VZCZCXRO2428
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #1745/01 2391332
ZNR UUUUU ZZH
R 271332Z AUG 09
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 9454
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHOR/AMEMBASSY GABORONE 5538
RUEHMR/AMEMBASSY MASERU 2893
RUEHMB/AMEMBASSY MBABANE 4569
RUEHWD/AMEMBASSY WINDHOEK 5027
RUCPDC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 PRETORIA 001745 
 
SIPDIS 
 
USTR FOR BILL JACKSON 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EIND EINT ETRD SF
SUBJECT: TRADE MINISTER ON THE FUTURE OF TIDCA AND AGOA 
 
PRETORIA 00001745  001.2 OF 002 
 
 
¶1.  (U) Summary.  The Southern African Customs Union (SACU) 
will "engage energetically" on the U.S./SACU Trade, 
Investment, and Development Cooperative Agreement (TIDCA), 
said South African Minister of Trade and Industry Dr. Rob 
Davies at a breakfast briefing for the American Chamber of 
Commerce on August 13.  Davies cautioned against graduating 
South Africa from the African Growth and Opportunity Act 
(AGOA) program benefits, and stressed that AGOA and other 
trade preference arrangements should be used to advance 
regional integration.  He reiterated that South Africa is 
committed to industrial policy and to specific interventions 
in distressed sectors such as autos and textiles.  Davies 
also stressed that broad-based black economic empowerment 
will be continued and must be aligned with industrial policy. 
 End Summary. 
 
--------------------------------------- 
SACU to "Engage Energetically" on TIDCA 
--------------------------------------- 
 
¶2.  (U) The Southern African Customs Union (SACU) will 
"engage energetically" on the U.S./SACU Trade, Investment, 
and Development Cooperative Agreement (TIDCA) before the end 
of October 2009, said South African Minister of Trade and 
Industry Dr. Rob Davies at a breakfast briefing for the 
American Chamber of Commerce on August 13.   Progress on the 
TIDCA has been slow because SACU "hasn't gotten its act 
together," he admitted.  Davies said that the TIDCA will 
focus on sanitary/phytosanitary measures, technical barriers 
to trade, information exchange on customs cooperation, and 
programs to build private sector trading capacity. 
 
-------------------------------------- 
Davies Opposed to Graduation from AGOA 
-------------------------------------- 
 
¶3. (U) A broad range of South African sectors have benefited 
from AGOA, Davies told the AmCham audience.  He appealed to 
the U.S. not to "graduate" South Africa from AGOA, explaining 
that AGOA benefits have not yet trickled down to the 
country's underdeveloped "second" economy.  He also argued 
that graduation of South Africa would disrupt regional 
integration because other countries in the region would 
remain members. 
 
--------------------------------------------- -------- 
Trade Should be Used to Promote Regional Integration 
--------------------------------------------- -------- 
 
¶4.  (U) The South African Development Community (SADC) Free 
Trade Area was launched in January 2008, but regional 
integration remains a challenge, according to Davies.  Plans 
for a SADC Common Market by 2010 are "completely 
unrealistic," he acknowledged.  Accordingly, Davies reported, 
the SADC Task Force on Regional Integration recently decided 
to broaden rather than deepen regional ties.  SADC will now 
seek free trade agreements with the Common Market for Eastern 
and Southern Africa (COMESA) and the Economic Community of 
Western African States (ECOWAS), rather than aim at deepening 
integration among SADC members.  Davies emphasized that 
outside trading partners must treat the entire region as a 
single entity.  He cited the European Union's Economic 
Partnership Agreements with other SACU members as an example 
of a trade arrangement that threatens to create different 
sets of obligations and thereby disrupts regional integration. 
 
--------------------------------------------- --- 
The Global Economic Crisis and Industrial Policy 
QThe Global Economic Crisis and Industrial Policy 
--------------------------------------------- --- 
 
¶5.  (U)  While South Africa has been "severely affected" by 
the global economic crisis, Davies argued there is great 
potential for post-crisis economic growth underpinned by 
expanded infrastructure currently under construction.  The 
South African government, he promised, will assist sectors 
struggling with the global recession, including autos and 
clothing and textiles.  Davies reiterated the government's 
support for industrial policy in "strategic sectors" such as 
tourism, chemicals and pharmaceuticals, autos, and inputs to 
the infrastructure program (such as engineering and telecom). 
 Davies noted that the Department of Trade and Industry is 
planning to attract investment by doing sector-specific 
analysis and encouraging companies that are already doing 
business in South Africa to expand their operations. 
 
PRETORIA 00001745  002.2 OF 002 
 
 
 
--------------------------------------------- --------- 
Broad-Based Black Economic Empowerment Still Necessary 
--------------------------------------------- --------- 
 
¶6.  (U)  Broad-based black economic empowerment (BBBEE) will 
end someday, but not any time soon, Davies said.  "We still 
have a significant backlog when it comes to black 
participation in the economy.  We are nowhere close to 
saying, 'We don't need BEE,'" he stressed.   He said that 
BBBEE must now be aligned with industrial policy and support 
tied between small firms and large established companies. 
 
------- 
COMMENT 
------- 
 
¶7.  (U)  South African government officials and members of 
the business community have been quietly speculating about 
the future of AGOA for several months.  There is widespread 
concern that South Africa will be graduated from the program 
or that the program will not continue after it sunsets in 
¶2015.  Post is encouraged that AGOA is not being taken for 
granted in South Africa. 
 
GIPS