BRIEFING TO THE PORTFOLIO COMMITTEE ON DEFENCE: UPDATING THE WHITE PAPER ON THE SOUTH AFRICAN DEFENCE–RELATED INDUSTRIES

INTRODUCTION

  1. Cabinet approved the White Paper on the South African Defence Related Industries on Wednesday, 01 December 1999. The Portfolio Committee on Defence has called the Department to discuss possible updates and changes to the White Paper. This is scheduled for Thursday 07 August 2003 at 14:00.
  2. ORIGINS OF THE WHITE PAPER

  3. Government policy on the South African defence industrial base has been under discussion since the transition to a democracy and the negotiations preceding this transition. This has been done in a very transparent manner that followed an exhaustive consultation process with Government, industry, civil society and academia. This process can be traced as follows:
    1. In terms of the Transitional Executive Council Act, research was commissioned into the future of the arms and related industries.
    2. A Committee of Ministers formulated a comprehensive framework for the underlying philosophy, policy and approach with regard to the various aspects of the arms industry.
    3. The White Paper on Defence addressed issues of arms control and the defence industry.
    4. The Defence Review built upon the policy framework of the White Paper on Defence and the arms acquisition process was designed and promulgated.
    5. Cabinet tasked the NCACC to initiate and oversee the preparation of a White Paper on the Defence Industry.

    DRAFTING AND CONSULTATION PROCESS

  4. The NCACC appointed a Steering Committee to oversee the execution and management of the research and writing process for the White Paper, with representation from the:
    1. Defence Secretariat.
    2. Department of Trade and Industry.
    3. Armscor.
    4. Denel.
    5. South African Aerospace, Maritime and Defence Industries Association (AMD).
    6. Human Sciences Research Council (HSRC).
    7. Council for Scientific and Industrial Research (CSIR).
    8. University of Cape Town’s (UCT) Center for Conflict Resolution (CCR).
    9. University of the Witwatersrand’s Graduate School of Public and Development Management.

  5. A drafting committee was established consisting of three members from the Defence Secretariat, AMD and UCT's CCR. The document was tabled at the Joint Standing Committee on Defence for information, and who were also briefed twice.
  6. Four workshops were held with civil society on the document in Cape Town and in Johannesburg.
  7. DEFINING THE DEFENCE INDUSTRY

  8. South Africa is the first country to coin the term "defence-related industry" and to do away with the term "defence industry", as the studies conducted in the White Paper indicate that a ‘defence industry’ could not be identified or defined as a distinct industrial sector. Defence work is done across all sectors of the South African industrial base.
  9. There is also a growing tendency for companies producing defence equipment to make use of civilian technologies, or to manufacture dual-use products which can be sold to both defence and non-defence markets. There is also an increasing overlap between defence and civilian production within companies.
  10. SIGNIFICANCE OF THE WHITE PAPER

  11. The White Paper is a significant document in that it is based on exhaustive research of an industry that was not previously exposed to public scrutiny. The document makes incisive policy proposals that are located within a descriptive narrative aiming to contextualise the policy debates.
  12. The White Paper on the Defence Related Industry examines what was previously an area of closed debate in South Africa, providing both background information on the industry and a coherent policy for the industry. It thus provides a National Policy Framework for the Defence Related Industries of South Africa within which Government sets the parameters for the activities of the industry.
  13. SYNOPSIS OF THE CONTENTS OF CHAPTERS IN THE WHITE PAPER

    CHAPTER ONE

  14. This chapter examines the national policy framework applicable to the industry. Besides cardinal defence policy, it locates the policy context of the White Paper firmly in South African national economic, industrial and technology policy.
  15. CHAPTER TWO

  16. This chapter is essentially descriptive in nature. It provides a condensed history of the industry, as well as an extensive economic analysis of the earnings, value and employment levels in the industry. The chapter is important in that the level of detail provided allows significant evaluation of the economic viability of the industry.
  17. CHAPTERS THREE AND FOUR

  18. These two chapters must be read in close context to each other. Chapter Three establishes the DOD structures to control and direct acquisition and technology management.
  19. Chapter Four identifies strategic technologies and capabilities for the Defence Force. They are by nature few in number and well defined, mapping a long term technology master plan for defence that is firmly located in the progressive position adopted by the White Paper on Technology.
  20. The chapter further accepts that normal market forces will apply to the defence-related industry and will determine entries and exits to the defence market. Thus, subsidisation of the industry is not envisaged. Those few and specific technologies that are strategic to the Defence Force will however not be exposed to market forces and limited protectionism will occur.
  21. The shortcoming to date is the interface between the Defence Review and this White Paper. The deviation in the categorisation of strategic and non-strategic technologies and capabilities from the Defence Review to this White Paper is problematic. A definitive instruction is required whereby the areas/capabilities identified as strategically essential in the White Paper on the Defence Related Industry supersedes that of the Defence Review.
  22. CHAPTERS FIVE AND SIX

  23. Again, Chapters Five and Six must be read together to gain context. They deal with the matter of government support to the defence-related industry and its antithesis, arms control structures. Chapter Five, addressing government support measures, acknowledges that weapon systems are essentially sold on a government to government basis and identifies major government role players who assist the defence-related industry in marketing products: Departments of Defence, Foreign Affairs, Trade and Industry, the South African Secret Service and Armscor. The chapter calls into existence a Marketing Support Board which functions to co-ordinate government effort.
  24. Chapter Six reviews those international arms control treaties and regimes to whom South Africa is a signatory, and which control the transfer of arms and certain technologies. These range from conventional arms controls to nuclear, chemical and biological controls. This review of South Africa's international obligations conceptualises further discussion on domestic arms control legislation and structures impacting on the defence-related industry.
  25. Seven different sets of legislation are reviewed (Conventional Arms, Armaments Production and Development, Non-Proliferation of Weapons of Mass Destruction, Firearms and Ammunition, Teargas, Explosives and Nuclear Energy).
  26. Five control structures are reviewed (the NCACC, the Non-Proliferation Council, the Explosives Inspectorate, the Central Firearms Register and the Atomic Energy Corporation).
  27. The chapter notes the absence of legislation and statutory control structures for conventional arms and requires the investigation of legislation and structures.
  28. CHAPTER SEVEN

  29. Chapter Seven addresses specific social and economic challenges facing the industry, providing government with options on how these may be addressed. Within the context of globalisation and the internationalisation of the defence market, the chapter investigates how the defence-related industry might deal with issues of consolidation and the establishment of both joint ventures and equity partnerships.
  30. Within the context of the transformation of South African society, the chapter expresses itself on issues such as affirmative procurement, equity ownership amongst previously disadvantaged groups, as well as facilitating new entrants to the market. Broad transformation issues are also touched on, such as the range of new labour related legislation in South Africa.
  31. ACTIVITIES INITIATED BY THE WHITE PAPER

    LEGISLATION

    The Conventional Arms Control Act

  32. The NCACC initiated the drafting of a Conventional Arms Control Bill to establish the NCACC as a Statutory Body that will formalise many of the conventional arms control processes in South Africa. This bill has been approved and promulgated into force during 2003.
  33. Conventional arms control regulations are also being prepared to support this Bill in order that the necessary regulations are put in place as soon as is possible.
  34. The Armscor Bill

  35. The White Paper calls for a review of the Armaments Development and Production Act and the drafting of the Armscor Bill in the light of the main policy pronouncements made in the White Paper. In addition to the White Paper, this issue is also driven by other key developments.
    1. Conventional arms control as currently provided for in the Armaments Development and Production Act, are taken up in the Conventional Arms Control Act.
    2. The Defence Review calls for the establishment of a dedicated Acquisition Agency to support the transformed structures and processes in the Department of Defence.
    3. The Public Finance Management Act specifically addresses Public Entities in Chapter Six of the Act and the Armscor Act will have to be aligned with the provisions of this act.

  36. As is the case with the Conventional Arms Control Act, all regulations related to Armscor will also have to be reviewed as part of this process.
  37. Legislation for the Mines Ban Treaty

  38. South Africa has signed and ratified in Parliament the Mines Ban Treaty. Section 231(4) of the Constitution makes such self-executing international agreements law in South Africa. Article 9 of the Mines Ban Treaty requires each State Party to take all legal, administrative and other measures, including penal sanctions to prevent or suppress any activity prohibited by the Convention.
  39. Both the National Assembly and the National Council of Provinces have approved the Anti-Personnel Mines Prohibition Bill.
  40. Legislation for the Certain Conventional Weapons Convention

  41. South Africa has signed and ratified in Parliament the Certain Conventional Weapons Convention (CCW). Section 231(4) of the Constitution makes such self-executing international agreements law in South Africa.
  42. Article 14(1)&(2) of Protocol II of the Certain Conventional Weapons Convention requires each High Contracting Party to take all legal, administrative and other measures, including penal sanctions to prevent or suppress any activity prohibited by the Protocol.
  43. The Certain Conventional Weapons Convention requires High Contracting Parties to initiate a number of other steps in addition to the enabling legislation identified above. Article 6 of the Convention requires that comprehensive instructions on the Convention must be disseminated to the Armed Forces. Article 14(3) of Protocol II requires that armed forces receive instruction on the Protocol and Operating Procedures are promulgated.
  44. The ‘Prohibition or Restriction of Certain Conventional Weapons Bill’ is being finalised within the Department of Defence.
  45. Balancing Support and Control of the Defence Related Industry

  46. Chapters Five and Six of the White Paper deal with government support to the defence-related industry and its antithesis arms control structures.
  47. Chapter Five, addressing government support measures, acknowledges that weapon systems are essentially sold on a government to government basis and identifies major government role players who assist the defence-related industry in marketing products: Departments of Defence, Foreign Affairs, Trade and Industry, the South African Secret Service and Armscor.
  48. The chapter calls into existence a Marketing Support Board which functions to co-ordinate government effort.
  49. Chapter Six reviews those international arms control treaties and regimes to whom South Africa is a signatory, and which control the transfer of arms and certain technologies. These range from conventional arms controls, to small arms, nuclear, chemical, biological and dual-use controls. This review of South Africa's international obligations conceptualises further discussion on domestic arms control legislation and control structures impacting on the defence-related industry.
  50. Given the close and symbiotic nature of control and support of the defence related industry by Government, future work will have to be done on examining ways and means of creating greater synergy between the efforts of Government to support the legitimate initiatives of the defence related industry and the duty of Government to control the products of that industry, namely armaments.
  51. In this regard, the DOD, Armscor and the Defence-Related Industry have recently created an organisation called SEDESO.
  52. Creating A Defence Related Industry ‘Cluster’

  53. The White Paper indicates that a ‘defence industry’ cannot be identified or defined as a distinct industrial sector. Defence work is done across all sectors of the South African industrial base. There is also a growing tendency for companies producing defence equipment to make use of civilian technologies, or to manufacture dual-use products which can be sold to both defence and non-defence markets. There is also an increasing overlap between defence and civilian production within companies.
  54. As the Defence Related Industry cannot be identified as a separate sector of the South African industrial base, due to defence work being done across all sectors, consideration can be given to conducting an investigation to establish and define the industry as a cluster of organisations producing armaments as a specific product.
  55. Such further work will have to de done in co-operation with the Departments of Defence and Trade and Industry and the industry itself.
  56. UPDATING THE WHITE PAPER ON THE DEFENCE-RELATED INDUSTRIES

  57. Hereunder areas are discussed wherein the White Paper could be updated.
  58. Ownership

  59. The question of the ownership of the White Paper on the Defence Related Industries should be addressed, as well as which Department should lead this process.
  60. Chapter 1

  61. Chapter 1, which deals with the National Policy Framework, could be updated to reflect South Africa’s policy developments in terms of industrial, economic, scientific and technology policy.
  62. Chapter 2

  63. Chapter 2, which provides an economic overview of the defence-related industry, is very outdated. Since the introduction of the Strategic Defence Packages, the size, shape and organisation of the defence-related industry has changed significantly.
  64. Chapter 3 and Chapter 4

  65. Chapter 3, which deals with acquisition and technology management structures, has not changed significantly.
  66. Chapter 4 however, which deals with strategically essential technologies and capabilities, does require updating. This chapter should be informed by three new developments, namely: the Military Strategy, the Force Employment Strategy, and the Technology Strategy currently being developed with the Department of Science and Technology.
  67. Chapter 5 and Chapter 6

  68. Chapter 5, dealing with marketing facilitation, should be updated to reflect the new SEDESO approach.
  69. Chapter 6, dealing with arms control structures, should be updated to reflect recent developments, namely: The Firearms Control Act, the Conventional Arms Control Act, the Regulation of Foreign Military Assistance Act, the Prohibition of Anti-Personnel Mines Bill and the Prohibition or Restriction of Certain Conventional Weapons Bill.
  70. Chapter 7

  71. Chapter 7, dealing with ancillary matters to the industry, needs a general update to reflect current developments.