US-SA trade: we can’t have our cake and eat it.

Sara Gon | Mar 19, 2019
South Africa be wary - the United States is watching how the government implements EWC. Our trade relationship may be in jeopardy if we don't heed the US administration's warnings.

John Sullivan, the United States (US) deputy secretary of state, visited the country last week to strengthen bilateral relations with South Africa. Sullivan as deputy secretary of state is the highest ranked state department official to visit South Africa since 2012.

The US is  our third largest foreign direct investor.

Sullivan said that the complexity of land reform process, including “the continuing national dialogue about expropriation, has not travelled well across the Atlantic Ocean to the United States and there is some "misinformation" about what it actually entails.”

During his visit Sullivan met, amongst others, with senior officials from the Department of International Relations and Cooperation. Collague, David Ansara, COO of the Centre for Risk Analysis (CRA), was invited by the American embassy to a breakfast meeng on Thursday, 14 March 2019 to provide input about relevant issues.

On land reform and expropriation Sullivan has said that an open and transparent land reform process will help retain confidence in the economy, while a closed and non-transparent process will achieve the opposite.

Sullivan’s approach to the bilateral relationship between the US and SA is “to plead with the government that processes that are underway remain transparent and that it promotes confidence in the South African economy.”

His goal is to promote deeper and stronger commercial ties so as to encourage foreign direct investment by US companies.The IRR’s concern is the effect the execution of the land reform programme could have on South Africa’s future participation in the US’s Africa Growth and Opportunity Act (Agoa).

The South African government’s increasingly protectionist stance risks damaging the country’s international trade and investment relationships.

Former president Zuma’s government unilaterally terminated 13 bilateral trade treaties.

The 2015 Protection of Investment Act effectively stripped key protection measures away from foreign investors.

If South Africa is disqualified from Agoa, theTrump administration is unlikely to renegotiate as favourable trade agreement according to Peter Draper, managing director of Tutwa Consulting.

Draper made the obvious point: “South Africa doesn’t have the market power to continue to impose obligations and costs on investors and think we’re going to get away with it.” (South Africa is on notice – Opinion piece Thursday, 18 May2017, Prinesha Naidoo, MONEYWEB (SOUTH AFRICA)

 

Draper’s comment is as pertinent in 2019 as it was in 2017, if not more so.


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