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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #2382/01 3050815
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R 310815Z OCT 08
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 6221
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHOR/AMEMBASSY GABORONE 5377
RUEHMR/AMEMBASSY MASERU 2768
RUEHMB/AMEMBASSY MBABANE 4474
RUEHWD/AMEMBASSY WINDHOEK 4940
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 PRETORIA 002382 
 
SENSITIVE 
SIPDIS 
 
PLEASE PASS TO USTR FOR BILL JACKSON 
 
E.O. 12958: N/A 
TAGS: ECON ETRD SF
SUBJECT: SOUTH AFRICAN BUSINESS VIEWS ON TIDCA AND TRADE 
 
PRETORIA 00002382  001.2 OF 002 
 
 
¶1. (SBU)  Summary:  South Africa's business community is 
pleased that the Southern African Customs Union (SACU) SACU 
and the U.S. will begin talks under the U.S./SACU Trade, 
Investment and Development Cooperation Agreement (TIDCA), and 
hopes that TIDCA can pave the way to a free trade agreement. 
The business community did not lobby for the U.S./SACU free 
trade agreement when it was being negotiated, but it was 
disappointed when the talks were suspended in 2006.  Now 
business sees the TIDCA as an opportunity to re-engage with 
the U.S. and ultimately lock in AGOA benefits.  Labor unions, 
however, do not support the TIDCA.  In general, factions 
within the South African business community have widely 
differing views of trade policy and varying degrees of 
sophistication about trade.  Trade facilitation issues are of 
significant concern to South African business.  End Summary. 
 
---------------------- 
Better Late Than Never 
---------------------- 
 
¶2.  (SBU)  Business Unity South Africa (BUSA) Director of 
Trade Policy Catherine Grant (protect) met with Deputy 
Economic Counselor and Trade and Investment Officer on 
October 22 to discuss developments in South African trade 
policy.  Grant said the South African business community is 
increasingly interested in the TIDCA that was signed at the 
AGOA annual forum in July.  According to Grant, the business 
community's interest in the TIDCA is ironic because business 
showed little interest in the U.S./SACU free trade talks 
while they were actually taking place.  However, the business 
community was disappointed when FTA talks were suspended in 
¶2006.  Grant commented that business is worried about losing 
AGOA benefits and therefore wants the TIDCA to be a success 
and to pave the way to a free trade agreement between the 
U.S. and South Africa.  BUSA is currently canvassing its 
members for items to place on the TIDCA agenda. 
 
¶3.  (SBU)  The Congress of South African Trade Unions 
(COSATU) "hates the TIDCA," according to Grant.   When the 
National Economic Development and Labour Council (NEDLAC) 
reviewed the draft TIDCA, COSATU submitted a negative 
position paper complaining that the U.S. was pursuing a 
"template" approach to trade negotiations. She also said the 
complaint was essentially a renewed objection to a free trade 
agreement.  Grant noted that when NEDLAC approved the TIDCA, 
COSATU complained that it had not been consulted.  (Note: 
NEDLAC is a tripartite -- government, business, and labor -- 
body that, among other things, reviews trade agreements prior 
to adoption by the South African government (SAG).  End 
Note.)  Because South African business largely sat out the 
FTA talks with the U.S., opposition from labor unions went 
unchecked.  Though business support of TIDCA is new, Grant 
expects that COSATU will continue to oppose TIDCA. 
 
-------------- 
Trade Politics 
-------------- 
 
¶4.  (SBU)  Grant said the South African business community is 
divided on trade policy.  Chemical, steel, and textile 
manufacturers are protectionist and view free trade 
agreements as threats to their well-being.  The auto industry 
is somewhat protectionist, though it does have access to the 
global supply chain.  Agriculture comprises the core free 
trade constituency.  Banks are starting to organize positions 
on trade policy, as are telecommunications companies. 
Qon trade policy, as are telecommunications companies. 
However, Grant said the level of ignorance on trade issues is 
enormous, noting that CEOs have asked her, "So what is SADC, 
anyway?"  (Note:  SADC is the Southern African Development 
Community.  End Note.)  She said BUSA is going to work with a 
local business school to develop a program that will raise 
awareness of the importance of services agreements. 
 
¶5.  (SBU)  Grant commented that South African companies are 
usually not involved with the government in the development 
of trade policy.  She cited long-term isolation under 
apartheid and general distrust of the SAG as reasons for 
their lack of involvement.  She also noted that business only 
comes to government when it has a particular problem that it 
needs to solve.  The business community must focus more on 
trade in services, Grant stressed.  While trade in goods 
"takes care of itself" because businessmen understand tariffs 
and other basic trade principles, they are much less 
 
PRETORIA 00002382  002.2 OF 002 
 
 
sophisticated about trade in services.  Labor unions, in 
particular, dislike the idea of services agreements, which 
they see as the "thin edge of the wedge" that will lead to 
comprehensive liberalization. 
 
¶7.  (SBU)  BUSA (South Africa's foremost business body), 
agrees with the SAG position on Non-Agricultural Market 
Access (NAMA) negotiations in the Doha Round of WTO talks, 
Grant said.  She explained that BUSA supports market access 
liberalization only if there is a special and differential 
treatment for South Africa, since South Africa liberalized 
voluntarily in the 1990s.  According to Grant, Doha has not 
done enough on agricultural subsidies, and developed 
countries are pushing the developing world too aggressively 
on manufacturing tariffs.  Grant commented that BUSA supports 
the Doha Round more strongly than the SAG does.  She claimed 
that some SAG officials are "relieved" that Doha has 
foundered. 
 
------- 
Comment 
------- 
 
¶8.  (SBU) BUSA's support for TIDCA is encouraging.  Grant 
recommended that U.S. trade officials engage not only with 
the private sector but also with COSATU on their next visit 
to the region to explain U.S. goals in TIDCA.  Post agrees 
with this recommendation. 
LA LIME