SACU governments are looking at
a four to five
year time-span
'Any free trade agreement with the US would
complement Agoa'
Alan Peat
THE NEWS that discussions on the proposed Southern African Customs Union (Sacu) free trade agreement with the US could move up a gear by year-end is promising, according to Duncan Bonnett of trade consultants Whitehouse & Associates.
Preferential access into a US$10-trillion market is not to be sniffed at, and the timing is right, he told ftw.
"When first mooted people asked why an FTA with the US when we've got Agoa (Africa Growth and Opportunities Act)," said Bonnett,
"But, if you look at how tortuous our negotiations with Europe were for the European Union (EU) trade pact, the SACU governments are looking at about a four to five year time-span Ð actually getting close to the end of Agoa in 2008."
Also, the FTA would make it more difficult in theory for US industries to restrict SA imports, Bonnett added.
"It's far more difficult under World Trade Organisation (WTO) trade rules for them to hit us with punitive duties," he said. "Therefore we should have a much more stable access to the market."
But, if it's to be a two-way FTA, SACU negotiators need to be "hard-nosed" about what SACU markets are open to the US, Bonnett told ftw.
"The agricultural market, for example, is sensitive with US farmers being very heavily subsidised.
An FTA would also create a conducive atmosphere for investors, Bonnett added.
"SA being able to tout the fact that they've got preferential access to Europe and the US "would give us a competitive advantage over Australia, Asia (particularly India) and Ð to an extent Ð South America," he said.
There also needs to be a mind-set shift amongst the more pessimistic of businessmen, according to Bonnett.
"It needs a shift from the fear of US exports flooding the market," he said.
"You must remember that they already have a massive competitive advantage Ð economies of scale etcetera. We need to rather look at the benefits for us."
The fact that it's a SACU driven FTA Ð not solely South African Ð is also not a concern, Bonnett added.
"In our turn we have those same competitive advantages over the less industrially developed members of the Union.
"It would also boost the economies of these members, again to our advantage."
Trade experts have said that because of the complexity of the US economy and the different capacity levels of Sacu countries - South Africa, Namibia, Botswana, Lesotho and Swaziland - it could be a while before the negotiations proper get under way.
Following meetings with US trade representative Robert Zoellick in February, Sacu trade ministers recently took an in-principle decision to entertain the idea of a free trade agreement with the US.
South Africa's head of trade, Tshediso Matona, said the Sacu ministers had seen the "strategic value of pursuing long-term preferential access to the US markets".
But, he warned, negotiations would only start once the terms of reference governing the process had been drawn up.
These would govern the political and technical aspects of the discussions and outline the benefits Sacu hoped to gain from the agreement.
They would cover specific barriers that needed to be targeted and what safeguards needed to be put in place.
Apart from this, a host of internal preparatory and consultative processes within Sacu would have to be completed and the US economy would need to be studied in detail, he said.
Any free trade agreement with the US would complement Agoa, which was introduced unilaterally by the US 18 months ago and runs until 2008.
Even without a free trade agreement with the US, South Africa already derives great benefit from its trade with the world's biggest economy.
Dawie Mullins, an economist at Conningarth Economists who did research into the benefits to South Africa of Agoa on behalf of the US government, said exporters taking advantage of Agoa would support more than 89 000 direct, indirect and induced jobs in 2002. This is up from the 62 000 jobs supported in 2001.
