DTI to enforce BEE on trade policy?


By Gerhard van Onselen: Senior Analyst – Sakeliga

Minister Ebrahim Patel’s recent June DTI budget speech points to yet another emerging avenue of BEE enforcement in South Africa.

It appears that the DTI now intends to make “transformation” a further requirement placed on local companies when applying for trade relief (e.g. tariffs on competing imports) at government’s International Trade Administration Commission (ITAC).

Mr. Patel is quoted in saying, “We [the DTI] will refocus our trade policy so that tariff relief that is offered to domestic companies is accompanied by clear, enforceable commitments to invest more, expand output, create jobs and transform.”

This forms part of what government has called ‘developmental trade policy’, which seeks to leverage trade interventions as measures for supporting the rolling Industrial Policy Action Plan.

In a 2016 DTI directive (cf. p.4)  issued to ITAC by Minister Patel himself, it was required for companies that apply for “trade relief” to “make commitments” on “investment”, “expansion” and “job-creation” in order to qualify for tariffs on competing imports.

ITAC was requested by Minister Patel to ‘deepen the commitments’ made by applicants and to ‘monitor adherence to these commitments’.

Judging from Patel’s comment in the June budget speech, the DTI now seeks to add transformation, likely measured through the lens of BEE, as a further condition for protective tariffs and trade remedies.

Rather astonishingly, this two-for-one anti-free market policy seems to succeed in curtailing market freedoms twice through one intervention.

First, through the imposition of import taxes itself, and second, by setting coercive impositions, called ‘enforceable commitments’, that curtail commercial freedoms and add to costs by binding companies to the red-tape of the BEE apparatus.

Such a proposal to enforce transformation, we assume to mean BEE, through tariff measures would only add to the DTI’s drive for a stricter and broader enforcement of BEE.

The DTI’s trade agencies already execute trade remedies on a so-called case-by-case basis, which one may argue makes it rather arbitrary. Adding BEE to the mix of course complicates the matter even more and only expands the say of bureaucrats over commerce and freedom of trade.