Trade, Industry, and Competition BRRR

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Trade, Industry and Competition

08 November 2022
Chairperson: Ms J Hermans (ANC)
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Meeting Summary

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Budget Review & Recommendations Reports BRRR

The Portfolio Committee on Trade, Industry and Competition held a virtual meeting to consider the draft Budgetary Review and Recommendations Report (BRRR) for the Department of Trade, Industry, and Competition and its entities.

The Committee focused on the concluding remarks and recommendations submitted by two parties. While several points were discussed, the point applauding the proposed shift in Broad-Based Black Economic Empowerment to focus on the empowerment of all workers and Black industrialists led to an intense debate with each of the parties presenting and defending their political principles. Some of the Members suggested changes to the concluding points that had been submitted, but it was determined that parties did not have to change their submissions; the other parties should submit their own concluding remarks and recommendations for discussion if they did not agree with the proposals before them. Two recommendations were made but were subject to scrutiny against the procedural requirements for recommendations. The ANC had not proposed any recommendations but indicated that in light of the recommendations submitted by the opposition, it would have to make a late submission of its own recommendations.

The adoption of the Report was planned for the following week.

Meeting report

Opening Remarks
The Chairperson stated that the intention of the meeting was that the Committee would look at and consider the first draft of the Budget Review and Recommendation Report. She requested the Committee Secretary to take the Committee through the Report.

First Draft of the BRR Report
Mr Andre Hermans, Committee Secretary, presented the first draft of the report which focused on the DTIC Annual Report. He stated that Members had been requested to submit concluding remarks and recommendations prior to the meeting. He began reading the report.

Mr M Cuthbert (DA) proposed that the Committee take the report as read as all Members would have read the report to submit conclusions to the report. To read it again would be duplicating the effort that Members had already put into it.

Dr M Tshwaku (EFF) stated that he had not been able to complete a reading of the report as he was going through it line-by-line. He requested that he be permitted to submit his conclusions by the end of the day.

The Chairperson agreed to a late submission from the EFF and, as there was no objection to Mr Cuthbert’s proposal, the Committee would take the report as read.

The Secretary read the concluding remarks as prepared by the ANC.

Concluding remarks proposed by the ANC
Dr Tshwaku asked for clarity on point one: the last sentence referred to” the pledges in 2020 investments”. Did it mean that those pledges had not translated into investment and jobs?

Mr S Mbuyane (ANC) stated that the ANC was acknowledging the pledges made to the Presidential Investment Committee. They were pledges at that stage, not jobs.

Dr Tshwaku asked for clarity on how the BRR Report worked. Did the Committee accept ANC conclusions?

The Chairperson explained the process.

Dr Tshwaku disagreed with point two. He believed that public sector investment was critical to driving development. It was better if this was done by the government rather than the private sector which just wanted to manipulate things to make money.

The Secretary read point three: …the South African economy has been buffered by the pockets of industrial resilience that emerged during this time. The Committee was of the view that the localisation policy resulted in companies being able to expand operations. The Committee welcomed the fact that since 2019, localisation focused on strategic industries defined by the capacity to be labour-absorbing providers of critical goods or significant export earners. This demonstrated the need to intensify localisation to circumvent the over-reliance on imports and to create additional economic opportunities.

Mr Cuthbert did not agree with the concluding remark relating to localisation. The DA’s opposition to state-led localisation was well known and his party could not agree with that particular concluding remark on a basis of principle. He asked for the DA’s vote against the point to be registered.

The Secretary read point four: The Committee remains concerned about the economic impact of ongoing load shedding on the manufacturing sector. It welcomes the DTIC support to contribute to government in the IT initiative to address the energy classes, in particular the recent financial report to companies manufacturing components for renewable energy supply.

The Secretary continued: The revitalisation of industrial parks is of vital importance to the Committee, as it views the development of the industrial park as a key vehicle to promote and develop local and rural economies. … Point 7: Furthermore, the Committee also welcomed the policy review underway on the role of the private sector in the ownership, management and operation of industrial parks, as this may improve the effectiveness of industrial parks.

Dr Tshwaku asked for an explanation of “welcomed the policy review.”

The Secretary explained that there was a discussion on the role of the private sector concerning the ownership and management of industrial parks. The Minister would report to the Committee in the future on the outcome of the process, which was a change because currently, in industrial parks, there was no private sector ownership at all.

Dr Tshwaku stated that the policy of the state-led developments in industrial parks was key. He knew that the private sector only wanted profits; it was more about profits and was unlikely that they would support on-the-job creation. It was not the policy of the EFF.

The Secretary stated that Dr Tshwaku’s view would be noted in the minutes. He continued: The Committee welcomed the progress made concerning the Auto Green Paper and acknowledged the need to source funding for the implementation of the proposed policy. Completion of the process, in the view of the Committee, is critical to position South Africa's automotive manufacturing sector to remain sustainable given the transition into electro-mobility solutions and technology. Point 8: The Committee encouraged the dtic to finalise the trade policy proposals on measures to restrict and regulate trade in gross, ferrous, nonferrous metals, waste scrap and semi-finished ferrous and nonferrous metal products to limit damage to infrastructure and the economy and to ensure certainty for the upstream and downstream industries.

Mr Cuthbert offered a word of credit: it was a very well-crafted concluding remark. He agreed with it. It did not hold a particular position, but it did communicate the urgency with which the matter needed to be finalised.

The Secretary continued: The Committee welcomes the establishment of a Quick Response Team comprising officials from the Chinese embassy to DTIC, SARS and ITAC to address illegal input from China as it was detrimental to the delicate domestic economic opportunities and the industrialisation effects as well as slowing down socio-economic improvements among the poor. Furthermore, the Committee applauded the difference by DTIC that secured the re-opening of the Chinese markets to South African oysters. He continued with point 11: The Committee supports the position that AGOA should be extended beyond 2025 and encourages the Minister to secure South Africa's inclusion in an extension of AGOA.

The Secretary moved on to the next point: The Committee was concerned about the high levels of economic concentration in the economy, which impedes structural transformation. In particular, it had been concerned about economic concentration in the real estate sector and encourages the Competition Commission to consider whether there is a need to initiate a market inquiry in this regard.

Mr Cuthbert thought that the country should be cautious about over-regulating from a competition perspective because there had been several instances where he believed that the Competition Commission had misused the public interest clause in the legislation to overreach. He stated his opposition to that point and asked that it be registered as such.

The Secretary noted the request. Point 13: The Committee welcomed the proposed shift in Broad-Based Black Economic Empowerment to focus on the empowerment of all workers and Black industrialists. It also recognised the need to place a greater emphasis on merit for strategic positions while growing the requisite technical skills and capabilities of all South Africans. Point 14: The Committee urged the Minister to expedite the appointment process for the Director General of DTIC, and the Commissioner of ITAC.

Mr Cuthbert disagreed with point 13. The DA believed in empowerment based on poverty and means testing, as opposed to race. So, he would be opposed to that particular theme as a concluding remark.

Mr J Mulder (FF+) queried the meaning of point 13: the Committee welcomes the proposed shift in Broad-Based Black Economic Empowerment to focus on the empowerment of all workers. He asked if that was not a contradiction in respect of all workers and Black industrialists. It recognised the need to place greater emphasis on merit for strategic positions which he supported but he was not sure how the first two sentences of point 13 could be understood. Was it not a contradiction because on the one hand, it says there is a shift in Broad-Based Black Economic Empowerment. And on the other hand, it says it is focusing on the empowerment of all workers. He was just asking for clarity.

Mr Z Burns-Ncamashe (ANC) asked Mr Cuthbert whether he acknowledged that the country had emerged from a history in which Black people had been excluded from the economy. The issue was about ensuring that the broad-based character of the redress achieved the intended outcome. Mr Cuthbert did not seem to acknowledge the fact that the country had emerged from a history of Black people who, by law, were excluded from participating in the mainstream economy and thus, as part of creating an inclusive economy, which was a critical component of transformational imperatives, those policies had to be put in place and they were still relevant because the economy was still largely in the hands of the white minority. He had a problem with that.

Mr W Thring (ACDP) said that his reading of the point was that the ACDP would welcome it because the ACDP would welcome a shift in Broad-Based Black Economic Empowerment and that shift would focus on the empowerment of all workers, which would include Black industrialists. That also focused on the other groups. The point went on to speak about recognising the need to place a greater emphasis on merit for strategic positions which, if one looked at the Eskom saga as an example, there was a recognition that merit was needed for key state programmes and initiatives. So, if he read it that way the shift was from the previous Broad-Based Black Economic Empowerment to one that was going to be more inclusive. That had been the argument of the ACDP which had a sunset clause where initially it supported the policies of affirmative action and Broad-Based Black Economic Empowerment because it recognised the injustice of the past, but the ACDP said that it could not be in perpetuity; it could not be forever. That then would just be a reversal of apartheid. And South Africa had a democracy that was now 28 years, 29 years in existence. That was the ACDP view. If he was wrong in terms of how he was interpreting the point, then he would like to be informed.

Mr Cuthbert expanded his opposition to the point. If the recommendation had read: “The Committee welcomed the proposed shift in the focus on empowerment of all workers” and that was where the sentence stopped, he would not necessarily have an issue with it, whilst recognising that the sentence seemed to try and take competing schools of thought and mix them into something that was a compromise in a way that made it very unclear and very vague. Mr Mulder raised a very good point in terms of two competing ideas in the same sentence, possibly to appease everyone. But it was something that had linked to racial categorisations. That did not make it palatable in the DA’s view.

He added that Members should not get into intense debates in the meeting. If Mr Burns-Ncamashe would like, he could send him a copy of the DA Social Justice and Economic Justice Policy to explain the DA’s position on it. He was more than welcome to it. The DA leader in the House had explained it in a question to the President recently. No one denied the disadvantages and total pain that people, particularly those of colour, had to go through during apartheid. But the policy of BBBEE had not been successful over the past 30 or so years and the country needed to look at a mechanism that was able to lift people out of poverty, put them into jobs, and create a better life for all.

The Chairperson was sure Mr Burns-Ncamashe would take Mr Cuthbert up on that invitation. The Committee secretariat was recording all the inputs from the various political parties.

Dr Tshwaku said the EFF was for the workers, the working class, and Black people, in particular. They could not sugarcoat matters. They came from a past, where people were excluded and Black people were still suffering, even to that day because the economy of the country was in the hands of the few, that 10% of Whites, and the majority of Black people were not in the economy, and the land was still not with them. So, they needed to push things like that. It had to be more for the workers, not for the elite. Maybe it was a mistake made before in that it concentrated on the managerial components of B-BBEE. Some of his friends or his white friends did not know about those things, not even those who were educated. If affirmative action and all those laws were not made, Black people were not going to be promoted because the white people promoted themselves and that was the reality that they did not want to accept, even after the KwaZulu-Natal riots. The injustices were not appreciated because it was hush-hush. Blacks still needed to be empowered. They still needed the land, and they still needed the economy to be in their hands. It had to be distributed. They were pussyfooting around issues at times. Race still played a role because Blacks were poor. Blacks were disadvantaged because of the colour of their skin. There had been job reservation for a long time.

Dr Tshwaku said there had to be a state-led approach in terms of industrialisation and development without the private sector. He appreciated the fact that it said “all the workers” because Members should remember that they should also empower white females. After all, white females had been disadvantaged as white males were the captains of the industries. Black people were at a disadvantage in terms of ownership and the strategic positions of the economy as well.

Mr C Malematja (ANC) stated that Members should not make the mistake of pretending not to understand what it was that the ANC was trying to address. Industry had not arrived at a number that could satisfy and justify Blacks being in power. Blacks were in power through the process of democracy where the majority were voted in and that majority could, at any given time, implement any policy without those who were left out. But South Africa was a true democracy where people were trying to accommodate each other. By accommodating others, the ANC should not forget that there was a bigger agenda that it needed to deal with: where there was injustice, where the economy was in the hands of the few who were even today not necessarily willing to share, and until everyone shared equally, there was no way the ANC was not going to demand that power because it was only the ANC that was in power. He wanted to know who the agitators were, and who the owners of apartheid were. Everybody said that apartheid was not their policy; they were not there; they never implemented apartheid policies. But when the ANC wanted to deal with apartheid, it was like those people became defenders of apartheid.

He said that, even now, Blacks were feeling the impact of apartheid. So, Blacks had to be allowed to exercise what they thought would assist. And it was true that some never benefitted and the approach covered those people. He said that the comrades should be ready to accept that the ANC was doing a little to try and accommodate everybody and so they should stop politicising other things.

Mr Cuthbert noted the need for the Members to lecture him. However, he was a student of Political Science, History and Public Policy, so he was well-versed in what had happened and he acknowledged what happened in the past. And he did think it should be addressed, as he had said earlier. However, what would be a more authentic concluding remark coming from the ANC, would be that they supported a race-based policy and Black Economic Empowerment and the DA, from a practical level, would have opposed that particular concluding remark, as he had done with other concluding remarks that had come before. And then it would not have gone into a debate. But it seemed that there was an attempt by Members to posture. And if that was what they wanted to do, then they were welcome to do so. And no matter how much they said, they were not going to change his mind in the sense that he believed that the country should have a needs-based policy in Parliament and that it had to be far broader than what the current system allowed for, which was to enrich the elite at the expense of the poor. He did not know if the media was on the meeting platform, hence the posturing. However, that was not going to change his view. The Committee could simply move on, register the DA opposition to the point and it would be detailed in the minutes. And then the Committee could get on with the business of the meeting.

Mr Mulder suggested that Members should be very patient regarding the whole situation. What he had raised was the fact that there were two contradictory comments made in paragraph 13. And that was the main issue – points or issues that contradicted each other. So, it was important to rectify that. As it stood, it was a contradiction. Members should be careful about getting involved in conversations about the past, and the future, because the FF+ believed the only way in which people could be empowered was if the economy grew, and the country should grow the economy in the best way possible that made business sense, and without any political intervention, which was the only way that the economy would grow and people would be empowered. He was not going to talk about state capture and all the trillions of Rand that had been lost and all the people who could have been empowered with that money, etc, etc. That was not what paragraph 13 was about. It was about the fact that there was a contradiction between the two ideas: in one sense was the shift in Broad-Based Black Economic Empowerment to focus on the power of all and Black industrialists versus a greater emphasis on merit. It should be rephrased to mean one thing or another, and if a certain party did not agree, it could oppose the remark.

The Chairperson noted Mr Muller’s point but those were the conclusions of the African National Congress and unless the ANC agreed to change it, that was how it stood. The FF+ would be welcome to submit a conclusion.

Mr Burns-Ncamashe said that sometimes the ANC preferred to be accommodative, to its own detriment. At times, even during debates in the House, one could witness the level of arrogance and impunity with which Black people in South Africa were treated. He did not think it was something that they should tolerate forever. That attitude of condescending and gaslighting was not acceptable. Mr Cuthbert might not be sensitive to that because of his age. People knew exactly what it meant to be under white rule in an apartheid system, so he urged colleagues who were interested in building an inclusive economy, who were committed to the spirit of reconciliation to account for what they said. When the ANC said it wanted an inclusive economy, it was to address the past injustices that were inflicted by the whites' own people against his own forebears. That was the reality. It did not matter how they felt about it; it was a fact.

Mr Mbuyane stated that those were the concluding remarks submitted by the ANC. All parties were given an opportunity to submit, but the parties chose not to submit their concluding remarks. They came to the meeting and wanted to grandstand about the past. B-BBEE was an ANC policy and now the ANC was shifting the focus to empowering the workers because they were the ones building the economy. Those who were beneficiaries in the past did not want the ANC to transform the economy so that it became inclusive so that anyone in South Africa who was working for the economy should benefit. The ANC wanted to empower all workers as part of the B-BBEE proposal, and also Black industrialists so that they formed part of the inclusive economy of South Africa. Others should not grandstand about desires and so forth. It would not assist the Committee because that was an ANC submission.

Mr Cuthbert did not want to lecture Members of the Committee, but if they had just allowed the whip to speak first, it would make life so much easier. He was right in saying other proposals were anti-recommendations. If other parties wanted to put concluding remarks, they could. He had done so. He had just wanted to register the DA’s vote against it and then Members could have moved on with the business, but the Committee had to be subjected to soliloquies by Members. If they just deferred to the whip, the Members would have saved themselves a lengthy debate. Everyone’s views on those matters were very well established. They were dealing with procedural business and should get on with it.

The Chairperson reminded Mr Cuthbert that every Member had a right to make his or her voice heard, but she took his point. She requested the Secretary to move on to number 14.

The Secretary read point 14: The Committee urged the Minister to expedite the appointment process for the Director-General of the DTIC and the Commissioner of ITAC.

Mr Cuthbert stated that the DA had made a similar point but would accept the ANC’s point 14 instead. It was a little bit of a compromise to his ANC colleagues.

The Secretary noted the change to be made to the DA submission. Point 15: The Committee welcomes the progress made in the forensic investigation initiated by the Minister and the SIU into allegations of corruption, and maladministration involving the NLC. It also welcomed the reservation orders obtained by the SIU in an attempt to recover the stolen funds. The Committee was encouraged by the significant changes underway at the NLC and welcomed the appointment of the new chairperson, Dr Pityana, and other board members who provided strong governance support.

Dr Tshwaku stated that the EFF had reservations about the point relating to the SIU because the SIU was acting on reports that had not been sent to the President and finalised: the reports were ongoing. The SIU should have waited for the reports to be signed by the President before acting on them. He did not know whether there was a mission but he was not pleased in terms of the SIU going after people prior to finalising a report. People implicated in those reports had not been given a chance to account. So, he had a problem with the issue. He added that, of course the money had to be recovered and he agreed with the upliftment of the poor but not on the appointment of the 78-year-old Dr Pityana. Why did they not take someone young, new and competent instead of recycling the old guy? He had reservations about that.

The Chairperson said he should not judge but was free to make a recommendation.

Mr Cuthbert stated that he agreed with the recommendation. He did not share the same concerns as Dr Tshwaku about Dr Pityana. It was good to have young blood in an organisation. He was only 29 himself, he did not think that age was necessarily indicative of competence. If a man was competent at that age and wanted to do a job like that, instead of enjoying a life travelling, that was his free will to choose. Mr Cuthbert’s concern lay with the Minister’s representative, who had not responded to allegations levelled against him. Those needed to be tested. If he considered the work done by the new leadership, and the acting executive, those allegations needed to be clarified before he could agree to something like that. There were two options. He could approve the ANC's concluding remark if it ended with Dr Pityana or just included a broader statement on leadership, but he could not agree with other board members until that allegation was cleared up by Dr Lubisi himself.

Democratic Alliance Concluding Remark and Recommendations proposals
The Secretary read the first concluding remark: The Committee did not receive an answer to requests for a status update on the SADC-EU EPA between SA and the EU. This is concerning as this trade agreement is our most significant trading relationship in terms of overall Rand value.

There were no objections but the Secretary proposed that it be paraphrased and sent to Mr Cuthbert for his approval.

Mr Cuthbert was happy for the Secretary to do that. One issue relating to the concluding remark was that in the draft report received that morning, the fact that the Committee did not receive a response to the question was highlighted. He did think it was important that the trade directors brief the Committee on the issue and explain exactly what had happened because the information that he had was that there had not been much progress and the matter needed to be finalised considering the economic impact of the agreement.

The Chairperson stated that there was no opposition to the point but the Committee Secretariat needed to check the wording and where it would be placed under the concluding remarks.

The Secretary noted that the second proposal by the DA was withdrawn as the DA accepted a similar point on the ANC list.

The Secretary read out the first recommendation from the DA: The Department must develop a strategy and implementation plan, which allows for better use of the tariff line concessions contained within the AGOA agreement. To complement the high trade volume in the automotive sector, the Department should look at ways of expanding agricultural exports to the USA market.

As there were no objections, the Secretary proposed a redraft of the recommendation.

Mr Cuthbert was happy with that. He added one substantiating point: if one looked at how SA benefited from AGOA, the top five tariff lines used were all automotive exports. There was a lot of under-utilisation of other tariff line concessions that AGOA offered and if SA was going to lobby to have that agreement extended, then the country’s economic strategy needed to be geared in part towards making sure that it maximised the use of all of those tariff line concessions. Otherwise, SA would have agreed to an agreement that it was not taking full advantage of, and it was in every party's interest to want to achieve that.

The Chairperson agreed that there could be no opposition to that point.

Dr Tshwaku suggested that the point should also state that there had to be a re-negotiation of those low tariffs at some point and put them a bit higher as that would scientifically stimulate what the second point wanted to achieve, which was the localisation of the economy. He suggested that the Committee should call for a re-negotiation of those tariff lines.

The Chairperson explained that it was the Democratic Alliance's input but the secretariat would note the EFF comments on the Democratic Alliance's input.

Ms Margot Sheldon, Committee Content Advisor, clarified that AGOA was legislation decided on by the US administration. So, the tariff line concessions that Mr Cuthbert and the DA were referring to was determined by the US, not by SA as it was about the SA exporting to the US. It was not implemented on SA’s side because it was not about imports; it would apply to SA exports to the USA.

Dr Tshwaku agreed the tariffs should be lower, not higher.

Mr Cuthbert noted that Dr Tshwaku was a natural scientist of note, by virtue of his PhD, which spoke for itself, but from an Economic Sciences point of view, his statement was not scientific. Margot had explained it in part. A number of those tariff line concessions implied that SA landed goods at a minimal rate, or for nothing. When a country had an agreement like that with the USA, or the SADC-EU EPA (Southern African Development Community-European Union Economic Partnership Agreement) for example, a number of them contained what they called developmental concessions. Because those countries had a more developed economy than SA, SA got more out of the deal because they understood SA’s need to stimulate and grow the economy to become competitive. It was a piece of legislation voted on by Congress, and not necessarily a trade agreement. However, SA had an agreement because it was a participant in the programme. SA was reliant on the US Congress which would decide on AGOA in 2025. SA needed Congress to vote in favour; it was not a trade negotiation tool that SA could negotiate over.

Dr Tshwaku stated that he did not understand AGOA but was in favour of it if the USA was going to be on SA’s side; the USA should not charge SA a lot when the country imported to the USA. That was fine; he was happy with that.

The Secretary read recommendation number two: The department should provide the Committee with the quarterly metrics of the impact of localisation on the economy, i.e., contribution to GDP, impact on prices, and jobs created as a result of this policy choice.

He added that a similar principle would apply. The secretariat needed to look at whether that was a recommendation or a concluding remark and he would advise accordingly.

Mr Cuthbert was partially happy with that. However, it was an admission made by the Minister when he had asked the Minister the question the previous week, and it was purely about the data that the Committee was provided with. If it were put in as a recommendation, it was more binding in the sense that the DTIC would then have to, on a quarterly basis, make sure that all of that information was collated through the Economic Research Unit, and provided to Members. It would give the Committee a better idea of whether or not a policy was successful. He would like to keep that as a recommendation because it was an action step that needed to be taken by the Department. The Committee was well within its rights to request that of the Minister and for him to consider it as a recommendation from the Committee.

The Chairperson accepted the point but asked that the Secretariat take a look at the procedural aspects.

The Secretary agreed to look at it because there were procedural processes regarding recommendations. He would advise accordingly and the Committee would then have to decide on the way forward.

The Chairperson noted that concluded inputs received so far, but other parties might want to submit recommendations or concluding remarks before the Committee looked at the formal adoption of the Report the following Tuesday. She assumed Members would take the Report to their respective caucuses that Thursday. Hopefully, at the Programme Committee would indicate which day each Committee would debate the reports.

Mr Cuthbert stated, for record, that the DA reserved its right to take a position on the report until discussed by its caucus. He asked the ANC whip if the points submitted by the ANC were merely concluding remarks or whether they included recommendations because he had not seen a separation between the two. And if they were just concluding remarks, could he expect recommendations to be forthcoming from the ANC?

Mr Mbuyane said that the ANC had submitted concluding remarks. The party would have to submit recommendations because there were two recommendations submitted by the opposition. So, according to the process, the ANC had to submit at least two recommendations.
 
Minutes
The minutes of 7, 13, 21, 27, and 28 September 2022 were read and approved unanimously with no amendments or objections.

Closing Remarks

The Committee Secretary informed Members that the following meeting would be on Wednesday 9 November 2022: Briefing by the ITAC on its 2021/22 Annual report as well as its first quarter financial and non-financial performance for the 2022/23 financial year; briefing by the CIPC on its 2021/22 Annual Report as well as on its first quarter financial and non-financial performance for the 2022/23 financial year.

The meeting was adjourned.

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