US-SACU free trade talks hit snags

Islam Online | 14 May 2006

US-SACU Free Trade Talks Hit Snags

By Rodrick Mukumbira, IOL Correspondent

WINDHOEK, May 14, 2006 (IslamOnline.net) - The latest round of talks between the US and the five-member Southern African Customs Union (SACU) on a free trade agreement has failed to yield fruits, with many blaming the US for seeking to impose a one-size-fits-all formula.

"The US is failing to recognize the degree of economic development within SACU," Namibian economist Trevor Nicolberg told IslamOnline.net.

Some businesses and NGOs also blame Washington’s approach to the talks as "inflexible" as it asked SACU members to accept the "template" it applies in free-trade talks with other countries or blocs, rather than engaging in real negotiation.

When the Deputy US Trade Representative Karan Bhatia arrived in South Africa in April for the negotiations with SACU, the world’s oldest customs union, he had hoped to fast track his country’s model of free trade.

But Botswana, Lesotho, Namibia, Swaziland, and South Africa refused to join the US free trade parade - citing flaws in the one-size-fits-all template the US offered.

Since June 2003 the talks have been on-again-off-again and were nowhere near meeting the aggressive agenda of being completed before US President George Bush’s "fast track" authority expired in July 2007.

The Trade Promotion Authority - which allows the administration to negotiate trade agreements it can submit to Congress for a yes-or-no vote without any changes - expires in July next year.

SACU, a customs union among the countries of Southern Africa, came into existence on December 11, 1969.

It is an agreement where goods are traded free of duty between members. South African tariffs are used as a common external tariff.

Inflexible

SACU member states accuse the US of being inflexible by refusing to budge on the so-called "new generation" issues, which affect US exports to the region and tend to focus on services or high technology goods.

Unrealistic demands by the US are said to be at the center of the stalemate of the talks, says IOL correspondent.

Analysts are warning that should the US fail to backtrack on some of its conditions, the deal will remain a far-fetched dream.

Trade pundits are doubtful that any deal will be reached soon.

They believe that Washington’s so called "golden standards of trade relations" are just too high for sub-Saharan Africa.

Southern Africa’s trade analyst Peter Draper said the expiry of the Trade Promotion Authority in 2007 meant that the US wanted to focus on deals that could be concluded and ratified by year-end.

At the end of the talks, Bhatia admitted - while not accepting defeat - that a broader trade pact with the five-member SACU was still far off.

He said the US would not compromise on issues like intellectual property, government procurement and investment.

The diplomat added that intellectual property rights were important in industries where products could be easily copied.

"US companies don’t feel comfortable where there is weakness in intellectual property rights," he said.

Washington insist such issues are important for US companies doing business on the continent, but Africans say they are too difficult to enforce.

Bhatia said the agreement would have covered non-tariff barriers and investment.

It would have also included agreements that would "smooth the flow of goods" between the region and the US.

The five SACU countries already have duty-free access to the US market for most of their exports under the African Growth and Opportunity Act (AGOA).

The free trade agreement would also have provided open markets and trade flow at the same time consolidating the World Trade Organization (WTO) call for developed and least developed countries to lower trade.

Harmonization

Trudi Hartzenberg of southern African think tank, Trade Law Centre of Southern Africa, sees SACU’s stance as short-sighted for failing to push for harmonization in the region and push for a comprehensive deal.

"SACU has yet to integrate its national systems to cover comprehensive arrangements covering services, intellectual property, investment and new generation issues," he said.

"Actually, the sharing from the common revenue pool is the glue that keeps the arrangement (SACU) together, not its common policies."

Some see the US-SACU episode as being a wake-up call while Hartzenberg says that SACU will have to rise to the challenge of harmonizing its regulatory environment "with some urgency".

The US and SACU members have agreed to develop a "joint work program" that would see talks about the tough issues continuing, a move seen by some analysts as a last resort strategy implicitly recognizing that a free trade deal was not achievable.

An apparent last-ditch attempt to save US-SACU free trade talks, which are on life-support, appears to be on the cards with a senior US trade representative scheduled to visit SA later this month.

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source: Islam Online