steel products. While many goods enter duty-free and those subject to duty normally pay at rates between 5 and 25 percent, some rates of tariff protection (especially luxury items and automobiles) persist in excess of 60 percent. To be sure, the government remains publicly committed to its WTO obligations and simplification of the tariff structure has yielded some success in reducing tariff barriers. One such case is that of import duties on computer components which were lowered from 11.5 to 6.9 percent in September 1995. 6. Export Subsidies Policies The primary subsidy regime of the South African government is the General Export Incentive Scheme (GEIS) through which South African exporting companies receive direct non-discriminatory cash subsidies based on the value of exports, the degree of beneficiation or processing, and the local content of the exported product. The GEIS was recently downsized in early 1995 and is expected to be eliminated by the end of 1997. Under this most recent revision, subsidies for fully manufactured products were lowered from 25 percent to 14 percent of export value on 1 April 1995, to 12 percent on 1 April 1996 and to 10 percent on 1 April 1997 until the wholesale elimination of the program on 31 December 1997. Subsidies for partially manufactured products dropped from 12.5 percent to 3 percent on 1 April 1995; to 2 percent on 1 April 1996; and to 0 percent on 1 April 1997. Subsidies on raw materials and beneficiated raw materials were eliminated on 1 April 1995. In addition, categorization of the various goods eligible for GEIS subsidies were re-defined such that many goods previously defined as "partially manufactured" were downgraded to "beneficiated" and so lost eligibility for subsidies. Another export incentive of the South African government is the Export Marketing Assistance scheme (EMA) which offers financial assistance for the development of new export markets, through financing for trade missions and market research. Other subsidies include electricity and transport rebates for businesses located in designated development corridors. Provisions of the Income Tax Act also permit accelerated write offs of certain buildings and machinery associated with beneficiation processes carried on for export and deductions for the use of an export agent outside South Africa. 7. Protection of U.S. Intellectual Property Despite the existence of a comprehensive legal framework protecting intellectual property rights (IPR) and membership in international protocols like the Paris Convention for the Protection of Industrial Property, the Berne (copyright) Convention for the Protection of Artistic and Literary Works, and the World Intellectual Property Organization (WIPO), South Africa has been the target of persistent complaints from business and the International Anti-counterfeiting Coalition concerning the intentional misappropriation by South Africans of internationally recognized trademarks. Such consistent misappropriation of internationally-known U.S. trademarks led the U.S. Trade Representative to place South Africa on the Special 301 Watch List as a country that denied adequate and effective IPR protection. An out-of-cycle review of South Africa's IPR protection, originally scheduled to be completed by September 1995, was recently delayed in order to continue monitoring developments by South Africa to address several outstanding U.S. trademarks concerns pending in South African courts. To be sure, the South African legal framework provides comprehensive IPR protection on a par with most Western industrialized nations. In May 1995, the new Trade Marks Act of 1993 replaced the Trade Marks Act of 1963, improving protection of internationally-known trademarks. Parliament also passed the Designs Act of 1993 which introduced a registration system providing protection for design proprietors for 10 years from the date of registration or issue, whichever is earlier. In addition, the Patent Act of 1978 was most recently amended in 1988 to provide patent protection of inventions and innovations for a period of 20 years from the date of filing, without extension. Other South African IPR laws include the Plant Breeder's Rights Act of 1976 and the Copyright Act of 1978 (amended in 1992). Despite the volume of legal statutes protecting IPR, foreign firms continue to complain of trademark and IPR infringements. In 1994–1995, a large number of internationally-known U.S. companies complained of IPR infringements, most notably in the children's toys, franchise foods, and women's apparel sectors. Many of these complaints focused on the problem of street vendors who pirate the trademarks of internationally-known concerns. When a complaint has been lodged, the South African government has enforced its laws by conducting raids on suspected pirates. A more serious problem, however, exists where South Africans have registered wellknown foreign marks in anticipation of future investment by the foreign mark owner. To date, those U.S. firms seeking redress through the South African legal system have not fared well. In one well-publicized nuisance trademark dispute involving an internationally-known U.S. firm, a South African judge found the U.S. firm lacking in intent to use the trademark and expunged its mark at the request of the South African "nuisance registrant.” Although the U.S. firm has appealed the case, (on the grounds that apartheid-era sanctions prevented use of the trademark), legal authorities found the ruling ominous for future IPR protection. Nonetheless, the South African government has stated its strong support for and commitment to implement fully its Trade-Related Aspects of Intellectual Property (TRIPs) obligations under the World Trade Organization. Another IPR concern is the extent of computer software piracy in South Africa. The Business Software Alliance (BSA), a global body with active anti-piracy programs in over 50 countries, estimates that as much as 70 percent of South Africa's software is pirated, resulting in a net loss of over $56 million in revenue to computer firms. In addition, the U.S. motion picture industry reports that piracy, including unauthorized public performances, video piracy, and "parallel imports" pose a serious problem to doing business in South Africa. Likewise, U.S. pharmaceutical firms operating in South Africa express similar concerns regarding “parallel imports." 8. Worker Rights a. The Right of Association.-Freedom of association is guaranteed by the interim constitution and given statutory effect by the recently approved Labor Relations Act. All workers in the private sector and most in the public sector-with the exception of members of the National Defense Force, the National Intelligence Agency, and the South African Secret Service-are entitled to join a union. Moreover, no employee can be fired or prejudiced because of membership in or advocacy of a trade union. There are 201 registered trade unions and 47 unregistered trade unions, with a total approximate membership of 3.4 million or 44 percent of the employed, economically active population. South Africa's largest trade union federation, the Congress of South African Trade Unions (COSATU) is formally aligned with the African National Congress (ANC) and the South African Communist Party (SACP). Over 60 former COSATU members serve in national and provincial legislatures and administrations. More COSATU members will enter government with the conclusion of the November 1995 local elections. The second largest trade union federation, the National Council of Trade Unions (NACTU), while officially independent of any political grouping, has close ties to the Pan Africanist Congress (PAC) and the Azanian Peoples Organization (AZAPO). The right to strike is also guaranteed in the constitution, and is given statutory effect by the new Labor Relations Act. The LRA has established a simple procedure for a protected strike, with the requirement that the dispute first be referred for conciliation. If conciliation fails to resolve the dispute, then a trade union is entitled to engage in a legal strike. Such a strike is not liable to criminal or civil action. The LRA does, however, permit employers to hire replacement labor for striking employees after giving seven days notice to the striking trade union. The LRA also accords the right to strike to public sector employees, with the exception of essential services and the three components of the security services mentioned above. While this right was first asserted in the Public Sector Labor Relations Act of 1993, the new LRA simplifies and rationalizes collective bargaining in the public sector and the resort to industrial action. The International Labor Organization (ILO) readmitted South Africa in 1994. Originally an ILO member since its inception in 1919, South Africa withdrew from the ILO in 1964. Following the reinstatement, the international labor conference rescinded its declaration concerning action against apartheid. There is no South African government restriction against union affiliation with regional or international labor organizations. b. The Right to Organize and Bargain Collectively.-South African law defines and protects the rights to organize and bargain collectively. The government does not interfere with union organizing and generally has not interfered in the collective bargaining process. The new LRA statutorily entrenches "organizational rights," such as trade union access to worksites, deductions for trade union subscriptions, and leave for trade union officials, which will strengthen trade union ability to organize workers. Several recently-created fora have served to strengthen and institutionalize the role of collective bargaining in recent months. The creation of the National Economic Development and Labor Council (NEDLAC), a tripartite negotiating forum, has served to solidify the role of trade unions as social partners with government and business in the formation of economic and labor policy. In addition, the new LRA creates workplace fora which will allow for better shopfloor communication between management and labor over issues of work organization and production. To receive statutory protection, these fora can only be initiated by trade unions in businesses with more than 100 employees. It is hoped that these provisions will be expanded in time to include workplaces with smaller workforces. To further reduce the adversarial nature of South African labor relations, the new LRA also created a Commission for Conciliation, Mediation, and Arbitration (CCMA), which promises to play an aggressive, interventionist role in dispute resolution before parties move to full-fledged strikes or lock-outs. In those instances in which the CCMA is unable to resolve a dispute, the LRA permits its referral to the labor court. It is expected that this will be a rarely used option, however, as the intent of the LRA is to reduce judicial intervention into labor relations and encourage negotiated resolution whenever possible. South Africa has no export processing zones. c. Prohibition of Forced or Compulsory Labor.-Forced labor is illegal under the interim constitution, and is not practiced. d. Minimum Age for Employment of Children.-Employment of minors under age 15 is prohibited by South African law. The LRA, however, grants the Minister of Welfare discretionary powers to permit employment of children under carefully described conditions in certain types of work, such as in the agricultural sector. Enforcement of child labor laws by the ministries of labor and justice, however, are weak and reactive, depending largely upon complaints made against specific employers. As a result, use of child labor in the informal economy is quite common. e. Acceptable Conditions of Work.---There is no legally mandated national minimum wage in South Africa. Instead, the Labor Relations Act provides a mechanism for negotiations between labor and management to set minimum wage standards industry by industry. To date, over 100 industries, including a majority of workers in the manufacturing sector, are protected by the provisions of the act. In those sectors of the economy not sufficiently organized to engage in the collective bargaining processes which establish minimum wages, the Wage Act grants the Minister of Labor the authority to set minimum wages and conditions. The Wage Act, however, does not apply to farm or domestic workers. Occupational health and safety issues remain a top priority of trade unions, especially in the mining and heavy manufacturing industries. Although government focus on these issues has increased substantially (highlighted by the passage in 1993 of the Occupational Health and Safety Act), South African industrial and mining processes are still considered hazardous by international standards. Parliament is currently studying a Mines Commission of Inquiry on Health and Safety Issues in the mining sector, to determine ways to improve existing mine health and safety legislation. Although current South African occupational health and safety laws require that an employer not place employees at unreasonable risk, they do not give employees the right to remove themselves from hazardous jobs. An employee who leaves a worksite as a result of hazardous work conditions could face disciplinary action or dismissal. It should be noted, however, that South African occupational health and safety laws do provide protection from dismissal or reduction in salary/rank for whistle-blowing workers who report or file complaints against unsafe working condi tions. f. Rights in Sectors With U.S. Investment.-The workers rights conditions described above do not differ from those conditions found in sectors with U.S. capital investment. Extent of U.S. Investment in Selected Industries.-U.S. Direct Investment Position Abroad on an Historical Cost Basis-1994 Extent of U.S. Investment in Selected Industries.-U.S. Direct Investment Position Abroad on an Historical Cost Basis-1994—Continued [Millions of U.S. dollars] 1Exchange rate fluctuations must be considered when analyzing data. Percentage changes are calculated in SA. 1995 figures are all estimates based on available monthly and quarterly data in November 1995. GDP at factor cost for base year indicated (1985 Data superceded). 4"Other Services" includes community, recreation, personal and other services. Includes Government Administration and Defence, Education, and Health and Community Services. |