Sacu and US to kick-start trade talks

Business Report, South Africa

September meeting to sidestep sticky issues

Sacu and US to kick-start trade talks

August 18, 2005

By Andile Ntingi

Johannesburg - The US and the five-member Southern African Customs Union (Sacu) will meet in the second half of September to kick-start trade negotiations that ground to a halt late last year after the two regions failed to reach consensus on a range of key issues.

The differences centred on intellectual property rights, trade in services, investment, government procurement and black economic empowerment.

The US and Sacu trade negotiators have not gathered since their last meeting in December last year in Walvis Bay, where efforts were made by both sides to revive the collapsed talks.

However, Xavier Carim, South Africa’s chief trade negotiator, hinted that the September meeting would sidestep controversial issues and instead focus on the lowering of industrial tariffs to facilitate exchanges of manufactured goods between the two regions.

"We have agreed to have our first negotiating meeting in the second half of September. We will essentially focus on industrial tariffs," said Carim. "There are also going to be exploratory exchanges to see whether we can reach a compromise in other areas where we have had differences."

Carim said the discussions with the US negotiators were unlikely to be affected by heavy technical and tactical preparations for the World Trade Organisation (WTO) meeting in Hong Kong in December.

"With regard to the WTO meeting, there is not going to be a direct impact on our trade negotiating agenda with the US. We want to ensure what we are doing in one negotiation does not contrast with what we’re doing in another," said Carim.

A free trade agreement with the US, if concluded, will extend local exporters’ preferential access to the $11 trillion (R70 trillion) economy. Already, Sacu - which consists of South Africa, Lesotho, Swaziland, Botswana and Namibia - enjoys preferential market access to the US for its exports, mainly textiles and clothes, under the African Growth and Opportunity Act (Agoa).

Peter Draper, a trade expert at the SA Institute of International Affairs, said it was important for Sacu to secure an investment and services free trade agreement (FTA) with the US because members of the customs union were already getting duty-free market access for most of their products to the world’s richest economy.

"The big question is why are we negotiating with the US. We probably want to permanently lock in the gains under current preferential market access schemes such as Agoa because they can be withdrawn," said Draper.

"It also makes sense to negotiate bilaterally with the US for an investment and services FTA because about 95 percent of our industrial products are getting duty-free market access to the US anyway."

Sacu will go into the Hong Kong gathering with the jury still out on whether significant breakthroughs will be achieved after a recent WTO mini-ministerial meeting in China failed to make progress on controversial trade issues.

The mini-ministerial - which was a precursor to the Hong Kong meeting - was plagued by differences between the rich and poor nations on how to reduce industrial tariffs, clouding the outcome of the December WTO meeting.

Carim said South Africa would send a strong delegation of 45 people, drawn from several government departments. This number compared with a team of 20 to 25 officials that handled trade negotiations with the US, said Carim.

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source: Business Report