US, Sacu deadlocked

The parties met in Pretoria this week. Unrealistic demands by the US government are said to be at the centre of the failed talks. The parties have, however, agreed to set up a framework for future negotiations. Analysts have warned that should the US fail to backtrack on some of its conditions, the deal will remain a pie in the sky. The US government’s announcement that it is not going to compromise on any of the three identified areas of trade appears to be a hurdle too high to jump for their prospective partners, Sacu. The US congress has mandated Karan Bhatia, its deputy trade commissioner, to ensure that the deal must include Intellectual Property Rights, Government Procurement Rights and Investment. Sacu, which consists of South Africa, Namibia, Lesotho, Botswana and Swaziland, has not done much trading in these areas, in fact the union is still in the process of putting together internal policies to govern these areas of trade. The US trade envoy has acknowledged that this is a major challenge. Trade pundits are doubtful that any deal will be reached soon. They believe that Washington’s so called “golden standards of trade relations” are just too high for sub-saharan Africa. Nkululeko Khumalo, a senior researcher on trade policy at the South African Institute of International Affairs (Saiia), says the fact that Sacu is yet to get its house in order in terms of harmonising trade policies, is reason enough for negotiations to fail. However, the biggest impediment, says Khumalo, is that we have a developed big industrialised economy like the US, trying court developing countries such as South Africa and poor countries like Lesotho. Khumalo says the US is racing against time because its Trade Promotion Authority will soon expire, so they actually need to seal this free trade agreement with Sacu as soon as possible. Since it has already become apparent that an agreement is unlikely going to be reached, Khumalo says the parties will have to arrange another meeting, while they consult with their various authorities. The US was not at the same level of trade negotiation ambitions, insiders said. To conclude an agreement on US terms would have profound negative implications for SACU’s broad development policy. “A key question is whether our political systems could accommodate such an agreement,” said another source who attended the talks. “You cannot discuss environment, labour and trade on the same dimension,” Hopes of advancing negotiations on the United States’ first free-trade agreement in sub-Saharan Africa were dashed for the second time after a U.S trade envoy led by US trade representative Robert Zoelick met with SACU trade ministers late 2004. Continuation of the talks put on hold until when they resumed this week. They had stalled over a number of issues, including labour, the environment and intellectual property rights. SACU members argue that many of these issues should be dealt with through other forums and want a more limited deal than that proposed by the United States. Leader of SACU delegeation at the time, South African Trade and Industry Minister Mandisi Mpahlwa, described the three-and-a-half-hour meeting in the Namibian port of Walvis Bay as difficult. “There is further work that needs to be done to take this process forward,” he said without elaborating. SACU countries make up the United States’ largest export market in sub-Saharan Africa. U.S. officials say a free trade agreement with SACU would be an opportunity to create a framework for trade and investment that furthers regional growth and development. “We build on the relationship that we have built under the framework of the Africa Growth Opportunity Act (AGOA). “SACU is in a process of developing and strengthening its own institutions and this helps in strengthening regional integration.” Passed in 2000, AGOA forged a new trade partnership between the United States and sub- Saharan Africa ‘granting duty-free access to the US market for substantially all products of eligible countries and bringing new jobs and new investment to the region. AGOA has created new commercial opportunities for Africans. AGOA imports totalled US$14.1 billion in 2003, and non-fuel exports to the United States from eligible countries were up by more than 30 percent over 2002. A more prosperous Africa is also benefiting American companies, farmers, and workers. Between 1999 and 2003, US exports to the region have grown by 24 percent to $6.9 billion. President Bush has made AGOA a cornerstone of the administration’s policy toward sub- Saharan Africa and a key part of his effort to open markets and promote economic growth and development in this struggling area of the world.

April 2006
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