Why SA and the US need each other

Why SA and the US need each other

Sunday Times, Johannesburg

19 September 2004

US Ambassador Jendayi E Frazer

Johannesburg

THE US-South Africa relationship is strong and can and will grow stronger as our commercial ties are strengthened. There is a mutual benefit from this strong relationship that will shape Africa and the world at large.

First, America is critical to South Africa’s growth and development, and to its global posture. As South Africa develops as a key global economic player, it can do this better by expanding its ties with the US, more so than with any other country or regional grouping.

Second, as we seek to expand the circle of free and prosperous nations globally, we must expand our ties to South Africa more so than any other country in Africa.

In many ways, South Africa’s role in sub-Saharan Africa is analogous to the role of the US in the world. Our two countries are in a historic moment where deepening our relationship and our commercial ties will positively shape global affairs.

On my first point, the US has emerged as the world’s economic powerhouse. We have a dynamic economy that continues to grow.

With a gross domestic product of about $11-trillion, America is by far the biggest single market, and the US government has given South Africa and 36 other African countries duty-free access to that market through the African Growth and Opportunity Act.

South Africa has seized the opportunities of AGOA to increase its trade ties with us. Your AGOA exports totalled $1.7-billion in 2003, second only to Nigeria.

South Africa has done well because its exports were highly diversified, including transportation equipment, minerals and metals, chemical-related products, agricultural products, and textiles and apparel.

The Bush administration is also working to build free trade in all regions. For the first time, we are negotiating a free trade agreement (FTA) in sub-Saharan Africa with the Southern Africa Customs Union (SACU), signalling a recognition of Africa’s central role in the global economy and its strategic importance to the US.

For all its economic challenges, South Africa is a remarkable country with world-class companies, products, and services.

South Africa clearly can compete in the global economy, and an FTA can help the rest of the SACU to be more competitive globally. It will increase confidence in Southern Africa as an attractive destination to do business and lock in the benefits of AGOA beyond 2015.

My second point is that America needs South Africa. The US is the most economically and politically powerful country in the world, while South Africa is the most economically and politically powerful country in sub-Saharan Africa.

The US economy represents about 30% of the world’s output, and South Africa’s GDP is about 38% of sub-Saharan Africa’s output.

The US and South Africa should be proud of our economic accomplishments. We aspire to create societies with high living standards and increased prosperity through good governance and sound economic policy.

We also accept the challenges that are placed upon us. Our economic strength allows us to work together to improve the lives not only of our own citizens but also to cooperate to tackle regional and global issues.

So having noted our similar positions, our similar responsibilities, and the importance of our trade relationship, it would be wrong to leave out the importance of increasing development assistance. It has to complement trade in order to move African countries from least developed country (LDC) status to higher income status.

In many respects South Africa itself, despite its economic power, continues to be a developing country. That is why the US Agency for International Development has contributed R2.2-billion in development assistance over the past decade.

While there may be two economies in South Africa, one rich and one poor, the one that is rich is a competitive match to other economies in the world.

According to an analysis that measures South Africa’s GDP on the basis of purchasing power parity, South Africa is the 20th-largest economy in the world.

Many US companies are here to do business because they know South Africa is a viable and important market. These firms are engaged in all major sectors of the economy.

I am proud that US companies, as represented by the American Chamber of Commerce, also contribute to the second economy by spending in excess of R1.5-billion on social responsibility and community development related to training, education, health, HIV/Aids, and welfare.

In closing, I repeat, if South Africa seeks to grow its economy it must strengthen its economic ties with the US, and if the US is serious about expanding the circle of free and prosperous nations globally, it must strengthen its ties with South Africa. All sides gain from these deepening ties.

- This is an edited version of an address made at an American Chamber of Commerce breakfast in Johannesburg on Tuesday

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