TRALAC - Trade Law Centre

Local union warns South Africa that AGOA eligibility under threat if land expropriation goes ahead

Tuesday, 07 August 2018 Published: | SISEKO NJOBENI

Source: Business Day (South Africa)

SA could breach eligibility requirements of the African Growth and Opportunity Act (AGOA) if the country proceeds with plans to implement land appropriation without compensation, South African trade union Solidarity has warned.

In terms of section 104 of the act, the sub-Saharan African countries eligible for AGOA have to commit to protecting private property rights.

AGOA, which came into effect in May 2000, provides trade preferences for quotas and duty-free entry to the US for certain goods.

Solidarity deputy general secretary for metals and engineering Marius Croucamp said the mooted policy changes on land expropriation threatened thousands of jobs and hundreds of companies.

Initially approved for 15 years in 2015, the US government has extended AGOA for another 10 years until September 2025.

ANC head of economic transformation Enoch Godongwana dismissed Croucamp’s allegations that expropriation without compensation posed a risk to private property rights.

"There is a distinction between expropriation of land without compensation and property rights. It is not as if we are saying we are going to expropriate every piece of land without compensation. We will expropriate for specific purposes. For instance, if we need land for housing, we will expropriate for that purpose. But we will not expropriate in all circumstances," Godongwana said.

There was a deliberate distortion of the ANC’s intention in order to ignite chaos and panic, he said. An amended section 25 of the constitution would spell out conditions under which the government would expropriate land without compensation.

Solidarity’s warning comes after law firm Herbert Smith Freehills flagged the legal implications of the move in July, cautioning that expropriation of foreign-owned property without compensation constituted violations of international law and various treaties to which SA was party.

Peter Leon, Hannah Ambrose and Ernst Müller from the firm said the amendment of the constitution would be a disincentive for investment.

"Existing foreign investors, in particular, will need to consider what rights and resources might be available to them under international law to mitigate the risk of expropriation without compensation," they said.

Former finance minister Trevor Manuel has spoken of the difficulty in explaining the land policy to investors. Manuel, one of President Cyril Ramaphosa’s special investment envoys, said establishing an understanding of the country’s land debate had been tougher than expected.

Speaking at a discussion held by the Obama Foundation in Johannesburg in July, Manuel said: "Communicating this [issue], I think, is a bigger challenge than what we thought."

Land was a "complex and unresolved matter", he said.

Azwimpheleli Langalanga, a senior analyst on political economy at Tutwa Consulting Group, said the implementation of land expropriation without compensation was unlikely to derail SA’s eligibility for AGOA, adding that the move did not threaten US national interests.

"From a US perspective, national interests do not necessarily include land abroad. But it will elicit concerns if you follow the school of thought that this is the beginning of an attack on property rights in SA."

Langalanga cited US push-back on the intellectual property policy reforms set out earlier in 2018. "They were worried about that and raised those concerns in the context of AGOA. They were also concerned about the amendment of the Private Security Industry Regulation Act."

Changes to the act included a compulsory 51% local ownership requirement, he said.

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