International Capital and South Africa: Jostling Of Interests and Space

2016-01-06 14:33

Corporate interests and interactions in South Africa have been subject to greater scrutiny in recent years, especially amid the social and economic turbulence befalling the country. From sell-out notions by our political leadership (namely Nelson Mandela vis-à-vis CODESSA) to the unapologetic squandering and decadence of incumbent ANC leaders, corporations seem to have a greater collective eye on their interests and motives. The story may be more nuanced than the simple [figurative] black and white narratives summing interactions between government and capital. The government's recent adoption of the "Promotion and Protection of Investment Bill" (PPIB), garnered plaudits from many leftists as many have come to see the purveyance of international capital used as a vehicle to undermine national governments and national sovereignty.

Just recently, the South African government has displayed strong and resolute commitments to deviate from a subservient position to international and local capital. Trade and Industry Minister Rob Davies’ recent introduction of a bill, severing our government’s ties to accommodate international trade treaties containing clauses like Investor-State-Dispute-Settlement (ISDS) should be lauded. ISDS is a mechanism contained in bilateral and international trade (BIT's) agreements which allow multinationals to seek reparation from national governments thought to be hindering their profit margins or activities relating thereof. South Africa made headlines following its decision to remove itself as a signatory from international agreements facilitating such reparations. Following closely behind was Indonesia, which cited an unfair and bias system, favouring US-based corporations.

Many of these disputes take place in Washington, under the auspice of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). Even The United States itself found itself on the receiving end of ISDS. Dubiously enough however, the US government has won all 13 cases brought against it by multinational corporations. these include its own companies, many of whom resituate their headquarters based on legislative convenience rather than patriotic affiliation. It would seem in light of this, that the South African government has made the right decision to remove itself from the maelstrom of shadowy corporate manoeuvring. This will, of course, have adverse effects for our economy since foreign direct investment forms a significant part of the economy. Reprisals in some form or the other are bound to be waiting, as multinationals and international power brokers look to retain greater rights, access and ownership of our economy and its various sectors.

One example of late has been the poultry saga, which saw our government refuse to import US chickens into South Africa, based on unacceptable health standards. The American Growth and Opportunity Act is surely going to be used as a retaliatory vehicle on their part against our exports, with up R2 billion in losses for our US destined poultry exports touted by industry experts. This already follows tariff patterns more favourable to northern economic states/institutions.

Source: WEF 2014 Global Trade Enabling Report 2014, pp. 29

Proponents of ISDS and other such treaties have decided to contest BEE legislation, as they feel it (ironically) 'discriminates investors' (most of whom are white European males). This has meant South Africa has had to defend legislation which has the potential to transform society. Minister of Trade and Industry, Rob Davies recounted in his opening argument against ISDS in November last year, that

Foreign direct investment (FDI) is currently protected by more than 3 000 International Investment Agreements (IIAs) worldwide. Most of these agreements feature an Investor-State Dispute Settlement (ISDS) mechanism to enforce investor rights. These agreements are mostly structured along the “old architecture that allows investors to sue States in arbitral fora and give investors the right to bypass domestic courts."

Companies like Coca-Cola have now been thrust into the spotlight for using BEE as a vehicle to rid itself of commitments to full-time staff, instead, turning them into contractual slaves. They now face a civil suit to the amount of R6 billion from 'Owner Drivers' who found themselves hard done by Coca-Cola and affiliates ABI/SAB. It is perhaps in light of such instances that international companies have been contesting legislature which conforms to notions of human dignity which touch upon economic restoration. Given South Africa's removal as a Bilateral International Trade signatory, the timing for this civil lawsuit couldn't have been any more fortuitous. One can only hope the coming storms resulting from (probable) reprisals can be weathered by resolute leadership, keen on finding alternatives to do business and grow our economy (China notwithstanding). This comes in the face of strengthened/reinforced international capital, with mergers and acquisitions reaching an all-time high across the globe in 2015, while Sub-Saharan companies remaining relatively mute in comparison.

[embed]https://www.youtube.com/watch?v=j0LOwmwgkdA[/embed]

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