January 13, 2017
By: Anna Sayre, Legal Content Writer, SanctionsAlert.com
A decade ago South Africa was inaugurated as the first African member state of the Wassenaar Arrangement (WA), an agreement that promotes transparency in transfers of conventional arms and dual-use goods and technologies. Since that time, South Africa has developed its export control regulations into a more modern, more cohesive regime.
During the apartheid era, South Africa’s foreign trade and investment were stifled by sanctions and boycotts imposed by the international community, which ideologically opposed the regime and sought to weaken it. During the 1970s and 80s, South Africa was hit with a UN arms embargo, US economic sanctions, as well as an oil embargo by the Organization of the Petroleum Exporting Countries (OPEC).
Since that time, South Africa has once again become a democratic country, resulting in the end of international restrictions and thus allowing foreign trade in South Africa to increase exponentially.Exports in the last year alone have grown by 12.8%, mainly consisting of mineral products, such as chrome, manganese and coal(20.6%), precious metals such as gold, platinum and diamonds (18%), vehicles and aircraft vessels (12.6%), iron and steel products (12%), machinery (9%), and chemicals (7.5%). Machinery and transportation equipment make up more than one-third of the value of the country’s imports. Other imports include chemicals, manufactured goods, and petroleum.According to the South African Revenue Service, South Africa’s top export/import partners for 2016were China, Germany, and the US.
The Wassenaar Arrangement Explained
The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies came into operation two decades ago, in 1996,following the end of the Cold War. At that time, the members of the previous export control regime, the Coordinating Committee for Multilateral Export Controls (CoCoM), which was created in the wake of WWII, realized that the existing arrangement did not cover the new risks to regional and international security brought on by the spread of conventional weapons. The WA is far reaching and targets any state or group of states that are “of concern” to its members.
The WA is open on a global and non-discriminatory basis to prospective adherents that comply with the agreed criteria. To be admitted, a state must:
- Be a producer/exporter of arms or industrial equipment respectively;
- Maintain non-proliferation policies and appropriate national policies, including adherence to relevant non-proliferation regimes and treaties; and
- Maintain fully effective export controls.
Radio Frequency Modules and Carbon Fibers
According to its founding document, the WA was “established in order to contribute to regional and international security and stability, by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies”, namely in order to keep such items out of the hands of terrorists.
A so-called dual-use item can have non-military ‘innocent’ applications, or can have military applications, such as being used in an explosive device. A classic example is a radio frequency module:a piece of equipment that is used to transmit signals between two devices. Such a radio frequency module could be something as simple as a mobile phone, but could also be used to detonate a bomb. Often, dual use items cannot be exported without permission from the government.
The234-page long WA control lists include many of dual use products that appear innocent. A good example is carbon fibers. Though this material is often used to make tennis rackets and golf clubs, carbon fibers appear on the dual use list because they are also the ideal material for creating the nose cones of intercontinental ballistic missiles due to their resistance to heat upon re-entry into the Earth’s atmosphere.
Commitments of WA Members
To promote transparency, the WA calls on states to make certain voluntary disclosures of information and notifications of their export activities relating to items that appear on the WA’s two control lists.
Participating member states, of which there are currently 41, have agreed to a number of guidelines and procedures as a basis for decision-making through the application of their own national legislation and policies.For example, the US has enacted the International Traffic and Arms Regulations (ITAR) to enforce export controls, whilst the UK makes use of its own legislation called the Export Control Act. Members enact legislation and control all items set forth on the WA’s List of Dual-Use Goods and Technologies and Munitions List, with the objective of preventing unauthorized transfers of the items found on those lists.
In addition, participating States must be members of or be acting in accordance with the following international non-proliferation agreements: Treaty on the Non-Proliferation of Nuclear Weapons (NPT), Missile Technology Control Regime (MTCR), Chemical Weapons Convention (CWC), and the UN Register of Conventional Arms.
South African Export/Import Control Regulations
Though South Africa only formally became a participating member of the WA in February 2006, it had already incorporated the WA control lists into its national legislation through the National Conventional Arms Control Act No. 41 of 2002.Also established that year, through the International Trade Administration Act No. 71 of 2002, was the International Trade Administration Commission (ITAC). Similarly to the US Department of Commerce’s Bureau of Industry and Security (BIS) and State Department of Directorate of Defense Trade Controls (DDTC), ITAC’s core mandate is the enforcement and administration of import/export control measures.
Not unlike its Western counterparts, one must obtain a permit ensuring that compliance with applicable export control measures in order to export/import certain goods in/out of South Africa. Such a permit can be obtained by applying to ITAC’s Import and Export Control Office, whose key role includes enforcement of control regulations “to ensure effective compliance with the conditions contained in permits” and applicable regulations. The issuance of a permit takes up to 5 days for imports and 14 days for exports. Rejections are not currently very common, and often are the result of non-availability of stock to be inspected at the time of application, or the business having no presence in South Africa.
Most restrictions on the export of goods center around support strategies of beneficiation or to assist local manufacturers to obtain raw materials before they are exported and are relatively simple in scope. Import controls are much less advanced. Most interestingly, despite that fact that a permit must still be obtained from ITAC, the majority of new (as opposed to second hand) goods are exempted from import control measures entirely. Click here for South Africa’s export and import control regulations.
As South Africa’s trade policies continue to develop, the rules regarding exports, imports and tariffs continue to be altered to meet international standards. Most recently, investigations have resulted in much more stringent duties and restrictions on international trade.
Though modern export control and policy is relatively new in South Africa, the government continues to develop programs to boost trade and exports as well as prevent proliferation of weapons of mass destruction.
The South African Department of Trade and Industry (DTI) promotes and creates policy relating to trade and exports. Under the Non-Proliferation Act (Act No. 87 of 1993), the DTI provides resources to the South African Council for the Non-Proliferation of Weapons of Mass Destruction to fulfill its obligations in accordance with the national non-proliferation policy, and to meet its undertakings regarding international treaties and regimes. The Council, consisting of government agencies and representatives of the private industry, is responsible for implementing policy on non-proliferation in compliance with multilateral rules governing trade in controlled goods and technology related to weapons of mass destruction.
Non-Proliferation Compliance Program for South African Industry
The Council also calls for commitment to compliance by entities whose activities are regulated by Act No. 87, and offers guidelines for dealing with proliferation controls.
The emphasis within these guidelines is on practical and relevant measures as well as aspects typical of quality management.
Its voluntary guidelines, cover a myriad of topics, including training, record keeping, handling of suspicious orders, and includes a list of red flags of suspicious enquirers. The goal of the guidelines is to ease trade procedures, benefit the customer, and help those companies involved in controlled activities or with goods that could contribute to WMD programs to proceed with confidence.
According to Jonathan Brewer, Visiting Professor at King’s College London and an expert on global proliferation threats, “Effective non-proliferation involves partnerships between government and industry, and the Council performs an important role by educating industry on compliance good practices. What is less clear is the Council’s role in respect of information that industry may possess regarding activities of agents procuring on behalf of WMD programs. Such information needs to be passed to government departments that are responsible for detecting and disrupting procurement networks.”
No Economic Sanctions Regime
As opposed to export controls, South Africa does not have its own economic/financial sanctions regime. It implements Section 25 of the Protection of Constitutional Democracy Against Terrorist and Related Activities Act 2004 (“the Act”) and empowers the President of South Africa to give notice of UN Security Council Resolutions. Every proclamation issued under Section 25 of the Act shall be tabled in the Parliament of South Africa for its consideration and decision.