Advisory Centre on WTO Law Agreement: ratification

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Meeting Summary

The purpose of the briefing was for the Committee to consider and approve SA’s accession to the Advisory Centre on WTO (World Trade Organisation) Law (ACWL). Some background was that there was an increase in use of non-tariff barriers and hence tariffs no longer afforded adequate protection. Trade restructuring measures were accumulating in terms of the WTO. SA needed to protect its economy and its industries. When there were disputes between countries it was referred to the WTO. The ACWL would assist SA to better understand WTO dispute rules. The ACWL was an independent, impartial and non-political source of legal advice. It provided developing countries and least developed countries with legal capacity to enable them to take full advantage of the benefits and opportunities offered by the WTO. Members were provided with insight into the services offered by the ACWL and on what the process entailed in joining the ACWL. It was pointed out that on the 26 August 2015 cabinet had approved of SA becoming a member of the ACWL. As far as financial implications to SA for joining the ACWL there was a once-off membership contribution of approximately R2.2m depending on exchange rates. Besides this once-off contribution members of the ACWL were not required to make any further payments to receive services except the payment of a discounted fee charged in dispute settlement proceedings. Some benefits accruing to SA as a member of the ACWL was that SA would have a free source of legal advice on the compatibility to WTO laws of trade measures of other countries that affect South African exports and of trade measures that SA wished to introduce. The ACWL could also assist SA in WTO dispute settlement cases at a discounted rate. The ACWL comprised of highly skilled and highly regarded lawyers who contributed towards the strengthening of the WTO dispute system as well as prosecuting their developing country clients’ interests. By SA joining the ACWL it would foster a sense of confidence and equity in the multilateral trading system, allowing developing members to enforce their rights under international trade law. The DTI recommended that a body comprising of all  South African government departments be established for consultative purposes. It was further recommended that the Committee considered and approved SA’s accession to the ACWL.

Members asked whether the once-off membership fee of approximately R2.2m was for legal advice or for legal assistance should litigation take place. The DTI was asked whether SA by reducing its tariffs was not making itself vulnerable. Tariffs were after all imposed as a means of protecting vulnerable sectors. The DTI was further asked whether it had considered the implications after the Protocol was approved. Members requested the DTI to provide it with a full list of the ACWL’s membership. Members were interested to know how SA had been dealing with disputes thus up until now. The DTI was asked why it could not use its own trade and development division to deal with legal issues that arose. Members felt that the “discounted fee” that SA would be charged when it engaged in dispute resolution mechanisms sounded vague as no amount was specified. Could it be likened to SA signing a blank cheque? The DTI was also asked what happened when there was a dispute between ACWL members themselves. The DTI was further asked to provide a definition on what constituted a dispute. The Committee felt that Africa needed to stand united, only then could the best deal be negotiated. The problem was however that each African country had its own interests. The reality was also that trade interests of countries differed. The suggestion was made that members could perhaps be taken along with SA’s delegation the next time the WTO met. The Chairperson read out the Committee’s resolution which recommended that the National Council of Provinces (NCOP) in terms of section 231(2) of the constitution approve the said Protocol. The Committee’s resolution would be presented to the NCOP. The resolution was unanimously agreed upon by all members.

Outstanding Committee Minutes were also adopted.

Meeting report

Briefing on ratification of the Protocol of accession of SA to the Advisory Centre on World Trade OrganisationLaw (ACWL)
The delegation comprised of Ms Lizell Reinecke, Chief Operating Officer: International Trade and Economic Development Division, and Ms Mogani Konar, ASD, DTI.

Ms Reinecke undertook the briefing. The purpose of the briefing was for the Committee to consider and approve SA’s accession to the Advisory Centre on WTO (World Trade Organisation) Law (ACWL). Some background was that there was an increase in use of non-tariff barriers and hence tariffs no longer afforded adequate protection. Trade restructuring measures were accumulating in terms of the WTO. SA needed to protect its economy and its industries. When there were disputes between countries it was referred to the WTO. The ACWL would assist SA to better understand WTO dispute rules. The ACWL was an independent, impartial and non-political source of legal advice. It provided developing countries and least developed countries with legal capacity to enable them to take full advantage of the benefits and opportunities offered by the WTO. Members were provided with insight into the services offered by the ACWL and on what the process entailed in joining the ACWL. It was pointed out that on the 26 August 2015 cabinet had approved of SA becoming a member of the ACWL. As far as financial implications to SA for joining the ACWL there was a once-off membership contribution of approximately R2.2m depending on exchange rates. Besides this once-off contribution members of the ACWL were not required to make any further payments to receive services except the payment of a discounted fee charged in dispute settlement proceedings. Some benefits accruing to SA as a member of the ACWL was that it would have a free source of legal advice on the compatibility to WTO laws of trade measures of other countries that affect its exports and of trade measures that it wished to introduce. The ACWL could also assist SA in WTO dispute settlement cases at a discounted rate. The ACWL comprised of highly skilled and highly regarded lawyers who contributed towards the strengthening of the WTO dispute system as well as prosecuting their developing country clients’ interests. By SA joining the ACWL it would foster a sense of confidence and equity in the multilateral trading system, allowing developing members to enforce their rights under international trade law. The DTI recommended that a body comprising of all government departments be established for consultative purposes. It was further recommended that the Committee considered and approved SA’s accession to the ACWL.

Discussion
Mr W Faber (DA, Northern Cape) agreed that the ratification of the Protocol should be supported. He asked whether the once off payment that was referred to in the briefing was for legal advice of for legal assistance should litigation take place.

Ms Konar on how much the ACWL would charge said that there was set amounts and these were set out in a schedule contained in an annexure.

Mr B Nthebe (ANC, North West) asked whether SA by reducing its tariffs was not making itself vulnerable. Tariffs were after all imposed as a means of protecting vulnerable sectors. The emphasis of the briefing seemed to be on a dispute resolution mechanism. Was this what the Protocol was about or was it about SA reducing tariffs?

Ms Reinecke pointed out that there were sectors in the South African economy that were sensitive. One such sector was the clothing and textile industry and SA should use its policy space to protect its industries. These types of sectors needed to be protected. One option was perhaps to increase tariffs. The emphasis globally at present was to reduce tariffs. Countries like the USA and blocs like Europe came up with very creative ways of protecting their industries. SA needed to learn from what these countries did. SA should perhaps consider increasing tariffs and consider other measures to protect its industries. The ACWL offered an advisory function.

Mr J Mthethwa (ANC, KwaZulu-Natal) noted that cabinet had already approved the ratification of the Protocol. He asked whether the DTI had considered the implications after approval by both houses of parliament. Cabinet had in the past also approved SA being part of the International Criminal Court (ICC) and now SA was in trouble. SA needed to protect its economy. He asked whether SA would be protected against banks in SA that was stealing money from the country for long periods of time.

Ms Reinecke stated that the ACWL was an independent non political organisation that SA was joining. The DTI had consulted with the State Law Advisers Office and was given the go ahead. There were no issues of constitutionality if SA joined. There was also no conflict with domestic law.

Mr M Rayi (ANC, Eastern Cape) said that SA had lost the ICC case and the matter would come to parliament. He asked that the Committee be provided with a full list of the ACWL’s membership. He asked how SA had been dealing with disputes thus far. If the ACWL was established in 2001 why was SA only joining now? He asked what the achievements of the ACWL for its members were thus far. The DTI was asked why it could not use its own trade and development division to deal with legal issues that arose. He asked the DTI to confirm that the ACWL membership fee was R2.1m. He also asked whether it was correct that SA would have a discounted fee to pay when it was engaged in a dispute resolution mechanisms. This discounted fee sounded vague as no amount was specified. Could it be likened to SA signing a blank cheque? He further asked what happened when there was a dispute between members themselves.

The Chairperson said that Committee Researchers had prepared a document providing detail on the workings of the ACWL.

Ms Reinecke explained that there were 33 developing countries who were members of the ACWL. The Committee would be provided with a full list. Of late there had been a huge increase in protectionism. The USA placed its interests first and foremost and so should SA. Negotiations at the WTO had not progressed. SA had been frustrated by the impasse at the WTO. The voice of less developed countries was not heard. Developed countries were too strong. SA needed to be prepared to put its foot down. There was as yet no need for SA to take cases to the WTO on dispute. SA joining the ACWL was an option that was there if it was needed. Why had SA joined? She noted that issues of trade law were complex. It dealt with aspects of services and goods. SA did not have the technical expertise. SA required the best legal advice on WTO trade matters. She stated that SA was not signing a blank cheque. There was a cap placed on the amount.

Ms Konar said that there was no illegality regarding the processes of the ACWL.  There was a roster system in place when counsel was needed to assist.

Mr L Magwebu (DA, Eastern Cape) asked if there was a definition on what constituted a “dispute”.

Ms Konar said that a dispute was where there was a country A which was the complainant and country B who was a respondent. The scenario could be that country B had not complied with WTO measures. There were various stages in the process. The dispute was between two countries.

Mr Magwebu wished to know the actual definition of “dispute”. He realised that it was a technical issue and agreed to leave it for now.

Ms Reinecke said that a detailed definition of “dispute” and detail on what the process entailed would in writing be provided to the Committee.

The Chairperson stated that a former DTI official, Ambassador Xavier Carim represented SA at the WTO. He added that he had participated in two of the WTO’s meetings. Ambassador Carim and Minister Rob Davies led SA in meetings. Members could perhaps be taken along with SA’s delegation the next time the WTO met.

Ms Reinecke pointed out that the 11TH WTO meeting was coming up in December 2017 to be held in Argentina. Minister Davies would be taking along a delegation comprising of members of the Portfolio Committee on Trade and Industry as well as members of the Committee. The delegation would also be made up of representatives from business, labour and from the National Economic Development Labour Council (NEDLAC).

The Chairperson said that he was aware that Minister Davies’ budget would be tighter in 2017. Perhaps members’ costs could be covered from the Committee budget.

Mr J Londt (DA, Western Cape) said that he supported SA joining the ACWL. SA on its own would not have negotiating power. Africans needed to stand united. Only then could the best deal be negotiated. One only had to look at how strong the USA and Europe was. Africans needed to sing from the same sheet.

Ms Reinecke agreed that Africa needed to sing off the same sheet. SA as part of the South African Customs Union (SACU) had to negotiate as part of SACU. In Geneva there was an African group of ambassadors and Africa’s development agenda was presented. She said that there was Tripartite Free Trade and Continental Free Trade Agreements in place. Where there were areas of interest then countries could complement each other. The Tripartite Free Trade Agreement would be signed in June 2017. A great deal of legal text had been cleared.  There was an alliance between the Big 3 ie SA, Kenya and Nigeria. Common interests were found. She conceded that different countries had different interests.

The Chairperson said that the problem was that even though Africans sang from the same sheet they each had their own tunes. Agenda 2063 was important to unite Africa. Legacies that African countries dragged with them often determined their individual interests. Trade interests of countries differed. Interests could either be extractive or of an agricultural nature. 

The Chairperson read out the Committee’s resolution which recommended that the National Council of Provinces (NCOP) in terms of section 231(2) of the constitution approve the said Protocol. The Committee’s resolution would be presented to the NCOP.

The resolution was unanimously agreed upon by all members. 

Committee Minutes
Committee Minutes dated the 15 February 2017 was adopted as amended.

The meeting was adjourned.

 

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