By Desie Heita
The Southern African Customs Union and United States of America have finally reached a common understanding on trade and investment, after five years of on-and-off courtship.
Southern African Customs Union (SACU) ministers signed an agreement on 16 July in Washington, USA, where they attended the seventh annual African Growth and Opportunity Act (AGOA) Forum. The Minister of Trade and Industry, Hage Geingob, signed on behalf of Namibia.
The agreement is expected to provide a building block on which to pursue a Free Trade Agreement (FTA), an area on which the two trading partners have never reached common ground.
The agreement is for a short-term commencement on a trade, investment and development cooperative (TIDCA), but with a possibility of a long-term FTA agreement in the future.
SACU and the USA have been negotiating for an FTA since 2003 but the talks have met several stalemates and deadlocks. Negotiations effectively collapsed in April 2006 at the South Africa negotiation round.
The model for the TIDCA agreement on which the two parties agreed to was arrived at after SACU accused the USA of pushing for its own “one-fits-all free trade USA template” at the last FTA negotiations.
Executive Secretary of SACU, Tswelopele Moremi, said the TIDCA agreement is “an important step in reaching a long-term and sustainable trade relationship between the region and the USA that will improve investment flows on both sides”.
“Before we address the issues of an FTA, we are using the new TIDCA to expand market access, strengthen the links between trade and economic development strategies, encourage greater foreign investment and promote regional economic integration and growth,” said United States trade representative, Ambassador Susan Schwab.
The TIDCA will be a formal mechanism for the USA and SACU to conclude a range of trade-related agreements, cooperative work and other trade-enhancing initiatives. It would also allow the USA and SACU to develop work plans on key issues such as food safety standards and technical barriers to trade and investment promotion, that should lead to increased USA-SACU trade and investment in the near future.
SACU is the United States’ largest non-oil trading partner in sub-Saharan Africa, with bilateral trade valued at $15.8 billion in 2007.
SACU is also the largest beneficiary of AGOA, with American imports valued at $2.9 billion, including a wide range of goods such as automobiles, minerals and metals, diamonds, agricultural products, chemicals, transportation equipment, footwear, textiles and apparel.
The collapse of the FTA negotiations is rooted on differences of opinion on the inclusion of several industries, issues of black economic empowerment, which the USA thought might be of disadvantage, labour rights and environmental regulations.