SOUTH AFRICA: INPUT FOR PRESIDENT'S 2006 REPORT ON

UNCLAS SECTION 01 OF 02 PRETORIA 000964

SIPDIS

SIPDIS

DEPT FOR AF/S MGABLE; AF/EPS MNORMAN
USDOC FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND
TREASURY FOR BCUSHMAN
DEPT PASS TO USTR FOR PCOLEMAN AND WJACKSON

E.O. 12958: N/A
TAGS: ETRD ECON PHUM USTR AGOA PREL SF
SUBJECT: SOUTH AFRICA: INPUT FOR PRESIDENT'S 2006 REPORT ON
AGOA

REF: A. 06 STATE 26707


B. 05 PRETORIA 4109


1. (U) This cable responds to the request for post input to
the President's 2006 Report on AGOA, drawing on instructions
provided in Ref A.

Market Economy, Economic Reform, and the
Elimination of Barriers to U.S. Trade
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2. (U) The South African government continues to implement
prudent fiscal and monetary policies. Inflation averaged
3.9% in 2005, well within the Central Bank's 3-6% target
range. Economic growth, at 4.9%, exceeded government
expectations for 2005. The 2006 budget once again focused on
maintaining the fiscal balance as well as accelerating
economic growth so as to alleviate high unemployment. The
President and Deputy President have announced the Accelerated
and Shared Growth Initiative in an effort to remove obstacles
to higher growth. Central to this initiative is greater
government spending, especially on infrastructure, and
helping local and provincial government to better implement
government programs and deliver public services to the poor.


3. (U) Negotiations on a free trade agreement with the
Southern African Customs Union (SACU) have stalled over the
reluctance of SACU to negotiate chapters on labor,
environment, intellectual property, government procurement,
and services. A bilateral tax treaty and a Trade and
Investment Framework Agreement remain in force. South Africa
provides national treatment to foreign investors. The
country has made considerable progress on enforcing
intellectual property rights. The Department of Trade and
Industry is creating a 36-person strong enforcement unit and
the judiciary increasingly understands the complexity and
specialized nature of intellectual property rights.
Specialized Commercial Crime Courts have been established in
the major cities of Johannesburg, Pretoria, Durban, Cape
Town, and Port Elizabeth. In January 2005, the harshest ever
sentence for pirating was meted out, i.e., eight years in
jail or a fine of R440,000 ($67,000). A gap in the
counterfeit goods law makes it difficult to seize pirated
goods that transit South Africa.

Rule of Law, Political Pluralism. and Anti-Corruption
-------------- --------------


4. (U) The government is committed to the rule of law and is
working to strengthen its judicial and regulatory systems.
The judiciary is independent at all levels. South Africa
maintains a multiparty parliamentary democracy within which
political parties are allowed to operate freely. Free and
fair municipal elections were held March 1, 2006. While the
African National Congress holds an overwhelming majority in
Parliament and in other levels of elected government, several
opposition parties are quite active. Municipal service
delivery and corruption remain a challenge. The government
has prosecuted dozens of members of Parliament, municipal
councilors, and the former Deputy President for corruption.

Poverty Reduction
--------------


5. (U) Poverty reduction and job creation are major
government priorities. The February 2006 budget contained
additional measures to improve the social welfare payment
system and the delivery of public services, such as water and
sanitation, electricity, and telephony, especially to the
rural poor. It also allocated funds for civil projects that
employ labor-intensive methods as a means to create
employment and impart job skills.

Labor, Child Labor, and Human Rights
--------------


6. (U) The South African constitution provides for equal
protection under the law, freedom of speech and of press,

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freedom of assembly, and an independent judiciary. The
constitution also protects strong worker rights, including
freedom of association and the right to organize and bargain
collectively.


7. (U) Approximately 26 percent of economically active South
Africans belong to 485 registered trade unions. South Africa
ratified ILO conventions 29 and 105, and prohibits forced or
compulsory labor. In sectors where unions have found it
difficult to organize, such as farming and domestic work, the
Department of Labor has established sector-wide minimum
wages.


8. (U) South Africa is actively engaged in reducing the
incidence of child labor, including the worst forms of child
labor. The government is taking preventative measures,
including eligibility for income grants for poor children
under the age of 11 and waivers of school fees for poor
children, and actively prosecuting employers of child labor.
The SAG prohibits child labor for children under the age of
15 or under the minimum school leaving age (where the age is
15 or older),and does not allow the employment of children
over age 15, should that employment be detrimental to the
child. Children under age 15 are allowed limited employment
in film, entertainment, sports and advertising, if the
employer has applied for and been granted license by the
South African Department of Labor. South Africa has ratified
ILO convention 182 on the worst forms of child labor. The
latest survey of child labor was conducted in 1999, and found
that 36 percent of children between the ages of 5 and 17
engaged in work of some type, most frequently fetching fuel
or water. The high incidence of HIV/AIDS in the country has
complicated the picture somewhat because it has led to a
marked increase in the number of child-headed households.


9. (U) The government has focused high-level attention on the
human rights issues involving law enforcement, however deaths
caused by excessive force from police and/or security forces
and deaths while in police custody have been reported. Some
police officers have reportedly beat, raped, and otherwise
abused suspects and detainees. The government has taken
action to investigate and punish some of those involved.
TEITELBAUM