South Africa’s relationship with the United States, long a complicated one, has been thrown into sharp focus by the announcement from the office of the US Trade Representative that South Africa’s participation in the superpower’s Generalized System of Preferences (GSP) is to be reviewed.

GSP access allows a very wide range of goods from the 119 participating economies into the US market on favourable terms, with eligibility determined by the adherence by each of these countries to a set of principles. Among these is the protection of intellectual property rights.

The review had arisen as a result of legislation passed by South Africa’s legislature, and awaiting President Cyril Ramaphosa’s signature. The two laws, the Performers’ Protection Amendment Bill and the Copyright Amendment Bill, have sparked fears that South Africa is moving towards a diluted and pliable system of intellectual property protection.

The most prominent issue is the idea of ‘fair use’, which would allow for significant exceptions to the protection of owners’ material.  Concern was evidently articulated by an industry group, the International Intellectual Property Alliance, which represents some 3 200 US companies involved in filmmaking, publishing, and various other entertainment industries.

 Safeguarding intellectual property has, of course, been as important for US businesses. Theirs is often an economic model driven by innovation, which is a costly enterprise. The Harvard Business Review estimates that some 80% of the market value of the S&P 500 is bound up in its ‘intangible assets’ – of which intellectual property is a valuable element. To find the fruits of this innovation reproduced and used by their competitors can be a crippling blow.

Indeed, intellectual property infringements have been an ongoing source of conflict between the US and China.

It remains to be seen how this will play out, but there is a great deal at stake. In purely monetary terms, South African exports to the US amount to around R34.8 billion a year. South Africa actually runs a healthy trade surplus with the US, and has done for the past two decades. The US is also an important market for value-added goods.

It also bears remembering that President Ramaphosa has said that increasing exports is an economic priority.

So, whatever (well-advertised) hostility South Africa’s government and ruling party feel towards the US, this is not a relationship that should be lightly compromised.

This legislation has not just rattled the Americans; it has been the subject of major controversy in South Africa, too. While the legislation has received some support, largely on the basis that it might expand access to educational materials, others have protested audibly. These include many within the country’s creative and publishing industries, who see it as intruding into their interests and undermining their livelihoods.

This is not without foundation. A 2017 study by PWC of the possible implication of the Copyright Amendment Bill on the publishing industry revealed widespread apprehension on the part of South African publishers about the impact of the bill. It warned that it would likely lead to a decline in sales of some 33%, suggesting a decline in revenues to the tune of R2.1 billion, along with a decline in employment of some 30% of the full-time jobs in the industry – some 1 250 positions that will not be easily replaced.

Collen Dlamini, convener of the Coalition for Effective Copyright in South Africa, has argued that this indicates a threat not just to the material interests of the creative sector, but to its property rights. In a piece published earlier this year, he commented: ‘On substantive grounds, the Bill amounts to the retrospective and arbitrary deprivation of property, an infringement of Section 25 of the Constitution. The Bill allows, in effect, the expropriation of local content without compensation (EWC).’

Here he is correct – and never more so than today, when knowledge, ideas and ingenuity are sought-after commodities, but technology has allowed them to be appropriated as never before.

However, he continues: ‘Parliament is in the process of amending Section 25. Yet, it is doubtful that any of the supporters of expropriation without compensation ever intended it to apply to homegrown South African culture and creative expression. Expropriating land as a form of social justice is one thing; expropriating content, especially content produced by black artists, writers and creatives, is quite another. One is redress; the other exploitation.’

Here he is mistaken. As we at the Institute of Race Relations have argued repeatedly, the drive towards EWC is about land – but about so much more, too. It will achieve increased state power over the property of those subject to it, and land – while the idiom in which EWC has been phrased – is nowhere near the most lucrative or tempting prize. Section 25, do not forget, is about property, not land.

For any number of reasons, the government and ruling party are committed to a statist economic path. For some, this is about building a future socialist utopia; for others, this is about constructing a mighty developmental state; for others, again, it is merely a means to access more property out of sheer venality. The degradation of property rights is something that resonates with each of these.

Whether it affects farmers or filmmakers, whether foreign or local, the danger of undermined property rights looms large. The damage that this course of action will inflict will be felt without discrimination across the economy. The country, and each of its interest groups, ignores each threat at its peril.

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Terence Corrigan
Terence Corrigan is the Project Manager at the Institute, where he specialises in work on property rights, as well as land and mining policy. A native of KwaZulu-Natal, he is a graduate of the University of KwaZulu-Natal (Pietermaritzburg). He has held various positions at the IRR, South African Institute of International Affairs, SBP (formerly the Small Business Project) and the Gauteng Legislature – as well as having taught English in Taiwan. He is a regular commentator in the South African media and his interests include African governance, land and agrarian issues, political culture and political thought, corporate governance, enterprise and business policy.

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