TRALAC - Trade Law Centre

Southern Africa: SACU-US Agreement Could Build On AGOA

Monday, 05 December 2005

Source: Business Report (South Africa)

The stalled free trade agreement between the US and the Southern African Customs Union (Sacu) will fail unless South African business pushed the country's trade negotiators.

This warning was issued by Duane Newman, the automotive industry group leader and a partner at Deloitte, who said African countries were questioning why they should care about this proposed agreement when they had the African Growth and Opportunity Act (Agoa).

But Newman warned at a briefing on Friday hosted by Ford Southern Africa that this attitude was dangerous.

Agoa is a non-reciprocal gesture by the US aimed at liberalising trade and assisting growth and development in sub-Saharan countries through duty-free and quota-free access into the US for a broad range of products.

Newman said a free trade agreement was an opportunity for Sacu to build on the success of Agoa and move the growing commercial ties between southern Africa and the US from one-way preferences to a full partnership.

The proposed agreement was also an opportunity to improve southern Africa's commercial competitiveness, better position the region for success in the US market and the global economy, and attract much-needed foreign direct investment.

But Newman said negotiations on the differences between the parties had not moved for a year and questioned whether South African business could afford for this trade agreement to fail.

"US business and the US congress are pushing for it but South Africa isn't. What happens to all the donor aid if the negotiation of an agreement fails?" he asked.

Newman said the main thrust of the trade and industry department's trade negotiations was at World Trade Organisation level, the highest level, and its trade strategy was around "a butterfly approach".

He said the trade and industry department was saying that South Africa's main trade partners were Europe and the US but this was not diversified enough.

The department's trade negotiations were looking at diversifying South Africa's trade by moving into South American markets, China and India, he said.

There was misinformation about the large number of trade agreements, which led to missed opportunities for business. The various trade agreements were typified by acronyms and jargon, which made people switch off.

"Trade agreements have major impacts on business that are quite obscure and knowledge about them is important. The government doesn't benefit, business benefits and they must be informed to reap the benefits."