Thesis (MBA)--Stellenbosch University, 2007. / ENGLISH ABSTRACT: The SACU bloc, which accounts for one-half of the subcontinent's GDP, is the largest market
for the US exports in SSA (Langton, January 2005). Wide differences exist among the
economies of SACU - while SA has developed a significant manufacturing and industrial
capacity, the other countries remain dependent on agriculture and mineral extraction. The
grouping is dominated by SA, which accounts for 87% of the population, and 93% of the GDP of
the customs area. SACU member states had a combined real GDP of $201bn in 2003. Services
made up 65% of SA Trade in 2003 and had become a major player.
In 2003, SACU was the 32nd largest trading partner of the US with two-way trade equivalent \
$7.3bn. Merchandise imports from SACU totaled $5.6bn in 2003, a 17.3% increase from 2002
and a 126% increase from 1996. They were composed of minerals such as platinum, diamonds,
and titanium, textiles and apparel, vehicles, and automotive parts. Major US exports to the region
include aircraft, vehicles, computers, and construction and agricultural equipment. Services trade
between the US and SA has increased dramatically for both countries, with US exports
increasing 154% and service imports from SA increasing by 383% respectively since 1992. The
stock of US FDI in SA totaled $3.9bn in 2003 and was centered around manufacturing
chemicals and services.
The main economic objective of FTAs is to reduce trade barriers between member countries and
liberalize trade and investment rules (Kanoute, November 2005). This improves market access
which is the key to foreign export earnings and investment. But market access is a door that
swings both ways, opening local markets to a flood of imports. This can undermine domestic
production and employment, and thus exacerbate poverty. Some US civil society organizations
have expressed concern that a SACU FTA could have negative consequences for poor Southern
Africans, citing potential adjustment costs for import-competing farmers, poor enforcement of
labour rights, privatization of utilities, and increased restrictions on importing generic drugs to
treat HIV/AIDS (Langton, January 2005).
The proposed FTA is ambitious, especially given the tight deadline and the broad range of topics
on the negotiating table (Zunckel, Tralac). These include not only tariffs on goods, as is
traditional in trade talks, but the wider global economic panoply of agriculture, rules of origin
intellectual property, trade in services, investment, government procurement, trade remedies,
labour, environmental standards and trade dispute settlement. The US gains reciprocity by
gaining improved access to the SACU market than it currently enjoys under AGOA.
The IP and "TRIPS plus" provisions are of particular concern to consumers (www.tralac.org.)
Ongoing developments at the multilateral level bode against the advisability of entering into
binding bilateral agreements with less favourable provisions on essential medicines. Foreign
investment could lead to greater industrialization within SACU and competition within local
industry, boosting efficiency. But safeguards and industrial policy must be utilized effectively to
protect the region's developmental goals. Reliance on domestic courts as the forum of first
instance (and state-to-state dispute settlements should those fail) is preferable, as it allows greater
possibilities of defending the public interest of SACU citizens over investors' interests (Langton,
January 2005).
Reaching consensus on negotiating strategy in SACU is no easy feat. Formal negotiations began
in June 2003, but talks have made little progress over the past years. The interests of the five
different countries, at differing stages of development, have to be reconciled (Draper. 2004). No
doubt SA, with its diverse array of interests relative to its BLNS partners in the customs union,
will drive this. SACU negotiators, in common with those in many developing countries, have
great difficulty in understanding, let alone mobilizing, their services sectors. Hence they have
adopted a defensive posture, favouring liberalization only in those (few) sub-sectors that are well
understood. SACU has formally accepted an offer made by the US to progress a so-called trade
and investment cooperation agreement (TICA). Prior negotiation will be needed among SACU
countries, who clearly have an interest in coordinating its negotiation with other US bilateral
negotiating partners (Whalley & Leith, December 2003).
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/21982 |
| Date | 12 1900 |
| Creators | Odendaal, Daniel Jacobus |
| Contributors | Breytenbach, Willie, Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | 118 p. : ill. |
| Rights | Stellenbosch University |
Page generated in 0.0248 seconds