SA expects challenges to security law – Davies
SOUTH Africa could expect challenges to legislation that would limit foreign ownership of private security companies, Trade and Industry Minister Rob Davies said, days after the US warned the bill might affect the country’s inclusion in a preferential trade agreement.
“The law is sitting with the president,” Davies said on Friday. “We do think that we must expect there will be a challenge if the bill goes through in its current form.”
Section 20 of the Private Security Industry Regulation Amendment Bill would require all security companies and manufacturers, importers and distributors of security equipment to be at least 51 percent owned by South Africans.
Opponents of the bill say it would violate the World Trade Organisation’s (WTO) General Agreement on Trade in Services and the requirements of the US African Growth and Opportunity Act (Agoa) because it would effectively result in expropriation and limit foreign investment.
“South Africa still needs to take concrete steps to eliminate barriers to US trade and investment,” the US embassy in Pretoria said on October 7. Removing section 20 from the private security bill “would address all US concerns”, it said.
The law, which is awaiting President Jacob Zuma’s signature, is also opposed by Crawley, UK-based G4S, the world’s biggest provider of security services, as well as Securitas and Tyco International.
The government says the bill is needed to protect national security by ensuring South African control of the firms.
If enacted, it could result in foreign private security firms leaving South Africa completely because they probably would not operate in a country where they did not have full control of their business, Costa Diavastos, the executive director of the Security Industry Alliance, an industry body, said on October 6.
“If the private security bill is signed into law, Agoa is the least of our problems,” Catherine Grant Makokera, a senior associate at Tutwa Consulting, said on Friday. “There’s a whole lot of other things that will kick it, like the WTO obligations, claims of expropriation potentially.”
The security bill would not be decisive in determining whether South Africa could continue to benefit from Agoa, because the review was based on the issue of beef, pork and poultry access, Davies said.
“I am confident that we are on track to keep us in Agoa,” Davies said on Saturday.
South Africa would probably retain duty-free access for exports to the US worth as much as $1.7 billion (R22.66bn) a year under Agoa, Davies said, citing a letter he received from the US trade representative.