November 15, 2002

US to offer South Africa a free trade deal

The US is planning to offer SA a more ambitious free trade area agreement than the existing accord between Pretoria and Brussels, SA's trade ambassador to the World Trade Organisation (WTO) in Geneva, Faizel Ismail, said.

Ismail was speaking after a meeting in Sydney between Trade and Industry Minister Alec Erwin and his US counterpart, Robert Zoellick, where both ministers are attending an informal meeting of the WTO. The US offer signals concern among US businesses that they are losing out to their European Union (EU) counterparts in trade with SA, as the SA-EU agreement has been up and running since 2000, while the US has no equivalent deal to allow its exports preferential access into the SA market.

Zoellick recently briefed the US congress on his intentions regarding a free trade agreement with SA, an issue he raised during a visit to SA earlier this year.

Ismail said it was clear the US was offering a more comprehensive agreement than SA's existing deal with Brussels. He said the idea of an agreement with the US was alluring as the current provisions under the Africa Growth and Opportunity Act (Agoa) were not guaranteed forever. However, these could be secured under a free trade agreement. On the other hand, Agoa offers SA access into the US market without any requirement for SA to open up its own market something that would have to happen under a free trade agreement. "Agoa will not be there forever. It is due to end in 2007," said Ismail. "Clearly, the US is not going to rest with Agoa they have bigger ambitions."

Ismail said Zoellick had introduced a set of objectives, much more ambitious than SA's EU free trade agreement. "It's a very broad, comprehensive structure, including much more detail on agriculture, nonagricultural trade, and services plus a whole set of agreements on government procurement, e-commerce and intellectual property rights." He also said SA was a strategic country for the US. "The US has a strategic interest in ensuring their level of access to the SA market is at least on the same level as that of their main competitor, the EU. They want to achieve a level playing field."

SA has yet to respond formally to the US overture, which would involve not just negotiations between Washington and Pretoria, but would also include the other countries in the Southern African Customs Union Botswana, Lesotho, Namibia and Swaziland. Ismail predicted a positive response to the US offer from southern Africa. "Although the EU is our largest market, we can't ignore the world's largest market," he said. But he warned SA would be no pushover. "We are in a strong position to negotiate this deal with the US with the Europeans, it was our first big negotiation, and the most important negotiation with our largest trading partner and the biggest investor in SA." In negotiations with the US, "we will make sure mot to agree on issues best dealt with at a multilateral level". (Business Day, Johannesburg)

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