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World Bank gets the cold shoulder

From the Aug/September 2018 ParlyReport…….

Go to:   World Bank gets the cold shoulder

Posted in Finance, economic, Special Recent Posts, Trade & Industry0 Comments

US schedules AGOA trade checkups

Feature article sent to clients 10 March….. 

AGOA trade agreement qualified…….. 

For the first time in the case of all African countries, theusa sa logo AGOA trade rules under the agreement for South Africa will be subject to a regular “out of cycle review” by the US. Normally any such agreement holds for ten years without review but the US wishes to check regularly that in South Africa the “quid pro quo” is being adhered to.

Parliament has been the scene for a number of briefings both on trade and international relations in the last two weeks and AGOA has been top of the list.

Also to emerge is the fact that one of the driving factors behind South Africa’s insistence on partnering with Brazil, Russia, India, China to form the BRICS trading bloc appears to be a fear of become totally reliant on trade agreements with any one country and particularly USA, in the case of the AGOA agreement.

This is despite the fact that the EU remains South Africa’s main trading partner, followed by the US.

The full monty

nomaindia mfekethoIn a briefing to the Portfolio Committee on International Relations a full team appeared from the Department of International Relations (DIRCO) headed by Deputy Minister Noamindia Mefeketu, together with Dave Malcomson, Chief Director of Regional Organisations; Ms Yoliswa Maya, Deputy Director General, Americas, Europe and the Caribbean; and Mr Arnold Lyle, Counsellor for DIRCO on the USA on agreements with BRICS, China and Pacific Rim countries.

In attendance for some of the time was Minister of International Relations, Maite Nkoana-Matshabane and a broad picture emerged of South Africa’s international trade policy, particularly with reference to the AGOA and how South Africa arrived at what most consider a favourable outcome.

Too many strings

Nkoana MatshabaneMinister Nkoana-Matshabane prefaced the meeting by saying the developing world had been borrowers from the IMF and the World Bank with conditions attached to loans “so stringent that they would never be able to develop.” South Africa, she believed, “was part of a progressive movement to find alternative funding sources and different trading partners.”

Relationships with the USA have emerged time and time again and, when pushed at the end of the briefing, the Minister, when asked by Opposition members in the case of the AGOA who needed it most, she replied “Perhaps SA needed the trade with the US more than they needed SA’s trade”. However, she was insistent that the country needed at the same time to find other trading partners to avoid being pressurized.

“If the AGOA had lapsed it might have been terrible at first with the job losses and we would have gone through some very bad times. But we would have overcome this. As a result of this event, we have learnt that the threat in terms of our own priorities will always exist”, the Minister said. “South Africa must now see itself as the priority and therefore look for other opportunities”, she concluded.

Going the BRICS route

Starting with a briefing on BRICS, DIRCO’s Dave Malcomson said the BRICS agreementdave malcomson backed up
the African Union programme for “continental infrastructure programmes” and from a domestic dimension, “all participants faced similar developmental challenges which needed infrastructure build programmes.”

The New Development Bank (NDB) had been launched with headquarters in Shanghai for the moment, subject to Contingent Reserve Arrangement (CRA) funding which South Africa had contributed to, the CRA funding being referred to in Minister Gordhan’s Budget presentation. He asked parliamentarians to note that despite a bad start with all BRICS countries experiencing lower growth, the combined GDP of BRICS was “likely to exceed that of the US by 2020, if not sooner”.

The NDB was expected to approve its first projects in April 2016. Malcomson referred to a “Host Country Agreement” between SA and the NDB which would be finalised soon. He also said that in place was an equal shareholding agreement with other BRICS countries in the NDB.

There was also to be a board of governors for policy issues; a governance board of directors; and the NDB would have initially 100 positions – the first presidency being from India; the CEO coming from China; the CFO (ex-Minister Nene?…ed.) being from South Africa; and with Brazil handling the position of risk CEO.

Sino summit

On Chinese relationships, following a successful summit staged in Johannesburg by South Africa in December last year with 48 heads of state attending, the Forum on China-Africa Cooperation (FOCAC) established a line for R60bn for development in Africa. Trade discussions between SA and China were extensively being built upon, said DIRCO’s Arnold Lyle.

iora logoAs far Indian Ocean Rim Association (IORA) was concerned, this was heavily linked to Operation Phakisa and the development of oceanic trade possibilities. IORA was focused on fisheries and aquaculture; renewable ocean energy; seaport and shipping development; seabed exploration and minerals, marine biotechnology and research and development. Tourism was also included.

IORA was primarily led by India, Australia, Indonesia and South Africa, with countries such as the UAE also involved. South Africa would lead IORA for 2017- 2019, strategic objectives being the “blue economy” and maritime peace and security sustainable development. There were considerable synergies, Malcomson said, and he quoted skills training of artisans in ship building as an example.

In answer to questions, he said the main difference between FOCAC and BRICS was that FOCAC was focused as a unit on the African continent whereas in the case of BRICS, South Africa was the representative for the African continent.

AGOA specifically

motor vehicle plantMeanwhile, the importance of AGOA was still evident and emphasised when a summation of was made to MPs by Yoliswa Maya of DIRCO. She pointed to the fact that the AGOA created over 62,000 jobs in SA and 100,000 jobs in the US. In 2014, 21% of SA’s exports to the US were exported under AGOA whilst 16% was under the EU’s “Generalised Scheme of Preferences” (GSP), which allows developing country exporters to pay sometimes less or sometimes no duties on their exports to the EU.

SA’s exports classified as purely under the AGOA amounted to $1.75bn whilst the country exported over R23bn worth of vehicles to the US in 2014, which supported some 30 000 jobs in Port Elizabeth and the Gauteng Province. SA also exported agricultural products to the US worth $175m, which represented 2.1% of SA’s total exports to the US. For the period January to November 2015, SA enjoyed a trade surplus of R2.3bn. Ms Maya did not compare figures with the EU or individual EU countries.

Debate

Responses from the Chairperson of the International Relations Committee Moses Masango and othermoses masango 2 ANC MPs seemed to be “playing to the gallery” of Ministers throughout the meeting. At one point Chair Masango said that the ANC-led government and the DIRCO team should be congratulated for making the BRICS and NDP bank “a reality” bearing in mind that, in his opinion, the International Monetary Fund and the World Bank mainly funded infrastructure projects “to keep colonialism alive in Africa”.

This seemed to reflect a growing belief amongst ANC members that the USA was interfering in SA political affairs and Masango remarked that “like the Roman and the British Empires, the American Empire hoped to achieve the same economically”. He said the question had to be asked what China, India and the US actually wanted in Africa. He said that South Africa had to be cautious.

The standard of debate was uplifted when the implications for SA were elaborated upon by Ms Maya of DIRCO when she said as far as the AGOA agreement was concerned, President Barack Obama issued a notice of suspension on the 11 January 2016 and a deadline of 15 March 2016 was set for imports of US poultry to be duty free into otherwise duty free access for South African agricultural products was to happen.

The rest of the story was well known, she said, and chicken products were about the go into the retail trade with meat products still to arrive. President Obama’s concurrence appeared to be a formality.

Between the lines

However, Deputy Minister Mfeketu said the US was “increasingly advocating for a post-AGOA trade relationship with Africa as a whole on a Free Trade Agreement basis” and US trade representatives were to submit a report to the US Congress in June 2016 regarding future trade relationships between Africa and the US.

The Deputy Minister said that South Africa was not short of poultry, had not asked for it and said the US appeared to have decided that if conditions were not met regarding poultry and certain meats, any other benefits would cease.

Other responses

Santos Kalyan of the DA said DIRCO were in fact saying that “that the US was beating SA with a big stick”. However, she pointed out that the Minister of Trade and Industry, Mr Rob Davies, had signed the

courtesy iol

courtesy iol

agreement and therefore South Africa had entered into the agreement willingly in its own overall interests.

She asked DIRCO whether in their view the US was having problems with South Africa’s trade policies and international policies. Ms Maya admitted that the US was also in disagreement with Private Security Industry Bill and Intellectual Property Bills and said that the US also “had some problems with BBBEE”.

Mr D Bergman (DA said “ The truth of the matter was that if SA lost the AGOA because of this issue then SA would lose out.” Deputy Minister Mfeketu conceded that DIRCO agreed that South Africa needed to trade with the US more than the other way around. She repeated the fact that South Africa had accordingly to look for other opportunities.

Free trade agreements

DIRCO concluded that during a meeting of the African Ministers of Trade at the Africa-US AGOAFlorizelleLiser Conference in August last year, Department of Trade and Industry (DTI) had indicated that SA is not ready to enter into a Free Trade Agreement (FTA) yet with the USA and will consult with business and labour before formulating. Already the Assistant US Trade Representative for Africa, Ms Florizelle Liser, has visited SA to consult with the DTI and various other stakeholders on this view.

Previous articles on category subject
Plenty in the way of AGOA agreement – ParlyReportSA
EU and AGOA still important to SA, says govt – ParlyReportSA
AGOA : Parliament this week 3 Nov 2015 – ParlyReportSA
Private Security Industry Bill comes closer – ParlyReportSA
SACU trade split is EU bullying, says Minister Davies – ParlyReport

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