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30 August 2007

Programme Director
Chairperson and Members of the SABS Council
Chief of Executive Officer (CEO) of the South African Bureau of Standards, Martin Kuscus
Ladies and gentlemen

Issues of standards and technical regulations are fast becoming the major new challenge facing developing countries in international trade. This is not my view alone, but also that expressed by the Director-General of the World Trade Organisations (WTO), Pascal Lamy, at an Organisations for Economic Co-operation and Development (OECD) meeting I attended a year or two ago.

As tariffs come down and as issues like subsidies are under challenge, regulatory matters as well as issues of supply capacity, become fundamental in determining whether or not theoretical market access is turned into real opportunities for expanding trade. The setting of standards by both public and private entities, are fast becoming the major regulatory hurdles, which producers in developing countries have to confront, in seeking to expand their exports to developed country markets.

In such a context, a country like South Africa needs now, more than ever, effective and efficient technical infrastructure dealing with standards, accreditation and metrology. More than that, we need technical infrastructure institutions that are capable of constant renewal and improvement that strengthens their capacity to rise to new challenges being imposed in a fast changing international and domestic environment.

We need effective standard setting bodies, in the first instance, to develop and maintain standards that can be used by government to develop regulations capable of protecting our own public against shoddy, sub-standard and potentially injurious products. Recent news stories about poisonous pet food and other dicey food products, point to the fact that there are producers of sub-standard goods in various countries in the world, who are only to happy to offload those sub-standard goods in any market that is willing, or too careless, to accept them.

We need strong and effective standard setting bodies, secondly, to engage in the international arena and particularly in multilateral, regional and bilateral processes, where rules pertaining to the setting of standards are being set. Standard setting has logic and an immediate justification in relation to matters of public good, consumer or environmental protection. But standard setting also has the potential to create technical barriers to trade, whose impact can become no less potent than tariffs and subsidies.

Standards can be set and justified in terms of protection of consumers or the environment, whose real intention is in fact to set the bar so high, that otherwise competitive producers especially from developing countries are effectively excluded from certain markets. Even if that is not the direct intention, the creation of new technical barriers can be an unintended consequence of possibly well intentioned legislation.

Our recent engagement with the European Commission and the European Parliament on the passage of the European Union's (EU's) chemical product registration legislation, (the so called "REACH legislation") arose precisely from such concerns. We need therefore, domestic standard bodies that are well abreast of global trends and can advise us as government, on relevant issues in the sphere of standard setting. I have mentioned earlier, that the challenges in this regard are not just with public standards, but also with issues raised by the setting of private standards.

Those of us with any acquaintance with agro-processing industries involved in exports to the developed world will know all too well that supermarket chains and buyers organisations are active in demanding adherence to various technical standards of hygiene, product use and so on, along the entire production value chain. The third reason that we need a strong and effective standard setting body is because we know that South Africa cannot hope to establish its competitive position in the world, through a race to the bottom with the lowest cost, lowest quality and sweat shop producers of the world.

South Africa needs to find its niche in the world economy as a producer of quality goods and services. South Africa's reputation needs to be synonymous with quality merchandise in all the different lines and products that we produce and sell, and we must worry if opportunistic elements among us compromise our common reputation by trying to pass off sub-standard (or in the case of markets in neighbouring countries, date expired) merchandise.

We should also note that standards are increasingly being set not only in relation to technical qualities, but also in relation to the environmental impact of production processes and the ethical quality of labour and trading practices. Important higher value niche markets are emerging in some developed countries for products produced according to acceptable environmental, labour and ethical trading standards. South Africa thus needs standard setting institutions that can actively promote higher quality production, as well as begin to explore the challenges and opportunities of what is called "ethical trading."

We know, of course, that we are not alone among developing countries in facing the manifold challenges in the area of standards. Increasing co-operation with standards setting bodies in other developing countries and in particular within our own Southern African Development Community (SADC) region, is an imperative. Indeed, as SADC advances its regional integration agenda we need to move purposefully towards a rapid harmonisation of our standards into a common regional standards regime.

This will facilitate intra-regional trade, by creating certainty and removing potential technical barriers to trade, and also strengthen the capacity of the region to engage on these matters in the wider international environment. We need as a region to become much more proactive in the setting of our own standards. Countries and regions that neglect this field will find themselves having simply to abide by standards set elsewhere, and it is precisely such countries and regions that are most vulnerable to the abuse of standards as technical barriers to trade.

The recent changes that we have been making to our technical infrastructure legislation are an indication of the importance which government and the dti in particular, attach to a constant improvement of our technical infrastructure. Arising as they do from reviews of our technical infrastructure institutions, recent legislative changes have been made with the intention of strengthening metrology and accreditation agencies.

As I am sure you all know two new bills which have recently been approved by Cabinet, and will be passing through the Parliamentary process shortly, will directly impact on the work of the South African Bureau of Standards. Essentially the two bills will bring about a division of labour, in which a new national regulator will from now on handle the regulation of compulsory specifications in the interest of public safety or environmental protection. This will bring us into conformity with WTO rules on technical barriers to trade, which requires compulsory standard regulators to be independent of national standard setting bodies.

The legislation will leave a reconstituted South African Bureau of Standards with responsibility for the development, promotion and maintenance of standards, as well as the provision of related conformity assessment services. While SABS will no longer be responsible for the regulation of compulsory standards, its new core function will face the institution with new challenges. The philosophy which underlines the new SABS Bill recognises that the writing base for South African standards needs to be broadened. It acknowledges that there are a number of instances where industry bodies or specialist groups, will want to prepare their own standards and have them applied nationally. This is a process which has emerged in other countries, and has the advantage of gaining industry participation, as well as reducing the costs to national standard bodies. The new legislation, however, continues to recognise SABS as the peak national standardisation institution in South Africa. This will impose on SABS the responsibility of ensuring co-ordination and maintaining high standards in a wider standards writing process. SABS will also continue to play the leading role in representing the country in international, regional and foreign bodies, involved in the setting of standards.

The new bill, if I understand it correctly, will see SABS no longer administering compulsory regulation, however the SABS will continue to develop South African National Standards supporting regulators who needs these standards that they can call up in their regulations. The other bill, which will transfer the regulatory responsibilities of the SABS to the National Regulator for Compulsory Specifications, is considered to be a key element of the Department of Trade and Industry's (the dti's) project to modernise the South African technical infrastructure. There is an opportunity for the new regulator to improve its administration of compulsory specifications in a manner that will increasingly support improvement in the quality of technical regulation.

This split of SABS will, I am sure, pose new challenges both to the reconstituted SABS and the new regulator. I trust that this Lekgotla will thoroughly discuss these challenges. As you engage in these discussions, may I invite you also to reflect on the potential impact on your work of the recently launched National Industrial Policy Framework and the Industrial Policy Action Plan (IPAP). Our Minister has expressed the view that the implementation of our Industrial Policy will require all divisions in the dti and all Council of Trade and Industry Institutions (COTII) to act in a more integrated manner and will thus give the work of all of us a greater coherence. As you know, the current IPAP identifies four lead sectors: capital goods and transport equipment; automotives and components, chemicals, plastics and pharmaceuticals and wood, paper and furniture making.

This is in addition to the AsgiSA priority sectors, where the IPAP envisages maintaining momentum. Beyond this, work is ongoing on both cross cutting issues and on the development of other sectoral programmes. Within the four lead sectors, among others, I have no doubt there are many challenging issues of standards setting and conformity assessment. I invite you to consider ways to give this due priority, and also to make recommendations on ways we can work more closely in advancing our industrial policy.

Let me say, on behalf of the dti, that we have full confidence in the ability of SABS to rise to the challenges posed both by your own restructuring and by the adoption of our Industrial Policy. We look forward as a department to deepening our cooperation with SABS. I thank you for your attention and wish you well with your deliberations in this important Lekgotla.

Issued by: Department of Trade and Industry
30 August 2007