Standards Bill & National Regulator for Compulsory Specifications Bill: Deliberation on Proposed Amendments

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Trade, Industry and Competition

13 February 2008
Chairperson: Mr B Martins (ANC)
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Meeting Summary

The Legal Advisor for the Department of Trade and Industry took the Committee through the proposed amendments to each of the Standard Bill (which dealt with voluntary standards) and the National Regulator for Compulsory Specifications Bill (which related to compulsory standards). In the Standards Bill, technical corrections were being proposed to Clauses 5(2), and he asked that copies be made available.
Substantive issues were addressed in Clause 6, where it was agreed by Members that the Board should be stated as being between seven and nine members, and Clauses 23 and 24, where the headings and wording would be changed to correct misunderstandings around the norm of a South African National Standard and the standards issued in compliance with that norm. Clause 26 relating to copyright and authorisation was extensively discussed, and was clarified with “personal use”. A new Clause 28 was tabled.

In respect of the National Regulatory for Compulsory Specifications Bill, clause 5(2)(f) was being replaced as certain of the wording was duplicated elsewhere. Clause 6 would be amended to reflect a Board of between seven and nine members. Clause 13(1)(c) would be substituted with a new clause allowing the Minister, in certain defined circumstances, to declare or amend compulsory specifications relating to public safety, health or environmental issues. Clause 14 was being amended to reflect the records to be supplied, and regulations for issuing of a permit to be made. Clause 19 contained provisions relating to self-incrimination principles where a person might be hindering the administrative function of the regulator. A clear distinction was explained between the regulatory powers here dealt with and the criminal processes. The drafters were asked to look at simpler wording if possible. Clause 34 was being corrected to reflect all offences and penalties. Clause 35 contained amendments to cater for transfer of employees. The Schedule was tabled.

Members discussed a suggestion mooted at the last meeting whether there should be some provision inserted in the Bills to restrict the number of directorships that could be held by a Board Member. Members understood the rationale but thought that this could result in unforeseen consequences.

Two Members noted that he and Mr Labuschagne had received documents from two different industries, complaining that they were contemplating bringing legal action against the Department around an alleged proposed to remove anti-dumping duties. The Committee ruled that until the documentation was provided to all Members, the matter could not be discussed further.

Meeting report

Standards Bill B46-2007
Mr Johan Strydom, Legal Advisor, Department of Trade and Industry, tabled the proposed amendments to the Standards Bill and the Regulator for Compulsory Specifications Bills, which had been drafted by the Department, following his earlier briefing to the Committee on the Department’s and South African Bureau of Standards’ (SABS) responses to the public submissions. The Department had taken account of comments raised at the public hearings as well as those by Members.

Clause 5
Mr Strydom said that Clause 5(2) had contained an incorrect cross-referencing. That was being corrected to read "an agreement in terms of subsection (1)(e)"

Mr S Rasmeni (ANC) intervened to say that he would have liked to hear the general comments before going through the technical amendments.

The Chairperson noted that the responses had been given in a previous meeting, and he asked that copies be made available.

Mr Strydom said that some of the amendments were based on comments during the public hearing, and he would indicate this as he went through.

Clause 6
Clause 6 amendments were in line with submissions at the hearings. The original wording was that the size of the Board should be between 10 and 13. The proposal was now that the numbers be changed to between 8 and 11.

Mr L Labuschagne (DA) was not happy with this figure. He pointed out that the SABS was run efficiently with 7 members. He pointed out that there would now be two boards, each handling half the business, yet the numbers for each board were being increased beyond those of the unified board. Furthermore the previous Board had not had an advisory forum. It was mentioned that the Board should be larger to develop expertise. This was not intended to be a developmental forum; those appointed to the Board must already be able to do the job. He felt strongly that the plethora of Boards should be curtailed. He was of the view that the Board size should be between seven and nine.

Mr S Njikelana (ANC) asked how large the Advisory Forum was to be.

Prof B Turok (ANC) said that no numbers were given. He supported the view that the size should be reduced, as he felt it would be a waste of money and time to have larger boards.

Ms F Mahomed (ANC) commented that on the previous day the Science and Technology Portfolio Committee had also discussed the policy and framework of boards. It was necessary to look at the effectiveness of boards. If there was a very good reason to have a bigger board, she would support it. Otherwise, the smaller boards could be as effective.

Mr D Olifant (ANC) noted that there had been a large debate around the size of boards. He appreciated Ms Mahomed's comment, but noted that a decision on that would only be taken in the future. He had specifically asked about payment of Advisory Forum members, and was told that they would not be paid. However, there might be expenses. He concurred that the size of the board should be workable.

The Chairperson said that there was general support for a seven to nine-member Board.

Mr Strydom said that the wording would be changed to reflect the views of the Committee

Clause 22
Mr Strydom proposed that Clause 22 be amended to reflect the financial year ends. The original clause provided for continuation of the existing SABS, to retain its status as a juristic person, but the operation of the last portion of Clause 22 was problematic for SABS. As the Bill currently read, if it were to commence on 1 November, then the current financial year of SABS would end on 1 November instead of 31 March, causing the necessity to report both in November and March. The amendment now proposed would simplify the position. As the status of SABS was to continue, the financial year would thus now merely be stated as 1 April to 31 March. It would carry on doing the reporting on the basis of the current financial year.

Clauses 23 and 24
Clauses 23 and 24 were being amended in response to submissions at the public hearings. The headings of Clause 23:"South African National Standard" and Clause 24: "Issuing of South African National Standard" were confusing in that they suggested that both clauses were referring to the same thing. In fact the clauses dealt with different matters.

Clause 23 spoke to a single South African National Standard (SANS). That was the norm being used by SABS to develop and establish South African National Standards in general and there may be many of those. The new clauses should rather describe the single standard as a norm, and the standards that were then issued by SABS must comply with that single norm. Mr Strydom thus proposed a new heading for Clause 23 as "Norm for the setting and amending of South African National Standards" while the heading for Clause 24 was "Issuing of South African National Standards".

Mr Strydom said that there was further confusion in these two clauses because Clause 23 (4), (5) and (6) were in fact relevant to Clause 24. Therefore these subclauses would now be moved to Clause 24.

Clause 26
Mr Strydom said that Clause 26(3) was now to have the word "personal" inserted after "own". This related to copyright and authorisation from SABS to copy the standards. Subsection (2) had exempted a person from making a copy of the standards for his own use. That was too wide, and might lead to infringement of copyright if a person claimed that his own use covered use for commercial purposes. Therefore the proposal was to qualify this by making a limitation for "own personal use".

Mr Rasmeni noted that everyone would like to observe the standards. He asked whether it would be wrong if he were to reproduce a copy to guide others. If a firm of consultants were to reproduce copies for personal use in the firm, but perhaps also for wider dissemination to clients, would there be a distinction.

Mr G Selau (ANC) asked if a whole subclause was required for the exception. The previous sub clause was quite specific.

Prof Turok noted that universities had problems with this type of clause. Many universities would make photocopies for students, and in practice the rule was broken everywhere in the world.

The Chairperson indicated that universities were adequately covered. A certain percentage could be copied without fees. He would like to focus on the particular matter covered in the Bill.

Mr Moses Moeletsi, Regulatory Executive, SABS, indicated that the Chairperson was correct. The intention was to prevent exploitation. Permission could be obtained in certain circumstances. He had no strong views as to whether there should be one or two sub clauses as long as the objectives were achieved.

Mr Rasmeni asked whether consultants would be able to assist the Black Economic Empowerment (BEE) companies by making copies available.

Ms M Ntuli (ANC) said this clause was intended to be preventative. She agreed that making commercial gain out of the standards would be problematic.

Ms D Ramidobe (ANC) noted that the offences and penalties clause probably covered the issue.

Mr Olifant said that the intention was clearly to avoid abuse, but he was concerned that another interpretation may be put on this.

Ms Mahomed concurred with the stance of the Department. If the regulatory framework was in place, then this clause could curtail the risk of abuse. She would support insertion of the word "personal" to regulate access to material. If there was abuse, then the offences and penalties clause 31 would apply.

Mr Strydom felt that one subsection would serve the purpose.

Mr Mongameli Kweta, State Law Advisor, said that Clause 26(2) stated that no person may publish or reproduce any document without authorisation. Clause 26(3) spoke to the making of a copy. There was a distinction, and he felt there was sufficient justification to retain two sub sections.

Mr Strydom noted that it was sometimes difficult to find the right words. A reference to no person making copies for monetary gain would not cover a person who circulated copies, infringing copyright, without necessarily obtaining a commercial advantage. The reference to the copyright indicated that the Copyright Act would apply. He suggested that in the absence of other suitable wording, perhaps insertion of "personal" was the best option.

The Committee agreed that "personal" could be inserted.

New Clause 28
Mr Strydom said that initially, when the Standards Bill was submitted to the State Law Advisors for review and certification, there had been a clause making provision for other State departments, by way of simply referencing a SANS in a Government Gazette, to incorporate that standard into their laws. This was intended to ease the position of a Department such as Department of Health and ensure that standards could be more easily incorporated. However, the State Law Advisors had indicated that there was some difficulty with this, because a Department being permitted merely to gazette the incorporation by reference would amount to the Department making legislation, which was contrary to the Constitution. The power to legislate was the sole prerogative of Parliament. The State Law Advisors had therefore come up with another solution, which would be incorporated in a new Clause 28. This stipulated that a SANS in respect of any product or service that affected public safety, health or environmental protection could be incorporated in any law. This could be done by referring to the title and the number, or the title, number and year or edition.

Mr L Labuschagne suggested that clause (a) should end with the word "or".

Mr Strydom said that this was correct. This would be inserted as Clause 28 and there would be renumbering of other clauses.

Mr S Maja (ANC) asked what the difference was between the original clause that had caused concern to the State Law Advisors, and this clause.

Mr Kweta explained that the original clause had said that the incorporation would take place merely after notice in the Gazette. This would have been inconsistent with the Constitution. The new version referred to inclusion "by incorporation in any law", which would of course have to be passed by Parliament.

Mr Kweta further noted that the new (3) of the new Clause 28 had two sub clauses. He submitted that (b) was not necessary. If the standard was not amended, no incorporation would follow.

Mr Strydom did not necessarily agree. The Department held the view that (3)(b) was closely related to the provisions of the same clause's sub-clause (2). There was provision being made for incorporation only by referencing the title and the number. Sub clause (3) said that there could alternatively be referencing by the title, number and year or edition number. These two options would allow the State department to choose whether or not they wished to include any amendments. If so, then the consequences were spelt out. If the Department chose to use the reference in (b), then any amendment of the SANS would not be incorporated. If the Department chose to list the title and number only, then any amendments of the SANS would be incorporated.

Mr Kweta said that he was still of the view that it was not necessary to have (3)(b). There would be no danger that amendments would automatically be deemed to be incorporated. (3)(a) was clear as it spoke to an amended standard. Leaving out (b) would not make any difference.

Mr Nonkonyana noted that lawyers would always differ in their interpretation. He hoped that they could meet and come up with a solution.

The Chairperson noted that this was really a "belt and braces" approach.

Ms Bongiwe Lufundo, State Law Advisor, Office of the Chief State Law Advisor, said that there was no need to say that an amendment would not be deemed to be incorporated. Sub clause (3)(a) contained a deeming provision. If the State Department did not wish to deem an amendment to be incorporated, then it would not happen automatically,  as the law was silent on the point.

The Chairperson said that he would like the legal advisors to consider this further and report back.

After the tea break, Mr Strydom said that from a strictly legalistic viewpoint, he now agreed that Mr Kweka had a point. He apologised that two views were presented to the Committee, saying that it would have been preferable if the legal advisors had presented one viewpoint. He accepted that there could be room for different interpretations, but said that the version drafted by the Department was an attempt to clarify every possible situation. He agreed therefore that the suggestion made by Mr Kweka could stand.

The Chairperson assured the Department that there was no need to apologise for presenting differing interpretations The Committee had to discuss all matters extensively so it was not necessary for legal advisors to agree. It was very important that the best outcome could be gained from discussion and debate.

National Regulatory for Compulsory Specifications Bill B47-2007 (NR Bill): Department briefing on proposed amendments
Clause 5

Mr Strydom said that the Department proposed that the whole of clause 5(2)(f)(line 40) be removed. Clause 13(6)(c) of the Bill, read with Clause 14(3)(a) in fact already covered what had been in this subclause. Therefore a new 5(2)(f) was drafted, to incorporate only what was essential and what was not stated elsewhere.

Clause 6
Clause 6 contained similar wording in relation to the Board, as discussed earlier under the Standards Bill. He suggested that the Board should be composed of between seven and nine members. The Committee agreed.

Clause 13
This amendment flowed from some of the submissions in the public hearings. Clause 13(1)(c) was to be substituted with a new clause. It now read that only in respect of public safety, health or the environment would the Minister be able to declare or amend a compulsory specification in the event that a SANS or provision of a SANS was not available under sections 13(1)(a) or (b). The comment had been made that there was no justification to give the Minister this power. The Department felt that it was important. The Minister and the industry might not see eye to eye on matters relating to public health, safety or the environment. If there was a stand-off the Minister's hands would be tied if he were not to have discretion, and the Department did not wish such a situation to arise.

Mr Strydom wished to stress that this was not simply Ministerial power in a vacuum and no unfettered discretion was being given. The Minister must firstly act on the recommendation of the board. He could act only  where there was no existing SANS that would apply. Furthermore, as set out in the new 13(8), the Minister was to make regulations that set out the consultation process that must precede such a declaration or amendment. There was therefore a three-pronged approach of recommendation, lack of SANS, and consultation. The Parliamentary Law Advisors had indicated that they would also agree with this amendment.

Mr Labuschagne asked where this emanated. He was worried about a relatively unfettered discretion. He said that if this was not properly canvassed by the industry he would have reservations about inserting this clause without proper public consultation.

Mr Njikelana asked how a SANS would be formulated under normal circumstances. Clearly this clause would refer only to a situation where there was no SANS. He asked for comparison of the scenarios, if there were indeed two separate issues.

Prof Turok said that there might well be a situation where it was necessary for something to be done. Perhaps there should be a safeguard attached to stated time frames, or a requirement that the matter should be referred for full deliberation at some stage. This would put some limits on the discretion.

Mr Strydom said that the Standards Bill was merely dealing with standards in general. There were many standards that were not necessarily compulsory specifications or standards. No one was obliged to apply them. This NR Bill, however, dealt with compulsory specifications. These related to the very important areas of safety, health and the environment. There might be a norm that related to something taking place, for instance, in a hospital. That should not be left as a voluntary standard. Therefore the Minister was given the power to make that norm into a compulsory specification. Then anyone dealing with a particular situation would be obliged to apply it. This amendment catered for the situation where the Minister regarded the setting of and complying with a compulsory standard as essential in a particular context such as the promotion of health or safety. If there was not already a standard formulated, the Minister would then have the power to declare a compulsory specification.

Ms Koleka Beja, Parliamentary Legal Advisor, supported Prof Turok on the time line. The purpose was to cater for situations where the process of coming up with a standard was taking too long, or where there might be disputes between the industry and the Department. The Minister would need to have the power to intervene to declare a standard as an interim measure and public safety matter, pending resolution of the dispute. If at a later stage the matter was resolved he could amend the declared standard to reflect what was agreed between industry and stakeholders.

Mr Moeletsi noted that the standards would be published following consensus. The Minister would have to first allow the consensus process to work before declaring a compulsory specification. There were already situations where industry, not wishing to be regulated, would do its best not to reach consensus. For instance, it was desirable to have regulations for safety issues on quad bikes. The industry was not keen to be regulated, and was not worried about operating with little regard for safety. Clearly the Minister needed to intervene. However, it must be noted that the Minister must also, in the regulation, specify the process, such as time lines, recommendations of the Board, and so forth, to be followed.

Mr Njikelana, on the basis of that explanation, would support the clause with the suggested amendment by Prof Turok. He said that the challenge in fact had come from National Automobile Association, not from the health sector.

Ms Mahomed asked, in the absence of standards, whether it would not be possible to set out a process to sharpen the standards process. This only affected three sectors. This might help people to look at the prescriptions and this might help to shorten the process.

Dr Tshenge Demane, Chief Director, Department of Trade and Industry, said that a existing standard could be made compulsory for public safety, health and the environment. The process that the Minister must follow where there was no standard would be set out in the Regulations to the Bill. These would be drafted with the involvement of the stakeholders. Therefore there would already be a consultative process.

Mr Olifant pointed out that there was no disagreement on the clause. He wondered if there should not be reference to "must" because the clause clearly applied when drastic action was necessary. The clause did not clearly spell out when the Minister must act. The wording should be tightened.

The Chairperson clarified that the "may" formulation gave the Minister the opportunity to assess the seriousness. The word "must" implied that on every occasion he had to act. He believed the current formulation of the clause was correct.

Clause 14
Mr Strydom noted that the existing 14(3)(a) would be substituted with a new clause. Any person selling a product to which a compulsory specification applied must keep or supply records to the National Regulator, as may be prescribed by the Minister.

Clause 14(6) was also to be substituted to allow the Minister to make regulations to prescribe the process for the issuing of a permit.

Clause 19
Mr Strydom indicated that the amendment set out had been proposed by the State Law Advisor. It was a fundamental principle of the law that no person should be obliged to make a statement that would incriminate him or her, unless this was done within very specific parameters (such as a confession before a Magistrate). This provision was inserted to cater for the situation where a person, pursuant to a clause in the Bill, was making a statement to an inspector. If the prescript against incrimination were to apply fully, then this might render the Regulator less effective. It was therefore suggested that clause 19(3) should be amended by addition of the wording "except in criminal proceedings where the person concerned stands trial on a charge contemplated in Section 34(1)(i), (j), or (k).” If a person made a false statement, knowing it to be false, he could not rely on the non-incriminatory rule as a defence.

Mr Nonkonyana asked if this clause was not inconsistent with the Constitution. Any person had the right to remain silent.

Mr Sisa Makabeni, State Law Advisor, noted that there had been a Constitutional Court judgment relating to the Gambling Board regulations. The Court recognised that there was an enforcement responsibility and that the regulator had to be given certain powers. It was therefore necessary to exclude cases from the general rule, which involved people trying to defeat the Regulator or failing to comply with instructions of the inspector. The need for regulators to do their work was considered to justify the departure from the general principle.

Ms Ntuli asked for an example of self-incrimination.

Mr Strydom hypothesised that there might be a commodity to which a compulsory specification applied. A dealer in that commodity might not comply with the compulsory specification. The dealer might admit to the inspector that he had indeed not complied. The dealer's answer amounted to confirmation of the commission of the criminal offence, and this was referred to as self-incrimination. The inspector would not be able to use the self-incriminating answer to gain immediate conviction. A proper confession would have to be made to a magistrate or judge before that confession could be used, or the case would have to be prosecuted and proved beyond a reasonable doubt.

Mr Nonkonyana said that the person being questioned by the Inspector was surely entitled to remain silent, and was entitled to be warned about the consequences of what was being said. He wondered if this clause was not subject to constitutional challenge.

The Chairperson said that American television programmes commonly showed American citizens claiming the Fifth Amendment (the right to remain silent). This meant that the person would have the right to refuse to answer any questions until his legal representative was present. If the person did not claim that right, then the information given could normally be utilised, provided that the person had been warned of his rights, and nonetheless elected to speak.

Mr Makabeni said that the primary purpose of the clause was not to prosecute. It was for regulatory monitoring. Inspectors would be able to see if industry was complying with compulsory standards, and it was not designed for enforcement by police officials. That was why the immunity was granted when answering the inspector.   However, if the person was attempting to defeat the purposes of or hindering the work of the Regulator, perhaps by misleading him, then the self-incrimination protection could not be invoked.

Mr Olifant asked if there was not a simpler way of wording this. Not all business people were lawyers.

Mr Makabeni said that similar wording was used in a number of other statutes.

Clause 34
Mr Strydom said that Clause 34, dealing with offences and penalties, had, owing to an oversight, not included a mention of contraventions of sections 14(2) or (3). The amendments now proposed would correct the position.

Clause 35
Clause 35 dealt with the position of employees of the current SABS.

Proposed insertion of further clause: Proposal by Mr Labuschagne
Mr Labuschagne said that during the discussions on the size of the board, there was a suggestion made that there should be some controls around the number of directorships that Members of a Board could hold. He had suggested that limitations be put in the legislation. The King reports on Corporate Governance were very definite on this point.

Mr Labuschagne therefore wondered if it would not be possible, in each Bill, to  insert wording to the effect that a Board member should not be "over-encumbered by other directorships" and that this would be one of the factors to be taken into account by the Minister in making the appointment.

Ms Mahomed did not agree. Obligations followed from a directorship. If a Director did not do the job, then he or she would have to face the consequences.

Mr Nonkonyana agreed with Ms Mahomed. Nothing would be gained from inserting the wording suggested by Mr Labuschagne. Those called upon to act as a Director, must understood that fiduciary and statutory duties applied, and consideration must be given to whether they had time.

Mr Olifant said that the Minister, looking at the resumes, would be able to find out what directorships were already held and apply his or her mind to whether the person had the necessary qualifications and experience and time to do the job.

Prof Turok agreed that there were indeed some people who were serving on too many boards, and turning their membership into a profession. They would often be paid, but would not attend board meetings, particularly in para-statals. However, he did not agree that this was necessarily the right way to deal with the problem, because legislating might hit the wrong targets.

The Chairperson said that other Portfolio Committees had also considered the matter, and were agreed that quality time must be given.

Mr Strydom pointed out that Clause 8(2) and (3) of the NR Bill prescribed that a Member of the Board must vacate office if absent from three consecutive meetings. The Minister also had the power to terminate.

The Committee was generally agreed that although there was generally a problem around directorships, it would not follow Mr Labuschagne's proposal.

Mr Strydom tabled a Schedule setting out the Acts that would need to be amended consequentially. There were no policy issues but merely technical matters.

The Chairperson noted that the Department should clean up the clauses, and then present a version to be debated, clause by clause, by the Committee at the next meeting.

Other Committee business
Prof Turok noted that he and Mr Labuschagne had received two documents, one  from the poultry industry and the other from a conglomerate of other industries, setting out their intention to bring legal action against the DTI pursuant to the suggestions that they might be removing some anti-dumping regulations

Prof Turok explained that the World Trade Organisation allowed countries to protect certain industries under certain conditions. This would generally apply to unfair trade practice arising through subsidies. Country A might be heavily subsidised and allow its industry to export at lower prices than Country B could manufacture, and Country A’s goods would be preferred to Country B. There was a dispute between the industries and the Department around the dates of the subsidy agreements. If the anti-dumping duties were removed, then thousands of people could become unemployed. This was the major concern.

Mr Labuschagne added that the matter had arisen because of a court decision relating to one product. Because of that, the International Trade Administration Commission (ITAC) wanted to remove all anti-dumping provisions. It had asked for submissions, but were considering recommending the removal of all provisions to the Minister. This would require huge capital investment by some companies. He suggested that this Committee should ask ITAC to brief the Committee on the issue, and possibly then proceed to public hearings, before it made the recommendations.

The Chairperson noted that Members did not have the documentation. Perhaps that should first be circulated, and the matter raised with the Department, before Members discussed the issue.

Prof Turok secondly noted that the Competition Commission had recently been extremely active, taking to task a number of companies for price fixing, not only on the bread issue. It appeared to be developing momentum. He felt that such an important issue should be given attention by the Committee.

The Chairperson said that perhaps the Commission could be invited to address the Committee.

The meeting was adjourned.

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