Review of White Paper on the Defence Related Industries

1
Review of White Paper on the Defence Related
Industries

• PCD
• 19 August 03

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Origins of the White Paper on the DRI

• Origins of the White Paper
• Transitional Executive Council Act provided the
  legal framework for discussion on broad defence
  matters.
• JMCC deliberations took place and work was
  commission into the future of the arms and
  related industries.
• Committee of Ministers was appointed, led by
  Minister of Defence, who formulated a
  comprehensive framework for the underlying
  philosophy, policy and approach with regard to
  various aspects of the arms related industry.

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• White Paper on Defence and Defence review
  addressed broad issues of arms control and
  defence industry, and the Defence review
  addressed the acquisition process of the DOD in
  greater detail.
• NCACC tasked by Cabinet to initiate and prepare a
  White Paper on the Defence industry.

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Process Matters

• Ownership of the White Paper
• NCACC
• Cabinet Approved on 01 Dec 1999.
• Key Government Stakeholders
• DTI
• DST
• DPE
• DOD

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• Steering Committee
• Defence Secretariat (Mr Shaikh - Chief of
  Acquisition, also the chair)
• Department of Trade and Industry (Mr Hirsch).
• Armscor (Dr Buys).
• Denel (Mr Potgieter).
• South African Aerospace, Maritime and Defence
  Industries Association (AMD) (Maj Gen Rtd.
  Kriel).
• Human Sciences Research Council (HSRC) (Mr
  Mojale).
• Council for Scientific and Industrial Research
  (CSIR) (Mr Anderson).
• UCT Center for Conflict Resolution (CCR) (Mr
  Nathan).
• University of the Witwatersrands Graduate School
  of Public and Development Management (Prof
  Cawthra).

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Points of Departure

• Defining the Industry
• South Africa is the first country to coin the
  term defence-related industry and to do away
  with the term defence industry
• The defence industry could not be identified or
  defined as a distinct industrial sector. Defence
  work is done across all sectors of the South
  African industrial base.
• Growing tendency for companies producing defence
  equipment to make use of civilian technologies,
  or to manufacture dual-use products which can be
  sold to both defence and non-defence markets.
• Increasing overlap between defence and civilian
  production within companies.

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• Significance of the White Paper
• The White Paper is a significant document in that
  it was based on exhaustive research of an
  industry that was not previously exposed to
  public scrutiny. Attempts to contextualise the
  policy debates.
• Provided both background information on the
  industry and a coherent policy for the industry.

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Synopsis of the White Paper

• Chapter 1
• Provides a comprehensive analysis of the South
  African economic, industrial and technology
  policy at that time.
• Chapter 2
• Condensed history of the industry
• Comprehensive analysis of the earnings, value and
  employment levels of the industry.
• Allows for analysis of the economic value of the
  industry.
• Chapter 3
• Following from the Defence Review, describes DOD
  acquisition process and technology process.

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• Chapter 4
• Identifies strategic technologies and
  capabilities for the Defence Force. They are by
  nature few in number and well defined, mapping a
  long term technology master plan for defence that
  is firmly located in the progressive position
  adopted by the White Paper on Technology.
• Accepts that normal market forces will apply to
  the defence-related industry and will determine
  entries and exits to the defence market.
• Those few and specific technologies that are
  strategic to the Defence Force will however not
  be exposed to market forces and limited
  protectionism will occur.
• Subsidisation of the industry is not envisaged.
• The shortcoming to date is the interface between
  the Defence Review and this White Paper. The
  deviation in the categorisation of strategic and
  non-strategic technologies and capabilities from
  the Defence Review to this White Paper is
  problematic.

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• Chapter 5
• Addresses government support measures.
• Acknowledges that weapon systems are essentially
  sold on a government to government basis.
• Identifies major government role players who
  assist the defence-related industry in marketing
  products Departments of Defence, Foreign
  Affairs, Trade and Industry, the South African
  Secret Service and Armscor.
• The chapter calls into existence a Marketing
  Support Board which functions to co-ordinate
  government effort.

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• Chapter 6
• Reviews those international arms control treaties
  and regimes to whom South Africa is a signatory,
  and which control the transfer of arms and
  certain technologies. These range from
  conventional arms controls to nuclear, chemical
  and biological controls.
• Review of South Africa's international
  obligations conceptualises further discussion on
  domestic arms control legislation and structures
  impacting on the defence-related industry.
• Seven different sets of legislation are reviewed
  (Conventional Arms, Armaments Production and
  Development, Non-Proliferation of Weapons of Mass
  Destruction, Firearms and Ammunition, Teargas,
  Explosives and Nuclear Energy).
• Five control structures are reviewed (the NCACC,
  the Non-Proliferation Council, the Explosives
  Inspectorate, the Central Firearms Register and
  the Atomic Energy Corporation).
• The chapter notes the absence of legislation and
  statutory control structures for conventional
  arms and requires the investigation of
  legislation and structures.

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• Chapter 7
• Addresses specific social and economic challenges
  facing the industry, providing government with
  options on how these may be addressed.
• Within the context of globalisation and the
  internationalisation of the defence market, the
  chapter investigates how the defence-related
  industry might deal with issues of consolidation
  and the establishment of both joint ventures and
  equity partnerships.
• Within the context of the transformation of South
  African society, the chapter expresses itself on
  issues such as affirmative procurement, equity
  ownership amongst previously disadvantaged
  groups, as well as facilitating new entrants to
  the market.
• Broad transformation issues are also touched on,
  such as labour related legislation in South
  Africa.

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Outcomes of the White Paper

• Legislation
• National Conventional Arms Control Act.
• Formalises conventional arms control processes.
• Creates the NCACC as a statutory body.
• Came into force in 2003.

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• Armscor Bill.
• Shift of the production capabilities of Armscor
  to Denel in 1992.
• Shift in Arms Control responsibility to the NCACC
  in 1995.
• Establishment of the Defence Secretariat in 1995
  with a dedicated defence acquisition division.
• White Paper on the Defence-Related Industry
  called for a review of the Armaments Development
  a Production Act. Armscor to be established as
  the Acquisition agent of the DOD.
• Meet the defence materiel requirements of the
  Department.
• Meet the defence technology, research,
  development, analysis, test and evaluation
  requirements of the Department.
• Emphasis is placed on efficiency, effectiveness
  and economy, as well as legality, fairness and
  transparency.

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• Prohibition of Anti-Personnel Mines Bill.
• Signed ratified Convention on the Prohibition
  of the Use, Stockpiling, Production and Transfer
  of Anti-Personnel Mines and their Destruction.
• Article 9 "Each State Party to the Treaty shall
  take all appropriate legal, administrative and
  other measures, including the imposition of penal
  sanctions, to prevent and suppress any activity
  prohibited by a State Party under the Convention
  undertaken by persons or on territory under its
  jurisdiction".
• The Prohibition of Anti-Personnel Mines Bill
  brings the Convention into South African Law.

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• Prohibition or Restriction of Certain
  Conventional Weapons Bill.
• Signed ratified Certain Conventional Weapons
  Convention (CCW).
• Article 14(1)(2) of Protocol II of the Certain
  Conventional Weapons Convention requires each
  High Contracting Party to take all legal,
  administrative and other measures, including
  penal sanctions to prevent or suppress any
  activity prohibited by the Protocol.
• The Certain Conventional Weapons Convention
  requires High Contracting Parties to initiate a
  number of other steps in addition to the enabling
  legislation identified above.
• Article 6 of the Convention requires that
  comprehensive instructions on the Convention must
  be disseminated to the Armed Forces.
• Article 14(3) of Protocol II requires that armed
  forces receive instruction on the Protocol and
  Operating Procedures are promulgated.
• The Prohibition or Restriction of Certain
  Conventional Weapons Bill is being finalised
  within the Department of Defence.

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• Structures
• Creation of the Marketing Support Board
• Further development into the SADESO
• Initiated the Cluster vs. Sector Debate.

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Areas of Possible Amendment

• Chapter 1
• Deals with the National Policy Framework.
• Could be updated to reflect South Africas policy
  developments in terms of industrial, economic,
  scientific and technology policy.
• Chapter 2
• Provides an economic overview of the
  defence-related industry, is very outdated.
• Since the introduction of the Strategic Defence
  Packages, the size, shape and organisation of the
  defence-related industry has changed
  significantly.

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• Chapter 3 and Chapter 4
• Deals with acquisition and technology management
  structures, which have not changed significantly.
  
• Chapter 4 however, which deals with strategically
  essential technologies and capabilities, does
  require updating.
• This chapter should be informed by three new
  developments, namely the Military Strategy, the
  Force Employment Strategy, and the Technology
  Strategy currently being developed with the
  Department of Science and Technology.
• Chapter 5 and Chapter 6
• Chapter 5, dealing with marketing facilitation,
  should be updated to reflect the new SEDESO
  approach.
• Chapter 6, dealing with arms control structures,
  should be updated to reflect recent developments.
  
• Chapter 7
• Deals with ancillary matters to the industry,
  needs a general update to reflect current
  developments.

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• QUESTIONS?

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Executive Summary of Briefing

• Origins of the White Paper
• Transitional Executive Council Act.
• JMCC Deliberations.
• Committee of Ministers led by Minister of
  Defence.
• NCACC tasked by Cabinet.
• Ownership of the White Paper
• NCACC
• Cabinet Approved on 01 Dec 1999.
• Key Government Stakeholders
• DTI
• DST
• DPE
• DOD

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• Synopsis of the White Paper
• Chapter 1 National policy framework.
• Chapter 2 Economic analysis of the DRI.
• Chapter 3 Defence acquisition process.
• Chapter 4 Defence technology management and
  identification of strategic defence technologies
  and capabilities.
• Chapter 5 Marketing support to the DRI
• Chapter 6 Arms control regimes in South Africa.
  (Nuclear, Weapons of Mass Destruction, Dual-Use,
  Conventional Arms, Firearms and Ammunition,
  Teargas, Explosives).
• Chapter 7 Challenges to the industry
  (globalisation, foreign entrance, equity
  partnerships, joint ventures, BEE, Affirmative
  procurement etc.).

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• Activities initiated by the White Paper on DRI
• Legislation
• National Conventional Arms Control Act.
• Armscor Bill.
• Prohibition of Anti-Personnel Mines Bill.
• Prohibition or Restriction of Certain
  Conventional Weapons Bill.
• Structures
• Marketing Support Board
• SADESO
• Cluster vs. Sector Debate.
• Areas that can be updated
• Chapter 1 Update national policy framework
• Chapter 2 Complete economic analysis of size
  shape of the DRI post the SDPs
• Chapter 3 Include the new acquisition policy
• Chapter 4 Agreed on DOD strategic technology
  strategy.
• Chapter 5 Include SEDESO developments
• Chapter 6 Update of SA arms control regimes.