Trade deals should be sealed by end of 2004

Posted On Tuesday, 10 June 2003 02:00 Published by eProp Commercial Property News
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Impetus driving the December deadline is next year's US presidential elections after Bush's first term

Xavier Carim









Industrial Correspondent

DECEMBER 2004 is an important date in SA's diary as the country and fellow Southern African Customs Union (Sacu) members hope to have free trade agreements in place with several partners by that date.

But it will be particularly important for Sacu to complete its negotiations with the US which got under way last week by the end of next year.

The biggest driving force to meet the deadline is the end of President George Bush's first term. A change in the presidency has the potential to derail bilateral negotiations such as those with Sacu.

"A new US president might have a new set of priorities," says trade specialist Peter Draper.

Bush was given the authority earlier this year through the Trade Promotion Authority Act to close agreements independently, without the senate being able to amend or delay them. Through the legislation, the senate is allowed only to accept or reject an agreement.

Draper warns that if the talks are not concluded by the end of 2004, the process could suffer similar setbacks such as those that occurred in free trade negotiations between Sacu and the Latin American trade bloc of Mercosur, where changes in the presidency of some of the Mercosur member countries caused delays in the process.

While hurtling towards the deadline, Sacu which has limited negotiating capacity would have to be cautious not to overlook details in the negotiations.

Trade specialists warn that this could have vast consequences for Sacu economies, which include SA, Botswana, Lesotho, Namibia and Swaziland.

"Sacu needs to be careful in focusing on getting the best deal, rather than rushing to meet the deadline," warns Liz Whitehouse of Whitehouse & Associates.

Draper agrees that Sacu would need to exercise caution during negotiations, but says that the 2004 deadline is a "good thing. It seems to have concentrated the SA government's mind and it is forcing the process along".

"They are building capacity rapidly. There seems to be a new sense of energy," says Draper.

Sacu negotiators are aware of the minefield and have managed to stagger talks, but still within the 18month timeframe. This is considerably less than the seven years taken to complete free trade talks between SA and the European Union (EU).

US negotiators initially wanted to run negotiations on all subjects concurrently. SA's chief negotiator, Xavier Carim, said at the conclusion of trade talks last week, however, that negotiations had been scaled down in response to Sacu's request to first discuss traditional market access issues such as tariffs and customs procedures over the next six months. Newer issues such as trade remedies and intellectual property would be negotiated from the beginning of next year.

Carim said that it was critical for the US to recognise the limits of Sacu's negotiating capacity and to accommodate this in talks between the regions.

The US is providing a trade capacity-building programme to help Sacu member countries to "participate effectively" in World Trade Organisation and free trade negotiations and also, as US chief negotiator Florie Liser says, "to implement the commitments they make during negotiations".

Carim and Liser agreed that if the good pace that was illustrated in the first round of talks was maintained, the end-of-2004 deadline was attainable.

But the devil was in the detail, and while the first round essentially consisted of each party stating what it wanted out of talks, the following rounds were bound to present some sticking points. Subsidised agriculture and trade remedies were likely to be among these.

While negotiations were being pushed ahead, there were also pull factors for both parties to complete the negotiations within the set time. As Liser said last week: the sooner the agreement was in place, the sooner both parties could start benefiting from the deal.

US exporters are keen to catch up with their European competitors, who have secured lucrative contracts in SA, which has a free trade agreement with the EU.

The US and Sacu are responding to a world frenzy to form free trade agreements, which have proven to enhance trade between partners in the agreement often at the expense of trade partners outside of such an agreement. The US is party to only three of the 190 or so preferential trade pacts worldwide.

Sacu countries would gain improved access to a market of about 10-trillion through the expected trade agreement.


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