WT/TPR/S/34 Trade Policies Review
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II. TRADE AND INVESTMENT REGIMES
(1) Institutional Framework
1. The Republic of South Africa (RSA) adopted a new Constitution on 8 May 1996, which was
enacted on 3 February 1997.1  The Constitution is the supreme law of South Africa;  any law or
conduct determined to be inconsistent with the Co nstitution is invalid.  Under the new Constitution,
the Republic of South Africa is a parliamentary democracy, with a multi-party system;  provisions for"co-operative government" between national, provincial and local spheres are written into the
Constitution.  The Constitution provides for a bicameral Parliament comprising the National
Assembly and the National Council of Provinces (replacing the Senate), and a Cabinet consisting of
the President, a Deputy President and Ministers.
2
2. The President is the Head of State and exercises executive power in consultation with a
Deputy President.  The President, whose tenure is limited to two five-year terms, is elected by the
National Assembly from among its members;  upon election he ceases to be a member of the National
Assembly.  The President may dissolve the National Assembly;  the latter, by a vote of no-confidence,
may dismiss the President and/or the Cabinet.  The Deputy President and Ministers are appointed by
the President, normally from among the members of the Assembly;  at most two Ministers may beselected from outside the Assembly.  National legislative authority is vested in Parliament and the
President:  the National Assembly passes legislation;  the President assents to, and signs, bills.  The
National Council of Provinces participates in the legislative process to ensure that provincial interests
are taken into account in the national sphere of Government.
3. The National Assembly consists of between 350 and 400 members elected for five years by
universal adult suffrage under a system of proportional representation.
3  The Speaker and the Deputy
Speaker are elected by the National Assembly from among its members;  the Speaker presides oversittings of the National Assembly.  In general, issues before the National Assembly are decided by a
simple majority of votes cast, provided that there is a quorum;  the quorum consists of the majority of
the members of the Assembly in the case of votes on, or amendments to, bills, and of at least one third
of the members of the Assembly for votes on all other issues.  The member of the National Assembly
presiding at a meeting of the Assembly has no deliberate vote, but must cast a deciding vote whenthere are an equal number of votes on each side of the question;  he may cast a deliberate vote when a
question must be decided with a supporting vote of at least two thirds of the members of the
Assembly.
4
                                                     
1The political change from apartheid to a democratic regime, initiated in the RSA from 1990, led to the
adoption of an interim constitution, which came into ef fect in April 1994.  Under the interim constitution, a
multi-racial transitional administration and an interim Government of National Unity (GNU) were established inMay 1994.
2Certain provisions of the Constitution will not come into force before the next global election, to be
held by end-april 1999.  Schedule 6 of the new Constitution provides for transitional arrangements on, inter alia ,
rules and orders of the National Assembly, and the structure of the Cabinet, in force when the new Constitutiontook effect.
3The National Assembly currently consists of 400 members.
4Section 1 of the Constitution (the Founding Provisions) may be amended by a bill passed by the
National Assembly with a supporting vote of at least 75% of its members, and by the National Council of
                                                                                                                                                (continued...)Republic of South Africa WT/TPR/S/34
Page 17
4. The National Council of Provinces consists of 90 members:  ten representatives elected by
each of the nine provincial legislatures, including the Premier of each province.  The Council elects its
Chairperson and its two Deputy Chairpersons from among its members.  The Chairperson and one of
the two Deputy Chairpersons are elected for five years unless their term as a delegate expires earlier5;
the second Deputy Chairperson is elected for one year from each province in rotation.  Provincial
legislatures have legislative competence in various functional areas, such as agriculture, industrialpromotion, trade, tourism, public transport, regional planning and development, and welfare services.
Municipal Councils may also enact by-laws, which must not be inconsistent with the Constitution or
any Act of Parliament.
5. The National Economic Development and La bour Council (NEDLAC), which replaced the
National Economic Forum and the National Manpower Commission on 18 February 1995, is the
vehicle by which Government, labour, business a nd community organizations seek to cooperate,
through problem-solving and negotiation, on economic, labour and development issues, and related
challenges facing South Africa.  NEDLAC's scope of activity covers all social and economic policy.All its agreements, reports and findings are tabl ed in Parliament.  NEDLAC is funded by the
Government from the budget of the Department of La bour.  The structure of NEDLAC comprises:  an
annual National Summit of 300 participants chaired by the President or the Deputy President;  an
Executive Council;  a Management Committee;  four Chambers (Public Finance and Monetary Policy,
Trade and Industry, Labour Market, and Development) that drive its work programme and makerecommendations to the Council;  and a Secretariat.
6  The Trade and Industry Chamber (TIC), for
instance, seeks to reach consensus and makes agreements on all matters pertaining to the economic
and social dimensions of trade, industrial, mini ng, agricultural and services policies, and the
associated institutions.  TIC provides technical as sistance to the Government in preparing bilateral,
regional and multilateral negotiations and identifies areas that require particular attention.7
6. The Constitutional Court, comprising a President, a Deputy President and nine other judges,
is the highest court competent to deal with issues relating to, inter alia , the interpretation, protection
and enforcement of the Constitution.  The Suprem e Court of Appeal, which consists of a Chief
Justice, a Deputy Chief Justice and judges of appeal, may decide appeals and connected issues, as
well as matters that are legally referred to it.  A High Court may decide any constitutional matter,
except a matter that only the Constitutional Court may decide, or a matter assigned by an Act of
Parliament to another court of a status similar to a High Court.  The other Courts, including
                                                     
4(…continued)
 Provinces, with a supporting vote of at least six provinces.  Chapter 2 of the Constitution (the Bill of
Rights) may be amended by a bill passed by the National Assembly, with a supporting vote of at least two thirdsof its members, and the National Council of Provinces, with a supporting vote of at least six provinces.
5"Permanent" delegates are appointed for a term that expires immediately before the first sitting of the
provincial legislative after its next election.
6The participants in the National Summit come from the spectrum of South African society.
Government, organized business and organized labour are represented in equal numbers in the four chambersand the Executive Council.  Community-based organizations (civics, women, youth, rural people and disabled
people) are represented in the Development Chamber, Management Committee and Executive Council.  The
Minister of Labour coordinates the Government delegation in NEDLAC.
7The areas so far emphasized by the Trade and Industry Chamber are training, investment incentives
and incentives relating to upgrading technology, human resource development and productivity enhancement.WT/TPR/S/34 Trade Policies Review
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Magistrates Courts, may judge any matter falling under an Act of Parliament, but they may not
enquire into, or rule on, the constitutionality of any legislation or any conduct of the President.8  The
President and the Deputy President of the Constitutional Court, the Chief Justice and the Deputy
Chief Justice, and all other judges, including those of the Constitutional Court, are appointed by the
President after consulting with, or on the advice of, relevant organs or persons.
(2) Policy Formulation and Implementation
7. The national executive formulates and implements policies, and the President and Parliament
enact related legislation.  Each Ministry formulates policies in its field of activity.  The bills relating
to the policies are submitted by means of memoranda to the Cabinet for comment.  Bills are reviewed
by the State Law Advisors, before introduction into Parliament.9  Only a Cabinet member, a Deputy
Minister, or a member or committee of the National Assembly may introduce a bill in the Assembly.Money bills may only be introduced in the Assembly by the Cabinet member responsible for national
financial matters.
10  Bills, excluding money bills, falling within functional areas, may be introduced in
the National Council of Provinces by its members or its committees;  bills, such as those amending
Chapter 1 (Founding Provisions) and 2 (the Bill of Rights) of the Constitution must also be passed by
the Council.  A bill passed by the Council must be referred to the Assembly.  When passed by theNational Assembly, bills affecting provinces (bills re ferred to in Sections 76(3), (4) or (5) of the
Constitution) must be referred to the National Council of Provinces.
8. After introduction of a bill in the National Assembly it is submitted, after a first reading, to
the portfolio committee that deals with that area of policy for consideration.  Trade-related legislation
is debated before the Portfolio Committee on Trade and Industry.  The bill goes back to the National
Assembly for a "second reading" with the Committee's report.  Members debate the issue and the bill
may be returned to the Portfolio Committee for ame ndments before its submission for a vote in the
National Assembly.  Then, if applicable, the bill is tabled in the National Council of Provinces.  The
bill is referred to the applicable committee on provincial level, in the same manner as with the
Portfolio Committee.  Once that procedure has been completed, the bill is put to vote in the National
Council of Provinces.  If the bill is rejected or passed with amendments, it must be passed back to the
National Assembly for reconsideration.  If necessary, the bill will be referred to a MediationCommittee for final agreement.  If agreement is not reached within 30 days, the bill lapses unless the
National Assembly passes it again with a two-thirds  majority.  The bill finally becomes an Act and
passes into law when the President assents by signing the document.  The President has the authority
to refer the bill back to the National Assembly if he believes that it may not be Constitutional.  If the
bill is not amended to the President's satisfaction, it will be referred to the Constitutional Court for a
final decision.  The signed Act is published in the Government Gazette for public information.
9. Under the provisions of Article 231 of the Cons titution, the national executive negotiates and
signs all international agreements.  Such agreements, except those of,  inter alia , technical,
administrative or executive nature, bind the Republic of South Africa only after they have been
approved by resolution in both the National Assembly and the National Council of Provinces.  Any
                                                     
8Special Courts are composed for a particular purpose, for example the Water Court, the Special Court
for Revenue Appeals, the Patents Court and the Special Court regarding Harmful Business Practices.
9The State Law Advisor may also draft bills on the basis of information provided by a Ministry that
initiates a policy.
10Money bills appropriate money or impose taxes, levies or duties.Republic of South Africa WT/TPR/S/34
Page 19
international agreement becomes law in the Republic of South Africa when it is enacted into law by
national legislation;  however, a self-executing prov ision of an agreement approved by Parliament is
law in the Republic unless it is inconsistent with the Constitution or an Act of Parliament.  The WTO
Agreements have been ratified by Parliament but have not been enacted into law;  therefore, they have
no standing before national courts.
10. The Department of Trade and Industry (DTI) fo rmulates and coordinates South Africa's trade
and industrial policies.  Initiatives on trade and investment issues may also come from other
departments and agencies, such as the Department s of Finance, Agriculture, National Health, and
Mineral and Energy Affairs, and the South African Reserve Bank.  Proposals and recommendations to
the DTI may come as well from public and private sources, including the National Economic
Development and Labour Council (NEDLAC), the Bo ard on Tariffs and Trade (BTT), the Industrial
Development Corporation (IDC) and the South Afri can Chamber of Business (SACOB).  The private
sector enters the debate through its delegation in NEDLAC and in the President's Economic Advisory
Council.11  The IDC and Parliamentary Committees assist the DTI in carrying out periodic reviews
and assessments of trade policies.
11. Under the provisions of Section 48 of the Cust oms and Excise Act, the Minister of Finance
may amend customs duties at the request of the Minister of Trade and Industry, provided that such
amendments comply with the technical requiremen ts, such as the International Convention on the
Harmonized System, that apply with regard to the customs tariff.  Such duty amendments are
implemented, with immediate effect , by way of a notice in the Government Gazette, and are tabled
annually by the Minister of Finance in the National Assembly.  Amendments made in any calendar
year and not tabled in the National Assembly lapse at the end of the following calendar year.
Enquiries with regard to the Act must be directed to the Commissioner for Customs and Excise, whois responsible for its administration.
12. The Board on Tariffs and Trade (BTT) is an investigative and advisory body;  its members (at
least four) are appointed by the President.  The objectives of the Board are to promote industrial
growth, within the fram ework of South Africa's economic policy, by conducting investigations into
any matter that affects or may affect the trade and industry of South Africa or the common customsarea of the Southern African Customs Union, and to advise the South African Minister of Trade and
Industry in this regard.
12  At the request of the private sector, the Board also may investigate alleged
dumping, subsidized imports or "disruptive competition", and the development of industries by the
levying of customs duties.  By order of the Minister of Trade and Industry, it may also investigate any
matter, including amendments to the customs tariff and the Customs and Excise Act, that affects ormay affect trade and industry.
13. The Department of Trade and Industry ha s a mandate to promote South Africa as an
investment destination, more specifically, direct fixed investment into the industrial sector.  After a
consultative process in NEDLAC and in cooperation with the provincial governments, the DTI
established a non-profit organization, Investment South Africa (ISA), in January 1997.  The agency,
under the authority of its Board, works closely with the private sector, provincial governments and the
various promotion agencies.  It is tasked with promoting foreign direct investment into South Africa
in all sectors of the economy.  Funded by the Government, ISA plays a facilitation role.  Prospective
                                                     
11The President's Economic Advisory Council gives advice on the appropriate mix of policy measures
to achieve priority economic goals.
12Article 3 of the Board on Tariffs and Trade Act, 1986.WT/TPR/S/34 Trade Policies Review
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investors are required to apply to the Department of Home Affairs (DHA) via South Africa's missions
abroad for residence/working permits.  The permits are issued to prospective investors after the DHA
has received documentary motivation and evidence of the applicants' intention to invest in
South Africa.  A consultative forum exists between the DTI and the DHA on matters pertaining to
immigration of prospective foreign investors to South Africa.
(3) Policy Objectives
14. In South Africa, trade and investment policies are aimed at contributing to the success of the
Reconstruction and Development Programme (RDP), established in 1994, and are in consequence
integrated into the overall restructuring of the economy.  The RDP is designed, inter alia , to achieve
sustainable economic growth and a socially acceptable distribution of income, to meet the social and
economic basic needs of the population, to develop human resources, and to seek mutual economiccooperation and balanced development in Southern Africa.
13  Annual economic growth of 6% is
deemed necessary to achieve these goals.
15. In light of the deterioration of the current account since 1994 (Chapter I(2)(ii) and (3) and
with a view to achieving a sound balance of paym ents, the Government decided in 1995 to seek to
accelerate the growth of non-gold exports, mainly manufactured products, as these are less subject toprice fluctuations.  Tariff reforms (rationalization and simplification of the tariff structure) combined
with a variety of incentives (Chapter III) are to co ntribute to an improvement in the productivity and
international competitiveness of the manufacturing se ctor by reducing production costs and increasing
the performance of production factors.
14  Such an improvement also requires investment in new
capacity, i.e. an increase in private investment.  As a result of reform, tariffs will be the main trade
policy instrument in South Africa:  however, tariff protection will remain high for the manufacturing
sector (end-products in particular) but will substantially drop for capital equipment and primaryproducts (Chapter III(2)(iii)(b)).  Tariff escalation will consequently be more pronounced.
16. Public investment will be aimed at meeting the basic needs (access to modern and effective
services) of all South Africans and, in particular, the disadvantaged.  The Government hopes to boost
investment both by South Africans and foreigners by creating an enabling environment that will
facilitate efficient markets and better allocation of resources.  Transparent, stable and consistentmarket-oriented reforms, including commercial serv ices reforms, the deregulation of prices and the
relaxation of exchange controls on residents, the restructuring of State assets, and the success of the
RDP and the related climate of political stability and economic growth are designed to contribute to
the creation of such an environment.  Thus, the relaxation of capital controls will facilitate access to
foreign credits for long-term investment by the private sector and reduce overall financing costs.Investment incentives, such as the Tax Holidays, Accelerated Depreciation, and Small/Medium
Manufacturing Development Programme schemes, are available for both local and foreign investors.
The abolition of the non-resident shareholders' tax of 15% in 1995, the National Industrial
Participation Programme launched in 1996 (Chapter III(2)(xi)) and the establishment in 1997 of
Investment South Africa (ISA), together with the e xpected establishment of branches of international
                                                     
13Government of South Africa (1994a).
14NEDLAC recognizes the necessity of trade liberali zation in South Africa;  it is reviewing the timing
of tariff reforms and their consequences on the economy.Republic of South Africa WT/TPR/S/34
Page 21
banking groups, are also aimed at contributing to a rapid increase in foreign direct investment, mainly
in the export-oriented manufacturing sector.15  Human resource development and training incentives
are available to improve the employment intensity of investment, especially in the manufacturing
sector, and to address the unemployment problem;  the promotion of small and medium-sized
businesses (seen as labour-absorbing enterprises) is also to enhance growth in employment.
17. The Government has identified the economic development of the southern African region
(especially the Southern African Development Community area) as critical to South Africa's growth;
mutual cooperation in the region and the development of the other southern African countries will
increase their potential as markets for South African exports and help to curb migration to
South Africa.  South Africans are encouraged to invest in the region.
(4) Laws and Regulations
18. Two main laws govern South Africa's foreign trade:  the Customs and Excise Act and the
Board on Tariffs and Trade Act.  The Customs and Excise Act regulates:  the levying of customs and
excise duties and other charges (e.g. the fuel levy);  the importation, exportation, transit and coastwise
carriage of goods;  customs and excise warehouses;  customs valuation, clearance and origin of goods;
emergency measures;  and tariff concessions.  Under the Board on Tariffs and Trade Act, the Board isestablished to promote industrial growth;  the Board influences the imposition, amendment and
removal of import duties.  Import and export control measures are applied pursuant to powers
conferred on the Minister of Trade and Industry by the 1963 Import and Export Control Act.
19. South Africa does not have an Investment Act.   However, sector-specific Acts (Table II.1)
regulate investment.  A variety of schemes and Government Notices provide incentives to investors
(Chapters III and IV).  According to the authorities, national treatment applies to all foreign investors;
foreigners are free to invest in all industries open to local investors and to repatriate the proceeds and
earnings after payments of taxes.  The only limitations are made in pursuance of exchange control and
immigration regulations and are on local borrowings (in rand and South Africa's capital markets) by
non-residents investing and operating in South Africa.
Table II.1
Main trade related legislation in South Africa
Area LegislationDate of entry into
force
Foreign trade,  customs and excise duties and other charges;  emergency
measures;  tariff and tax concessions;  clearance and origin of goods;  and
customs valuationCustoms and Excise Act (Act 91) and
various amendments1964
Trade and industry;  customs duties and emergency measures;  tariff and tax
concessionsBoard on Tariffs and Trade Act (Act
107) and various amendments1986
Price controls and regulations in the manufacturing sector Price Control Act (Act 25) 1964
Control of the industrial price of sugar Sugar Act (Act 9) 1978
Competition Maintenance and Promotion of
Competition Act (Act 96)1979
Table II.1 (cont'd)
                                                     
15In 1996, the Government was to allow the establishment of branches of international banking groups
(Marx and Hough, 1996).WT/TPR/S/34 Trade Policies Review
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Area LegislationDate of entry into
force
Formation, conduct of affairs and liquidation of companies;  and
smaller businesses (one to ten natural persons)Companies Act (Act 61)
Close Corporations Act (Act 69)Trust Property Control Act1973
19841988
Use of natural resources - mining The Minerals Act (Act 50) 1991
Re-insurance facilities The Export Credit and Foreign
Investments Re-Insurance Act
(Act 78)1957
Standards Standards Act (Act 29) 1993
Agricultural Products Standards Act
(Act 119)1990
International payments, capital movements and foreign exchange transactions Currency and Exchanges Act (Act 9) 1933
Exchange Control Regulations,
Orders and Rules1961
Financial Services Banks Act 1990
Financial Markets Control Act 1989
Stocks Exchanges Control Act 1985
Mutual Banks Act (Act 124) 1993
Insurance Act (Act 27) 1943
Corporation for Public Deposits Act
(Act 46)1984
Mining Minerals Act (Act 50) 1992
Minerals and Energy Laws
Rationalization Act (Act 47)1994
Agriculture Marketing of Agricultural Products
Act (Act 47)1996
Co-operatives Act (Act 91) 1981
Wine and Spirit Control Act [?]
Livestock Improvement Act (Act 25) 1977
Government procurement State Tender Board Act (Act 86) 1968
Government Notice R1237 1988
Import and Export Controls Import and Export Control Act (Act
45)1963
Government Notice R2263 1992
Intellectual Property Rights Patent Act 1978
Trade Marks Act 1993
Designs Act 1993
Copyright Act 1978
Merchandise Marks Act 1941
Tourism Tourism Act (Act 72) 1993
Telecommunications Telecommunications Act (Act 103) 1996
Government Notice 293 1997
Source: Information provided by the South African authorities.Republic of South Africa WT/TPR/S/34
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(5) Agreements
20. South Africa is an active participant in all major multilateral organizations16;  it has on several
occasions expressed its support for an open multilateral trading system and its readiness to comply
with the rules and obligations of such a system.  South Africa views the World Trade Organization as
providing the comprehensive regulatory framework necessary to the ongoing processes of integration
and interdependence of national economies, which will ensure a sustainable and equitable path togrowth and development for all WTO Members.
17  South Africa's accession to regional and bilateral
agreements is determined not only by economic considerations but by traditional, political and
cultural links with partner countries, mainly in the Southern African region;  thus, considerable
emphasis is placed on the development of the Southern African Development Community (SADC),
and renegotiation of the Southern African Custom s Union (SACU) agreement is under way.  The
authorities have clearly indicated their view that such agreements complement those of the WTO,
with which they must be consistent.
21. South Africa relies on rules and procedures laid down in the WTO Agreements for the
settlement of its trade disputes with other Members.  Bilateral and regional trade agreements to which
South Africa is a signatory make provisions for consultations on actions taken by a party that affect ormay affect other member countries.  Negotiations are ongoing for the establishment of dispute
settlement mechanisms under regional trade agre ements, including SACU and SADC.  Between the
first Trade Policy Review of South Africa in 1993 and May 1997, South Africa has not been directly
involved, either as a complainant or as a defendant, in any dispute settlement proceedings.
(i) Multilateral agreements
22. South Africa is a founding member of the World Trade Organization (WTO), having signed
the Marrakesh Agreements subject to ratification, on 15 April 1994, and achieved Parliamentaryratification on 6 April 1995.  South Africa accords at least MFN treatment to all WTO Members.
South Africa is a signatory to the Agreements on Bovine Meat and Dairy Products, and is an observer
to the Agreement on Government Procurement.  South Africa was a founding member of the GATT
and had participated in, or had observer status in, several Agreements and Arrangements negotiated
under the Tokyo Round.
18
23. South Africa has entered into concessions and commitments under all the WTO Agreements
and was generally satisfied with the results of the Round.  Coinciding with the end of apartheid, the
authorities saw the conclusion of the Uruguay R ound as providing South Africa with an opportunity
for its reintegration into the international system of political and economic cooperation, and thus
accelerated the liberalization of the trade regime.
                                                     
16South Africa hosted the Ninth United Nations Conference on Trade and Development (UNCTAD) in
April 1996, it retains the Presidency of UNCTAD until the year 2000.
17Government of South Africa  (1996b).
18See GATT (1993).WT/TPR/S/34 Trade Policies Review
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24. As at mid-April 1997, South Africa had made 70 notifications to the WTO in several areas,
including agriculture, subsidies and countervailing measures, sanitary and phytosanitary measures,
textiles and clothing, trade-related investment measures, trade-related aspects of intellectual property
rights (Table II.2).  However, neither the Southe rn African Customs Union (SACU) agreement nor the
Southern African Development Community (SADC) trea ty to which South Africa is a party have been
notified;  the Government of South Africa has undertaken to do so once the current renegotiations arecompleted.
Table II.2
Status of South Africa's selected notification requirements to the WTO, as of mid-April 1997
WTO Agreement Description of
requirementsPeriodicity Document No. of most
recent notification
(if none, ...)Comments
Anti-dumping
(Art. 16.4)Laws and regulations Once by 3.95, then
changesG/ADP/N/1/ZAF/1, 30.10.95 BTT Act;  Extracts from
Customs & Excise Act;&
Guide
Anti-dumping
(Art. 16.4)Anti-dumping actions
takenSemi-annual G/ADP/N/22/ZAF/Rev. 1,
15.4.97As at mid-April 1997,
49 actions were taken of
which 31 definitive duties
Agriculture
(Art. 5.7)Special safeguard
provisionsAnnual (end of
marketing year)G/AG/N/ZAF/4,
11.9.96No special agricultural
safeguards were invoked in
1995
Agriculture(Art. 18.2)Aggregate measure of
supportAnnual (end of
marketing year)G/AG/N/ZAF/5,
15.11.96
Agriculture
(Art. 10 and 18.2)Export subsidies Annual (end of
marketing year)G/AG/N/ZAF/6/Rev.1,
6.1.97Any food aid notifiable was
not provided in 1995
Agriculture
(Art. 16.2)Decision on measures
concerning the
possible negative
effects of reform
programmeNot specified G/AG/N/ZAF/7,
6.1.97Technical and financial
assistance was provided to
Angola, Botswana,
Mozambique and Zambia
Agriculture
(Art. 18.2)Tariff quotas Once, then changes G/AG/N/ZAF/1/Rev.1,
8.11.95
Subsidies and
countervailing measures
(Art. 32.6)Laws and regulations Once by March 95 G/SCM/N/1/ZAF/1,
30.10.95
Subsidies and
countervailing measures
(Art. 28.1)Existing programme Once by March 95 G/SCM/N/2/ZAF,
12.5.95The General Export
Incentive Scheme (GEIS) is
being scaled down and willbe terminated by the end of
1997
Subsidies and
countervailing measures
(Art. 25.11)Countervailing actions
taken Semi-annual G/SCM/N/7/Add.1,
1.11.95As at 30 June 1995, no
countervailing duty actions
were taken
Safeguards(Art. 12.7)Pre-existing Art. XIX
measuresEnd of February 95 G/SG/N/2/ZAF,
6.3.95No measures were
maintained
Safeguards
(Art. 12.7)As Art. 11.1 measures End of February 95 G/SG/N/3/ZAF,
6.3.95A list of products was
provided
Safeguards
(Art. 11.2)Phasing out of
safeguards under Art.
11.1End of June 1995 G/SG/N/5/ZAF,
23.5.96Timetables for phasing out
Table II.2 (cont'd)Republic of South Africa WT/TPR/S/34
Page 25
WTO Agreement Description of
requirementsPeriodicity Document No. of most
recent notification
(if none, ...)Comments
Sanitary and phytosanitary
measures (Art. 7, Annex B)SPS to be notified
promptlyOnce, then changes G/SPS/N/ZAF/1,
9.4.96Temporary suspension of
importation of beef from the
United Kingdom
Understanding on the
implementation of
Art. XVIIState trading
enterprisesNot specified G/STR/N/1/ZAF,
4.8.95
Textiles and clothing
(Art. 2.7)Transitional safeguard
mechanismEnd February 95 G/TMB/N/197/Rev.1,
26.11.96A list of products to be
integrated in Stage I was
provided
TRIPS(Art. 63.2)Laws and regulations Not specified IP/N/1/ZAF/1,
20.2.96
TRIMS
(Art. 5.1)TRIMS taken End of March 95 G/TRIMS/N/1/ZAF/1,
20.4.95Motor vehicle industry,
telecom equipment, tea and
coffee
Implementation of Art. VIIof the GATT (Art. 22.2)Customs valuation
(laws and regulations)Once, then changes G/VAL/N/1/ZAF/1,
9.8.96
Dairy
(Art. II:1 and III.3)Market data semi-annual IDA/STAT/4,
22.3.95
Bovine meat
(Art. III:1)Inventory of domestic
policiesAnnual IMA/INV/9/Rev.1,
21.5.96
TBT(Annex 3C)Acceptance of the
WTO Code of Good
PracticeOnce G/TBT/CS/N/4,
8.5.95The South African Bureau
of Standards is the
standardization body in
South Africa
Source: WTO documents.
25. South Africa is a member of, inter alia , the International Monetary Fund, the World Bank, the
United Nations and its agencies, the Commonwealth, the Organization of African Unity (OAU), the
International Wheat Council, and the International Cottonne Advisory Committee;  it has acceded to
the Convention on International Trade in Endangered  Species (CITES) of Wild Fauna and Flora and
to the Montreal Protocol on Chlorofluorocarbons.
(ii) Regional agreements
(a) The Southern African Customs Union (SACU)
26. On 1 March 1970, the Southern African Cust oms Union (SACU) agreement, concluded on
11 December 1969, replaced the 1910 Customs Union arrangements, which linked the former British
protectorates of Botswana, Lesotho and Swaziland (BLS) with South Africa.  Namibia became a
de jure  member on 10 July 1990, after having been a de facto member during the time it was
administered by South Africa.19  The aims of the SACU, as expressed in the preamble to the 1969
agreement, are to encourage economic development and diversification, in particular in the less-
advanced member countries, and afford all parties equitable benefits arising from intra-Union and
international trade.  The Customs Union Commission, comprising representatives of all the
contracting parties, is the supreme consultative body of SACU;  the Commission meets annually in
                                                     
19Namibia became independent on 21 March 1990.WT/TPR/S/34 Trade Policies Review
Page 26
each member's capital city in turn.  SACU also has three liaison committees:  the Customs Technical
Liaison Committee, and those for Trade and Industry, and for Transport.
27. Under the SACU agreement, members apply the customs, excise, sales, anti-dumping,
countervailing and safeguard duties, as well as related laws, set by South Africa, to goods imported to
the common customs area from third countries outside the Union.20  A SACU member may enter
separately into, or amend, trade agreements with a country outside the common customs area,provided the terms of such agreements or amendm ents do not conflict in any way with the provisions
of the SACU agreement.  Members may not impose duties or quantitative restrictions on goods
grown, produced or manufactured in the SACU area (Article 2 of the agreement).  Members may not
impose any duties on importation, from any other member, of goods which were imported from
outside the common customs area (Article 3).  E ach member has its own legislation on quantitative
restrictions on goods imported from outside th e SACU area.  Botswana, Lesotho, Namibia and
Swaziland (the BLNS States), but not South Africa, may, following consultation, apply additional
duties or increase duties for protection of infant industries (Article 6 of the agreement).
21  The BLNS
States may, with the concurrence of all the parties, specify industries which are of major importance
to their economies.  During a specified period, the duties applicable to goods imported from outsidethe common customs area and competing with those produced by the specified industries, may not be
decreased or abrogated without the consent of the BLNS State which may have specified such
industries (Article 7 of the agreement).
22  Rebates, refunds and drawbacks granted by member
countries must be identical, except in specified circumstances, including emergency situations,
obligations under multilateral or international agreements or technical assistance agreements.
Exceptional trade restrictions by a member may also be justified on, inter alia , economic, social and
cultural grounds.  Moreover, members participate in marketing arrangements under which agriculturalimports from other SACU countries may be restricted, particularly at harvest time.
28. The SACU agreement also provides for non-discriminatory transport rates and freedom of
transit within the common customs area.  In general, duties are collected at the place of entry into the
common customs area.  The provision for duty-free circulation of goods within the SACU area
favours the collection by South Africa of applicable customs duties and excise taxes on virtually allthe external trade of land-locked Botswana, Lesotho and Swaziland, which is directed through RSA,
as well as on much of Namibia's international trade.
23  All customs, excise, sales and additional duties
collected by members are pooled in the Consolidated Revenue Fund of South Africa.  The pooled
revenue is subsequently distributed to members.  The shares of the BLNS countries are determined on
                                                     
20Article 5 of the SACU agreement requires Sout h Africa to afford the other members adequate
opportunity for consultations before imposing, amending or abrogating customs duties, except in specified
cases.
21Protection of infant industries is normally allowed for a maximum of eight years.
22The use of duties for the protection of infant industries and industries of major importance to a BLNS
economy has been restricted by various quantitative and qualitative requirements, including proof of the non-
availability in the common customs area of the good to be produced if a reduction of duties is requested onindustrial inputs.  The supply of more than 60% of the SACU market is required for an increase in the duty on afinal product for the protection of a new industry.
23GATT (1993).Republic of South Africa WT/TPR/S/34
Page 27
the basis of a revenue-sharing formula and the residual (after BLNS countries have been paid) is
allocated to South Africa.
29. The original 1910 revenue-sharing formula was based on the respective contribution of the
BLS countries to total imports into, and consumption of excisable goods produced within, the SACU
area.  The 1969 formula provided for an enhancement factor of 42% of the shares of the BLS
countries;  this factor was introduced to compensate the BLS countries for negative effects resultingfrom their participation in SACU.  The formula was renegotiated in 1975 and a "stabilization factor"
was added in 1978, operating retrospectively to 1974/75, to reduce fluctuations in the revenue shares
accruing to the BLS (the BLNS since 1990) countries (Box II.1).
30. All members have been dissatisfied with the existing arrangement since the latter half of the
1970s;  they unanimously recognized that certain aspects of the agreement have become outdated.The key issues on the agenda of the ongoing negotiations comprise the technical revision of the
revenue-sharing formula (the level of compensation for the price-raising and the industrial
polarization effects, and for the loss of fiscal discretion, as well as the stabilization factor), the time
lags in distribution of revenue by South Africa, th e management of the SACU system and the need for
a dispute settlement mechanism.
24  Significant changes are expected following the renegotiations.
                                                     
24The loss of fiscal discretion results from the fact that South Africa sets the common tariff and excise
tax schedules for the customs union;  such import duties are to protect South African producers from non-SACUcompetition (this is the price-raising effect).  The in dustrial polarization effect results from the fact that
industries serving the customs union market were located primarily in South Africa in detriment of other
member countries.  Furthermore, a two-year lag exists between the date of payment of revenue to BLNS
countries and the relevant statistics on which the distribution is based.  In order to address the problem relatingto lagged payment, initial estimated amounts, are calculated and remitted in the year that the payment is due,and revised when final data are made available two years later.  The differences between the initial estimatesand subsequent estimates are then remitted to the countries involved.WT/TPR/S/34 Trade Policies Review
Page 28
Box II.1:  The revenue-sharing formula of the Southern African Customs Union (SACU)
The original formula negotiated in 1969 (Article 14 of the Agreement) was, for a given financial
year, as follows:
S = 1.42{R(A+B+C)/(D+ E+F+G)}, where:
S = the amount allotted to a specific member country;
R = the total revenue pool of SACU, i.e. E+G;
A = c.i.f value (at the border) of imports into the country irrespective of their origin:  imports
from the common customs area are thus included;
B = value of excisable and sales duty goods produced and consumed in the country;
C = excise and sales duties paid on B;
D = c.i.f value of imports into the SACU;
E = customs and sales duties paid on D;
F = value of excisable and sales duty goods produced and consumed in the SACU;
G = excise and sales duties paid on F;
S can be rewritten as follows:
S = 1.42RX/Y; where:
X = A+B+C;  and
Y = D+E+F+G;
By denoting by s0 the basic share (X/Y), and se  the enhanced share (1.42s0), the above formula
becomes:
Se = 1.42s 0R = s eR.
The Agreement, as amended in 1978, provides for a stabilization factor.  For the normalization
purposes, the amount S e accruing to each BLS (BLNS since 1990) country, as calculated from the
above formula, is compared with X (i.e. A+B+C):  S e is divided by X.  The 1978 amendments
clearly extended A to include all duties paid or payable on imports to each BLS country;  the 1969
Agreement was not clear on this point although this factor was taken into account right from
1969/70.
The 1978 stabilization clause normalized the enhanced shares at 20% of X (0.2X), and provided
for a lower and an upper boundary.  If the amount accruing to each BLS/BLNS country is less
(more) than 0.2X, an amount equal to 50% of the difference between the calculated amount Se
and 20% of X - the standard level is thus 0.2X - is added (subtracted), provided that the resultant
amount, which will be called Ss below, is not less (more) than 17 (23)% of X, i.e.:
Ss = S e ± 0.5 ± S e - 0.2X |;  and (0.17 ≤ (Ss/X) ≤ 0.23).
After calculation, taking into account the constraints on the variables, the formula becomes:
Ss = 0.5S e + 0.1X, with a floor amount of 0.17X (17% of X) and a ceiling amount of 0.23X (23%
of X).
Source:  SACU Agreement 1969, as amended;  and WTO Secretariat.Republic of South Africa WT/TPR/S/34
Page 29
(b) The Common Monetary Area
31. In December 1974, the Rand Monetary Area (RMA), a tripartite arrangement between
Lesotho, South Africa and Swaziland, replaced the informal agreement on money and currency which
had existed between Botswana, Lesotho, South Africa and Swaziland.25  Namibia, still administered
by South Africa at this time, also formed part of the RMA.  In July 1986, the Common Monetary Area
(CMA) replaced the RMA.  The trilateral agreement (between Lesotho, South Africa and Swaziland)that established the CMA was in turn replaced by a Multilateral Monetary Agreement (MMA) on
6 February 1992 when Namibia officially joined the CMA of which it had been a de facto member
from the beginning;  Lesotho, Namibia, South Africa and Swaziland have since been the four
members of the CMA.  The MMA aims to achieve monetary stability in the region, better economic
and financial cooperation among member States for sustained economic development, and toencourage the advancement of the less developed members.  The administering organ of the MMA is
the Common Monetary Area Commission comprising a representative of each member country and
such advisers the country may appoint.  The Commission meets at least once a year and its decisions
are by consensus.  Members have regular consultations with each other on monetary issues.
32. The Agreement provides for free flow of funds within the monetary area (with the possibility
of limited exceptions) and a right of access by Lesotho, Namibia and Swaziland to the South African
capital and money markets.  The Namibian dollar, the lilangeni (the currency of Swaziland) and the
loti (the currency of Lesotho) are pegged to the South African rand at par, and banknotes issued by
Lesotho, Namibia and Swaziland (LNS) are freely convertible into rand.  The rand is legal tender in
Lesotho and Namibia but not in Swaziland.  For flexibility purposes and with a view to
accommodating country-specific needs, each of the LNS countries entered into a bilateral monetary
agreement with South Africa to supplement the MMA.
26  Each member is responsible for its monetary
policy and the control of its financial institutions.
33. Any dispute between members relating to the Agreement must be settled amicably and in
good faith.  Otherwise, the dispute must be submitted to a tribunal which will be appointed jointly by
the members.
(c) The Southern African Development Community (SADC)34. In August 1994, South Africa became a member of the Southern African Development
Community (SADC), which replaced the Southern  African Development Coordination Conference
(SADCC) in 1992.
27  The organs of SADC include the Summit of Heads of State and Government
(the supreme policy-making body), the Council of Ministers, and its Secretariat based in Gaborone
(Botswana).  SADC aims to promote regional c ooperation and economic integration towards a single
regional common market, with a common currency system, and balanced and equitable mutual
benefits;  its ultimate goals are development and economic growth of southern Africa.  To achieve its
objectives, SADC seeks to develop policies aimed at the progressive elimination of barriers to free
movement of capital, labour, goods and services, and to mobilize support for national and regional
projects.
                                                     
25Botswana was not a member of the RMA.
26African Development Bank (1993).
27SADC has 14 members:  Angola, Botswana, the Democratic Republic of Congo (since 1997),
Lesotho, Malawi, Mauritius (since 1995), Mozambique, Namibia, the Seychelles (since 1997), South Africa,Swaziland, Tanzania, Zambia and Zimbabwe.WT/TPR/S/34 Trade Policies Review
Page 30
35. SADC promotes cooperation in sectoral activ ities (e.g. transport, communications, tourism,
energy, industry, and mining) between members, and runs projects partially financed by foreign
sources.  Specific sectoral tasks with coordination offices are allotted to members;  South Africa is in
charge of coordinating SADC's finance and investment.  In late 1994, a decision was taken to set up a
regional rapid-deployment peacekeeping force.  The creation of a regional development bank and a
regional Parliament is provided for in the SADC Treaty.  SADC holds consultative conferences with
cooperating governments and international agencies.  In September 1994, SADC and the EU launched
a joint cooperation programme in areas such as trade promotion and control of illegal drug
trafficking.28
36. The SADC treaty provides for protocols that will set out principles and procedures underwhich member States will conduct their cooperation in specified areas.  A Protocol on SharedWatercourse Systems was signed in 1995 and four others were signed at the Maseru (Lesotho)
Summit in August 1996.  The four protocols deal with:  illicit drug trafficking;  energy;  transport,
communication and meteorology;  and trade.  The Tr ade Protocol, which was expected to be finalized
in 1997, had been ratified only by Mauritius.
29  The Protocol aims to establish a Free Trade Area
(FTA) in the SADC region:  it pr ovides for intra-SADC trade libera lization, with the removal of tariff
and non-tariff barriers within eight years from its entry into force.
37. The timeframe and the process that would lead to the establishment of the FTA will be
determined by the Committee of Ministers responsible for trade matters, and may be asymmetrical;
countries with higher tariff rates would be the first to start lowering their tariffs.30  The Committee
will also take into account sensitive sectors or products in each Member.  SACU members will make
a common tariff commitment.  Provisions exist under the protocol for freedom of transit within the
community and rules of origin (Chapter III(2)(vii)).   Intra-SADC trade - particularly in food and
beverages;  agricultural, mining and chemical product s;  textiles and clothing;  and wood products  -
increased by about 12.4% between 1990 and mid-1996.31
38. The treaty also provides for a protocol to constitute a dispute tribunal.  The tribunal willadjudicate those disputes arising from the treaty between Members that cannot be settled amicably
(Article 32 of the treaty).  Members of the tribunal will be appointed for a specified period.  Decisionsof the tribunal will be final and binding.
(iii) Bilateral agreements
39. South Africa has bilateral trade agreements with two southern African countries, Malawi and
Zimbabwe.  The agreements apply only to imports in to South Africa (but not into the rest of the
SACU area).  The goods specified in the 1964 tr ade agreement between South Africa and Zimbabwe
are subject to various conditions:  certain items are subject to concessional tariff rates or tariff quotas,
including dairy products, potatoes, birds, eggs, cheese and curd, and certain cereal groats and meals,
oil seeds and oleaginous fruits on which 100% concessions are granted;  others, including live horses,
asses, mules and hinnies;  cottonne waste, including yarn waste and garnetted stock;  metal bedsteads
are exempted from customs duty;  certain products (e.g. specified types of woven fabrics of cotton)are subject to concessional tariff rates when they meet specified levels of Zimbabwean content, 75%
                                                     
28EIU (1996) and Europa (1995).
29The Protocol on Trade was not signed by Angola.
30Marchés Tropicaux, 30 August 1996, and Jeune Afrique Economie, No. 225, 16 September 1996.
31SADC (1997).Republic of South Africa WT/TPR/S/34
Page 31
in most cases.  Concessional customs duties are granted by Zimbabwe on certain products exported by
South Africa.
40. The 1990 agreement with Malawi allows duty- free imports (free of customs duty but not
excise tax) of all goods grown, produced or manufactured in Malawi;  25% Malawian content - unless
otherwise specified - and final processing in Malawi are required for duty-free imports of
manufactures.  South African rough and uncut diamonds may be exported to Malawi exempt fromexport duty, provided they are to be used for industrial purposes.  Provisions exist under the
agreement for anti-dumping, countervailing and safeguard actions on imports from the other member
country.
32
41. South Africa also grants preferential tariff treatment to a list of products from Mozambique,including fish, shrimp, prawns, rock lobsters, cashew nuts, citrus fruit, coconut oil, wooden furniture,
cigarettes, tyres and tubes, clothing, textiles, and cotton-seed oilcake.  These goods are admitted
duty free, within annual quota limits (Table II.3), if the ad valorem  MFN rate is lower or equal to 3%;
they are subject to rates up to 3% if the ad valorem  MFN rate is higher than 3%.  The goods must be
for consumption only in South Africa and Botswana and 35% of their production cost must have been
incurred in Mozambique.
Table II.3
Quotas on imports from Mozambique
Tariff heading Description Annual quota
03.02
03.0303.05Fish, fresh or chilled
Fish, frozenFish, dried2,000 tonnes
03.06.11 Crayfish200 tonnes
03.06.13 Shrimps and prawns2,500 tonnes
03.06.14 Crabs, frozen500 tonnes
03.06.19 Langoustines1,000 tonnes
03.07.4
03.07.5Squid
Octopus100 tonnes
ex 03.07.91
ex 03.07.99Clams, live, fresh, chilled, frozen, dried, salted or in brine50 tonnes
08.01.30
2006.00.90Cashew nuts1,000 tonnes
08.05 Citrus fruit5,000 tonnes
15.13.1 Coconut oil5,000 tonnes
15.18 Cashew nut shell liquid500 tonnes
23.06.10 Cotton-seed oil-cake6,000 tonnes
24.02.20 CigarettesUS$600,000
40.11 New tires800 tonnes
40.13 Inner tubes30 tonnes
52.08 to 52.12 Cotton fabricsUS$500,000
55.15.11.37 Texlene/Trevira woven fabrics (70% polyester, 30% viscose)US$835,000
61.01 to 61.14
62.01 to 62.12ClothingUS$790,000
63.01.30
63.01.4063.01.90BlanketsUS$250,000
68.11.20.10 Asbestos-cement roofing tilesUS$300,000
94.03 Wooden furnitureUS$500,000
Several Handicrafts US$300,000
Source: Information provided by the South African authorities.
                                                     
32GATT (1993).WT/TPR/S/34 Trade Policies Review
Page 32
42. South Africa is negotiating an agreement for trade and development with the European Union
(EU).  The bilateral agreement is expected to cover economic development and cooperation, as well
as political dialogue;  it will contain a clause to  confirm both parties' obligations in terms of the
General Agreement on Trade in Services (GATS) of the WTO.  It is expected that the agreement will
provide for a free trade area between South Africa and the EU after a transition period during which
trade barriers will be dismantled.  It will be asymmetrical in both content and timing;  the EU willopen its market to South African exports at a faster pace than vice versa.  Detailed negotiations in this
regard are expected to start during the second half of 1997.
43. The adoption of a proposed agreement has been delayed, inter alia , by the exclusion of some
of South Africa's agricultural exports from the accord.  Products excluded from the negotiating
mandate voted by the EU Council of Ministers represent some 39% of South Africa's exports of goodsto the EU and include wine, cut flowers, fruit, fruit juice and jams.
33
44. According to the authorities, the future ag reement will take into account South Africa's
obligations under the WTO Agreements.  During the negotiations, South Africa will also be sensitive
to the impact the agreement may have on the region al economy.  According to the authorities, costs
involved by the future agreement for both South Africa and southern Africa have to be fairlydistributed between South Africa and the EU.  An Agreement on Science and Technology was signed
in December 1996 and two other agreements (on wine and spirits, and on fisheries) are to be
negotiated.
45. A protocol to the Lomé Convention to accommodate South Africa's partial accession was
finalized in April 1997.  The protocol provides for the eligibility of South African companies to tender
for European Development Fund (EDF) projects in ACP states.
34  However, South Africa will not be
eligible for non-reciprocal trade preferences and access to EDF funding.
46. South Africa has double taxation avoidance agreements with Botswana, France, Germany,
Israel, Lesotho, Malawi, Namibia,  Netherlands, Romania, Swaziland, Sweden, Switzerland, Tanzania,
Uganda, the United Kingdom, Zambia and Zimbabwe.  South Africa has also entered into sea and air
transport agreements with Belgium, Brazil, Ch inese Taipei, Denmark, Finland, France, Greece,
Ireland, Italy, Japan, Norw ay, Portugal and Spain.
(iv) Other agreements
47. South Africa participates in the Multilateral Investment Guarantee Agency (MIGA) of the
World Bank.  Canada, the EU, Hungary, Japan, Norw ay, Switzerland and the United States grant GSP
status to South Africa.
                                                     
33The Courier No. 159, September-October 1996, and International Trade Reporter , Vol. 13, No. 14,
3 April 1996.
34ACP is the acronym of African, Caribbean and Pacific.