World Trade Organisation Negotiations (WTO) &Southern African Customs Union (SACU) Developments: briefing

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Trade and Industry

24 August 2004
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Meeting report

TRADE AND INDUSTRY, AND FOREIGN AFFAIRS PORTFOLIO COMMITTEES
25 August 2004


WORLD TRADE ORGANISATION (WTO) NEGOTIATIONS AND SOUTHERN AFRICAN CUSTOMS UNION (SACU) DEVELOPMENTS: BRIEFING

Chairperson: Professor K Asmal (ANC)

Documents

 

Update on Multilateral Trade Negotiations with the WTO
SACU Developments by August 2004 presentation
SA-EU Relations- Levels of Interaction

SUMMARY

 

There were three presentations made to the Committee. The Department's first presentation elaborated on the "July Package" and the developments that had taken place in the World Trade Organisation's negotiations. Members were concerned about the possible beneficial impact, if any, that the negotiations had on South Africa.

The second presentation concerned the new developments in the Southern African Customs Union (SACU). Members were particularly concerned about the impact SACU had on Southern African development Community. The issue of concern was whether it was viable to include the rest of the Southern African countries into SACU. Another area of concern was the revenue sharing formula that had been adopted by SACU. The formula was in favour of the less developed members of SACU.

The last presentation related to the European Union's relationship with South Africa. The Committee was concerned with the issue of conditional aid given to South Africa. The Department stated that EU aid was not conditional in the ordinary sense but was conditional by agreement between the parties.

MINUTES
Update on Multilateral Trade Negotiations with World Trade Organisation (WTO) by Department of Trade and Industry
Mr T Matona (Deputy Director-General of International Trade and Economic Development), and Mr X Carim (Chief Director: Multilateral Trade Negotiations; International Trade & Economic Development) represented the Department. Mr Carim presented the Update on Multilateral Trade Negotiations with the WTO. He referred to this as the 'July Package'.

Discussion
Ms Hajaig (ANC) wanted to know the time frames the G20 had set for themselves in the negotiations. She also wanted to know what the Geneva Round was doing to promote the New Partnership for Africa's Development (NEPAD). In particular did the negotiations assist or delay the implementation of NEPAD.

Mr Carim responded that the time spent negotiating was a concern for the developing nations. Any delay in the negotiations caused a risk of maintaining the status quo. The reality of the situation was that the issues been negotiated were of a complex and politically sensitive nature. He said that the time frame and the potential outcome of the negotiations depended largely on what would happen in the US elections and the appointment of European Union (EU) commissioners. In the interim period he said that it was imperative that the negotiation process be maintained.

With regard to NEPAD, Mr Carim responded that the processes in the WTO reinforced the objectives of NEPAD. However NEPAD was concerned with a wider range of issues of which trade merely constituted a component.

Mr Ramgobin (ANC) wanted to know whether the inconclusive position of the environmental issue attributed to the US position in the negotiations. He asked if it were possible to integrate the developmental agendas of small-scale farmers into the negotiations. He asked further if the human resource component was also integrated in the negotiations.

Mr Carim responded that the negotiations had not considered the issue of the environment. The focus of the negotiations was agriculture. Small-scale farmers were accommodated in the negotiations. Mr Carim pointed out that India, which was part of the G20, had several small-scale farmers.

Mr Diko (UDM) asked whether the elimination of subsidies would have an effect on the land reform process.

Mr Carim responded that land reform would not be affected by the subsidies.

Mr Durr (ACDP) asked how the trade negotiations would benefit South Africa. He also wanted to know what the impact of genetically modified goods was on South Africa. He asked whether the developing countries had considered the negative impact of genetically modified seeds.

Mr Carim stated that with trade negotiations it was always difficult to make assumptions about the outcome and benefits that would fall South Africa's way. He responded that if some of the objectives of the negotiations were met there would be direct benefits to South Africa. Global markets would become open to local participants. The development of Africa as a whole would be beneficial to the country.

The issue of genetically modified goods had not been dealt with yet. He responded that there were no WTO rules that regulated the patenting of seeds at present. This topic was not part of the negotiations.

Prof B Turok (ANC) asked whether the formation of the G20 did not contradict the Africa group's efforts at the negotiations. He wanted to know whether the G20 was not in fact furthering its own agenda and not of the Africa group as a whole.

Mr Carim responded that there was growing co-operation between the G20 and the Africa group.

Mr Rasmeni (ANC) wanted to know, besides the July Package, what gains had been made in the negotiation process in the past ten years. He wanted to know what had been done to address negative effects from previous negotiations. He also asked whether the co-operation between the G20 and the Africa group was sustainable.

Mr Carim responded that studies were generally inconclusive in analysing the benefits or disadvantages that emanate from these negotiations. It was difficult to give a clear answer. Exports increase and decrease because of a wide range of factors. Trade agreements are but one of these factors.

Adv Madasa (ACDP) asked whether there were any contradictions in multilateral and bilateral agreements.

Mr Carim responded that where multilateral agreements fail, some countries such as the USA attempt bilateral agreements. South Africa approaches multilateral and bilateral agreements consistently.

Mr Mabe (ANC) wanted to know if there were any punitive measures in place in these agreements. He stated that India and Brazil were part of the G20 and part of the Five Interested Parties (FIPs) as well. He asked whether there was any conflict as a result of their dual membership in these negotiating groups.

Mr Carim responded that the FIP group was an attempt to draw up an agricultural agenda among the bigger players. It was unlikely that the group was a long-term group. South Africa was of the opinion that there was no conflict of interest because India and Brazil adequately represented the views of G20 in their negotiations in the FIP group.

Mr Sibande (ANC) asked what was meant by weak and vulnerable countries.

Mr Carim responded that weak and vulnerable was a term created by the EU to try and drive a wedge between the developing countries in order to stifle negotiations. The developing countries had successfully resisted this attempt by the EU.

SACU Developments: briefing by Department of Trade and Industry
Mr Matona, Deputy Director-General of International Trade and Economic Development, presented the SACU developments presentation. Mr Matona elaborated on length the revenue sharing formula and why it was tilted in favour of the less developed members of SACU.

Discussion
Mr Labuschagne (DA) wanted to know the meaning of the acronym ITAC. He also wanted to know why the other Members of SACU got a bigger share of the revenue.

Mr Rasmeni (ANC) asked whether there was some agreement on what the revenue sharing fund should be used for.

Mr Matona responded that ITAC stood for International Trade Administrative Commission. He said that the revenue sharing formula was balanced in order to give the least developed Members of SACU a greater share of the revenue pool to enable development

Mr Joubert (IFP) wanted to know whether it was feasible to extend SACU Membership to the other SADC Members.

Mr Matona responded that over time SACU would consider the extension of SACU Membership to other SADC Members. He mentioned that trade with Mozambique had increased dramatically over the past few years. Therefore it was possible that SACU would extend its Membership. He said that SACU needed to be consolidated first.

Ms Hajaig (ANC) asked what the impact of SACU was on SADC.

Adv Madasa (ACDP) asked what was been done to ensure that SACU policies do not undermine SADC policies and to align the two organisation together.

Mr Matona responded that SADC was currently emerging as the most cohesive block in Africa. He said that if SADC and SACU adopted a common approach then SACU would play an important role in Africa. SACU cannot therefore be to the detriment of Africa and to SADC as a whole.

Ms Ludwabe (ANC) asked how SACU would compete with China. He wanted to know whether SACU Membership should not be extended to other countries in order to effectively compete with the Chinese.

Mr Huang (ANC) wanted to know whether SACU had any anti-dumping protection measures against China.

Mrs Ntuli (ANC) wanted to know what measures where in place to enforce role anti-dumping.

Mr Matona commented that the issue is competing with China. He said the overwhelming majority of South Africans were scared of the Chinese. China is the leading importer. He said that it was necessary to engage with the Chinese in order to facilitate trade.

Interaction between South Africa and the European Union: briefing by Department of Foreign Affairs
Mr X Ndlangana (Director: European Organisations) presented on the level of Interaction between South Africa and the European Union. Mr Ndlangana elaborated on the background to the formation of the EU and on the future membership of the EU. He also discussed the background to South Africa's relationship with the Union.

Discussion
Ms Mabe (ANC) wanted to know the format of the funding. In particular she wanted to know whether it was made through a loan or a donation. She also wanted to know what countries contributed to become Members of the EU. She asked what percentage of the aid allocated by the EU South Africa received. She wanted to know what was been done to prevent a brain drain especially with countries that South Africa had agreements with.

Mr Ndlangana responded that the aid that accrues to South Africa comes from the actual EU budget. South African aid is budgeted for in the EU budget. This was not the same budget that went to the other African countries. He said that there were stringent requirements for EU Membership. For example a country seeking to be a Member had to have a functioning judiciary, a market not a command economy, and had to meet certain political requirements. He said that the brain drain was attributed to better opportunities available to South African professionals in other countries.

Mr Sibande (ANC) was concerned with the issue of aid. He commented that the use of EU experts meant that the grant given by the EU was used to pay for EU experts.

Mr Ndlangana responded that EU funding was made available through grants. The European Investment Bank made loans. It had made loans to the Industrial Development Co-operation (IDC). He said that aid had been used by the EU as a tool to further other EU objectives. He stressed that EU aid was not conditional in the ordinary sense. Aid was conditional by contractual agreement. For example where aid was granted for a specific project, the country receiving aid did not have the capacity to perform the contract, therefore the EU would suggest a European company that had that capacity. This would then form part of the contractual agreement. It was in this sense that EU grants were conditional.

Mr Ndlangana stated that donor agencies also attempted to attach conditions to their aid.

Mr Rasmeni (ANC) asked what the position of North African countries such as Morocco and Egypt was, since these countries received direct EU aid as part of MEDA. He was also concerned that the EU granted aid to Israel and the Palestinian Authority as part of MEDA.

Mr Ndlangana responded that the EU had been very vocal against Israeli practices in the Middle East. He said that the conflict between the two countries damaged the infrastructures that were built through EU aid. Therefore the EU had a direct interest in the conflict. He responded that Morocco had indicated that it would like to join the EU. It was not clear whether this would happen in the near future.

The meeting was adjourned.

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