Briefing by Minister on World Trade Organisation

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Trade and Industry

09 November 1999
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Meeting Summary

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Meeting report

10 November 1999

Documents handed out:


Committee Comments on SADC Trade Protocol
Committee Comments On EU/SA Trade Agreement
Explanatory notes on tabling of Bilateral agreements (EU/SA Trade Agreement)
Draft: WTO Ministerial text - draft proposed amendments by delegations (19/10/99)
A South African Position to the Third Ministerial Conference of the World Trade Organisation, 30 November - 3 December 1999: Discussion Document (Sept 1999)
SADC Ministers' Agreed Negotiating Objectives for the Third WTO Ministerial Conference (1/10/99)
[email with regard to accessing to WTO documents

The Report on SADC Trade Protocol was adopted.
The briefing by the Minister was postponed to a later date.

Adoption of the Report on SADC Trade Protocol
The Chairperson, Dr R Davies, said that only one comment on the Report had been received. In the comment Mr N Bruce (DP) had made a plain language proposal of the protocol. The Chairperson supported the idea of having a plain language Protocol and said that in future, but not on this occasion because of time constraints, the possibility of putting these documents in plain language should be considered. The Chairperson moved for adoption and it was agreed upon. Mr Pheko (PAC) said his party wished to abstain at this stage.

Mr Moosa (ANC, Chairperson of Select Committee on Economic Affairs) said the NCOP would have to agree to this adoption separately, but no objections were received from the NCOP.

Briefing by Minister of Trade and Industry on World Trade Organisation
Due to technical problems the video link to Pretoria was unsuccessful and therefore the briefing was postponed to a later date.

The meeting was adjourned.


Appendix 1:

Report of the Portfolio Committee on Trade and Industry on Comments on EC/SA Trade Agreement, dated 22 September 1999, as follows:

The Portfolio Committee on Trade and Industry, having been briefed on the South African-European Union Trade, Development and Cooperation Agreement (TDCA), reports as follows:

On September 17 1999, the Committee, together with the Portfolio Committee on Agriculture and Land Affairs, the Portfolio Committee on Foreign Affairs and the Select Committee on Economic Affairs, were briefed by the Department of Trade and Industry (DTI) on the TDCA. At that meeting, we were invited to submit any comments before the official signing, scheduled for 11 October 1999. The Committee appreciates this opportunity to offer some initial observations. At the same time, we need to reiterate our commitment, once the Agreement is formally referred to us for ratification, to hold public hearings and to report to Parliament on any further pertinent points that may arise from therefrom.

A. Scope and content of TDCA

The Agreement with the European Union (EU) is of major strategic importance for South Africa. The EU is South Africa's major trading partner if imports and exports are added together - although neighbouring SADC member countries remain our largest export market. The EU and EU member countries are also our most important development co-operation partners. The TDCA is a comprehensive, multi-faceted agreement that deals, inter alia, with trade, development co-operation, political dialogue, sectoral co-operation and trade-related matters.

South Africa's objectives in negotiating an agreement with the EU included the following:

1. To secure improved terms of access for South African products into the EU market and narrow the trade imbalance running at around R17 billion in the EU's favour.

2. To remove the discrimination against South African goods in EU markets that resulted from the fact that the country had been excluded during the apartheid years from a range of preferential trade arrangements the EU had been developing with various countries.

3. To respond to the offer made by the EU shortly after our first democratic elections in 1994 to develop a new relationship that could contribute to economic growth and development, and thus to the strengthening of democracy, in South and Southern Africa.

In the course of the negotiations, agreement was reached on a number of principles that needed to underscore trade and other aspects of the agreement involving reciprocity. These included the following:

(1) A trade agreement should be both "asymmetrical" and "differentiated", that is to say constructed in such a way that the weaker partner (in this case South Africa) should have more time to implement less onerous tariff phase-downs than the stronger partner (the EU).

(2) Note would have to be taken of the SADC trade protocol providing for the negotiation of an FTA in the SADC within eight years; a free trade agreement (FTA) with the EU would have to allow a margin of preference, at least for a period of time, for products from SADC countries seeking access to the South African market over competing products from the EU.

(3) An agreement would have to contribute positively to promoting economic growth and development in both South and Southern Africa, and hence be a trade, development and co-operation agreement.

B. Trade agreement

A major feature of the TDCA is a reciprocal FTA compatible with World Trade Organisation (WTO) provisions in this regard. The agreement provides for the EU to remove duties on imports from South Africa on approximately 95% of its tariff lines over a period of 10 years from implementation (scheduled to begin on 1 January 2000). In return, South Africa will be required to remove duties on around 86% of its imports from the EU over a period of up to 12 years in a few cases. As such the Agreement both offers opportunities and poses challenges to South African producers.

The opportunities appear to be most evident in respect of industrial products. Most industrial products produced in South Africa, which qualify under the rules of origin, will be able to enter the EU market duty-free within three years of the implementation of the agreement (i.e. by the end of the year 2002). There is no doubt, in our view, that this will open up several exciting prospects for South African manufacturers (including many that are not currently exporting to Europe). Producers of steel and steel products, ferro alloys, aluminium products, furniture and automotive products are, among others, potentially significant beneficiaries of this agreement.

The FTA, unlike most comparable agreements the EU has reached with other countries, also significantly includes agricultural products. In the course of negotiations, the EU was persuaded to reduce the list of agricultural products it wanted to exclude from schedules of products subject to tariff phase-owns, and to grant certain tariff concessions on products on the renamed "reserve list, for example 60ÿ20000 tons of canned fruit (one of the EU's most sensitive products) will be allowed to enter at half the MFN duty. As a result, the percentage of agricultural products wholly excluded from the agreement was reduced from 46% of South Africa's current agricultural exports to the EU to around 26%.

This was a significant achievement, which means that the TDCA will also create a number of new opportunities for exports of agricultural products. At the same time, it is clear that this agreement has only partially addressed problems for South African agricultural exporters created by the protectionism and unfair trading practices associated with the EU's Common Agricultural Agreement (CAP). For example, several of the agricultural products included - particularly those where South Africa is currently competitive - are either "backloaded" (meaning that tariffs would only begin to be phased down towards the end of the 10-year implementation period) or given only a tariff quota. Moreover, while the agreement is almost unique in acknowledging the potential distorting effects of EU export refunds (subsidies) on agricultural markets beyond the borders of the EU and in allowing South Africa to impose a special agricultural safeguard, many other related issues (such as export refunds in third world country markets) are not dealt with. Much of this, in our view, derives from the fact that the Marrakech Agreement condoned many such practices by developed country regions to the prejudice of developing countries.

Arising from the above, we make the following observations and recommendations:

1. Transforming the theoretical advantage of lower tariffs in the EU market into the real benefits of increased exports to the EU will depend on proactive steps being taken by both exporters and the government. Turning such advantages into real benefits will require the careful identification of real opportunities in the highly competitive EU market, as well as taking steps to get to know the rather strict rules of origin that apply in this agreement and the documentation required. We are aware, and appreciate, that the DTI is involved in a programme to alert potential exporters to what is required in this regard. We believe that there is an urgent need for actual and potential exporters to prepare themselves now to take advantage of available benefits. Consignments that do not meet the rules of origin and/or are not accompanied by appropriate documentation, will not be able to enter the EU on the preferential terms available under the agreement. We should assume that many EU exporters interested in entering the South African market will get their act together. If South African exporters do not, the asymmetry achieved through hard bargaining in the text of the agreement may become eroded in practice, or even turned into further asymmetry in the trade balance in favour of the EU. During the hearings we plan to hold in connection with the ratification process, the Committee would appreciate being briefed on what practically is being done in preparation of implementing the new procedures that will be required by the agreement.

2. The limitations on agricultural exports evident in the TDCA derive, as indicated above, from the fact that protectionist and unfair trading practices by developed countries' trading blocs in sectors where developing countries, including our own, are currently competitive, were condoned by the WTO's Marrakech Agreement. This, in our view, underscores the need for a major breakthrough in addressing such issues in the WTO's Millennium Round of negotiations, due to the begin in Seattle in December this year.

3. The reciprocal nature of the agreement means that we have accepted the obligation to open up over time a sizable part of the South African market duty-free imports from the EU. We appreciate the fact that the principles of asymmetry and differentiation, which our negotiators insisted on, have enabled us to exclude a larger range of sensitive sectors than the EU. We are aware, too, that our offer was carefully prepared through extensive consultation with stakeholders, and that the agreement makes provision for a number of safeguard measures to deal with the unpredictable surges in imports. The tariff removals provided for in the challenge for in the agreement will, nevertheless, be likely to pose a major challenge to several sectors. Sectoral strategies will need to be reviewed to take account of this agreement. In our proposed ratification hearings, we would hope to hear from the stakeholders in this regard as well as from the department on its assessment of the overall impact of the FTA on the South African economy.

4. The schedules of tariff reductions and derogations in the annexures, while comprehensive and perhaps necessary in this form in a formal treaty, are not, as they stand, particularly user-friendly. We would recommend the production of a document that makes it clearer to the ordinary reader how broad industry categories or product lines will be treated over time in the respective markets under the FTA.

C. Economic and development co-operation

The TDCA provides for extensive co-operation between the EU and South Africa in a range of economic sectors as well as in addressing South Africa's developmental challenges. Among the sectors indicated as areas of "economic cooperation" are industry, investment promotion and protection, trade development, SMME development, telecommunications and information technology, postal co-operation, energy and mining and minerals, transport, tourism, agriculture and science and technology. Development co-operation is intended to prioritise "operations ... which help the fight against poverty", expand employment and focus on "the basic needs of the previously disadvantaged communities and reflect the gender and environmental dimensions of development" (Articles 65 and 66). The agreement provides for a Multi-annual Indicative Programme, based on priorities negotiated between the two parties. The Committee is generally satisfied that these provisions will provide the basis for a firm, multi-faceted co-operative relationship between the two parties that will benefit the promotion of economic growth and development in South Africa.

The Committee notes that Article 62 obliges both parties to undertake to complete a "mutually beneficial" fisheries agreement "as soon as possible", as well as to reach final agreement on the "new names" for Port and Sherry products trading in each other's markets at the end of 12 years. These were difficult issues in the negotiations. The Committee expresses the hope that in seeking to resolve these issues in future discussions, the developmental principles and objectives both sides say they are seeking to promote through this agreement will not be swamped by commercial haggling by powerful vested interests in the EU.

D. Implications for SACU, SADC and ACP

The TDCA will, as negotiators on both sides recognised, have important implications for our partners in the Southern African Customs Union (SACU), the Southern African Development Community (SADC) and the African, Caribbean and Pacific grouping (ACP).

Our partners in SACU - Botswana, Lesotho, Namibia and Swaziland - will be most directly affected by the agreement. These countries are part, together with South Africa, of a customs union with a common external tariff. Tariff arrangements negotiated with the EU will, thus, apply to EU imports throughout the SACU common customs area and the BLNS countries will be affected by the sizable increase in the categories of EU goods entering the SACU market duty-free. Various impact studies have suggested that the impact on firms in the BLNS countries, whether producing for the domestic or South African market, will be slight. All agree, however, that the effect on the SACU customs duties revenue pool, on which several BLNS governments depend for a major part of their revenue, could be significant.

The TDCA itself says very little about the impact on the BLNS. One of the recitals on the Preamble refers to "... the Parties' commitment to ensure that their mutual arrangements do not impede the process of restructuring the Southern African Customs Union, which links South Africa to four ACP states". Another provision (Article 22.2) provides for consultation in the Co-operation Council concerning "... adjusting customs unions or free trade areas", if required.

However, various EU officials have repeatedly committed themselves to taking account of the impact of an FTA with South Africa in making financial allocations to BLNS countries, as well as to providing other assistance to ensure that these countries are not negatively affected. A major challenge facing South Africa, in our view, is to act to ensure that such commitments are followed up.

SADC countries that are not members of SACU will be less directly affected. The main issue here appears to be to ensure that producers in SADC countries enjoy a margin of preference in the South African market, at least for a period of time, over those from the EU. Trade negotiations have been taking place in terms of the 1996 SADC Trade Protocol. However, while considerable progress has been made, it is unlikely that they will be concluded in time for implementation to begin at the same time as the TDCA with the EU - scheduled for 1 January 2000. In view of the importance of ensuring that we are seen to give due priority to our relationship with the SADC, the government has indicated its desire to unilaterally implement the first phase of its offer on 1 January 2000. The Committee will be asked to pronounce on this matter definitively in due course.

The negotiation of the TDCA has coincided with the initiation of negotiations between the EU and ACP countries on a successor agreement to the Lome 1V Convention. We are aware of the EU's preferred model for a successor agreement to Lome‚ IV is Regional Economic Partnership Agreements (REPAs), a key feature of which would be WTO compatible reciprocal trade agreements. We are also aware that ACP countries have not committed themselves to REPAs, and many believe that a move to reciprocity is premature and does not address the real problems ACP countries are facing in improving their position in the EU market.

In this context, the Committee believes it is important for South Africa to stress that it does regard the TDCA as a model for those negotiations. There would indeed be much that is ironic if it were to become so. South Africa embarked on the negotiations leading to the TDCA because its initial request for inclusion on certain terms on the Lom‚ trade chapter was rejected by the EU, on the grounds that South Africa was a non-typical ACP country.

The TDCA needs, in our view, to be seen as a bilateral agreement reached between the EU and a relatively industrialised developing country. As argued earlier, as a trade agreement its main potential benefits to South Africa lie in manufactured goods that most ACP countries do not produce or export. The TDCA remains restrictive, albeit to a much lesser extent than comparable "association agreements" with Mediterranean countries, in agricultural products and agro-industries, where most ACP countries need to begin their struggle for development and industrialisation.

While not a model, the TDCA can be an important source of lessons for ACP countries. It is the product of hard and lengthy bargaining, in which haggling to promote the vested interests of various EU lobbies often held sway over professed intention to promote growth, development and democracy in the developing world. The demands on capacity, both in the government and civil society, were also significant. A major challenge will be to dissect the lessons at various levels and take them into the ongoing negotiations between EU and the ACP.

E. Role of Parliament in implementation

The Committee takes note that Article 97.4 commits both parties "to encourage and facilitate regular contacts between their respective Parliaments on the various areas of cooperation covered by the agreement". The agreement also provides for the establishment of a Co-operation Council to oversee implementation. The Committee looks forward to further discussion with the government and the Co-operation Council on ways to give effect to the provisions on parliamentary contacts.

Report to be considered.

Report of the Portfolio Committee on Trade and Industry on EC/SA Trade Agreement, dated 10 November 1999, as follows:

The Portfolio Committee on Trade and Industry, having considered the request for approval by Parliament of the Agreement on Trade, Development and Cooperation between the European Community and its member states, of the one part, and the Republic of South Africa, of the other part, referred to it, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Agreement.

Report to be considered.

Committee Comments On EU/SA Trade Agreement


Report of the Portfolio Committee on Trade and Industry on Further Comments on EU/SA Trade Agreement, dated 10 November 1999, as follows:

The Portfolio Committee on Trade and Industry, having held public hearings, together with the Portfolio Committee on Agriculture and Land Affairs, the Portfolio Committee on Foreign Affairs and the Select Committee on Economic Affairs, on the ratification, in terms of section 231(2) of the Constitution, of the Trade, Development and Co-operation Agreement (TDCA) with the European Union (EU), reports as follows:

On 26 October 1999, the Committee held the public hearings. The comments below, arising from those hearings, are in addition to those made in a Report adopted (on 22 September) prior to the signing of the agreement on 11 October, all of which we continue to regard as pertinent.

A. We remain convinced that there are many complex and difficult issues of implementation of the TDCA that are still too little known and appreciated by the stakeholders. The main elements of the Agreement include the following:

1. A Free Trade Agreement (FTA), in terms of which the EU will remove duties on imports from South Africa on approximately 95% of its tariff lines over a 10-year period and South Africa will remove duties on 86% of EU imports over a 12-year period. This will create a number of new opportunities for goods produced in South Africa to enter the EU market duty-free within the implementation time-frames. As we indicated in the previous Report, these benefits are most evident for manufactured goods, most of which will be able to enter the EU duty-free within three years of implementation.

2. A strict set of rules for determining the origin of qualifying products intended to create a correct balance between local content and imported materials from third countries.

3. Trade-related and non-trade-related aspects, including developmental and economic support, safeguard measures and an investment promotion element.

B. The practical implications of the agreement were discussed during the public hearings, and the following pertinent issues emerged:

1. South Africa's preparedness for the implementation of the agreement. The private sector's readiness to take advantage of the opportunities was questioned, particularly in relation to their European counterparts' readiness to increase their penetration of the South African market. Are South African enterprises ready to penetrate European markets and at the same time defend their local market share?

2. EU subsidies continue to act as trade barriers. The Common Agricultural Policy discriminates against agricultural products from South Africa. During the negotiations, the percentage of agricultural products excluded from the agreement was reduced from 46% of South Africa's current agricultural exports to the EU to around 26%. This was a significant improvement, which will create new opportunities for exports of agricultural products into the EU. However, the TDCA does not deal comprehensively with the distorting effects of subsidies. As indicated in the previous Report, a decisive breakthrough on this issue is imperative at the WTO Seattle Ministerial Summit.

3. There is a need to monitor the implementation and impact of the TDCA on a continuous basis. The involvement of the government, Parliament and civil society parties as envisaged in the agreement will be necessary. Establishing a mechanism for this and empowering constituencies to participate effectively will be essential.

4. Participants stressed that the implementation of the agreement must be sensitive to its impact on the Southern African region. Many of the issues we raised in the previous Report found an echo in several submissions received.

C. Arising from the above comments, we make the following observations and recommendations:

1. For South Africa to realise the potential economic benefits of the agreement, the process of implementation must be appropriately managed. The involvement of stakeholders is an important element in the implementation of the agreement. South African exporters need to get to know the technical aspects of the rules of origin that apply in this agreement and the documentation needed. Exports that do not meet the rules of origin or are accompanied by the incorrect documentation, will not be allowed to enter the EU on the preferential terms available under the agreement. The Committee appreciates that the Department of Trade and Industry is organising road shows to alert stakeholders. We strongly urge all those currently exporting to the EU, or who could do so with the benefits available under the agreement, to ensure that they become thoroughly acquainted with its provisions and requirements. At the same time, we are concerned that documentary requirements should not become another trade barrier. The allocation of quotas for products receiving tariff quotas needs also to be speeded up in some cases. Simplified, possibly sector-specific, versions of the agreement also need to be produced.

2. Several participants alerted us to the challenges that the implementation of this agreement, at the same time as the SADC Trade Protocol, will pose for customs control. This is, in our view, an urgent matter. We should not suppose that the only problems or avenues for abuse will come from the SADC Trade Protocol. The SA/EU TDCA will at the very least impose additional administrative requirements on SARS.

3. There is a widespread view, which the Committee supports, that there is a need for some assessment of the likely impact of the TDCA on the South African economy. This does not have to be a full macro-economic impact study, but a more general statement of expected benefits and challenges and potential impact on growth and employment.

4. Finally, the Committee notes that the negotiations on a wine and spirit agreement are ongoing, with many new issues and demands being raised by particular interests in the EU. It is an earnest hope that these negotiations will not impact adversely on the broader, and much more strategically significant, TDCA.

Report to be considered.

Report of the Portfolio Committee on Trade and Industry on SADC Trade Protocol, dated 25 October 1999, as follows:

The Portfolio Committee on Trade and Industry, having considered the request for approval by Parliament of the Southern African Development Community (SADC) Trade Protocol, referred to it, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Protocol.

Report to be considered.

Committee Comments on SADC Trade Protocol


Report of the Portfolio Committee on Trade and Industry on Comments on SADC Trade Protocol, dated 10 November 1999, as follows:

The Portfolio Committee on Trade and Industry, having held public hearings on 26 October 1999, together with the Portfolio Committee on Agriculture and Land Affairs, the Portfolio Committee on Foreign Affairs and the Select Committee on Economic Affairs, on the ratification, in terms of section 231(2) of the Constitution, of the Southern African Development Community (SADC) Protocol on Trade and in response to an invitation to comment thereon, reports as follows:

The Committee welcomes the opportunity to make the following comments:

A. Relationship of Protocol to broader SADC objectives

The Protocol signed by SADC member states in Maseru in 1996, becomes on signature and ratification "an integral part" of the Treaty of the Southern African Development Community, in terms of Article 22(2) of the Treaty. The Treaty adopted in 1992 commits the SADC to a multi-faceted programme of sectoral co-operation, policy co-ordination and integration, of which trade integration is but one component.

The SADC has repeatedly declared that its programme aims not at trade integration per se, but at promoting trade integration as a component of a broader process often described as "development integration". The concept of "development integration" is intended to capture two realities of our region, namely that the economies of SADC countries are very different levels of development and that there is therefore acute potential for polarisation in any trade liberalisation arrangement, and that many of the most significant barriers to intra-regional trade arise not from tariffs and regulatory regimes, but from underdeveloped production structures and inadequate infrastructure. The Protocol, viewed in this context, needs to be seen as something that both has merit in its own right, and which can serve as a catalyst and spur to the broader process of promoting development integration.

Trade with the SADC is of great strategic importance to South Africa. According to officially published trade statistics, exports of the Southern African Customs Union (SACU), of which South Africa is part, to the rest of the SADC have increased from R5,8 billion between January and December 1993 to R16,2 billion between January and December 1998. Disproportionally represented in these figures are a number of manufactured goods and high value-added products. Imports into SACU from the rest of the SADC have, by contrast, remained much flatter, rising from R1,3 billion in 1993 to R2,6 billion in 1998.

Against this background, the Committee endorses and supports the principle of South Africa, through SACU, making an offer that is both asymmetrical and differentiated in favour of our SADC partners. In general, we support the approach of our negotiating team of offering greater proportional access to the South African market to our SADC partners than we seek in return. At the same time, we agree with the negotiators that several of the offers of our partners need to be improved to provide greater access in sectors where domestic industries are not much involved, and which are currently dominated by exports from outside the region.

More than this, the Protocol must, as argued above, have significance beyond trade. We note and appreciate that achievements have been made in promoting cross-border co-operation and co-ordination in a number of sectors in recent years, some within the framework of the SADC but more frequently on a bilateral basis, for example through spatial development initiatives (SDIs). It is our view that the implementation of the Protocol will require a major effort to ensure that programmes of sectoral co-operation and co-ordination are refined and improved. The implementation of the Protocol will take the SADC on a new course of promoting integration in a context where there is still potential for polarisation, and it is not clear that all parties will be able to benefit from the new arrangements. Support from other SADC programmes will become more vital than ever, particularly for the least developed countries.

We are strongly of the view that the implementation of the Protocol must therefore become a spur for governments, Parliaments (including the SADC Parliamentary Forum), social partners and SADC officials to seriously review the action programme with a view to making it more effective and relevant in what will be a significantly new context.

B. Implementation issues

The expected implementation of the SADC tariff liberalisation schedules at almost the same time as those resulting from the Trade Agreement with the EU will post a number of challenges to both the government and other stakeholders.

There was general support in the hearing for strict "rules of origin", and for holding the line, for example on insisting on two stages of processing for qualifying clothing products. Acceptance of the principle of asymmetry and differentiation in favour of weaker economies in neighbouring countries rightly extends to goods actually produced by industries in those countries and not goods produced in third countries imported via those countries.

There are clearly many fears that the Protocol will expose South Africa to a flood of illegal imports trans-shipped from third countries. Some of these fears, we believe, are exaggerated. The SACU proposals on "rules of origin" would, in fact, in several cases have the effect of tightening up on the present unsatisfactory situation in several bilateral agreements, and may for that reason have to be phased in, particularly in cases of the least developed countries.

At the same time, there is undoubtedly a major challenge of enforcement. Greater co-operation between the SADC customs authorities is an urgent priority, and legislative and other changes may be necessary in this regard. We are not in a position to comment in any detail at this stage, but intend to maintain a watching brief on this issue as part of our broader oversight of the implementation of trade agreements.

A related point covers harmonisation of external tariffs. The SADC as a whole is not moving into a customs union, and it would in our view be premature to call for a common external tariff. Each country, or in SACU's case a group of five countries, will continue to set its own external tariffs. Nevertheless, it will be essential in a context of an emerging free trade area to promote greater harmonisation of external tariffs to avoid creating major opportunities for trade diversion and illegal entry.

We remain concerned that stakeholders may not be adequately prepared for the trade agreements that will be implemented next year. Both the SADC and EU trade agreements will challenge our exporters to identify and respond to opportunities that are created. Government information programmes are being prepared, and need to command significant attention. Simplified versions of agreements need to be widely disseminated. Broadly accessible assessments of the expected costs and benefits, opportunities and challenges of these agreements, if not full macro-economic impact studies, also need to be made more widely available.

Both the SADC and EU trade agreements will also pose a major challenge for industrial policy. There is an urgent need to identify measures to support restructuring in various sectors that will be affected by these agreements, as well as to assist workers whose employment may be at risk.

Finally, the Committee supports a vigorous pursuit at the Seattle WTO ministerial meeting and elsewhere of an approach to the issue of "social clauses" that promotes respect for basic rights and conditions as enshrined in international agreements, without doing this by way of heavy-handed conditionality.

Report to be considered.



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