Madam Chair, today I will be introducing the two trade agreements between South Africa and the Federal Republic of Germany and the United Mexican States.
The trade agreements define rules for the conduct of the trade policy and these rules must strike a balance between commitment and flexibility. While too much flexibility may undermine the value of the commitment, too little flexibility may render the rules unsustainable. Therefore, while government has many good reasons for signing trade agreements, it is crucial that effective agreements must strike an appropriate balance between flexibility and commitment.
With regard to Germany, we have come a long way and we know that it is already one of our major trading partners. It has already contributed more than R42 billion in 2002. It has also created approximately 60 000 jobs in the country with 450 companies.
With regard to the United Mexican States, even though we know that the Latin American market is relatively small, representing only 2% of South African trade with the Southern Common Market, these agreements will assist in the light of the fact that they will apply to the following taxes: the federal income tax; business flat rates tax; and in South Africa it will also assist us with normal tax, secondary tax and companies withholding tax and royalties; and tax on foreign entertainment and sportspersons.
As in the agreement with Germany, in addition to existing tax, the agreement shall also apply to any identical or substantially similar taxes that are imposed after the days of the signing of these agreements.
In conclusion, the trade agreements seek to regulate taxation and remove fiscal obstacles between the two countries, as well as providing for fair business practices in a foreign country through the provisions on nondiscrimination. Exchange of information relating to the agreement is also important as is collaboration between the contracting states, in the case of South Africa and Mexican States, with regard to the collection of the revenue that has been claimed. I thank you. [Applause.]
There was no debate.
Agreement between the Republic of South Africa and the Federal Republic of Germany for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital approved.
Agreement between the Republic of South Africa and the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income approved.