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US will not reopen Sacu trade deal talks

Business Day, South Africa

US will not reopen Sacu trade deal talks

By Siseko Njobeni

12 May 2009

The US government said yesterday it would not revive talks on a free trade agreement with southern African countries.

Free trade negotiations with Southern African Custom Union (Sacu) members SA, Botswana, Lesotho, Namibia and Swaziland, which began in 2003, were suspended in 2006 amid disagreement over the scope of the agreement and alleged US reluctance to make concessions.

For Sacu member countries, the free trade agreement would have built on existing market access to the US.

Yesterday, US Trade Representative Ron Kirk said the Obama administration would not revive the Sacu free trade agreement, and would instead focus on implementing separate agreements.

The US is SA’s biggest export market, and third-largest source of imports, according to the Department of Trade and Industry.

SA has benefited from the US’s Generalised System of Preferences that allows certain products to enter the US duty-free.

Through the Africa Growth and Opportunity Act (Agoa), an initiative of the Clinton administration, South African clothing and selected textile products enter the US market duty-free.

“After four or five rounds of negotiations it became increasingly apparent that we were approaching this through very different lenses,” Kirk said.

The US government would concentrate on the trade and investment development co-operation agreement that was signed in July of last year.

The agreement is a formal mechanism for the US and Sacu to conclude a range of interim trade- related agreements.

The US trade representative at the time, Susan Schwab, said that agreement would provide a framework for the US and Sacu to work towards a free trade agreement “in the long term”.

Assistant US Trade Representative for Africa Florizelle Liser is expected to hold discussions with South African officials this week on last year’s agreement.

“SA is by far the largest beneficiary of trade under Agoa, if you take away the petroleum exports,” Kirk said. “Still, there is a lot of room, a tremendous amount of room, for growth.”

Kirk led the US delegation that attended President Jacob Zuma’s inauguration at the weekend.

The change in the government “is perhaps an opportunity to have a new start to what can be an improved and strengthened bilateral relationship between the US and SA,” he said.

“There is a great foundation here already. There are over 600 US businesses invested in SA.”

Peter Draper of the South African Institute of International Affairs said yesterday the US government’s move did not come as a surprise “for a number of reasons”.

These, Draper said, included the widening gap between the parties. “The gap was just too big.” Draper said that explained the US government’s eagerness to pursue the trade and investment development co-operation agreement. “The environment is not conducive to a full free trade agreement,” Draper said.

Draper said the collapse of the free trade agreement was a blow to Sacu member countries. With Bloomberg