list and that are dual-use items used by industry for specific products. As a result it is important that we control how these items are traded in South Africa. We have also established domestic controls to prevent a proliferation of nuclear, chemical, and biological weapons and their means of delivery. This is done by the Non-Proliferation Council. The role of the Council is to consider applications from members of industry who would like to trade in these items. The Council issues permits after reviewing and accepting applications. In order to ensure that we have effective controls on the trade of these items, we have a working relationship with and coordinate with the South African Revenue Service (SARS).

[In response to Mr B Mkongi (ANC) asked if Ms Mlumbi-Peter was speaking from a presentation, the Chairperson explained that it is a brief overview but that this important information will be captured in Hansard and the minutes. She noted that, due to the tight budget of Parliament, acquiring a copy of a meeting’s Hansard is more difficult than it used to be, which is why when possible extensive minutes are captured. Ms Mlumbi-Peter explained that her remarks will be captured in the presentation as well.]

Ms Mlumbi-Peter said that the DTI works very closely with SARS to ensure that the items that are managed by the Council are flagged in the system so that SARS can grant the necessary permits for those items when trade in those items is requested. DTI has also developed through the Council’s Secretariat, a training module on these items that has been sent to SARS officials. There is normally a question as to why the Council sits within the DTI. The reason is that this relates to trade of controlled items, it relates to the issuing of permits to allow the trade of those items.

Ms Melanie Reddiar, Acting Chief Director: South African Council for the Non-Proliferation of Weapons of Mass Destruction (NPC), began by explaining South Africa’s Non-Proliferation Policy. The policy has five main goals:
▪ Promote international peace and security
▪ Implement arms control policy and active participation in non-proliferation regimes
▪ Help developing countries to obtain access to advanced technologies
▪ Serve SA’s best interest in civil and peaceful applications through this technology
▪ Continue to become a member of all non-proliferation regimes and supplier groups.

Ms Reddiar explained the mission of the Non-Proliferation Council as to protect the interests of the State, fulfill the obligations in accordance with the non-proliferation policy, and to meet international undertakings. The Council oversees imports and exports and conducts inspections on nuclear goods.

South Africa has many international obligations, including:
▪ Treaty on the Non-Proliferation of Nuclear Weapons
▪ Nuclear Suppliers Group
▪ Chemical Weapons Convention
▪ Biological and Toxin Weapons Convention
▪ Missile Technology Control Regime
▪ Comprehensive Nuclear-Test-Ban Treaty
▪ Wassenaar Arrangement.

Ms Reddiar explained a diagram illustrating the overlap of these international obligations. This overlap results in permits being required from all three bodies, but the three bodies work closely together to ensure efficiency.

The main legislative framework is the Non-Proliferation of Weapons of Mass Destruction Act 1993. The Act created the Non-Proliferation Council and is financed and supported by the DTI. The Act makes the appointment of inspectors and the seizure of goods legal, The Act provides for registration of goods, the listing of controlled goods, regulations, confidentiality, annual reporting, offences and penalties, treaties, conventions, and regimes. The goods that are deemed ‘controlled goods’ differ between countries and are up to national legislatures. The annual report is tabled in Parliament every year. The Minister of Trade and Industry creates both government notices and regulations. Recent regulations include regulations on registrations and chemical goods in 2010.

The Council is composed of representatives from the Department of International Relations and Cooperation, the Department of Defence, the South African Nuclear Energy Corporation, the Department of Trade and Industry, Industry representatives, the Department of Energy, and the State Security Agency. The Council has a Chairperson, a Vice-Chairperson, and a Secretariat composed of members from these areas.

Ms Reddiar detailed the various committees that exist within the structure of the Non-Proliferation Council. These committees include the Chemical Weapons Working Committee, the Biological Weapons Working Committee, the Nuclear and Missiles Duties Committee, and the Missile Technologies Control Committee. The Council also has a memorandum of understanding with the South African Revenue Service (SARS) to allow SARS to assist with import and export control.

Ms Reddiar asserted that the Council has successfully accomplished its goal of national non-proliferation. The Council has maintained a permit system to enable the trade of controlled goods, increased its outreach activities to industry, and encouraged capacity building in Africa for both technology and efforts against proliferation. In other African countries, one issue is the safe transport and handling of goods like dangerous chemicals; these countries have limited capacity to deal with crisis spillages. The Council has held courses for South African customs authorities to help customs officers identify if goods are actually what the importer is claiming them to be. The Council is pursuing rolling out these training courses throughout SADC.

Mr Jeffrey Leaver, Councillor: Non-Proliferation Council, thanked the Committee and said he looked forward to Committee questions. He apologised that the Chairperson of the NPC, who is also the Deputy Director General in the Department of Energy, was not able to attend. He explained the difference between the Non-Proliferation Council and the regulation of conventional arms by the National Conventional Arms Controls Committee (NCACC). The NCACC controls the actual weapon; in the area of Weapons of Mass Destruction, the controls focus on materials and thus require a much wider scope of expertise. The committee structure of the Non-Proliferation Council allows for experts from a variety of fields to come together. He welcomed questions from the Committee.

The Chairperson agreed was thankful for the differentiation between the NCACC conventional arms regulation and the Non-Proliferation Council. She called for questions.

Mr G Hill-Lewis (DA) said that the international obligations diagram is very confusing though the explanation was good. What intelligence role does the Council play? Do you rely on SAPS to try and stop entry into the country? Can you share success stories of stopping goods entering the country? The trend in international terror is small goods, not necessarily someone trying to smuggle an entire warhead. How are you responding to this threat?

Mr D Macpherson (DA) said that the battle to restrict such goods is ongoing. The rise of extreme Islamist organisations is concerning. The only way to stop proliferation is through a trained enforcement agency. What training of police has there been? How many officers are so trained? What capacity does the state have to deal with detection at ports of entry?

The Chairperson noted that communications among government is extremely important because there are so many materials that could pose a potential threat. Governments likely have different policies on this due to their geographic location and threat level.

Mr M Kolako (ANC) observed that the Minister of Trade and Industry appears at the top of the structure in the presentation, but you also say that the Council has a Chairperson and a Vice Chairperson. Who is the Chairperson? Where is s/he from? You have listed military intelligence under NPC participants, and you are now proposing the addition of the National Security Council that controls civilian intelligence. Does this mean that they were not involved in nuclear intelligence before?

Ms Reddiar apologised for the confusing diagram. The Council includes customs officials and SARS as well as other government bodies that have information on non-proliferation. The State Security Agency is a good example. When Customs inspects containers, they ensure that what is claimed to be in the container is actually in the container. The Council trains these officers to successfully identify fraudulent or unauthorised materials. When a container is stopped, officials have a hotline and email directly to the Council officials. There have been prosecutions in the past. Exports are actually of a greater concern than imports. The mandate of Customs is mainly levy collection, so they do not focus on exports as much. In some case, goods are diverted at a port on the way to a good’s destination; the Council works with other ports and countries to prevent diversion.

These substances can be difficult to control and not every substance can be controlled. For example, chlorine, an unbanned substance, was weaponised in Syria. The international community has to work together to implement the best possible control system. No mechanism will be perfect; events like ISIS and Syria will occur. Global terror is a major issue in need of elimination. Someone smuggling small goods is a very big concern, especially considering biological weapons that can fit in, for example, a toothpaste tube. Agencies are working hard to control such things. Capacity building in Africa is very important to promote the proper reaction to biological and other incidents. The Council teaches various basic reaction mechanisms.

Mr Leaver noted that questions from members reflect public concern on the danger of these weapons. The diagram illustrates that the NPC works across a spectrum of activities. Just in the nuclear section, security issues interplay with safety issues. Nuclear security is being given a large amount of attention by the International Atomic Energy Agency; this attention is filtering down to national governments as well. Proliferation has already taken place in many areas and rogue materials are an issue, but the international community is aware of this and on constant alert. The Act does not specify that the Chairperson be from the DTI, but only that he or she be qualified.

Ms N Matshoba (ANC) asked for more information about capacity building in Africa. For starters, which countries have you helped?

Ms Mlumbi-Peter replied that international cooperation is extremely important to help in controlling items and intelligence gathering. Regional cooperation is also important; South Africa is working closely with its neighbours for customs control training, spillage management and intelligence gathering. The Council works with the AU, the UN, and SADC. Though South Africa has limited resources, the goal is to reach as many countries as possible through these international organisations.

The Chairperson noted that the Non-Proliferation Council only appears before Parliament once every two years or so. She noted that much has happened in 21 years geo-politically since the Act passed. She thanked the delegation for attending.

Committee Report on the Protection of Investment Bill: rescinding of 3 November report
The Chairperson announced that yesterday, the Committee adopted the Protection of Investment Bill and its Committee Report on it. The Freedom Front Plus (FF+) gave a medical apology yesterday but made a written submission. At the end of the meeting, a minority view was expressed by the Democratic Alliance (DA) and the Inkatha Freedom Party (IFP). Afterwards these were submitted in writing. Last term was the first time the 'minority' clause in the Rules was exercised. After much debate at the time last term, what is sought is not a minority report, but rather a minority view for the report. The Chairperson has sought advice from the National Assembly Table. The Committee may need to rescind yesterday’s report and do it over. However, the Committee could also merely capture the minority view into the report. She called for comment on these two approaches.

The Committee Secretary said that the verbal comments of the DA in yesterday’s meeting and the written DA minority view are different technically. We should therefore rescind the report and do it over.

Mr Hill-Lewis explained that he was speaking from notes yesterday, so capturing his verbal remarks perfectly in writing was impossible. However, the gist of both was the same so he did not prefer either method.

Mr B Mkongi (ANC) asked for a further explanation of what rescinding the report would entail.

The Chairperson asked the Secretary to distribute her copy of the minority view. She clarified that the Committee is not doing the Bill right now, but only the Committee Report.

Mr Macpherson asked if it is possible to submit a Minority Report separate from the Committee Report?

The Chairperson said that the rules are quite specific in not allowing for a Minority Report; the Committee must submit one Report. Only minority views can be expressed. She did not presume to change anyone’s views, but rather intended to do the Report correctly.

Mr Kolako called for the Committee to follow the rules and capture the majority view in the Report and include the minority views in order to move forward.

The Chairperson assured members that no one’s views will be changed. These views need to be captured in the full Report. She called for the DA to submit its written submission.

Mr Hill-Lewis at first asked that his verbal remarks from the Hansard be sent to him in order to clean that up and submit it. However, he changed his view and called for the Committee to use his written submission.

The Committee formally rescinded their report of 3 November.

Committee Report on the Protection of Investment Bill: adoption of 4 November report
The Chairperson put the new Report that is now in full compliance with the Rules before the Committee. She read “The Report of the Portfolio Committee on Trade and Industry on the Promotion and Protection of Investment Bill dated the 4th November 2015. The Portfolio Committee on Trade and Industry, having considered the subject of the Promotion and Protection of Investment Bill B18-2015 refer to it as classified by the Joint Tagging Mechanism as a Section 75 Bill, reports on the Bill with amendments B18A-2015. The Committee was not able to reach consensus on Clauses Four (a), Six-One, Nine, Twelve-Five, and Thirteen as reflected in the introduced Bill as well as the Short and Long Title. The Committee further reports that there has been a general acknowledgement that the first generation Bilateral Investment Treaties have not balanced the rights of foreign investors with the right of the state to regulate in the public interest. In this regard, the Bill sets out to rectify this by codifying and aligning the protection available to all investors within the Constitution”.

The Chairperson asked whether she needed to read each paragraph.

The Committee agreed that reading it is unnecessary.

Mr Hill-Lewis said that the DA did not agree with point five and point twelve. The DA also took issue with language in point nine describing ‘broad agreement’.

Mr Mkongi found this process unnecessary and repetitive.

Mr Hill-Lewis said that this is the first time he is seeing this report.

Mr Macpherson asked whether the opposition can amend this report.

The Chairperson said that this is the whole point of the minority view.

Mr Hill-Lewis offered to supplement point five and point twelve with a minority view. He also again called for the language in the phrase ‘broad agreement’ to be removed.

Mr Kolako felt that the minority view covered these points; the view asserts that the DA does not agree with the Bill at all. The DA has raised these views and the report captures your views. What is about to happen is that the re-amplifying of DA points will not end.

Mr Hill-Lewis agreed with Mr Kolako but emphasised the accuracy in language point.

The Chairperson said that there was agreement that the Constitution covers the issues of the Bill, but some members wanted further detail and found repeating the Constitution unnecessary. The agreement refers to the Constitution. Not all members agreed that the details in the legislation were adequately covered. She supported removing the word ‘broad’.

Mr Macpherson said that point nine might need further work even without the word ‘broad’. The DA feels that the sentiment in point nine should be codified in law. For point eight, Advocate Alberts wanted protection extended to investments by South Africans outside the Republic.

The Chairperson read ‘There was agreement that Section 25 of the Constitution is adequate to protect the physical property of investors from arbitrary expropriation and deprivation but some members wanted this codified in the Bill’ as a new wording for point nine. She felt that this covered DA concerns.

Mr Hill-Lewis said that he no longer had an issue with point twelve.

Mr Macpherson moved to reconsider point eight.

Mr Kolako said that, when one says the Committee, one means the majority of the Committee. However, he was sympathetic to the DA’s point.

The Chairperson read “The Committee is of the view that the Bill can only apply within the Republic and that it cannot extend protection to South African investors and their investments abroad. The Committee’s view was supported by a legal opinion provided by the Office of the Chief State Law Advisor, however some members did not share this view”.

The Committee then approved the Report.

Minority Views
Mr Hill-Lewis asked for the Chairperson to note the DA’s objection and to record its minority views.

The Chairperson asked Mr Hill-Lewis to confirm that the Chairperson has the correct version of the DA minority view.

The Chairperson noted that the Report includes the IFP minority view in the main Report. She will sign this Report this afternoon.

Mr Mkongi noted that the ANC does not agree with the minority view. How will this be noted?

The Chairperson noted that the only reason there is a minority view is because there is the main Report that is reflective of the ANC views but not unanimously shared by the Committee as a whole.

Committee Minutes
The Committee adopted the minutes from 14 and 13 October; 15 and 9 September.

In considering 2 September minutes, the Mr Macpherson said that the minutes do not reflect many of the recommendations from the 2 September meeting. Since then, recommendations have not been pursued.

The Chairperson said that the Committee is trying to get the Hansard of this meeting.

Mr Macpherson noted that one of the main issues was Letters of Authority. He recommended holding these minutes in abeyance until the Committee can look at the Hansard.

Mr Mkongi said that he is uncomfortable with the template used.

The Chairperson said that these minutes should be left in abeyance.

Committee Business
The Committee said that this has been a tough period for the Committee. There has been much pressure on staff and members and various members have battled with sickness. She noted that there would not be Friday meetings in November. She hoped that future meetings would not deteriorate into disrespect and misconduct. She announced a meeting at 08:30 for 10 November. She announced a meeting on 11 November at 08:30 and a Minister’s briefing on 17 November. On 17 November is the debate on this Committee’s Bill. Some members have wanted to pursue the Centurion Aerospace Village (CAV) further on 17 November. She asked whether this is wise.

Mr Hill-Lewis said that he did not want to delay the matter until March.

The Chairperson said that the CAV would thus be discussed on 17 November.

Mr Hill-Lewis noted that some members would be absent for Western Cape by-elections on 11 November.

The Chairperson moved to consider oversight visits. Options include horse racing, Unilever, a tyre plant, the Dube port, a trade centre, and some other manufacturing. That is planned for the 24th-27th of November. We have been mentioning this for some time; she hoped that the Committee could formally agree on this now.

Mr Hill-Lewis proposed to go on an oversight visit to the National Regulator for Compulsory Specifications (NRCS) and to the Centurion Aerospace Village (CAV). The bottleneck in the NRCS is grinding the economy to a halt; we need to go there and see what is going on. We should also take up the Minister’s offer to take us through the CAV. Both are in Pretoria; one of those days should be used to leave KZN and go to Pretoria.

The Chairperson noted that the costs of going to multiple provinces would be prohibitive. We can really only go to one province. Also, I have recently learned that other committees such as the Economic Development committee have already gone to the CAV. The Committee should wait for the EDD report on the CAV.

Mr Hill-Lewis wanted to beseech the Chairperson to pursue the oversight visit to the NRCS to see why they still have audit issues.

Mr Koornhof proposed the application. Mr Mkongi seconded.

The Chairperson expressed concern that the Committee has not been able to contact Ms Mantashe to receive an update on her health. Apologies were given for the sick Mr Williams and Mr Esterhuizen. The Chairperson asked the Committee Secretary to try and contact the EFF in order to have an alternate present.

The meeting was adjourned.

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