Tag Archive | AmCham

South Africa’s IP policy still hidden away

Drug impasse on IP (intellectual property) rights……

patents graphicThe simplistic public platform which is pervading the pharmaceutical debate on the long awaited IP policy – that persistent argument that  South Africa could be a ‘rogue’ state with scant regard for property rights – is constantly coupled with the call by local and international activists for drugs which are affordable to poorer families.

All has been re-heated considerably by protests in Pretoria but nothing has yet reached Parliament in the form of a serious proposal on IP that can be considered by pharmaceutical companies in order to bring certainty.

What now seems to be the situation is that both manufacturers and activists are calling for a fair and legally correct policy document on intellectual property rights which gives certainty but nothing is forthcoming.   At the same time, the claim was made in Parliament some time ago that South Africa just “rubber stamps” patent applications at a vast rate, only 1% going to local innovators.

And yet all know the incredible cost to find a successful HIV/AIDS vaccine. These costs must be recoverable, say pharmaceuticals, or innovation and research will stop. South Africa, like so many countries, is about to step into the unknown.

Problem not with CIPC

According to CIPC the questions of registration of patents is proceeding with new vigour but complainants make the point that no actual testing takes place. Ms Astrid Ludin, current CEO and IT guru was not in Parliament to make any presentations on the specific subject of IP and who remains “on suspension” it appears for some transgression on awarding contracts.

Ludin has an excellent reputation with DTI and in all probability she just wanted to get a job done, at high speed and quickly chose what she thought was the best thing to do. Unfortunately, that is not how red tape works.

Most critical : Invention or intervention?

It appeared some time ago that stakeholders were past the endless argument that South Africa wouldmedicines, pills make the market place unsustainable for pharmaceutical companies with important and much needed drugs if there is disregard for patents lodged after years of painstaking research. But this once again re-emerging.

Over 100 submissions, it is rumoured, were made on the original Policy IP document when it was first submitted for comment, so one assumes that Dr Rob Davies has a fair assessment on how stakeholders are feeling… but his department still refusing to tackle the issue, it appears.

Keeping the same show running

Meanwhile, activists have re-opened their claims that “tweaking” of an expired but well established drug takes place and new patent periods sought for twenty years on the same item, which cuts out the possibility of cheaper generics and innovation. Facts presented at recent conferences on the subject have also re-awakened the premise that South Africa is paying more than most developing countries for drugs.

The background of the delay is provided by a divisive scenario between two government departments – health and trade and industry – the latter department being responsible for the production of the new intellectual property policy stating South Africa’s position.

Too many pokers in fire perhaps

medicine bottleDespite the minister of trade and industry (DTI), Dr Rob Davies, trying to calm waters with the “going nowhere” statement of “We are moving in a direction in striking a balance between innovation, affordable medicines and to modernise our IP regime”, South Africa’s new intellectual policy (IP) policy seems to be sticking at cabinet level.

It is difficult to disregard the much earlier scandal involving the rumoured attempt by a Washington-based PR company to delay and modify the draft IP Policy, a move which infuriated both the minister and the department of health. The anger of minister of health, Dr Aaron Motsoaledi, was patently obvious at the time and there is no doubt that a sour taste in the mouth is left with many in that department.

Has to come to a head

medicines sans frontWith Treatment Action Campaign and Médecins Sans Frontières ratcheting up their campaigns – the latter specifically naming Pfizer on TB drugs that cost R10 in India and R600 in SA – and DTI’s minister Davies at present in the USA arguing on GAT agreements, the much needed IP policy will probably remain on the backburner for a short while longer.

Two things will happen eventually. Either the government publishes a gazette calling for comment on yet a further draft IP policy or an ATC notice is issued by Parliament announcing its tabling as a paper for debate.

Either way, minister Davies is likely to call a media briefing first.

Other articles in this category or as background
Intellectual property law still in limbo – ParlyReportSA
Intellectual Property Laws Bill goes forward – ParlyReportSA
Medical and food intellectual property tackled – ParlyReportSA
Medicines Bill: focus on foodstuffs – ParlyReportSA

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Private Security Industry Bill comes closer

Motive for Private Security Bill unclear…..

adt securityAs of this date, the Private Security Industry Bill still remains for signature by President Zuma passing it into law, having had the contentious clause that South Africans must own at least 49% of shareholding of any security companies, as proscribed in the original Bill passed by Parliament, increased to 51%.

However, from statements made by senior officials in the department of police and the minister himself it seems quite possible that government will push the law through despite the stated objections of security  industry associations and the possibility of the industry taking government to court on the matter.

The Bill introduced two years by minister Nathi Mathethwa, then a protégé of president Zuma but now reduced to the post of minister of arts and culture, posed the reasons for a controlling number of 51% being the result of the possibility of national security breaches by foreigners in South Africans affairs. This has never been defined.

Ek is die Suid-Afrikaanse

Such a matter was stated by the local security industry as being absurd since most South African management, local shareholders and certainly the majority of employees were South Africans anyway. In can only be assumed that the government thinks their are “plants” by foreign countries working in the industry, or alternatively, the reasons given by the state are a cover for some other motive, as of yet not clear.

Immediately the Bill was tabled, opposition members in Parliament pointed out that such a law would place SA not only in violation of international trade agreements but place the country in jeopardy of renewal of AGOA by the United States, of valuable export trading advantage to South Africa.

Particularly, South Africa is in danger of violating GATT agreements, but the minister of police has responded with the names of other countries discounting international agreements on the issue of local ownership control.

In a rush to close Parliament for the May elections last year, the Private Security Industry Bill, with other Bills, was hammered through Parliament using every possible ANC vote but, however with the 51% clause reduced to 49%.  This has now been reversed.

Trade and Industry unconcerned

Unless the Bill is returned to Parliament unsigned, a course, which would seemingly make the new police minister Nkosinathi Nhleko unhappy, and with minister of trade and industry (DTI), Rob Davies, appearing ambivalent on the whole issue, all would seem set for a suicidal dive into unknown international trading waters as far as obligations are concerned.

This is despite a trade delegation visit to the US on the subject. Recent statements by US congressmen and a joint letter addressed by them to SA on other possible violations of GATT by the DTI, particularly on poultry import issues threatening AGOA, are all being played down by cabinet ministers.

 American Chamber of Commerce in SA have pointed to the difficulty, not only with B-BBEE but with this proposal, the difficulty US/SA companies operating in South Africa have with their head offices in parting with ownership of their companies.

The police minister says that he “finds that South Africa will meet its trade obligations under GATT and the action will not threaten AGOA” – an unusual statement for a minister of police, whilst DTI itself, or the minister of trade and industry, still seem have their heads well below the water line.

Under the skin

Eventually, it will emerge what it that is so worrying to the department of police about companies like ADT, Tyco, Securitas, Chubb and the many Japanese, Korean and British companies involved in the manufacture and supply of security equipment….. all at the risk of disinvestment or, worse, maybe an imagined xenophobic wish for these countries not to employ ex-pats or immigrants from other parts of Africa. 

Other articles in this category or as background

No moves on new Private Security Industry law – ParlyReportSA

Private Security Industry Bill gets through Parliament – ParlyReportSA

DA’s Crucial Infrastructure Bill tabled on security – ParlyReportSA

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Promotion and Protection of Investment Bill opens up major row

New DTI Investment Bill disliked as damaging to FDI……

A draft Promotion and Protection of Investment Bill has come under serious fire from not only South African business groups but from foreign firms operating in South employing large numbers of local employees. Most have described the proposals as adding woes to an already damaged South African investment picture, adding yet further risk to the current economic downturn

Promoted by minister of trade and industry, Dr Rob Davies, the Bill will enable South Africa to trade ignoring existing bilateral investment treaties (BITs) between South Africa and other countries in the EU whilst extending protection to new investors from all other countries.

Davis says bi ltateral treaties irrelevant

Davis says that the new Bill if passed as it stands “will enable a comprehensive and uniform legal framework to govern investments in the country”.  He said a review of South Africa’s bilateral investment treaties had found that there was no correlation between the existence or absence of a bilateral treaty with a particular country and the flow of foreign direct investment (FDI) from the country.

Minister Davies has been warning for some time that such a review would take place and the draft, just closed for public comment, indeed makes a number of radical changes to South Africa’s  trading relations, which many trade law experts say brings further uncertainty to the investment climate when least wanted by the country.

Listing the uncertainties to FDI

The first of the many changes is that investors no longer have recourse to international arbitration. Under BITs at present, trading investors are allowed to have arbitration proceedings as laid down by World Bank rules.   International arbitration, for obvious reasons, is preferred by investors as it is impartial and not in the hands of the country invested in, as is promoted the Promotion and Protection of Investment Bill making it local.

The second major change relates to the compensation paid in the event of expropriation. The new Bill simplistically says that  “compensation must be just and equitable”, clearly creating uncertainty in the light of known statements by cabinet ministers and senior ANC politicians in South Africa on the subject of expropriation.

Events in other parts of Africa will no doubt leave investors uneasy despite the promises of minister Rob Davies that “protection for overseas investors will be in terms of South Africa’s Constitution”, which he said “provides significant and robust protection for investors and for property both domestic and foreign.

All local foreign investors, even those with a half acquired knowledge of South Africa’s political development, will have watched the appointment of a state market valuator to handle land reform expropriation.

Finally, an uneasy point for many is that the new draft Bill fails to provide the normal provision of a BIT with what is considered by most internationals as the necessary affirmation that investors will enjoy fair and equitable treatment. Therefore they might feel that without the full protection that is enjoyed by any South African investor in the country, they might feel in jeopardy without the normal assurances of equal competition or against local protection.

amchamlogo2One such critic of the new Bill is the South African structured American Chamber of Commerce (AmCham) instituted by South Africans in Johannesburg some thirty years ago. AmCham represents some 250 American multinationals registered to do business in South Africa, eighty of the biggest contributing R233bn to the SA economy in 2011, and employing some 150 000 employees, either directly and indirectly.

They say they know where the minister is coming from but agree with all the points made by trade law experts, confirming their deep concern that the draft Bill states compensation will be an “equitable balance between the public interest” and the party that is involved.

This is totally unsatisfactory, they say. Reducing compensation or describing compensation in a manner as proposed in the Bill will increase the risk for investors, the paper says. The AmCham submission, available on their website, says that the state’s ability to undertake acts harmful to an investment’s profitability or property rights in the manner described appears to provide less protection than the Constitution itself affords.

They add that there is a perception given by the proposals that fair and reasonable treatment between local and international business issues will not be provided. AmCham goes on to state “any investment that violates domestic legislation or foreign agreements should be dealt with through legal channels available, without limiting the rights or protections of the investment.”

Jeff Nemeth

Jeff Nemeth – President AmCham

AmCham says, “Clear assurances that capital relating to investment and returns can be repatriated is not given and the investor should not lose their basic rights as is proposed under this law”. They add, “Investors are jittery of the slightest possibility of expropriation of assets by government which is perceived, rightly or wrongly, to be a very real possibility in relation to the South African government’s priority objectives of industrial development; public welfare objectives and black economic empowerment.”

“This perception should be decisively addressed by government and should be firmly dealt with in the Protection of Investment Bill.  In its current form, the draft Bill does not offer investors assurance that predictable and stable policies are a government priority”, AmCham concludes.

Davies said both his ministry and department of international relations “have been engaging with those European countries with whom South Africa has bilateral investment treaties to inform them about the country’s plan to introduce the Bill and the termination of the BTI only takes place six to 12 months after, depending on the agreement in place.”

The minister recently told a meeting that South Africa had significant  foreign direct investment from the US, Japan, Malaysia, India and other countries, “and we have no bilateral investment treaties with them”.

AmCham and others say this is not the point and now is not the time to tinker with the investment climate, thus providing less clarity and less security for FDI given the current downturn in economic factors.

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