TRALAC - Trade Law Centre

US firms blast South African security law

Thursday, 21 May 2015 Published: | Wiseman Khuzwayo

Source: Independent Newspapers (SA)

US business is once again using the looming renewal of the African Growth and Opportunity Act (Agoa), a key trade scheme that gives sub-Saharan African countries preferential access into the US market, as leverage to oppose legislation giving locals majority stakes in foreign-owned security companies.

The Security Industry Association of America (SIA) has blasted the South African law requiring foreign-owned security companies to sell at least 51 percent of their businesses to locals.

Yesterday, it emerged that SIA was now demanding that Agoa’s renewal for South Africa be conditional on the scrapping of the local ownership requirement for overseas security firms.

SIA contends that such companies are already required to exclusively employ South African citizens within the country, making the ownership requirement unneccesary.

The Private Security Industry Regulation Amendment Act (PSIRA) awaits President Jacob Zuma’s signature. It requires foreign-owned security companies as well as technology firms to sell at least 51 percent of their local businesses to South Africans.

SIA’s call follows close on the heals of calls by the US poultry industry that South Africa should be excluded from Agoa due to South Africa’s anti-dumping tariffs on US poultry.

The South African industry organisations, business and trade law experts that oppose the foreign ownership limitation have called on Zuma to send the legislation back to Parliament for the removal of the section on the basis it is expropriation.

SIA wants PSIRA to be included under the new Agoa’s new “out-of-cycle” review mechanism.

An “out-of-cycle” review allows the US to view a country’s Agoa status and that status can be suspended, limited or withdrawn for any beneficiary country found no longer eligible.

Mickey McCarter, a spokesman for SIA, said yesterday that the inclusion of this enhanced oversight provision in the US Senate in the form of the “out-of-cycle” review would lead to a more reciprocal and balanced trade relationship with beneficiary countries, most notably South Africa.

“If the South African Parliament does not remove the discriminatory clause from the PSIRA, it is highly likely such an issue would be raised as matter of concern during the South Africa review required under the Agoa reauthorisation moving through Congress,” said Jake Parker, SIA director of government relations.

Pressure

US opposition to the security law follows the pressure that two US Senators, Johnny Isakson and Chris Coons, had been putting on South Africa to end “unfair duties” on US chicken imports.

Barring South Africa from Agoa would cost as much as R30.33 billion in benefits and put thousands of jobs in jeopardy.

Trade and Industry Minister Rob Davies and the South African poultry industry lobbied hard in Washington in April for the country not be excluded from Agoa.

The Agoa bill was passed by the US Senate last week and authorises the renewal of Agoa for the next 10 years. The current version expires in September.

In his budget vote speech to the National Council of Provinces yesterday, Davies said: “Agoa is coming with demands that we accommodate the US for market access, starting but not limited to poultry. We continue to engage on this issue.”

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