Beyond Borders: Understanding International Regulatory Bodies and Their Impact on Our Products
Regardless of a country’s degree of economic development, securing stable finances, expanding the economy, and improving people’s standard of life are all constant challenges.
Given the unique characteristics of national economies and political systems, there is no single best way for any country to accomplish these goals. High growth rates in nations like Malaysia and Malta contrast sharply with the factors that have fuelled China’s rapid expansion over the past two decades.
The impact of laws and regulations on businesses and individuals is all-encompassing. They play a crucial role in national policymaking. While many of today’s most serious policy concerns cut across borders, laws and regulations generally only apply within their own borders.
This discrepancy undermines nations’ chances of realising their public policy goals and protecting their citizens’ interests.
Understanding international regulation in the context of globalisation
The so-called “globalisation” of the economy is a by-product of human ingenuity and technical development. Globalisation describes the growing interdependence of national economies as a result of cross-border trade and investment.
The phrase is often used to describe the flow of labour and information across national boundaries. The effects of globalisation extend to other spheres, including as culture, politics, and the environment.
The major technological advances of the last 30 years have contributed significantly to the greater interconnection of countries and the integration of the world economy. The efficiency and capacity of national regulatory systems are being put to the test by the increasing flow of goods, services, people, and finances across borders.
Because of this, the global environment in which policymakers and regulators function has undergone significant change. Policymakers and regulators in the modern era face possibilities and changes brought on by globalisation and an increasingly interconnected globe that cannot be tackled separately.
However, a number of universal truths appear to underpin increased affluence. Foreign direct investment, technological advancement, well-established institutions, prudent monetary and fiscal policies, a highly educated labour force, and a functioning market economy are all crucial factors.
Moreover, it appears that high-growth countries share a common factor: active participation in and integration with the global economy.
South African trade in the international regulatory framework
The importance of South Africa as a logistics and services hub in the region is best demonstrated by its massive manufacturing trade with the rest of Africa. There is also a strong emphasis on localization, and effective rates of protection remain high in some industries, while the country takes a cautious approach to trade agreements.
When taken together, these structural, environmental, and policy variables raise the bar for new entrants and reduce competition for established enterprises, increasing the incentive to produce for the protected local market over exploring new export potential.
Below, we explore the major regulatory bodies and the role they play in importing and exporting products across South African borders. We start by examining the financial sector in South Africa and the regulatory framework around the trade of financial products.
Financial regulation in South Africa
South Africa has redoubled and refocused its efforts to ensure that the financial sector offers individuals and businesses good-value options for receiving and making payments, saving, borrowing, and insuring against everyday hazards.
The National Development Plan emphasises the role that an efficient financial sector may play in delivering innovative intermediary services, so contributing to increased economic inclusion – particularly of historically marginalised populations – while also encouraging growth and creating jobs.
A strong market conduct policy is a vital pillar in constructing a financial sector that achieves these results. It can promote and facilitate increased competition and involvement in the financial industry, including the establishment of new black-owned financial institutions.
Market conduct regulation seeks to prevent, and manage when prevention fails, the negative consequences of financial institutions conducting their business in ways that are unfair to clients or damage the integrity of financial markets and public trust in the financial system.
Customer protection in the financial industry and genuine financial inclusion in South Africa are mutually reinforcing goals.
As a result, the market conduct policy approach should be viewed as a supporting pillar of South Africa’s financial inclusion policy; stronger levels of customer protection can generate greater inclusion as customers feel more comfortable in their involvement in the financial sector.
Following the global financial crisis, which was caused by poor financial sector practises combined with weak regulatory monitoring, financial sector reform has become a key focus of international concern.
International developments have undoubtedly accelerated South Africa’s reform agenda. However, prior to the global financial crisis, financial sector regulation in South Africa was under examination.
The next stage of the reform effort in terms of market behaviour was therefore to streamline and harmonise the legislative framework within which financial institutions will operate.
This comprised a thorough examination of existing financial sector regulations with the goal of adopting a single, comprehensive legal framework for market conduct regulation in South Africa that is consistently applied to all financial institutions. The drafted Financial Institutions Conduct Bill represents this new legal structure.
As a result of this streamlining process, institutions such as the FSCA were created in order to ensure a strong regulatory oversight for financial products and businesses within South Africa.
The Financial Sector Conduct Authority (FSCA)
The Financial Sector Conduct Authority (FSCA) is the market conduct regulator of licenced financial institutions such as banks, insurers, retirement funds and administrators, and market infrastructures that offer financial products and services.
Market conduct regulation and supervision fall under the purview of the Financial Sector Conduct Authority (FSCA). By encouraging financial firms to serve their clients fairly and by providing financial education, FSCA hopes to boost the effectiveness and stability of financial markets and to safeguard consumers. The Financial Stability and Consumer Act will be of great help in this regard.
The US Securities and Exchange Commission
The SEC is an abbreviation for the US Securities and Exchange Commission. It is a government agency tasked with regulating markets, protecting investors, and overseeing mergers and acquisitions in the United States.
The SEC was established in 1934 with the mission of enforcing US laws governing the trade of securities (financial assets), ensuring fair and efficient markets, protecting investors from exploitation, and assisting in the maintenance of a well-functioning economy.
Any individual who purchases more than 5% of a company’s ownership shares is required by the SEC to declare it. It also requires public corporations to publish regular profit reports and prosecutes those who violate securities rules.
The SEC is composed of a five-member commission, each of whom serves a five-year term.
The South African Bureau of Standards (SABS)
SABS South Africa has a well-developed standards regime based mostly on mandatory, regulator-led definition and qualification. Over numerous decades, South Africa has produced several standards that represent unique conditions related to the natural and human environment.
The South African Bureau of Standards (SABS) is a specialised South African government organisation that promotes and maintains standardisation and quality in commodities and service delivery. It is a division of the Department of Trade and Industry.
SABS is accredited nationally by the South African National Accreditation System (SANAS) and is recognized internationally by Netherlands-based Raad voor Accreditatie (RvA).
SABS belongs to both the International Organization of Standardization (ISO) and the International Electrotechnical Commission (IEC). Accordingly, it issues pharmaceutical and industrial standards that conform to those of the ISO.
SABS follows the standards of the ISO, the IEC and the European Committee for Standardization (CEN) and does not automatically recognize the standards of the United States.
British Industry Standards and the Deutsche Industry norm are favoured in the SABS systems for historic and technical reasons. Products sourced from these countries enjoy quasi-automatic accreditation.
In practise, while importing goods into South Africa, US corporations have been able to comply with South African norms. According to a survey of US corporations already established in South Africa, SABS standards have not been a major trade impediment; the automotive and pharmaceutical sectors are exceptions and deserve more attention.
All overseas vendors pursuing conformity with South African standards have experienced sluggish processing of Letters of Authority (LoA) applications, in some cases to the point of jeopardising technology redundancy.
The Consumer Goods Council of South Africa (CGCSA)
The Consumer Goods Council of South Africa (CGCSA) is an industry group that represents Retail and Manufacturing member companies in South Africa’s largest employment sector.
Their vision is at the heart of CGCSA’s mission: to become Africa’s top Consumer Goods industry platform for advocacy, collaboration, and best practise.
In an ever-changing environment influenced by regulatory requirements, risk management capabilities, and the quest of standardised operational solutions that allow members to trade more effectively, CGCSA is ideally positioned to provide members with confidence in value chain transparency.
They provide global standards that allow organisations to easily identify, capture, and share information; expertise in food labelling, food safety, and food waste best practises; sustainability and regulatory advisory services, as well as crime risk management and skills development and training, allowing us to support, advocate for, and advise organisations in the Retail and Manufacturing sectors at every stage of the value chain, from farm to fork.