US demands could slow down FTA resolution

Fifth round of talks held in Lesotho ALAN PEAT DESPITE PRESS reports that the free trade agreement (FTA) between the five-member Southern African Customs Union (Sacu) and the US has reached a “critical” stage, there is no evidence to support this, according to Liz Whitehouse of the African information specialists, Whitehouse & Associates. The fifth round of talks were held in Lesotho in the first week of May, she told FTW, and the US delegates presented a number of proposals. Among these was the opening up of government procurement and service industries - including banking and finance - to US companies. “Also, according to the Voice of America, the US wants stringent dispute resolution mechanisms - and even one that would allow US companies to directly sue regional governments,” said Whitehouse. These submissions before the SA-led Sacu negotiating team - representing SA, Botswana, Lesotho, Namibia and Swaziland - might tend to slow down the finalisation of the FTA, she added, although both sides are still hoping to reach an agreement by the year-end. The fact that SA has only one negotiating team for all the FTAs under consideration, whereas the US delegation focuses only on this one agreement, could be another delaying factor - with stress added to the human resources capacity of the SA team. There is also the issue of US government subsidies of agricultural export products for the Sacu team to sort out - a cost-cutting strategy which makes it all but impossible for the African farming industry to compete with the US opposition. But tariff barriers on US exports and/or a quota system could be one way to overcome the damage of cheap US exports to the Sacu market - and could, therefore, be built into the final FTA. Not that it’s all plain sailing - with opposition still prevalent. The Congress of SA Trade Unions (Cosatu), for example, points to the FTA possibly hindering economic development programmes and stresses that countries in Sacu already receive significant trade benefits under the US Africa Growth and Opportunity Act (Agoa). The fear is that these benefits being lost might counter-balance the advantages of the FTA. But again, the Voice of America quotes Peter Draper, a research fellow at the SA Institute of International Affairs, saying that the regional negotiating team will be seeking to secure and even extend the benefits of the act and to protect the region’s own programmes designed to promote the development of African businesses. “One obvious example in the SA case,” he added, “is the black economic empowerment (BEE) process. “I think what the SA 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.”