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DE RUEHSA #0937/01 1261212
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R 051212Z MAY 08
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 4330
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE

UNCLAS SECTION 01 OF 04 PRETORIA 000937 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EAID EAIR ELTN EWWT EIND EINV SF LI KE
SUBJECT: DOT DEPUTY SECRETARY VISIT TO SOUTH AFRICA, APRIL 12-16, 
2008 
 
REF:  CAPE TOWN 72 
 
¶1. (U) Summary. Deputy Secretary of Transportation Admiral Thomas 
Barrett led the U.S. delegation to the first African Growth and 
Opportunity Act (AGOA) Transport and Trade Forum in South Africa 
April 12-16.  The delegation met with a wide range of transport 
sector officials and industry representatives from throughout Africa 
and discussed many of the pressing transport issues facing the 
continent.  Congressman Donald Payne (D-NJ) met with the delegation 
on April 13 and discussed the role of transportation as an engine 
for economic growth in Africa.  The delegation held bilateral 
meetings with South Africa, Liberia, and Kenya to discuss transport 
challenges and offer U.S. assistance.  The AGOA Forum proceedings 
will be reported in greater details in septel.  The U.S. mission 
thanks the Department of Transport for sponsoring a timely forum to 
promote African transport infrastructure investment and U.S. trade 
with the continent.  End Summary. 
 
¶2. (U) Deputy Secretary of Transportation Admiral Thomas Barrett led 
the U.S. delegation to the first African Growth and Opportunity Act 
Transport and Trade Forum in Cape Town, South Africa April 12-16. 
The Department of Transportation (DOT) led the delegation, which 
included senior officials from the Millennium Challenge Corporation 
(MCC), the U.S. Trade and Development Agency (USTDA), and the Office 
of the U.S. Trade Representative (USTR).  The delegation brought 
together technical transport sector specialists and MCC, USTDA, and 
USTR representatives, who could address the issue of transport 
finance.  U.S. DOT delegates included experts from all 
transportation modes (aviation, land, maritime, and rail).  The 
delegation met with a wide range of transport sector officials and 
industry representatives (i.e., Boeing, FEDEX, Maersk and GE) from 
throughout Africa and discussed many of the pressing transport 
issues facing the continent.  The delegation visited the Port of 
Cape Town and Villafont Winery (a US-SA joint venture) as a part of 
a supply-chain logistics familiarization tour. 
 
¶3. (U) USTDA Director Larry W. Walther officially launched the 
African Trade Lanes Partnership during a press conference at the 
Forum.  The Partnership will support a coordinated intermodal 
transportation infrastructure program in order for Africa to take 
advantage of AGOA benefits.  The initiative is designed to promote 
regional cooperation and connectivity in all modes of 
transportation, including aviation, land, maritime, and rail. During 
the two-year initiative, USTDA will provide $4 million for 
transportation infrastructure planning across sub-Saharan Africa, 
including technical assistance, investment analysis, business 
workshops, training, project definition, and other critical 
capacity-building activities. 
 
------------------------ 
Congressman Donald Payne 
------------------------ 
 
¶4. (SBU) Congressman Donald Payne (D-NJ) met with the delegation on 
April 13 and discussed the role of transportation as an engine for 
economic growth in Africa.  Congressman Payne was in Cape Town to 
attend the 118th Assembly of the Inter-Parliamentary Union (reftel). 
  Barrett stated that the delegation was approaching transport and 
trade in a holistic manner.  Barrett sought advice on working on 
African transportation issues.  Congressman Payne cited border 
control issues (e.g., customs and long border delays), bureaucratic 
red-tape, and corruption as areas for concern.  Deputy Secretary 
Qred-tape, and corruption as areas for concern.  Deputy Secretary 
Barrett agreed and noted that a little more regionalism would help 
the transport sector in Africa.  Congressman Payne called for more 
regional and less country-specific assistance through the MCC. 
Deputy Secretary Barrett stated that discussions about recent MCC 
transport programs in Kenya and Tanzania highlighted the need for 
more regional assistance and hoped to "get more dialogue" on 
promoting regional programs during the forum and in follow-up 
discussions in D.C. 
 
--------------------------------------------- -- 
SA Bilateral - Assistance Offered for World Cup Preparations 
--------------------------------------------- -- 
 
¶5. (U) A South African Department of Transport delegation led by 
Director General Mpumi Mpofu met with the U.S. delegation on April 
¶14.  Deputy Secretary Barrett was positive about the opportunities 
for bilateral cooperation, which could be used as a model for the 
rest of Africa.  He stated that "South Africa was the right place on 
the continent to host the first AGOA Forum on Transport and Trade 
because of the leadership role South Africa played on the 
continent".  Director General Mpofu agreed, but added that South 
Africa's leadership role on the continent and in the African Union 
sometimes constrained its ability to act unilaterally.  Barrett also 
emphasized that improving regional transport infrastructure would be 
beneficial to trade development.  Deputy Secretary Barrett 
congratulated South Africa for its winning bid to host the FIFA 2010 
World Cup. 
 
PRETORIA 00000937  002 OF 004 
 
 
 
¶6. (U) Deputy Secretary Barrett offered technical assistance with 
transportation planning, outreach, and development for the World Cup 
and beyond.  He noted that the U.S. DOT was already providing road 
safety assistance for World Cup preparations and inquired how the 
U.S. could provide further assistance.  Barrett said the U.S. had 
comparative advantages in intelligent transport technology programs, 
which South Africa could benefit from.  For example, the U.S. DOT's 
21st Century Solutions program utilizes technology to improve 
efficiencies of existing infrastructure and infrastructure 
investment. 
 
¶7. (U) Mpofu stated that at this point all of the infrastructure 
plans for 2010 preparations were already in place and now the focus 
was on implementation.  She requested assistance to operationalize 
these transport infrastructure plans.  She said that the SAG viewed 
the 2010 World Cup as a catalyst to implement long-term, sustainable 
transport systems. 
 
--------------------------------------------- --------- 
Implementation - Leveraging Private Finance and Skills Development 
--------------------------------------------- --------- 
 
¶8. (U) Mpofu said that SA DOT needs assistance with operational 
plans and implementing ticketing systems.  The SAG has placed great 
faith in the transport sector and has dramatically increased 
investments in the transport sector from R6 billion ($779 million) 
to R20-24 billion ($2.6-3.1 million) per year.  The SAG has also 
launched a R300 billion ($39 billion) overall infrastructure 
development program.  It is receiving technical assistance on 
traffic management from the U.S. Intelligent Transport Systems (ITS) 
program.  SA is implementing a highway improvement scheme with 
assistance from ITS.  This R23 billion ($2.9 billion) program is one 
of the SAG's biggest transport investments.  New highway 
construction plans that will feature Easy Pass systems are in place 
for completion in 2011. 
 
¶9. (U) Mpofu stated that leveraging private sector finance is 
another major area where SA could use technical assistance.  Mpofu 
described World Cup preparations as the first phase of a larger 
ten-year transport development program.  The SAG needs to better 
understand investment mechanisms and determine which financial 
instruments to use to best leverage private sector financing. 
Deputy Secretary Barrett responded that the U.S. faces the same 
challenges.  The U.S. DOT is willing to follow-up and assist with 
increasing private sector finance.  One of the goals of the U.S. DOT 
21st Century Solutions program is to increase public private 
partnerships, which address transport technology and finance.  The 
U.S. can share best practices regarding public private partnerships. 
 Mpofu thanked Barrett and reiterated that this was a key strategic 
issue.  SA already has public private partnerships in different 
sectors, but more are needed in the transport sector. 
 
¶10. (U) According to Mpofu, FIFA chose the nine host cities well in 
terms of existing transport infrastructure, but the principle 
challenge has been stadium construction.  According to the SA DOT 
delegation, the 2010 transport projects are "feeling the bite of 
skills shortage" since stadium construction is absorbing skilled 
professionals.  Engineers and other skilled specialists are in 
demand, but in short supply.  SA DOT delegates asked for U.S. 
assistance in the form of skills transfer and other training 
programs.  They requested a program similar to an existing USAID 
Qprograms.  They requested a program similar to an existing USAID 
training program in Kenya.  Deputy Secretary Barrett responded 
favorably to the request.  He also encouraged the development of 
community colleges, technical institutes, and career development 
programs linked to businesses as means of addressing skills 
shortage. 
 
------------------------------------ 
Collaboration on Intermodal Linkages 
------------------------------------ 
 
¶11. (U) Deputy Secretary Barrett also raised the importance of 
intermodal linkages during the discussion.  He informed Mpofu that 
the delegation would be touring the Port of Cape Town to learn about 
its expansion program.  Mpofu said that the U.S. was a world leader 
in driving efficiency and SA DOT would like to engage with the U.S. 
on intermodal transport linkage issues.  SA has started creating 
regulatory bodies and intermodal plans and she proposed looking at 
freight, rail, and maritime transport to explore collaboration. 
 
 
¶12. (U) Mpofu stated that great opportunities for collaboration 
existed in the maritime sector.  The current problem with the SA 
maritime sector is its fragmented structure.  Transnet, the 
government-owned company which operates the ports, is under the 
authority of the Department of Public Enterprises and operates in a 
monopoly environment.  According to Mpofu, Transnet focuses on 
freight transport and logistics at the expense of maritime transport 
 
PRETORIA 00000937  003 OF 004 
 
 
development.  She said that SA needs significant assistance with 
port operations.  Deputy Secretary Barrett cited public private 
partnerships as a means for improving port operations efficiency. 
He also warned Mpofu not to lose total jobs due to increased port 
mechanization; but to also think about investing in areas that would 
spur further investment, development, and job growth.  He explained 
that a container facility in Port Smith, Virginia, was able to 
increase efficiency and double stack containers by raising the 
height of its tunnels. 
 
 
¶13. (U) Mpofu said SA also has an ambitious program to rehabilitate 
its rail infrastructure.  She added that SA could learn from U.S. 
experiences in operational efficiencies, refurbishing, and the 
establishment of finance mechanisms for rail infrastructure.  For 
the World Cup, SA is creating a high-speed rail system (Gautrain) in 
the Gauteng province linking Johannesburg and Pretoria.  Post 2010, 
SAG would like to implement similar systems in other urban areas 
such as Durban.  SA would also like to implement a bus rapid transit 
system.  SAG and the host cities are also procuring 1,200 new buses 
for the 2010 games. 
 
--------------------------------------------- ------ 
Open Skies - SA Frustrated by African Union Process 
--------------------------------------------- ------ 
 
¶14. (SBU) Deputy Secretary Barrett said that the U.S. has been 
unsuccessful in increasing aviation linkages through an Open Skies 
agreement with SA.  He reiterated that the World Cup could be a real 
catalyst for tourism growth if the number of direct flights to the 
U.S. were increased.  He added that an Open Skies agreement would 
signal that SA was open for business.  Mpofu responded by stating 
that bilateral Open Skies negotiations should be viewed in the 
context of aviation liberalization negotiations within the African 
Union.  She said that SA is looking at the recent U.S. Open Skies 
agreement with the European Union with interest.  SA is trying to 
get to an Open Skies agreement through the African Union, but is 
frustrated by the slow progress of the Yamoussoukro agreement. 
(Note: The Yamoussoukro Declaration outlines the process for 
aviation liberalization within the African Union and has precedence 
over any bilateral or multilateral agreements of member-states). 
 
¶15. (SBU) Mpofu expressed the belief that like-minded countries such 
as Egypt, Ethiopia, Kenya, and South Africa are ready for Open 
Skies.  She predicted that if the Yamoussoukro agreement does not 
move forward in the next year, then more countries will lose 
patience and proceed with aviation liberalization on a unilateral 
basis.  As far as SA is concerned a decision needs to be made in the 
next year.  "If the African Union process is not successful in 
twelve months, SA will have to rethink its strategy and go solo." 
In the interim, she suggested renegotiating airlift agreements to 
make them more liberal.  Mpofu noted that increasing airlift would 
improve trade links with the U.S. 
 
---------------------- 
Safe Skies - FAA Visit 
---------------------- 
 
¶16. (SBU) Deputy Secretary Barrett stated that SA had come very 
close to losing its Category One rating under the Federal Aviation 
Administration's (FAA) International Aviation Safety Assessment 
program in December 2007.  He emphasized that SA will not get a 
"second swing" this time when the FAA team returns.  He inquired how 
the U.S. DOT could assist in resolving safety issues and added that 
Qthe U.S. DOT could assist in resolving safety issues and added that 
the U.S. wants SA to be prepared for the June visit.  Mpofu was 
confident about the return visit.  She noted that significant 
progress has been made in improving human resource capacity since 
December.  Mpofu stated that legislative reform was also another 
major challenge that she expected to be resolved shortly.  She 
expected draft legislation to be ready when the FAA team returns in 
June. 
 
----------------- 
Liberia Bilateral 
----------------- 
 
¶17. (U) The delegation met with officials from the Liberian Ministry 
of Transport to follow-up on President Bush's successful Africa 
visit.  Liberian officials explained that 14 years of conflict had 
destroyed Liberia's transport systems.  Liberia is working to 
develop transport systems and has attracted Chinese investments. 
Deputy Secretary Barrett underscored the importance of examining 
ways to improve the efficiency of existing infrastructure since it 
would take a few years to built additional infrastructure.  He also 
stated that starting from scratch was not a bad thing since Liberia 
would not be constrained by existing infrastructure.  Barrett 
outlined technical assistance programs offered by the USG and 
encouraged the Liberian delegation to speak with U.S. transport 
experts at the forum.  He reiterated that the goal of the forum was 
 
PRETORIA 00000937  004 OF 004 
 
 
to assist Liberia (and other AGOA recipients) according to their 
needs.  USTDA Director Larry Walther offered to fund a USTDA 
definitional mission to Liberia to identify and define opportunities 
for USTDA funding in the transportation sector. 
 
--------------- 
Kenya Bilateral 
--------------- 
 
¶18. (U) The delegation next met with delegates from the Kenyan 
Ministry of Transport.  The Kenyan delegation spoke about a study 
released by the University of Nairobi, which examined U.S.-Africa 
trade volumes.  The study showed that Africa's share of U.S. trade 
is still small, but Africa trade with Asia is increasing.  Kenyan 
officials also stated that the number of Asian tourists was growing 
faster than the number of U.S. tourists.  The Kenyan delegation 
cited the lack of direct transport links as a cause for the low 
levels of trade with the U.S.  The Kenya Civil Aviation Authority is 
trying to achieve FAA International Aviation Safety Assessment 
program Category One status so that Kenya Airways would be able to 
initiate direct or code-share service to the U.S.  The U.S. 
delegation agreed that direct service would increase trade and said 
that implementation of safety standards would be a key issue in 
obtaining the Category One status.  U.S. officials also noted that 
Delta Airlines has shown interest in starting direct service to 
Kenya, but has experienced delays with Kenya's application process. 
 
 
¶19. (U) Kenyan delegates stated that rail systems currently carried 
only ten percent of products from Kenyan ports.  They hoped to 
improve the efficiency and reliability of rail service.  Kenyan 
delegates noted that big changes had recently occurred in the Kenyan 
and Ugandan rail sector.  A South African company has won a large 
concession, which should improve rail capacity.  Kenya is also 
trying to create a second port 25 kilometers from the Mombasa port. 
According to Kenyan delegates, this would shorten the distance 
between the Indian Ocean and the Sudan basin.  Kuwaiti investors 
have shown interest in owning and operating this second port on a 
transfer basis.  The Kenyan delegates would like to see more U.S. 
companies bid on Kenyan tenders.  So far, Chinese and European Union 
companies have been bidding and winning the tenders.  USTDA 
officials encouraged the Kenyan DOT to work with the U.S. Embassy 
and Foreign Commercial Service in Nairobi to attract U.S. investors. 
 USTDA could also provide funding for orientation visits to the U.S. 
to build relationships. 
 
¶20. (SBU) Comment.  The U.S. mission thanks the Department of 
Transportation for sponsoring a timely forum to promote African 
transport infrastructure investment and U.S. trade with the 
continent.  SA DOT officials have expressed gratitude for the 
networking opportunity presented by the forum and the bilateral 
dinner hosted by the Ambassador.  SA DOT officials have already 
scheduled follow-up meetings with U.S. DOT experts to discuss 
technology transfer and skills development.  SA DOT officials have 
also approached the U.S. mission with requests for orientation 
visits to the U.S. and to learn more about U.S. DOT best practices 
with respect to public affairs.  End Comment. 
 
¶21. This cable was cleared and approved by the U.S. DOT delegation 
led by Deputy Secretary Barrett. 
 
 
END TEXT 
 
BALL