African Continental Free Trade Area; SADC Protocol on Finance and Investment; Copyright Amendment Bill: clauses to be advertised; BRRR

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Trade and Industry

11 October 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

Call for Public Submissions

The Portfolio Committee on Trade and Industry was pleased to receive a briefing by the Department of Trade and Industry on the Ratification of the Agreement Amending Annex 1 (Co-operation on Investment) of the SADC Protocol on Finance and Investment (FIP). The Department sought to obtain approval to table the Agreement in the National Assembly main chamber.

At the job summit the previous Thursday, the President had mentioned the Agreement as important for job creation. The Agreement provided enormous benefits in respect of achieving larger economies of scale and a bigger market of over 1 billion people with a combined GDP of approximately US$3.3 trillion. Threats to South Africa included the possibility of transhipment, an influx of sub-standard goods, loss of customs revenue and the possibility of politicisation of a trade agreement. However, various mechanisms were in place in South Africa that should mitigate those risks. SARS was an important role player and would have to introduce legislation to implement the agreed preferential treatment as well as ensure that Customs & Excise implemented the necessary checks and controls.

Members were concerned about the actual mechanism of the dispute agreement and asked which court a country would approach with a dispute. Why had Home Affairs not been identified as one of the key stakeholders in the Agreement when it had to deal with the movement of people?  How was the Department of Agriculture, Forestry and Fisheries going to enforce guarantees when it was hopelessly behind in enforcing guarantees? How was the Department of Trade and Industry going to enforce the protocols and thereby protect the country’s trade against illicit goods? How could the continent overcome the infrastructure challenges?

There were questions around the timing of the request for approval to sign the Agreement. Why was South Africa was only then trying to get the Agreement when it was a very important issue and had been signed by other countries in March 2018?  What if the processes were not completed in time for South Africa to be a full member and not an acceding member? Why had South Africa not taken the lead in the process? Why had the country been pipped by seven relative minnows in Africa?

Following extensive deliberation, the Committee approved the Agreement and sent it to the House of Assembly for approval.

The Department of Trade and Industry presented the Memorandum on Ratification of the Agreement Amending Annex 1 (Cooperation on Investment) of the SADC Protocol on Finance and Investment to the Portfolio Committee for consideration. There had been amendments to Articles 1(1) and 1(2), 2(3), 5 and 6.

The Committee approved the Agreement and agreed that it should be sent to the House of Assembly for approval.

The Senior Parliamentary Legal Advisor presented additional amendments to clauses in the Copyright Amendment Bill and requested approval to publish the clauses for public comment. The amendments included the need to ensure that a collecting society was a non-profit company under the jurisdiction of the Companies and Intellectual Property Commission, that collecting societies had the right to request records of the commercial use of works and that a qualified administrator be appointed to manage the collecting fund should the need arise to appoint an administrator. Other clauses added the rights of distribution and rental to the Bill; processes for recording commercial use of audio-visual works, and ensured alignment with the World Intellectual Property Office Treaty.

A controversial clause dealt with the importation of copies of works. There were suggestions that the provision could create loopholes that would allow the abuse of copyright laws. However, the Committee decided to publish the clause for public comment and then debate further in the light of the inputs from the public.

The amended clauses in the Copyright Amendment Bill were to be published for ten working days from Friday 12 October 2018.

The Committee discussed the BRRR in the light of responses by the Department of Trade and Industry and its entities to previous BRRR recommendations. The Committee Secretary requested Committee Members to submit recommendations by the following Monday, 15 October 2018, so that they could be included in the BRRR for deliberation on 16 October 2018

Meeting report

Opening remarks
The Chairperson reminded the Committee that a decision had been taken to consider advertising at least one clause in the Copyright Amendment Bill. Time would be allocated for that matter in the afternoon.

The Committee Secretary informed Members that he would give them the previous recommendations and responses from DTI to previous Budgetary Review and Recommendation (BRR) Reports.

The Chairperson had been pleased to read in the media of a lady who had studied part-time while working as a house worker. The lady had qualified as a doctor earlier in the year. She was pleased to hear such good news stories.

Mr D Macpherson (DA) commented on the change in temperature in the room since the previous day that made it more conducive to working. However, at that moment, the Committee was requested to move to another venue as that venue had been booked by another Committee.

Consideration of Minutes
The minutes of 1 August 2018 were tabled. The Committee adopted the minutes.

The minutes of 14 August 2018 were tabled. The Committee adopted the minutes.

The minutes of 15 August 2018 were tabled. The Committee adopted the minutes.

The minutes of 21 August 2018 were tabled. The Committee adopted the minutes.

The minutes of 28 August 2018 were tabled. The Committee adopted the minutes.

The minutes of 29 August 2018 were tabled. The Committee adopted the minutes.

The minutes of 4 September 2018 were tabled. The Chairperson requested that the register be checked and the minutes returned to the Committee.

The minutes of 5 September 2018 were tabled. The Chairperson requested that the register be checked and the minutes returned to the Committee.

The Chairperson welcomed Mr Wamkele Mene, Chief Director: International Trade and Economic Division (ITEDD), DTI, who would be making a presentation on the Ratification of the Agreement Amending Annex 1 (Co-operation on Investment) of the SADC Protocol on Finance and Investment (FIP) to the Committee for approval to table the Agreements in the House. The Chairperson stressed that it was an important agreement.
Briefing and Consideration of the Agreement establishing the African Continental Free Trade Area (AfCFTA)
Mr Mene made a comprehensive presentation on the African Continental Free Trade Area Agreement to the Committee. He had intended to make the presentation to the Committee a month earlier but there had been exigencies.

The Chairperson apologised for the interruption of his presentation on the previous occasion. She and the Committee whip had laid a complaint with the Speaker about the matter.

At the job summit the previous Thursday, the President had mentioned the Agreement as important for job creation. South Africa supported a development oriented integration process of market integration, infrastructure development and industrialisation when it came to continental and regional integration.

AfCFTA provided enormous benefits in respect of achieving larger economies of scale and a bigger market of over 1 billion people with a combined GDP of approximately US$3.3 trillion. The AfCFTA included trade in services, which was important to the country which provided strong trade services. The Agreement also provided legal certainty and predictability of markets.

Threats included the possibility of transhipment, an influx of sub-standard goods, loss of customs revenue and the possibility of politicisation of a trade agreement. There was also a possibility that the commitments by regional partners would not be implemented, which had implications for preferential access for South African exports. However, various mechanisms were in place in South Africa that should mitigate those risks. SARS was an important role player and would have to introduce legislation to implement the agreed preferential treatment as well as ensure that Customs implemented the necessary checks and controls.

As the most industrialised country in Africa, South Africa should be amongst the first 22 countries to sign the Agreement. If South Africa became signatory number 23 or later, the country would have to become an acceding member. Accession to the FTA would pose serious legal risks for the country. Already a number of countries had signed the agreement as they were not required to follow similar internal protocols.

The AfCFTA brought the continent a step closer to the vision of an integrated market in Africa. Africa could achieve 52% intra-Africa trade by 2022. The Agreement would complement and consolidate African Union work.

Discussion
The Chairperson asked the Chief Director to cross-reference the PowerPoint against the large document on the Agreement that the Committee Members had been given to read.

Mr A Williams (ANC) referred to South Africa’s trade surplus with Africa of R202 billion and the fact that the country was exporting manufactured goods which amounted to 64% of the country’s exports to the continent. He believed that the agreement would provide massive opportunities for South Africa and he recommended that the DTI move along, as speedily as possible, with the ratification of the Agreement.
Mr B Radebe (ANC) agreed with his colleague. He appreciated the report and wanted it approved by the Committee that day and in Parliament within a month.

Mr Radebe added that he did not like the comparison between India and Africa as, unlike in Africa, India had a single President and could push things through. They were different and they were not competitors. India was far advanced.

He was very concerned about the dispute resolution mechanism in the Agreement because when a country went to the World Trade Organisation, one found that it had various reservations, and it supported America which had its own African markets.  He was also concerned about the actual mechanism of the dispute agreement and asked which court a country would approach with a dispute. Why had Home Affairs not been identified as one of the key stakeholders in the Agreement when it had to deal with the movement of people?  He recommended that Home Affairs be identified as one of the key stakeholders.

Mr Radebe stated that Africa needed to shake off the shackles of colonisation and the only way to do that was for Africans to trade amongst themselves. The agreement would provide a way of decolonising Africa. The Committee should move to approve the Agreement.

Mr G Cachalia (DA) noted the importance of the Agreement and the need not to become an acceding member. He also noted the importance of intra-African trade and South Africa’s role in that trade. He was interested to know why South Africa was only now trying to get the Agreement signed by January when it was a very important issue. What if it did not materialise in time? Why had South Africa not taken the lead in the process? Why had the country been pipped by seven relative minnows in Africa?

Mr Macpherson suggested that the real success or failure of the Agreement, particularly for South Africa, would depend on the various Annexures, particularly those on the Rule of Origin, the customs cooperation, the non-tariff barriers which countries used to protect their industries, and which South Africa used, whether it admitted to the fact or not. In-country measures for managing processes were critically important but the Department of Agriculture, Forestry and Fisheries (DAFF) was hopelessly behind when it came to enforcing guarantees. It was one of the continuous sticking points with the European Union and with the African Growth and Opportunity Act (AGOA) in respect of transit and movement of goods. If one looked at South Africa’s ability to engage in the protocols of trade, the country did not fare very well and was lagging behind in many of them.

According to Mr Macpherson, the problem for Mr Mene was that many of the functions necessary for successful trade agreements were located in other government departments and DTI could not enforce the protocols. Therein lays the biggest problem. Many people would be able to take advantage of South Africa’s participation in the Agreement if the protocols were not observed and the country was not protected against illicit imports. How was DTI going to enforce the protocols and thereby protect the country’s trade against illicit goods?

Mr Macpherson found it strange that the country was relying on dispute mechanisms outside the courts when the country’s Protection of Investments Act demanded that disputes go to court before they went to any other body. How did DTI square that circle? How would someone in the country resolve a dispute? He asked Mr Mene to explain the procedures for someone who had a dispute in the country and how that would align with the current Protection of Investments Act.

Response by DTI
Mr Mene apologised to Mr Radebe if he misspoke in the comparison with India as his intention was to indicate that the opportunities for growth were similar to those of India. He could have been clearer in respect of his point.

The dispute mechanism was based on the WTO model but efforts had been made to improve the model. Disputes would be resolved by a panel to be established. Legal arguments would be made before the panel. There would also be an appellate body comprising independent experts.  It was designed to be similar to the mechanism of the courts, including appeals and so on, but the intention was to make it more efficient. It had to take into account the type of disputes and the relevant experts.

In the Protection of Investments Act, there was no requirement to exhaust local remedies. There was no such requirement under international trade law so if a South African company had a dispute with a company in the US, there was no requirement under international law, or even under South African law, that all local remedies had to be exhausted. Disputes had been treated as a different class under WTO remedies. When the Agreement got to the Investment chapter, DTI would have to ensure coordination between the binding principles of the Protection of Investments Act and the dispute mechanism. Investment arbitration and trade law litigation had been treated completely differently to the WTO laws and hence the requirement for the exhaustion of local remedies. Some Free Trade Agreements (FTAs) might have a requirement to exhaust local remedies but he did not know of any. He, in fact, doubted if such agreements existed. All FTAs would create a body to deal with disputes.

The issue of the various protocols would be an ongoing challenge. Where a trade concern arose pursuant to an Annexure, the relevant department would be the first port of call to resolve it, e.g. DAFF. DTI would have to work with the relevant departments but it would be an ongoing issue and DTI would have to be vigilant. DTI did not have the expertise to handle such matters itself but would have to ensure that the relevant departments handled matters according to the relevant protocol.

Mr Mene noted that Mr Cachalia had asked why South Africa had not moved quickly regarding the signing of the treaty. He explained that the negotiations had been concluded on 15 March 2018 and the signing of the Agreement by other Heads of State had been on 20 March 2018. However, South Africa had not had time to put the documents through the normal procedures as per Section 231 of the Constitution and the relevant Act that set out procedures. DTI had only received the approval for the President to sign in late June. DTI was hoping to deposit the instrument in January 2019 but everything had to be done in a legally correct way so that there could be no challenges. He was aware of the urgency. He was not sure how other countries could move more quickly but a reason could be that those countries that had signed had expressed an interest in hosting the Secretariat of the Agreement. He admitted that he was speculating in that regard.

Mr Mene explained that there had not been a specific issue that had required the direct involvement of Home Affairs. Currently the movement of business persons was not included but there was a proposal to include the matter. When the process reached the point of discussing the movement of business persons, Home Affairs would be involved. Currently there was a discussion on the movement of professionals but under the framework of the International Trade Law and not Immigration Law. DTI would consult with Home Affairs.

Further discussion
Mr Macpherson asked when the investment chapter would be discussed or negotiated. Was a coordinating body going to be set up in the DTI to deal with the protocols on trade in respect of the Annexures? SARS was not able to deal with countries of origin and transhipped goods streamed into the country every single day. Customs could not cope with understanding the rules of countries of origin at the moment, it would be far worse when there was an additional 40 African countries sending goods to South Africa. While his party supported the Free Trade Agreement in principle, he could not see people not taking advantage of the country. DTI could not outsource responsibility for maintaining the protocols to other agencies and hope that they would get it right because, up to that point, they had not got it right. The agreement could ultimately be detrimental to the country.

The Chairperson noted that she was finding it difficult to hear in the venue. Talking, or even walking, prevented her from hearing what people were saying. The acoustics were bad.

Mr Mbuyane acknowledged that the Agreement also dealt with dumping. He proposed that the Committee approve the Agreement.

The Chairperson noted that Mr Mene had identified a number of pluses that the Agreement could have for Africa, but the schedules needed to be prepared for certain goods. There was the whole issue of country of origin. It sounded as if the nature of the African Continental Free Trade Agreement was that of a key to unlock a door but there were a number of things to be addressed beyond the door. One of them was that South Africa had realised the importance of productive industrialisation. How ready were other African countries to deal with those issues? Secondly, infrastructure in Africa was a major impediment. How could the continent overcome the infrastructure challenges? Europe had had many centuries to overcome infrastructure issues.  Thirdly, there was the matter of standards. Mr Macpherson had raised concerns about the capacity of SARS to deal with the Protocols. At one time SARS had had that capacity. Unfortunately SARS had lost a lot of capacity. The challenge was that South Africa had certain standards for products because of the requirements of external trading partners. How long would it take to try to harmonise those standards so that it did not impact negatively on another country?

The Chairperson noted that Mr Mene had referred to transhipment and countries of origin. Regarding countries of origin was the problem of sugar producers. South Africa’s neighbours also farmed sugar cane. What rules applied to the Rules of Origin? She asked that Mr Mene use sugar as an example. Could he unpack that issue?

The Chairperson added that it was, nevertheless, imperative that the country move ahead with the Agreement but try to put in specific measures to prevent the inflow of substandard goods. What measures would be needed to address products that were not up to standard, or was that matter still on the table?

Response by DTI

Mr Mene informed Mr Macpherson that the Investment Chapter would be started in January 2019. There was a schedule to the main Agreement that indicated the order of negotiation. It indicated that Phase 2 would deal with Intellectual Property Rights, etc. DTI would come back and table the Agreement when it was concluded as that was a requirement of law. It would be important to ensure that the Investment Agreement was in no way in conflict with the Protection of Investment Act. He assured the Committee that it did provide the country with new protections where the country did not have protection against some of its trading partners.

Regarding the coordination body within the DTI, he would take the matter up with the DG as it had financial and budgetary requirements. He was not sure that DTI could respond to the matter immediately to the request to improve DTI’s capacity to assist other departments.

He agreed that South Africa had measures against dumping, etc. based on existing South African law and implemented by the International Trade Administration Commission of South Africa (ITAC).

Those were the real challenges to ensuring that the country was protected.  The countries that were more industrialised would be the immediate beneficiaries but more had to be done to boost intra-African plans. The African Union had specific programmes to address supply chain constraints and to ensure that African countries relied less on primary commodities as export products that generated customs revenue. Initiatives had been undertaken by the African Export-Import Bank (Afreximbank) to boost industrial trade. The African Development Bank had specific programmes to boost intra-Africa trade. Both the Afreximbank and the African Development bank had been doing similar things independently but now they would be anchored under the Agreement which would ensure a coherence of the objectives of industrialisation, infrastructure development, etc. In June the African Development Bank announced that a significant amount of money had been set aside to improve Africa’s production capacity for those countries that did not have a viable national base. The same applied to infrastructure.

On the matter of value-addition, Mr Mene informed the Chairperson that South Africa had informed the relevant countries that certain industries would require protection, specifically sugar and other sensitive products. Sugar from India and Brazil would not get preferential treatment or SADC rates as that was where displacement occurred. DTI wanted to see more sugar refining happening in Africa rather than simply the growing of raw sugar.  The debate would continue during the negotiations as the issue of rules of origin had not been completed. Rules of origin would force industrialisation. The same would apply to other products such as automobiles. The intention was to prevent transhipment.

The harmonisation of standards was addressed in the Technical Barriers to Trade Annexure. The Annexure set out standards for products coming into a country and was based on WTO standards. He explained that, for example, a bottle of water would need to indicate ingredients on the bottle. The technical standards had been agreed upon, but the implementation of the standards would be the acid test. South Africa had to protect itself from sub-standard products by rejecting them at the border.

Mr Radebe appreciated what had been done as it was a good Agreement, but he was worried about the role of the Portfolio Committee on Finance because that Committee was responsible for SARS.

The Chairperson pointed out that joint meetings were held with the Portfolio Committee on Finance, when necessary. She asked Mr Mene if he was going to brief the Portfolio Committee on Finance. Training had to begin immediately to prepare customs staff. However, it was the best opportunity that she had seen for promoting trade across Africa. The Committee and DTI had been promoting entrepreneurship and the Agreement gave businesses the opportunity to expand their markets. That would provide legal architecture for entrepreneurs to expand into Africa. She believed that there would be teething problems but the Committee would set aside time to engage with ITEDD early in January and would include in the legacy document that the Portfolio Committee on Trade and Industry in the next Parliament would need to meet with ITED about three times a year.

She noted that up to 50% intra-continental trading occurred in Asia and intra-North American while in Europe, intra-continental trading was over 70%. African intra-continental trading was at 18%. Europe and other continents had also begun with limited trading, just like Africa, but many centuries before. The infrastructure had been in Europe since Roman times and the geographic area was much smaller. In Africa, however, intra-continental trading had to be developed and she was sure it would eventually reach higher rates of trading across the continent.

The Chairperson noted that Mr Macpherson and the DA had raised very legitimate concerns but those were concerns that the Committee would have to meet head-on and maybe even work with SARS on the issues. She did not know that South Africa had any non-tariff barriers, although Mr Macpherson could have been referring to the National Regulator for Compulsory Specifications (NCRS). Some of the information received from DTI about NCRS had made the Committee unhappy but NRCS had cut down on the backlogs on letters of authority, although the ICT system had not been implemented.

She thanked Mr Mene for bring the Members up to date on the Agreement.

The Chairperson informed Members that the Committee would have to agree to send a report on the Agreement to Parliament recommending that Parliament approve the signing of the Agreement.

Committee Report on Agreement
The Chairperson put it to the Committee that, having considered the proposal, the Committee recommended that the House approve the said Agreement in terms of Section 231 of the Constitution.

Mr Radebe moved that the Committee approve the Agreement and send it to the House for approval. Mr Williams seconded the motion. There were no objections and no abstentions. 

The Chairperson noted that the Agreement could have been taken to the House in September but a glitch in the Parliamentary Programme had prevented that.

Mr Radebe took the Chair. Mr Mene was to present on the SADC Protocol on Finance and Investment Agreement Amending Annex 1 and the Acting Chairperson asked him to be brief.

Briefing and Consideration of the SADC Protocol on Finance and Investment Agreement Amending Annex 1 (Cooperation on Investment)
Mr Mene indicated that his purpose was to present the Memorandum on Ratification of the Agreement Amending Annex 1 (Cooperation on Investment) of the SADC Protocol on Finance and Investment to the Portfolio Committee for consideration. Other countries did not have to ratify the Amendment but South African law required that such substantial Agreements be ratified. The Amendment had come into force when the eighth country had signed the Amendment.

Mr Mene listed the amendments to Articles 1(1) and 1(2), 2(3), 5 and 6.

Committee Report on the Agreement
The Acting Chairperson noted that the report had to be either agreed upon or rejected. He read the report. Mr Williams moved for adoption of the Agreement and adoption of the report. The motion was seconded by Ms L Theko (ANC). There were no objections or abstentions.

The Chairperson returned.

Decision on additional clauses for publication with respect to the Copyright Amendment Bill
The Chairperson made it clear that the Committee was not looking to publish clauses but had to advertise where it was necessary, in order to fulfil constitutional requirements.

Adv Charmaine van der Merwe, Senior Parliamentary Legal Advisor, Constitutional and Legal Services Office, presented the clauses that the team was proposing for advertising. The proposals were based on the technical panel inputs. Four panel members had provided a response: Adv Joel Baloyi, Mr Andre Myburgh, Mr Wiseman Ngubo, and Ms Michelle Woods. The responses were far wider than asked for but the panel members were so highly qualified in the field that one could not just shrug off what they had said.

Adv van der Merwe stated that consultation of a technical panel at the end of the process was not usual in the drafting of a Bill but because it was such a technical Bill, the panel had been necessary. A single incorrect word could have an enormous impact on the Copyright Bill and so the inputs by panel members were taken very seriously. The team had to request additional time to consider the inputs as one of the panel members had provided a 121-page document. The comments were examined to identify any issues that could enhance the Bill. Policy issues were not addressed, except where the wording of the Bill had an impact on the intended policy. The inputs addressed those aspects of the international treaties that were being incorporated and the team had to make a conscious decision not to include aspects that would be contrary to the policy decisions.

The advocate indicated that the amendments which she was proposing were new and would require the public’s input. The other amendments subsequent to the input of the panel would not need to be advertised as they addressed technical issues.

Proposal 1: Clause 1 Definition of a collecting society
Currently the collecting societies were non-profit companies but there was nothing preventing someone from making a profit out of collecting royalties and that had concerned Members. 

The amendment would mean that a collecting society had to be a non-profit organisation. The amendment also linked a collecting society to the Companies Act and a collecting society had to be registered under the Companies Act and all of the measures applicable under the Act would apply. Thirdly, a collecting society had to consist of rights holders and, fourthly, the primary purpose was to execute the rights of the artist.

Proposal 2: Adding the rights of distribution and rental
In the Bill, communication did not include rights of distribution and rights of rental. That meant that the Bill was not as broad as the WIPO Treaty. Those rights would have to be added to the Act at some stage and, as the Committee intended advertising the definition of a collecting society, the team had determined that it was best to advertise those rights at the same time and include them in the Bill. The inclusion of the rights was necessary and, if not done at that stage, would have to be added to the Act in the future.

The Chairperson asked for clarity that Clause 6 (section 6) was an addition.

Adv van der Merwe explained that the treaty provided for the communication of work to the public as well as distribution rights and rental rights. The Bill had only provided for communication of work to the public. Ms Michelle Woods from the World Intellectual Property Office (WIPO) had indicated that those rights had been omitted. In the proposal, those additional rights would be stipulated in respect of Clause 4 (section 6 – literary and musical works),* Clause 6 (section 7 – artistic works), Clause 8 (section 8 – audio-visual works), and Clause 10 (section 9 – sound recordings).

Mr Williams asked for clarity. The advocate had indicated that the Committee could add it presently, or at a later stage. What would stop the Committee putting it in at the current stage?

Adv van der Merwe explained that the clauses would need to be advertised. Her team had been cautious about proposing advertisement of clauses, as per the Chairperson’s instructions. However, as the matter of collecting societies was being advertised, the team was suggesting that those rights could be advertised at the same time.

Proposal 3: Clause 8 Section 8
When the Clause on sound recordings (Clause 9 section 10A) had been proposed, there had been a whole process of dealing with the rights and royalties, but in the end, it had been decided that one had to register the commercial use of the work and report to the collecting society, and failing to do so would be an offence. Similar requirements should be attached to all rights, but it was particularly important in respect of audio-visual works where collecting of royalties had been particularly problematic. She was proposing exactly the same wording that had been used in the clause on sound recording, except that it was in respect of audio-visual work.

Proposal 4: Clause 25, Section 22C
The next proposal related to collecting societies and dealt with the counter of the obligation to record and report. Currently collecting societies had no power to request that information. Mr Myburgh had proposed that the collecting societies be empowered to require a complete, true and accurate record of the commercial use of works. Mr Baloyi suggested that the Bill should give the collecting societies the power to negotiate licensing fees, royalty rates and tariffs.

In addition, because sections 8A and 9A contained offences, the same offence should apply to all persons who refused to provide the information to the collecting society. The offence was taken directly from sections 8A and 9A.

Proposal 5: Clause 25 Section 22D
Section 22D dealt with the provision of an administrator to be appointed if the collecting society was mismanaged. Mr Baloyi stated that it was insufficient to leave it to the Companies and Intellectual Properties Commission (CIPC) to appoint an administrator. It had to be an obligation to report to the Tribunal and the Bill had to set out the expertise that such an administrator should have. The person appointed had to be skilled in collective management and general administration of rights under the Act; skilled in business practice rescue, administration or liquidating; or other skills deemed appropriate by the Commission and the Tribunal. The required skills would be dependent on what had gone wrong in the collecting society.  Both the CIPC and the Tribunal had to agree on the required skills.

Proposal 6: Clause 28 Section 28
The Act currently provided that if a printer was printing books in  another country, then that printer would be allowed to import those copies into South Africa if that printing complied with the South African Copyright Act. No one could import anything that would constitute an infringement against copyright in the country. However, the Bill sought to address the fact that some countries might have broader exceptions than South Africa. The section would then allow copies to be imported if they were legal in the country of printing.

Mr Baloyi had suggested that it created a loophole. In countries where there were no copyright regulations, any printing would be legal, even if it were an abuse of internal copyright laws. WIPO had suggested that the Bill revert to the original wording in the Act but Mr Baloyi had suggested that it be allowed as long as the copyright holder had acquired approval from the copyright holder.

If the public input was extremely negative, it would be necessary to revert to the Act.

The Chairperson asked for clarification that the author would still receive royalties. Was the issue about localisation, or what was the actual issue if the author was not losing out on royalties?

Adv van der Merwe explained that one would only be receiving royalties if the printing had been with the copyright holder’s consent. If it were printed in a country with broader exceptions and without the copyright holder’s consent, the copyright holder would not get royalties. That was the point.

She could not say why it would be acceptable to for works to be printed outside of the country.

Mr Williams stated that he had a problem with the clause because he did not know who was going to be checking each book to ensure that the author had given permission?  How did children who had inherited copyright get to give permission? He could not imagine someone stopping large loads of books at the harbour and asking if the copyright holder had given permission. He thought that it was a huge loophole and that the original wording in the Act should pertain.

The Chairperson asked Adv van der Merwe to repeat what the Act said. Section 28 provided for the restriction of the importation of copies. Section 2 stated that copies of books could not be brought into the country if the book would be infringing any of the copyright laws in South Africa.

Adv van der Merwe stated that section 28 provided for the restriction of the importation of copies of works. Subsection 2 stated that one could not bring in copies if the work made outside of the Republic would have infringed South African law if they had been copied in South Africa. South Africa had limited exceptions and so there was a limit on books that could be imported.  The new clause in the Bill had tried to address, for example, the United States that had more exceptions because of its fair use principles.

Mr Radebe agreed that the clause should be advertised as part of the package of advertisements and then the Committee would see where it would fit in terms of the balance of rights because the Committee had decided to use the hybrid model. The clause could always be rejected at that stage when the Committee had an in-depth discussion.

Mr Cachalia was confused. Copyright existed but there would always be rogue players across the world. If South Africa aligned its copyright law according to fair use and fair dealing, then that was the route to go. There would be loopholes. Certain countries, like China, flouted copyright laws every day of the week. One had to police copyright and enforce it. It should be enforceable against various jurisdictions. He did know how making South Africa an island would help in any way.

The Chairperson asked DTI for the purpose of originally amending that clause in the Bill.

Dr Evelyn Masotja, DDG: Consumer and Corporate Regulation Division, DTI, explained that DTI considered access of materials to be very important and the Department had wanted to ensure that South Africa was covered in terms of legality. South Africa was part of the global trade and wanted to make sure that what came into the country was legal.

Ms Meshendri Padayachy, Deputy Director: Intellectual Property, DTI, explained that the clause was related to access and there was a buffet of exceptions and limitations. But looking at the broader community, a lot of South Africans missed out on movies because the country did not have the skills to create subtitles for disabled people. The only place where they could have obtained the audio-visual work with subtitles would be the United States. DTI recognised that there might be an infringement but had not wanted it to be an obstacle to those who needed subtitles. The Department had not wanted to engage in over-protectionism but to create a balance. The technical expert had suggested a safeguard to prevent the clause from being too broad.

Mr Cachalia noted that there were various jurisdictions around the world that had their own interpretations of copyright law. Some were lax and some dovetailed with the direction that South Africa had gone. Surely, in terms of international copyright law there had to be some jurisdiction somewhere? If a country did not adhere to it, there would be consequences for the country. Was that not sufficient?

Ms Padayachy stated that there were two main international agreements: the Berne Convention, which was the umbrella body of copyright and the other was the related-aspects of copyright that was in the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement under the WTO. The agreements had been confirmed by most countries but the only problem was that a country had to be a consenting member for action to be taken against the country.

The Chairperson asked if what had been presented in bold on the document was the proposal of the technical team. What exactly had the technical panel proposed?

Adv van der Merwe stated that the wording in black was the current wording of the Bill. The square brackets indicated a deletion. The words in red had been proposed. The panel had suggested deleting the words in red that were crossed out and using the words in red, i.e. the section applied to works printed outside of the country “if the making of the copies was without the authorization of the copyright owner.” 

The Chairperson raised a question asked by a Member. Was it related to a work printed in another country, without authorisation, and sold in that country or was it about a copy printed in another country and sold in South Africa or was it about both cases? What applied in those cases? How did one learn whether the printer had obtained authorisation from the copyright owner?

Adv van der Merwe stated that the law could only apply to what was imported into the country. The Act could not apply extra-territorially. What happened in another country, such as Eritrea, stayed in Eritrea. To find out if the copyright owner had given authorisation, one could ask for a letter from the copyright owner or a contract.

The Chairperson asked what the case would be if no authorisation had been obtained and the copies were imported. Who then would pay the royalties to the copyright owner? Who would bear the cost if Eritrea refused to pay?

Dr Masotja stated that it would be an infringement and there would be consequences. The example spoke to how one would ensure authorisation. The implementation practices had to be included in the Regulations or it would not be enforceable.

The Chairperson asked what would happen if the country in question was not a signatory to a treaty. What international law covered South Africa?

Adv van der Merwe stated if the country was not a signatory to a treaty; it would be difficult to do anything, although there might be a bi-lateral agreement. If not, trade and international relations negotiations would have to be entered into.

The Committee agreed that the clause should be advertised.

Proposal 7: Aligning Clause 28, Section 29 with the Treaties 
The clause dealt with the restriction of imported copies. WIPO had indicated that the Bill could not limit what people did in the course of business so the words, ‘in the course of business’ had to be removed from the clause. WIPO also pointed out that, although the Bill proposed to prevent all forms of distribution without the permission of the copyright owner, it had excluded communication to the public. The proposal was that the words ‘or communicate to the public a work or’ be added to the clause. 

The Chairperson stated it was a consequential amendment related to the previous discussion.

The Chairperson recapped the proposals. The Committee had agreed that the definition of collecting society be advertised. Secondly, there was the addition of the rights of distribution and rental. Thirdly, was the critical issue of collecting societies being able to demand the recording of works, the recording of commercial use of works in respect of audio-visual works and the creation of an offence. Then there was the converse of a user keeping records, i.e. the collecting societies could demand the records. Collecting societies could also negotiate licensing fees and tariffs. Clause 25 was about an administrator having appropriate skills. Clause 28 clarified the right to import copies of works and the last clause had simply been about alignment. Essentially six clauses had to be advertised.

The Chairperson suggested that the clauses be advertised so that the Committee did not subvert the Constitution.

Mr Cachalia clarified that the Committee was agreeing to the advertising but Members were not agreeing to the clauses. Decisions would be taken later.

The Chairperson confirmed his understanding and noted that the clauses would be advertised for ten (working) days and that they would be advertised the following day. She added that the Committee programme would have to be amended to include the responses to the advertisement.

Mr Radebe proposed that the clauses presented be advertised. The proposal was seconded by Mr Cachalia.

The Chairperson thanked the advocate and members of DTI and asked that her appreciation be extended to the experts.

The Committee then continued the deliberations on the BRR Report. The Chairperson informed Ms Theko that as she was a Member of the Portfolio Committee on Labour, the Chief Whip had been requested to make her an Alternate Member of the Portfolio Committee on Trade and Industry so that she would be entitled to attend every meeting, but it would not interfere with her attendance on the Labour Committee.

Consideration of the Budgetary Review and Recommendations Report (BRRR)
Ms Nontombi Matomela, Acting Group Chief Operating Officer from DTI, had provided responses to the questions that Members had raised during the previous discussion of the BRRR.

The first response was an update on Recommendation 3.1.1. The recommendation was about establishing a monitoring mechanism and consultation with the Minister of Finance and other relevant stakeholders. The response was that the group met regularly to discuss those issues.

Failure to comply with local production and content would be a transgression in terms of Regulation 14 of 2017, Preferential Procurement Regulations, which required compliance on localisation in terms of content and production. DTI had referred to the Auditor-General and his involvement and acknowledged the role of Proudly South African that had put in place a tender monitoring system. Where there were lapses, the DTI would require the entity to retract the procurement.

Recommendation 3.3 referred to the need for additional funding for the South African Bureau of Standards to upgrade critical infrastructure. The Committee noted that DTI had re-prioritised R100 million for SABS to upgrade some of the aging infrastructure, although that amount was unlikely to be sufficient to replace all the machinery that needed to be replaced. The Chairperson asked for a list of specific infrastructure required.

The potential loss that the Committee had discussed previously was an impairment and not an actual loss. The DTI had instituted controls to reduce such impairment in future. It related to over-payments, leave without pay and resignations before the end of the month after being paid on the 15th of the month, which was the standard practice in the public service.

4.2.2 – First Quarterly Report Financial Statement. The DDG provided explanations for funds underspent in the First Quarter.

The DDG provided a report from the National Regulation of Compulsory Specifications (NCRS) which stated that the NCRS had appointed a service provider to review the organisational structure and the grading of staff who were being paid above their grade. Only those critical posts determined essential would be filled while the organisation structure was being reviewed. She also noted that a labour agreement in 2014/15 had determined that all employees would be moved one grade up.

The Committee discussed the issues relating to the NCRS that had caused concern. The report explained that the NCRS had a highly qualified ICT Steering Committee, a risk management system, an international ICT company was providing guidance and support, and the NCRS intended engaging with other government departments on the proposed system. The Committee intended to document the issue of the ICT system in the legacy report as the entity had been in the process of procuring since 2014 and had still not implemented a new system.

The processing of a letter of authority by NCRS for importing goods was still too long and caused financial losses to importers. The Committee was concerned that the report was not true in that the majority of importers did not apply for the letter of authority after shipping their goods. Ms Matomela was requested to carefully check that the report was accurate in respect of the letters of authority. She was also asked to request more details on the matter relating to e-tolls in Gauteng.

The Committee Secretary requested Committee Members to submit recommendations by the following Monday, 15 October 2018, so that they could be included in the report for deliberation on 16 October 2018. The matter was scheduled to be handled after the discussions on the Copyright Bill.

Committee Members had been handed copies of the previous recommendations and the responses from the DTI and entities by the Committee Secretary.

Closing Remarks
The Chairperson stated that the additional clauses to be amended in the Copyright Bill would be advertised the following day, 12 October 2018. On 16 October 2018, the Committee would be briefed on the input by the technical expert panel. The Committee would not meet on the Thursday as there were caucuses in the morning and the President would be answering questions in the House in the afternoon.

The meeting was adjourned.
 

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