BUSINESS
UNITY
SUBMISSION TO
PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY
PUBLIC
HEARINGS
JANUARY
2008
STANDARDS
BILL [B46-2007] AND
NATIONAL
REGULATOR FOR COMPULSORY SPECIFICATION BILL [B47-2007]
1.
INTRODUCTION
Business Unity
South Africa (BUSA) is a confederation of chambers of commerce and industry,
professional associations, corporate associations and unisectoral
organizations. In that role it represents South African business on
macro-economic issues that affect it at the national and international levels
(Annexure 1 sets out the member organizations affiliated to BUSA). BUSA’s function is to ensure that business
plays a constructive role in the country’s economic growth, development and
transformation and thereby create an environment in which businesses of all
sizes and in all sectors can thrive, expand and be competitive.
The increasing government
emphasis on trade promotion required Government to review the national
situation in respect of technical regulatory infrastructure and in 2000
initiated a review. Business
participated in this review of the current situation and in the subsequent
consideration of the recommendations in Nedlac.
Most of the recommendations
in the review were accepted and the dti commenced
a process of implementation of the recommendations. In 2004, Government tabled a Discussion
Document on Modernising Technical Regulatory Infrastructure for discussion in
Nedlac. Agreement was reached on broad
approaches that would be adopted in implementing the strategies contained in
the document.
BUSA
represented Business in the Nedlac consideration of the discussion document and
the Bills and welcomes the opportunity to make a submission to the Portfolio
Committee on the version now being considered.
BUSA believes that it is important to recall that these Bills need to be
seen in the context of the Government’s overall approach to technical
regulatory infrastructure.
BUSA understands that
Technical Regulatory Infrastructure in a country comprises the network of institutions
that support technical regulation, like a standards authority, an accreditation
system and calibration facilities and regulators that can be either government
departments or regulatory agencies.
Members may recall BUSA’s support for the two Bills, dealing with
Accreditation and Measurement Units and Measurement Standards, during the
public hearings in June 2007. BUSA also
supports these two Bills but with some reservations that are discussed below.
2.
INDUSTRIAL
POLICY CONTEXT OF THE BILLS
BUSA views
industrial policy as an important framework within which more detailed
strategies for key subsectors and cross cutting interventions, can be developed
and implemented. In this regard it is essential that the National Industrial
Policy Framework provides an enabling framework within which the specific
interventions identified in the Accelerated Shared Growth Initiative can also
be implemented. The recently released
Industrial Policy Action P includes implementation of the National Technical
Regulatory Framework, including this Bill.
BUSA has always recognized
the need for Government to play a leading role in the economy but has always
argued for this role to be focused on providing the enabling environment that
promotes enterprise development. BUSA agrees
with Government that enterprise development, particularly at the SMME level is
one of the keys to economic growth and employment creation while at the same
time ensuring that more citizens participate in the mainstream economy. BUSA sees these Bills as an important
intervention in improving the enabling environment for investment.
The ultimate aim of the
industrial policy is seen as being to increase the attractiveness of the South
African economy relative to other investment destinations. Providing a clear and unambiguous technical
regulatory system is a major contributor to achieving this objective.
Some examples of the use of
standardisation in the key sectors identified by ASGISA include the following:
In addition climate change
presents a significant challenge for the economy and standards dealing with
energy efficiency and green house gas measurement are now being developed.
In addition to the benefits
to key manufacturing sectors, the value to the regulatory system in pursuit of
key government social development objectives should also not be
overlooked. Increasingly technical
standards are being used to enforce compliance with a range of safety, health
and environmental requirements.
3.
STANDARDS BILL
3.1 Role of SABS as regulator
While it is accepted that
the commercial activities of SABS are ring fenced and thus not subsidized by
the state, the role of SABS as the regulator as well as operator of compliance
testing facilities for voluntary standards and compulsory specifications has
led to perceptions of unfair competition with private sector testing
facilities, due to the state funding that the SABS receives.
The dual role of the SABS
has led to limitation of access to testing facilities which are operated by the
SABS, which in turn can lead to unacceptable delays in obtaining test results.
Separation of the current
functions into two independent entities is therefore supported.
3.2
Engagement with stakeholders
Implementation of the wide
range of technical regulations that national governments promulgate to protect
consumers’ health, safety and environment are covering an increasingly wide
range of commodities and sectors. It is
impossible for the Board of the SABS to provide strategic direction on all of
these sectors. BUSA therefore welcomes
the establishment of the Advisory Forum (Section14) as a powerful instrument to
address this gap.
A similar Advisory Forum
for the Accreditation System has proved very valuable in alerting the Board of
SANAS to challenges affecting sectors which can be addressed by
accreditation. The establishment of the
proposed forum is therefore strongly supported and BUSA will encourage its
sectoral affiliates to support these institutional arrangements.
The increasing technical
complexity required to effectively regulate certain aspects of health, safety
and environment has led government departments like labour and transport to
more extensive use of national standards as part of the technical regulatory
regime. Lack of formal co-ordination
mechanisms between SABS and the relevant government departments has resulted in
unnecessary delays in finalising regulations.
The establishment of the
Government Consultative Forum is therefore also welcomed as a mechanism to
alleviate this problem.
3.3
Profitability vs. state functions
The strategic priorities of
an organization that is concerned about profitability are not necessarily the
same as those of an organization which is undertaking a regulatory role on
behalf of the state. In BUSA’s view,
this has led to conflicting approaches.
For example the manager of the regulatory section is not able to achieve
faster turnaround times for compliance tests as he is under pressure to use
SABS test facilities.
Potential for conflict also
exists between the voluntary Mark Scheme and compulsory specification leading
to increased costs for industry.
3.4
Incorporation of South African
national standards in laws
BUSA notes with concern
that the clause dealing with incorporation of national standards in laws, which
was contained in the original draft on which we were consulted, has now been
deleted.
BUSA supported the inclusion
of this clause in the original draft on the basis that it would address a
number of problems that were currently being experienced with the incorporation
of national standards in legislation.
Some of the problems that
are currently experienced in this regard are discussed below.
·
Lack of coherence between finalization of standard
that will be taken up in legislation and the legal drafting process resulting
in delays in promulgation
·
Limited opportunity to provide for a reasonable
transitional period for compliance
·
Lack of clarity on enforcement regime
·
Lack of clarity on appropriate incorporation
process.
It is therefore requested
that the original text in this regard be reintroduced into the Bill.
The relevant text is quoted
below for convenience:
27 bis: Incorporation of
South African National Standards in laws
A South African National
Standard that has been published may be incorporated in any law by reference to
the title and number of that standard in respect of any commodity, product or
service which may affect public safety, health or environmental protection by
notice in the Gazette-
a)
By declaring a South African National Standard or a
provision of a South African National Standard to be a compulsory specification
i)
By referring to the title and the number of that
standard only, without indicating the year or edition number and that South
African National Standard is amended, the South African National Standard is
deemed to have been incorporated.
ii)
By referring additionally to the year or edition
number of that South African National Standard
b)
Declare an amended South African National Standard
or an amended provision of a South African National Standard to be compulsory
specification; in the case where the original declaration was made in terms of
subsection 3(a) (ii) or
c)
Withdraw a compulsory specification
(2) A notice in terms of sub-sections (1) (a) and (b) –
a)
Must contain full particulars of the specification,
provision or amendment;
b)
Comes into operation on a date fixed in the notice
which must be not less than two months after the date of publication of the
notice;
c)
May fix different dates on which different
provisions of a compulsory specification come into operation.
(3) The date referred to in sub-section 2(b)
or (c) may altered by notice in the Gazette.
(4) A notice may not be published under
sub-section (1) (a) or (b), unless a preliminary notice has been published in
the Gazette –
(a)
setting out full particulars of the proposed
compulsory specification or amendment; and
(b)
in which interested persons are invited to comment
on the proposed compulsory specification in writing by not less than two months
after the date of the publication of the preliminary notice.
3.5 Accessibility of standards
Use of standards as the
technical basis for regulation in regulations promulgated in
Terms of other Acts means
that business does not have immediate access to the relevant standard as
standards have to be purchased from the SABS.
In order to improve
accessibility it is proposed that consideration be given to making all
standards incorporated into legislation available free of charge.
3.6 South African National Standards
Section 23 and 24 of the
Bill appear to have been amended in such a way as to have resulted in
significant confusion.
BUSA understands the
original intention of these sections to have been as follows.
Section 23 should refer to
a specific national standard dealing with the development of national standards
in contrast to Section 24 which should deal with all other national standards.
The way the sections are
currently drafted appears to conflate the two types of standard.
It is therefore proposed
that the two sections be amended to reflect this difference. In respect of section 23 specific reference
should be made to a standard for the development of national standards and
subsections (4) (5) and 6) should be moved to section 24 with appropriate
amendments to make clear that this section refers to all national standards
except the one dealing with the development of national standards.
4.
NATIONAL
REGULATOR FOR COMPULSORY SPECIFICATION BILL
4.1 Demonstration of compliance
The Bill does not make any
reference to independent third party certification as a means to prove
compliance with a compulsory specification where that specification refers to a
national standard. It has been shown in the rest of the world that referring to
3rd party certification schemes as a means to prove compliance with
a technical regulation has been successful.
This should lead to more
effective use of resources in that companies that make use of accredited
facilities to certify performance will be able to demonstrate this thus
relieving the regulator of the need to check compliance.
Implementation
of the system could thus alleviate the enforcement burden on the state and
should increase the enforcement effectiveness in the critical areas of safety,
health and environmental performance in particular.
The value of
accredited inspection and testing facilities was highlighted in the discussion
on the Accreditation Bill.
It is therefore
proposed that consideration be given to making provision for the use of
accredited compliance facilities in addition to the regulator’s own facilities,
which would bring the technical regulator in line with other government
regulations which operate in this way
4.2 Engagement with
stakeholders
Consistent with
the support expressed for a similar forum in the Standards Bill, BUSA supports
the establishment of the Advisory Forum.
4.3 Entrenchment of existing rights of permit
holders
The Bill indicates that any
regulation made under the previous Standard Act will continue and would be
applicable to the appropriate new Act, Standard Act or Regulator of Compulsory
Specification Act. Currently under the present legislation, SABS Permit Holders
for products covered by a compulsory specification are exempted from the
payment of the compulsory levies in terms of that compulsory specification by
Government Notice R999 issued under the Standards Act of 1993. Whilst in the
near term the government notice R999 will remain in force it could, in future,
be withdrawn at any stage and this will lead to the removal of the exemption.
SABS permit holders would then be required to pay both the normal Mark Scheme
tariffs and the compulsory levies. This could mean a doubling of certification
and approval costs. The obvious solution would be for a company to relinquish
the SABS mark and only pay the statutory levies. This in turn would remove a
significant way of identifying compliance products, would seriously affect the
less knowledgeable buyers and would not ensure that products are safe and not
inferior. It is proposed that the
exemption from paying the levies should be entrenched in the legislation itself.
(Clause (35) (2) (c) and (d)).
4.4 Issue of sales permits
It is proposed that the
conditions for the issue of sales permits (Section 14(4) and (5) must be spelt
out in the Bill or prescribed by regulation.
However section 14(6) only makes provision for regulations in the case
of section 14(5).
5.
CONCLUSION
The finalization of the
review of the technical regulatory infrastructure, of which these Bills are
part, is recognised as a key action in the Industrial Policy Action Plan.
Achievement of economic
growth targets requires increased access to global markets. Such access can be facilitated by a strong
technical regulatory system.
As a country we need to be
able to demonstrate comparability to international standards. Separation of the functions of the SABS into
two separate entities allows each entity to focus on its strategic objectives
without being diverted by sometimes conflicting interests.
We believe that the
adoption of this legislation is an important intervention by Government in
establishing an investor friendly environment.
In summary BUSA supports
both Bills as drafted provided that the following concerns are addressed.
Standards
Bill
·
Amendment of sections 23 and 24
·
Reintroduction of section on incorporation of
standards in legislation
Technical
Regulation for Compulsory Specifications Bill
·
Provision for third party compliance testing.
·
Entrenchment of existing provisions to avoid
duplication of costs
·
Amend section 14.
1. African Minerals and
Energy Forum (AMEF)
2. Agri SA
3. AHI
4. Association for the Advancement of
Black Accountants of
5. Association of Black
Securities and Investment Professionals (ABSIP)
6. Automotive Sector
·
Automobile Manufacturers Employers’ Organisation
(AMEO)
·
National Association of Automotive Component and
Allied Manufacturers (NAACAM)
·
National Association of Automobile Manufacturers of
·
Retail Motor Industry Organisation (RMI)
7. Banking Association
9. Black Information
Technology Forum (BITF)
10. Black Lawyers
Association (BLA)
11. Black Management Forum
(BMF)
12. Business Leadership
13. Casino Association of
14. Chambers of Commerce and
Industry
15. Chamber of Mines of
16. Chemical and Allied
Industries’ Association (CAIA)
17. Confederation of
Associations in the Private Employment Sector (
18. Congress of Business and
Economics (CBE)
19. Construction Sector
·
Master Builders South Africa (MBSA)
·
South African Federation of Civil Engineering
Contractors (SAFCEC)
20. Financial Planning
Institute of
21. Life Offices Association
(LOA)
22. National African
Federated Chamber of Commerce and Industry (NAFCOC)
23 NAFCOC Construction
(formerly NAFBI)
24. National African Farmers
Union of
25. National Black Business
Caucus (NBBC)
26 National Industrial
Chamber (NIC)
27. Retailers’ Association
(RA)
28. Road Freight Employers
Association (RFEA)
29. South African Black
Technical and Allied Careers Organisation (SABTACO)
30. South African Chamber of
Business (SACOB)
31. South African
Communications Forum (SACF)
32. South African Institute
of Black Property Practitioners (SAIBPP)
33. South African Insurance
Association (SAIA)
34. South African Leisure
& Tourism Association (
35. South African Petroleum
Industry Association (SAPIA)
36. Steel and Engineering
Industries Federation of
37. United Businesswomen of