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US Seeking Free Trade Agreement with Southern Africa - 2004-05-07


Delegates from the United States and the five countries of the Southern African Customs Union are in Lesotho this week for a fifth round of talks to negotiate a free trade agreement between the United States and the regional grouping. The delegations hope to reach an agreement by the year's end.

The United States is seeking a sweeping free trade agreement with South Africa, Botswana, Lesotho, Namibia and Swaziland.

Among the proposals being negotiated are opening up government procurement and service industries including banking and finance to U.S. companies. The United States also wants stringent dispute resolution mechanisms that may include allowing U.S. companies to directly sue regional governments.

In return, the African countries would gain greater access to the huge U.S. market for such exports as textiles, minerals and agricultural goods, as well as manufactured goods like South African steel.

Still, organizations such as South Africa's Congress of Trade Unions say the free trade agreement will undermine economic development programs. They say countries in the region already receive significant trade benefits under the U.S. Africa Growth and Development Act which might be lost under a free trade agreement.

Peter Draper, a research fellow at the South African Institute of International Affairs, said that the regional negotiating team, led by South Africa, will be seeking to secure and even extend the benefits of the act and to protect the region's own programs designed to promote the development of African businesses.

?One obvious example in the South African case is the black economic empowerment process,? he said. ?I think what the South African government has done, essentially, is to draw red lines around aspects of that and to say we are not prepared to negotiate. Concretely, for example, that would extend to negotiations on a government procurement agreement.?

Another important area of concern for the region is the issue of U.S. government subsidies of agricultural export products, which make it difficult for African producers to compete with American farmers. Mr. Draper said there are ways of dealing with those issues in a free trade agreement.

?One way could be not to have any tariff reductions for goods that attract U.S. export subsidies,? he explained. ?Another might be to establish quota access. So there are ways of dealing with these things in the context of a broad agreement.?

Mr. Draper added that all trade agreements have both benefits and pitfalls and some local companies will increase their business if a free trade pact is negotiated, while other regional businesses will decline, but he said in the long term, the agreement is likely to help regional business and also improve the prospects of direct U.S. investment in the region.

It is likely that once this agreement is finalized the United States will seek to extend it to other countries in the region in a process the U.S. Trade Representative calls docking, allowing those countries to sign up to this agreement with little further negotiation.

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