Norwegian Delegation on Trade-Related Matters: discussion

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Trade, Industry and Competition

07 April 2003
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Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
8 April 2003
NORWEGIAN DELEGATION ON TRADE: DISCUSSION
 


Chairperson: Dr Rob Davies

SUMMARY
The Norwegian Trade Delegation formed an integral part of the Norwegian decision-making apparatus. The focus was aimed directly at agriculture, fishing, tourism, ITC and other sub-sectors such as fish farming. Unlike South Africa, the Trade Delegation shared this portfolio with various other institutions such as Foreign Affairs and Environmental Affairs. The Delegation comprised of twelve members, representative of the various political parties. The delegation was mandated to visit South Africa on a fact-finding mission. As Norway was not part of the European Union, trade and investment is negotiated on a direct basis with the intended partners.

MINUTES
The Chair introduced the Norwegian Trade Delegation. He explained the role of the Committee including its oversight role and the focus on Trade and Industry. Due to its mandate, the Committee did not focus on other related issues such as labour and transport, although there was an overlap regarding these issues.

The Chair explained that when the new political dispensation was created in 1994, the country inherited an economy that was in crisis. This was due largely to the fact that apartheid was costly. The various sectors were under strain and this reached breaking point with the advent of globalization, which set out new challenges. Present successes had been attained at a cost.

The motor industry had been protected by the state before 1994. This changed with the introduction of the new dispensation. The motor industry was forced to reconsider its strategy as well as its target market. It now focused only on activities that were sustainable at economically productive levels and in so doing introduced an export capability.

Other sectors have followed this route, but were hindered by low levels of education. This has impacted on the formal employment sector, which has lost more than a million jobs since 1994.

Unemployment figures in South Africa varied based on the criteria set. In the strict type of criteria, unemployment was estimated at 20%. According to the flexible type, it was estimated at 40%. To counter this situation, the government had embarked on a process of focusing on micro economic activities, especially in the rural areas. This was depicted by the formulation of the Integrated Development Strategy for various sectors such as tourism. This included support measures from the State and private business.

Another thrust was the acceleration of enterprise creation by historically disadvantaged persons (HDP). There were considerable obstacles, the largest being access to finance in the traditional manner such as commercial banks. This has led to the creation of alternative institutions that were joint ventures between government and private business. The creation of Co-operatives in rural communities had increased in this regard.

Black Economic Empowerment (BEE) existed since 1994. This was carried out by corporations which were not as effective as envisaged. This had led to the creation of a new advisory council.

Discussion
The Norwegian Trade delegation asked with regard to BEE, what sort of percentages would be aimed for and would this mean 'white' discrimination?

The Chair stated that the Department of Labour handled this issue, but the reality of the situation was that post 1994, 99% of senior management was 'white'. This had now shrunk to 90%. This level was still too high when one considered that 'white' people comprised 13% of the population. No direct quotas would be put in place, rather the creation of a scorecard which was based on the particular company.

Ms C C September (ANC) added that in 1994, the path taken by the country, as a whole was not to exchange numbers. Importance was placed on correcting the wrongs of the past in order to achieve success. This meant that empowerment must include gender and disability corrections. Past discriminations were being resolved in a holistic approach. The Constitution guaranteed that 'white' people would not be marginalised and that there were civil remedies available.

Norwegian Trade delegation stated that Europe was an important trading partner. What set of objectives would South Africa be aiming for?

The Chair replied that between 1994-1999, Parliament directly negotiated with the European Union. Presently, specific Trade Delegations were put forward with a targeted approach and mandate. South Africa remained the largest export market for European goods in Africa, with most of the goods being manufactured items. The pre-1999 trade agreements had handicapped South Africa. The most recent negotiations were based on asymmetrical burdens and projected and retrospective timespans. Recent negotiations had resulted in 96% of exports to the EU being tax-free for ten years. The largest obstacle was the export of agricultural goods, though exports had increased. There were ongoing negotiations with the different custom unions in this respect.

Norwegian Trade delegation enquired if tax incentives were offered to foreign investors?

A member replied that these incentives were for new foreign investors and were based on qualifying assets only. This included basic allowances, weighting for rural development and where the business was labour intensive. These offers were under the auspice of the Department of Trade and Industry (DTI) and were not seen as a long-term strategy. The incentives were based on a set number of rules.

Norwegian Trade delegation asked if the wounds of the past were healed and accepted by all race groups?

Ms September (ANC) held that it was an ongoing process and there was no guarantee that all wounds could heal in all respect. However a concerted effort was being applied. An example was the Truth and Reconciliation Committee (TRC) which aimed to bring past transgressions into the public eye. There remained a need for reparations and community development.

Norwegian Trade delegation referred to the unemployment figure of 40%. Was this a chance for wide spread and targeted education?

Ms September (ANC) conceded that the Human Resource Development consisted of a joint strategy by government and the private sector to educate individuals in targeted sectors. Joint funding had sourced the creation of the Sector Education and Training Authorities (SETA). Research and Development spending had not been great as a clear objective had not been identified.

Ms M B Ntuli (ANC) added that in the past, there were two forms of education being 'Bantu and White'. This created two worlds in one country where education was a privilege for 'blacks' and not a right. A direct result was the huge unskilled workforce in South Africa. Although government had put in place measures, this would take time. There was also no concrete focus on scientific subjects, which was a concern.

Norwegian Trade delegation asked if the size and future domination of the ANC limited the debate on how development should occur?
Ms September (ANC) stated that South Africa was a vibrant democracy and that the main opposition party would be in a better position to discuss the performance of the ANC. Clarity was indicated by the institutions created such as the Constitutional Court.

The Chair added that the size of the ANC did not mean that there was no democratic debate. The challenge to the ANC members as well as opposition was to scrutinize all facets of democracy. This was a critical support structure. A further demonstration of dialogue was that the public was allowed to enter their opinion in public meetings. This particular Committee had never convened behind closed doors.

The Norwegian Trade delegation was grateful for the useful interaction on clarifying certain issues. All expectations had been surpassed on their visit to South Africa.

The Chair contended that South Africa and Norway had always had a fruitful relationship. He looked forward to future growth and expressions of this relationship.

The meeting was adjourned.


 

 

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