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SELECT COMMITTEE ON ECONOMIC AFFAIRS
1 November 2006
MEASUREMENT UNITS AND MEASUREMENT STANDARDS BILL, & ACCREDITATION FOR CONFORMITY ASSESSMENT, CALIBRATION AND GOOD LABORATORY PRACTICE BILL, & SACU/EFTA FREE TRADE AGREEMENT: BRIEFINGS
Acting Chairperson: Ms M Temba (ANC)
Documents handed out:
Department Accreditation presentation
Department Measurement Units presentation
Measurement units and Measurement Standards Bill [B21B-2006]
Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill [B29B-2006]
SACU-EFTA Free Trade Agreement Department of Agriculture presentation
SACU-EFTA Free Trade Agreement Department of Trade and Industry presentation
SACU-EFTA Agreement Summary
The Committee met with the Department of Trade and Industry to receive briefings on the Measurement Units and Measurement Standards Bill and the Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bills, as well as a briefing on the Southern African Customs Union and European Free Trade Association’s Free Trade Agreement.
The Measurement Units Bill would seek to provide a legal framework for the measurement units and standards in South Africa. The National Metrology Institute would be established as a public entity. A consultative forum would be set up to advise the Institute on metrology-related matters. Assets and staff would be transferred from the Council for Scientific and Industrial Research. The Department would provide R43 million to the new Institute to facilitate the restructuring process. Questions were asked on the unbundling and transfer of assets and staff, the legal implications for the Institute. The State Law Advisors summarised and explained each of the clauses in the Bill. The portions dealing with sub-delegation were explained. The Bill was approved by the Committee.
The Department reported that the Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill sought to provide an internationally recognised accreditation and Good Laboratory Practice monitoring system and to establish the South African National Accreditation System as a public entity. The legislative process was explained. Various key stakeholders had been consulted. The Cabinet Committee on Governance and Administration had approved the Bill on 1 August 2006. The assets and liabilities of the section 21 company would be transferred to the new body. The current annual budget allocations would be increased. The Bill would manage an independent assessment of the technical abilities of South African laboratories, and would address technical barriers to trade would be addressed. The quality of water would also be included in the scope of the legislation. The legal advisers briefly outlined each clause of the Bill. Questions were raised on the market responses to the controls imposed by international trade, and the penalties for misuse of accreditation. The Bill was adopted by the Committee.
The Department then reported on the South African Customs Union and European Free Trade Association’s Free Trade Agreement. Common policy issues would be developed for a range of traded goods. The agreement would cover fish and marine products, processed agricultural products and industrial products. It excluded services, government procurement and intellectual property. The agreement between nine parties would be ratified before the end of November 2006, and would be phased in from 1 January 2007 over a period of eight years. Bilateral agreements were already in existence with a number of other European countries and the agreement would enhance a common approach to agriculture and address the issue of subsidies. Questions by members addressed the Nordic countries involved, whether there would be progress in America. The Department stated that negotiations were also under way with Brazil, Argentina, Uruguay and Paraguay. The Committee supported the Free Trade Agreement.
Department of Trade and Industry briefing on Measurement Units and Measurement Standards Bill
Dr Tshenge Demana, Chief Director:Technical Infrastructure, Department of Trade and Industry (dti) stated that technical infrastructure was needed to meet various standards and measurement challenges. Institutions had to be maintained and improved to remain relevant. South Africa’s technical infrastructure was outlined. International metrology was based on an intergovernmental agreement first signed in 1875. The Bill was required to provide a legal framework for the measurement units and measurement standards in South Africa. The Bill would also establish the National Metrology Institute (NMI) as a public entity. An independent Institute was necessary to ensure greater accessibility for all stakeholders in the Technical Infrastructure domain. The profile of metrology had to be raised to serve as a foundation for the entire South African measurement system. A consultative forum would be established to advise the Institute on metrology-related matters. The NMI would be tasked with designating national measurement standards and maintaining national measurement standards and units.
Dr Demana added that the Cabinet Committee on Governance and Administration had approved the Bill on1 August 2006. Consultations had taken place with key stakeholders including relevant government departments, the South African Bureau of Standards and the South African National Accreditation System. Assets and staff would be transferred from the Council for Scientific and Industrial Research (CSIR). A Chief Executive Officer and a Board would be appointed. The Department would provide R43 million to the NMI in terms of the annual budget allocation to facilitate the restructuring process.
Mr N Hendricks (UIF-Western Cape) asked whether the proposed unbundling from the CSIR was necessary as the present metrology system worked well and had received numerous international compliments. More information was required on the envisaged staff complement. He asked whether the reconfiguration of the Institute would not result in increased financial obligations in addition to the R43 million.
The Chairperson referred to the workshops held with government departments and asked whether provincial departments had been involved. Such information would assist the Committee in its oversight function.
Mr D Gamede (ANC-Kwazulu-Natal) sought further detail on the current level of capacity within the National Metrology Laboratory (NML) and whether sufficient capacity and skills existed to establish the new Institute as an effective regulatory body. He asked whether the financial allocation would be transferred in the next financial year or over the medium term. Clarity was sought on the number of staff to be transferred to the newly created Institute and whether the entire staff complement would be accommodated.
Mr Demana responded to all these questions by giving further background and comments. The international practice was to have stand-alone independent metrology entities. An Institute was important for the South African economy so that norms and standards could be developed and maintained. A single foundation for measurement was needed. The Institute would liaise with similar institutions on the international level. The present National Metrology Laboratory had to obtain permission from the CSIR as a sub-division to engage in any international arrangements or contracts. The NML currently had a separate budget line and an increase to the base line was required to fund the reconfiguration. The Institute as an independent entity would receive a Value Added Tax (VAT) payment correction that would provide further financial resources. The CSIR had spun off other divisions before and therefore a historical knowledge regarding the creation of new entities was in place. New skills had to be acquired on a regular basis to accommodate technological advances. All the present NML employees would be accommodated in the Institute. However, the Chief Executive Officer would be a newly created position. No direct workshops had been held with the provinces. The Department’s Regional Offices had communicated with the respective provincial departments.
Mr D Mkono (ANC-Eastern Cape) asked for a legal definition of a “juristic person” and the possible legal implications for the Institute.
Ms Regina Musiane (State Law Advisor) stated that the creation of the Institute as a “juristic person” would convey legal status to the entity thus enabling it to engage in litigation if need be or enter into contracts with international organisations. The Institute would be governed by a statute and would therefore be accountable to Parliament in terms of the Public Finance Management Act (PFMA).
Mr Johan Strydom (DTI-Senior Legal Advisor) added that Clause 8 established the Institute as a juristic person and declared that the establishment would not affect the validity of any action taken by the NML prior to the commencement of the Act. Clause 28 outlined the transitional provisions and stated that all rights, obligations, assets and liabilities acquired or incurred by the NML would vest in the Institute.
Mr Hendricks asked whether any financial obligations and other liabilities would be transferred to the Institute.
Mr Strydom reiterated that any liabilities and obligations of the NML would vest in the Institute.
Dr Wynand Louw Manager, National Metrology Laboratory (currently CSIR), declared that no unsavoury liabilities would be transferred to the Institute from the NML. The NML had enjoyed a happy relationship with the CSIR, who now reported to the Department of Social Development. Previously, the CSIR had reported to the Department of Trade and Industry. The R43 million should not be perceived as an extra cost for the Institute. The only additional cost would be for the CEO. A levy was currently being paid to the CSIR. A financial manager would have to be appointed. Currently 70% of the budget was received from the dti plus a certain portion from work for accreditation laboratories. R8 million was also received from the CSIR research grant.
Mr Mkono proposed that the Committee should adopt the Bill during the present meeting.
The Chairperson suggested that the Committee should go through the Bill in some detail prior to adoption.
Ms J Terblanche (DA-North-West) asserted that Members should rather receive the briefing and then spend the next week considering the implications of the Bill.
Mr Gamede declared that a reading on the Bill had occurred in the NCOP and all parties had supported the Bill in principle.
Mr Hendricks added that the Bill was not a contentious piece of legislation.
Mr Mkono stated that the Committee had time constraints that would necessitate adoption as soon as possible.
Ms Terblanche stated that the reading had not occurred in the NCOP but rather in the National Assembly. The Bill had not been placed before the Select Committee before.
Mr Strydom stated that clause 1 dealt with all relevant definitions. Clause 2 empowered the Minister to publish measurement units applicable in the Republic in the Government Gazette Clause 3 empowered the Minister to prohibit the expression of magnitude of quantities and designation of units.
Dr Louw stated that the equivalent of a unit was the same as appeared in the Measurement Act of 1973. Equivalent measurement units would be identified in the Gazette. Clause 5 and 6 dealt with National Measurement Standards and National Reference Measurements such as the national kilogram. The national standard was gazetted every second year. The South African National Accreditation System (SANAS) would be involved in determining measurement standards. A metrology in chemical section had been added to the reference measurement procedure to enhance accuracy. Clause 7 stipulated that the Institute could issue certificates stating the outcome of a measurement or analysis. Certificates could be used in a court of law as evidence. Drug standards would be provided to the SAPS to test against.
Mr Mike Pitt , CEO, -SANAS, stated that the certificates would remove any uncertainty regarding the value of evidence admissible in court cases.
Mr Strydom briefly outlined the remaining clauses in the Bill.
Mr Gamede asked why the rule preventing sub-delegation appeared to be overlooked in the Bill.
Mr Strydom referred to a legal maxim that prevented further delegation of a delegated task. Parliament however, could create legislation that, although seemingly contradicting this maxim, could still adhere to the Constitutional principles. Therefore, legislation could be formulated that allowed for sub-delegation, if deemed fit and necessary. The ultimate responsibility for the completion of the delegated function rested with the first person thus delegated.
Mr Mkono declared that the clause on delegation might require further clarity. He asked how the use of delegated powers and functions would be monitored to prevent abuse. A prescription period for dishonesty, as a criterion to prevent appointment as an Institute Board member, should be introduced.
Mr Strydom responded that only the functions of the Board could be delegated and not functions of the Institute. The Board could delegate certain functions to the CEO, who could in turn delegate to any person under his or her control. No further delegation could occur after this point. The reference to dishonesty was open–ended. Therefore convictions prior to 1994 for a particular offence other than dishonesty would not be applicable. Such persons could become members of the Board. The reference to mentally ill persons was based upon a court order as opposed to a medical diagnosis.
Briefing by Department on Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill
Mr Demana outlined the international practice with regard to accreditation. Conformity assessment services were recognised at the international level, thereby circumventing the need for retesting in other countries. Internationally agreed standards were used to accredit laboratories and inspection and certification bodies. For example, the Department of Labour used SANAS accreditation to monitor the activity of its approved inspection service providers. The National Accreditation System had been established in 1994. SANAS had achieved a high level of international recognition. The Bill sought to provide an internationally recognised accreditation and Good Laboratory Practice (GLP) monitoring system and to establish SANAS as a public entity. An independent body was needed to maintain international recognition. National Treasury had instructed that section 21 companies be phased out. Private sector bodies would be empowered to operate in the regulatory environment. The legislative process was explained. Various key stakeholders had been consulted. The Cabinet Committee on Governance and Administration had approved the Bill on 1 August 2006. The assets and liabilities of the section 21 company would be transferred to the new body. The current annual budget allocations would be increased.
Mr Mike Pitt stated that the Bill sought to manage an independent assessment of the technical abilities of South African laboratories. Certification bodies would assess the ability of private sector companies to comply with international management standards such as Good Laboratory Practice. Technical barriers to trade would be addressed. The quality of water would also be included in the scope of the legislation. International teams of experts would visit South Africa every four years to assess the ability of laboratory results. South Africa had a sound technical infrastructure. Government support for SANAS was needed to maintain international recognition.
Mr Strydom briefly outlined each clause of the Bill.
Mr Pitt stated that the essence of an internationally recognised accreditation system revolved around the need to only issue such certificates to organisations that deserved it and had proved a certain level of competence. A certificate of accreditation was issued in accordance with specific criteria. Consistency across processes would be ensured. The Bill would give legal standing to certificates. All accredited bodies would have to maintain the required level of accreditation. Remedial action would be taken against misuse of accreditation.
Mr Hendricks referred to the use of pesticides by farmers and asked how this practice could be monitored to ensure that the stipulated procedures were followed.
Mr Mkono sought clarity on the market responses to the stringent controls imposed on international trade.
Mr Pitt stated that a quality assessment system existed to govern the use of pesticides by farmers. SANAS had to ensure that the South African Bureau of Standards maintained international standards. Certain private sector food retailers were starting to set up their own voluntary standards that tended to ignore state regulatory proposals. Adequate testing standards were needed in South Africa to ensure that local products were accepted in international markets. 1000 accredited facilities were now in place to meet market demand.
Mr Gamede proposed that more information on the offence referred to with regard to misuse of accreditation be provided.
Mr Strydom responded that clause 27 outlined the penalty for misuse of accreditation. A person guilty of an offence would be liable to a fine or to imprisonment for a period not exceeding 24 months.
The Chairperson read out the motion of desirability and reports for both Bills.
The two Bills were duly adopted by the Committee.
Department of Trade and Industry and Department of Agriculture briefing on the Southern African Customs Union & European Free Trade Association’s Free Trade Agreement
Mr Wilhelm Smalberger, Trade Negotiator, dti, declared that the European Free Trade Association (EFTA) sought to assist their European traders in achieving optimal trading relations. The proposed Free Trade Agreement would support South Africa’s overall objective to create one single trading regime between Southern Africa and Europe. The EFTA assisted the South African Customs Union (SACU) in building common policies for a range of trade policy issues. The agreement would enhance South Africa’s ability to market itself as an investment destination. Full and legally bound access to European markets would be facilitated. The scope and content of the agreement was explained. The main agreement covered trade in fish and marine products, processed agricultural products and industrial products. Limited concessions in basic agricultural goods were exchanged. The agreement covered trade in goods but excluded services, government procurement and intellectual property. In terms of customs administration, one set of rules existed with the European Union and another with EFTA countries. The agreement would be ratified before the end of November 2006. The agreement would be phased in over a period of 8 years.
Mr Ralph Otto, Deputy-Director, Department of Agriculture, stated that bilateral agreements currently existed between SACU and certain European countries such as Norway, Switzerland and Lichtenstein. These agreements formed part of the overall agreement that established the Free Trade Association. EFTA countries had no common agricultural policies and followed different approaches to trade liberalisation. Therefore, EFTA states found it difficult to negotiate with SACU as a unit. A common approach to agriculture could not be developed and separate bilateral agreements remained. The bilateral agreements covered all agricultural products but excluded processed products. All agreements addressed the crucial issue of subsidies.
Mr Smalberger declared that nine parties would be involved in the agreement. The agreement would come into force on 1 January 2007. The European Union was a more integrated economic and political entity than EFTA. EFTA did not possess an adequate platform to provide financial resources for reconstruction programmes in the SACU region.
Mr Hendricks sought clarity on the agricultural and general safeguard clause. He asked which Nordic countries were involved in the agreement and whether any progress could be expected in the Americas.
Mr Smalberger stated that the Nordic countries of Denmark, Sweden and Finland were part of the EU agreement. Norway and Iceland would now be included in the new agreement. Negotiations with the United States stalled in 2004 due to a wide difference in points of departure. The presence of subsidies in the US contributed to the dilemma. The US had a Trade Promotion Authority that would expire next year before an agreement with SACU would be finalised. Discussions would resume with the USA in the near future to explore the promotion of exports. Certain trade arrangements did currently exist with the USA.
Mr Otto stated that it was hoped that the DOHA round of negotiations would resume. The African Growth and Opportunity Act (AGOA) had greatly assisted to open up agricultural products into the USA. Safeguard clauses helped to address surges in imports due to the sudden removal of import duties. A link had to be established between the surge of imports and the particular industry involved to determine whether material injury prevailed. Agreements tended to contain a general safeguard clause. For example, a tariff quota could be introduced to counteract the problems encountered.
Mr Smalberger stated that no major agreements were being pursued with Canada at the moment. A preferential trade agreement would be finalised with Latin America in the short term. Such an arrangement was allowed between developing countries. An arrangement would be established with Brazil, Argentina, Uruguay and Paraguay.
The Committee supported the principles behind the Free Trade Agreement.
The meeting was adjourned.
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