Identifier
Created
Classification
Origin
04PRETORIA5238
2004-12-02 15:24:00
CONFIDENTIAL
Embassy Pretoria
Cable title:  

SCENESETTER FOR SACU FTA MEETING IN WALVIS BAY

Tags:  ETRD PREL SF 
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C O N F I D E N T I A L SECTION 01 OF 02 PRETORIA 005238 

SIPDIS

DEPT PLEASE PASS TO USTR AMB ZOELLICK FROM AMB FRAZER

E.O. 12958: DECL: 12/02/14
TAGS: ETRD PREL SF
SUBJECT: SCENESETTER FOR SACU FTA MEETING IN WALVIS BAY

REF: A. PRETORIA 4042


B. PRETORIA 4689

C. PRETORIA 5218

Classified By: AMB. JENDAYI E. FRAZER FOR REASONS 1.4 (B) AND (D).

C O N F I D E N T I A L SECTION 01 OF 02 PRETORIA 005238

SIPDIS

DEPT PLEASE PASS TO USTR AMB ZOELLICK FROM AMB FRAZER

E.O. 12958: DECL: 12/02/14
TAGS: ETRD PREL SF
SUBJECT: SCENESETTER FOR SACU FTA MEETING IN WALVIS BAY

REF: A. PRETORIA 4042


B. PRETORIA 4689

C. PRETORIA 5218

Classified By: AMB. JENDAYI E. FRAZER FOR REASONS 1.4 (B) AND (D).


1. (SBU) We welcome USTR Ambassador Robert Zoellick's
upcoming visit to southern Africa. The U.S.-SACU FTA
negotiations are at a crossroads. Ambassador Zoellick's
initiative to meet with SACU trade ministers on December 10
in Walvis Bay is critical to any hope for re-establishing
momentum for a successful FTA. Over the last four months, we
have achieved buy-in from South Africa's senior political
leadership to move forward. This was evident in President
Bush's phone call with President Mbeki, in Ambassador
Frazer's meeting with new Trade and Industry Minister Mandisi
Mpahlwa in October (Reftel B),and just last week at the
Amcham Thanksgiving dinner, where former Trade Minister and
current Public Enterprises Minister Alec Erwin stated SACU's
interest in making the AGOA benefits permanent through an FTA
(reftel C). It is important for ultimate success that a good
relationship is established between Amb. Zoellick and South
Africa's new Trade Minister Mandisi Mpahlwa.


2. (C) South Africa remains the biggest stumbling block to
progress. It is a corollary that South Africa is also the
key to getting an FTA done. South Africa sees the FTA as
symbolic. They do not believe they or the United States
really need it. But prestige is important for South Africa
and, given the extension of AGOA, at this point South Africa
wants an FTA for the prestige it bestows on the country as a
global player rather than for the economic benefits. The
United States similarly has important geopolitical reasons
for advancing an FTA with South Africa in addition to the
trade advantages.


3. (C) When Ambassador Frazer met new Minister of Trade and
Industry Mandisi Mpahlwa in late October (reftel B),he
admitted there were capacity issues as well as chemistry
problems between the negotiators. Still, he acknowledged the
need to raise the FTA politically in order to give fresh
political direction on areas where we agree in the FTA. He
regretted that he had not been able to meet with Ambassador
Zoellick before. Mpahlwa feels he has been turned down twice

in requests to meet with USTR Zoellick, in Brazil during the
June UNCTAD XI meetings and in Mauritius during the July ACP
meetings.


4. (C) Walvis Bay presents an opportunity to grant Mpahlwa's
meeting request and thereby improve the bilateral trade
relationship and prospects for ultimate success negotiating
the U.S.-SACU FTA. We strongly recommend that Ambassador
Zoellick meet with Minister Mpahlwa, perhaps as a pull aside
in addition to the SACU ministers meeting, or during a flight
layover in Johannesburg or Cape Town. This would allow both
Ministers to develop the relationship that will be needed to
achieve a successful FTA. It is important that the USTR have
the Trade Minister's ear, particularly to provide needed
balance to the broken record "can't do" soundtrack of his
chief negotiator. Two key objectives in a meeting with
Minister Mpahlwa would be to: (1) get South Africa to commit
to a more ambitious FTA and (2) get clarity on the exceptions
desired in market access most important to South Africa.


5. (C) In the past the stumbling block presented by South
Africa's lead negotiator, Xavier Carim, at the rhetorical
level is getting an FTA that in his view is "balanced" and
accommodates South Africa's demands for asymmetry and special
and differential treatment. He wants an agreement that falls
far short of the "template" FTAs that the United States has
reached with other trading partners. Achieving this goal
will burnish South Africa's credentials as a G20 leader of
developing countries. It will also further the strategy to
liberalize as little as possible beyond what the WTO
requires. The existing FTA with the EU covers only 90% of
trade. South Africa's vision to negotiate trade agreements
with other developing countries, as well as with EFTA, is
marked by modesty rather than boldness.


6. (C) On a practical level, this overall low level of
ambition translates into demands for partial liberalization
and exclusions regarding market access in goods and services
in a U.S.-SACU FTA. South Africa has given no indication of
the depth or breadth of these exceptions. On agriculture,
however, the negotiator specifically wants to deny benefits
to any U.S. goods that benefit from subsidies. Besides
securing access to the U.S. market, he would also like
special treatment from U.S. trade remedies, such as
countervailing duties and anti-dumping. South Africa sees
the United States as the demandeur on all the other issues:
investment, dispute settlement, labor, environment, IPR,
procurement, e-commerce. South Africa believes an FTA
covering these subjects would require SACU to make
substantial changes in its laws and policies while providing
marginal, if any, additional access to the U.S. market and
little, if any, requirements on the United States to change
its laws and policies. Lastly, South Africa has argued that
because SACU does not have any common policies on these
issues it is premature to negotiate on them.
FRAZER