The European Union’s (EU's) top foreign affairs officials have expressed confidence that EU investments in South Africa will be properly protected under recently enacted investment protection legislation.
Over the last few years the South African government terminated bilateral (binational) investment treaties with several EU member states. Last December it replaced all of these with a single Protection of Investment Act covering investments from all countries. It stipulates that foreign investments should get the same protection as domestic investments.
Many EU member countries expressed concern that they would not get the same protection under this new law as under the bilateral investment treaties. They were particularly worried that it would not allow them recourse to international arbitration of disputes as the bilateral treaties had.
The new law allows such arbitration but only at the discretion of the South African government when domestic remedies have been exhausted.
Nonetheless Federica Mogherini, the High Representative for Foreign Affairs and Security Policy and Vice President of the European Commission, yesterday gave her implicit approval to the new law.
“We discussed this this morning,” she said after meeting her counterpart Maite Nkoana-Mashabane for the 13th political dialogue between their governments, in Pretoria.
“I am confident that the high level of investments that comes from the European Union to South Africa will be preserved, protected and encouraged in the future as it is our shared interest to make this happen.
“We were very pleased to see that President Zuma referred just a few days ago in Parliament to the role – and it was stressed again this morning – of European investment in South Africa in terms of economic impact but also in terms of job creation which is extremely important for the country but also for us. This is one of the issues we share as top priorities, both here and in Europe, especially looking at job creation for young people.
“This is not only an economic element but also a social and human development element. So I am confident this political recognition of the importance of the European Union’s investment presence here in the country is going to be preserved.
Mogherini was referring to Zuma’s State of the Nation speech where he said the EU was South Africa’s largest trading partner and largest foreign investor. He said over 2 000 EU companies were operating in South Africa, creating over 350,000 jobs, and producing value-added goods which were exported and contributed substantially to skills development and job creation.
In a joint statement the EU and South Africa said they had noted the growing levels of citrus exports from South Africa to the EU and the importance of the citrus industry for job creation in South Africa.
“They confirmed their commitment to enhance cooperation to address the Citrus Black Spot issue.”
An outbreak of Black Spot – a fungus on citrus skins – has been an issue between the two governments for several years. It has blocked some citrus exports though the two sides have now instituted procedures for managing the problem.
In the meantime a joint scientific enquiry is under way to determine whether Black Spot could harm the EU citrus industry anyway.