Bridges Weekly Trade News Digest • Volume 8 • Number 8 • 3rd March 2004
SACU-US FTA NEGOTIATIONS FOCUS ON "PHASE ONE" ISSUES
The fourth round of negotiations between the US and the Southern African Customs Union (SACU) aimed at establishing a free trade agreement (FTA) was held in Walvis Bay, Namibia on 23-26 February. The negotiations have been divided into two phases. The first phase, including the latest round of negotiations, focuses on market access issues, including industrial and agricultural tariffs, trade remedies, rules of origin and customs procedures. The second phase will focus more on services, investment, intellectual property, government procurement, labour and the environment.
Benefits and scope of the agreement
US chief negotiator Florizelle Liser stressed the historic importance of the negotiations as "we are not simply negotiating market access… but working to create an infrastructure, such as services investment and labour that will bring prosperity and provide for our common economic future". SACU’s chief negotiator, Xavier Carim, said the negotiations were important in deepening the regional integration of the customs union. The US-SACU FTA will be additional to the existing US Africa Growth and Opportunity Act (AGOA), an agreement allowing 38 sub-Saharan African countries duty-free access to the US market for a range of goods including fibres, yarns, threads, fabrics, footwear, wine and motor vehicle components. Currently the reduction or elimination of preferences is permitted on any product, as the AGOA is a unilateral offer from the US. The current AGOA agreement, dubbed "AGOA II," will be phased out in 2008, although there are two bills in the US Congress proposing the extension of benefits to 2015 or 2020.
In terms of specific negotiating items, the US has proposed the inclusion of an "investment chapter" outlining rights and obligations in order to provide clarity and guarantees for US companies investing in the region. SACU has stated its desire to include antidumping in the negotiations, as the Union considers such action by the US in the past to have hampered South African exports. Although the US believes this issue should be discussed during WTO negotiations, SACU negotiators will be awaiting an official response from the US in May during the next round of talks.
Other sticky issues include agriculture and sensitive industrial products and services. SACU negotiators have made it very clear that liberalisation of US agricultural trade is extremely important for the region. The US has, however, indicated that it wants to consider agricultural export subsidies only within the WTO framework, a line it has also taken in talks on a Free Trade Area of the Americas (FTAA). For trade in industrial goods, the US is seeking to remove tariffs and other duties, including elimination of non-tariff barriers. In services, the US also intends to push for the elimination of discriminatory barriers to trade in SACU countries’ services markets. SACU’s approach on this matter has been divergent of US objectives, as the regional grouping prefers a ‘positive list’ approach to services liberation, where market access commitments apply only to scheduled commitments, as opposed to the ‘negative list’ preferred by the Americans, who are not ruling out applying market access commitments across all sectors.
The next round of SACU-US negotiations is scheduled for May in Maseru, Lesotho. Future talks may be scheduled at closer intervals, with a final "super round" in December to meet the proposed year-end deadline to ink the deal only 18 months after the start of negotiations.
Civil society expresses wariness on services, investment
The South Africa-based Treatment Action Campaign (TAC) and the AIDS Law Project submitted a memorandum in early February to the South African International Trade Negotiating Team, raising their concern in areas of intellectual property, trade in services, investment and government procurement. The organisations fear that the FTA with the US might undermine the financing and provision of health care services in SACU countries, stressing that "the investment chapter would provide the back door for a pharmaceutical company, for example, to sue a SACU member state for failing to amend its legislation in line with the chapter on intellectual property". They also raised concern that "rules on procurement may unfairly preclude necessary and urgent action, such as procurement of essential medicines for dealing with a health emergency, such as a cholera outbreak".
SACU background
SACU consists of Botswana, Swaziland, Lesotho, Namibia and South Africa. Established in 1969 — based on custom union arrangements in force since 1910 — SACU aims to promote economic development for the Southern Africa area, particularly in its less developed members. SACU’s trade with the US has grown more than 300 percent since 1994. SACU exports to the US under the AGOA amounted to US$ 1.7 billion and imports to US$ 2.5 billion in 2002. SACU is also negotiating agreements with the European Free Trade Association, the Latin American trade bloc Mercosur, India and China.
To access the memorandum from TAC and the Aidslaw project, see: http://lists.essential.org/pipermail/ip-health/2004-February/005904.html
ICTSD reporting; "Antidumping On SACU Agenda," BUSINESS DAY JOHANNESBURG, 27 February 2004; "SACU Urged to Push for US Free Trade Deal," BUSINESS REPORT, 26 February 2004; "Accord Could Result in Huge Economic Boost," NEWS ERA, 27 February 2004; "US Wants to Finalise Free Trade Pact With Southern African Countries," XINHUANET, 17 February 2004; "Namibian Trade With US Insignificant," NEW ERA, 27 February 2004; "AGOA Trade Bills May Now Be Harmonised," THE NATION (NAIROBI), 2 March 2004.