The collapse of free trade talks between the Southern African Customs Union (Sacu) and the US meant South Africa should now concentrate on working closely with Americans on bilateral trade negotiations, a senior department of trade and industry (dti) official said yesterday.

This could be done with a view to resuming talks on a free trade agreement (FTA) down the line, said Iqbal Sharma, the department's acting deputy director-general of international trade and economic development.

However, Sharma said it was difficult to tell when talks would resume: "It could take two to three years."

On Wednesday MPs on the portfolio committee on trade and industry were told by dti director-general Tshediso Matona that the US and Sacu had agreed that it was "not possible to conclude an FTA right now".

Matona explained that the terms and conditions sought by Washington did not fit in with the policies of the South African government.

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"The US approach is not developmental," he said.

"We want to be able to phase in liberalisation, and exempt certain items. They want free trade now and they want everything", including the right to subsidise their agriculture.

"One of their agencies conceded: 'We don't want to negotiate. We put a paper down and show you this is where you sign,'" Matona added.

Sharma said all was not lost as South Africa still had market access to the US under the African Growth and Opportunity Act (Agoa).

Although the FTA negotiations between the US and Sacu had collapsed, they had been replaced by the trade and investment co-operation arrangement, he said.

The FTA would have presented South Africa with an opportunity to lock in the benefits of Agoa, which would have brought certainty to market access for exporters, a major benefit for any country doing trade with the US.

"Basically the level of the Sacu economies were not able to match the ambitions of the world's leading economy in respect of the FTA talks," Sharma said.

"The challenge is to lift the Sacu economies, which are relatively small for opening markets to the US."

Sharma added that the Sacu economies - Botswana, Lesotho, Namibia, South Africa and Swaziland - were in a position to open the services markets, but a lot of work was still needed in other areas.

Duane Newman, a trade analyst at Deloitte, said the main reason for the failure of the talks was that the FTA had not been pushed enough from a business perspective.

"The agenda has been solely pushed by the government without business input. There are lessons for both parties: Americans need to understand that they cannot negotiate with each country the same way, meaning using the same formula."

He said the government needed to be more open minded and consult the business sector more.

Tony Ehrenreich, a labour representative at Nedlac, the negotiating forum for government, business, labour and civil society, said labour was pleased with the government's cautious approach.

"It's a good thing that talks have collapsed because we want trade agreements to promote development within South Africa," he said. "We think this is a welcome move away from the free market fundamentalism that informed previous trade talks."

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