Office of the United States Trade Representative


USTR Zoellick and the Southern Africa Customs Union Trade Ministers
Pelican Bay Hotel, Walvis Bay, Namibia 12/10/2004

Minister Mpahlwa: Good afternoon, good evening, ladies and gentlemen of the media. We are pleased to let you in on the secrets of this meeting that took place here. [Laughter.] But on a serious note, we are happy to share a few comments with yourselves about the meeting that we held between ourselves as SACU trade ministers as well as Ambassador Zoellick from the U.S., and to give you a sense of some of the issues that we spoke about. It’s important at the very beginning to say that for us as SACU trade ministers we truly welcome the opportunity to have this high level interaction between ourselves and Ambassador Zoellick because we have been engaged in a process of free trade negotiations and it hasn’t been on many occasions that we have been able to meet at the ministerial level and to review progress of the negotiations themselves. But also, where difficulties may arise, to find ways around how to deal with those. So, we really welcome the opportunity to have this high level interaction. And we acknowledged the special effort that Ambassador Zoellick made to come to this part of the world so that we could all engage.

We did, as part of our discussions, take ourselves back to why in the beginning we chose this path of pursuing a free trade negotiation. And I think that from that discussion we are all at one that what informed us at the beginning, to embark on a free trade negotiation, is still valid to this day. It was really to build on what we have been able to achieve with AGOA and what we continue to achieve with AGOA, but to take that to another level, which is a level that provides greater scope but also greater certainty. Because as all of you know AGOA is an instrument, it’s a legislative instrument that gets amended, that gets extended, and so on.

So, we all agreed that we think we are still on the right track in terms of pursuing a free trade negotiation. But what we also did in our discussion was to exchange views that would ensure that we all have the common understanding of a free trade agreement, a comprehensive free trade agreement. As you would know, we are different entities. We are SACU, we are an emerging customs union, in the sense that we have sought in the last few years to place SACU really on a totally different footing than it has been since its establishment in 1910. So we are an emerging entity, we are an evolving entity, we are engaging in a free trade negotiation for the first time. It is both a learning process for ourselves but also a process that assists us to better understand our own system and our own environment. And the U.S. also has got particular norms and approaches to these issues so it was important for us to actually exchange on the understanding of what a comprehensive free trade agreement entails. Certainly, from that kind of a discussion there is further work that needs to be done, and I will come back to some of the proposals that we have put on the table to take that process forward. Thirdly, we explored the issues of – you know these kinds of negotiations, being as comprehensive as they are and being as technical as they are, that actually what you find as you negotiate is that on some areas there are perhaps better and earlier prospects to conclude than on other areas.

We therefore need to have that understanding and properly position and pace ourselves in terms of dealing with all of the issues, both those that may require a lot more work than others. So again when one indicates some of the proposals that we have we put on the table on how to take the process forward, those proposals would also address that issue. What we therefore have come out with very concretely is that we need to create for ourselves, because as ministers it is very difficult to have these kinds of meetings on a regular basis, and that necessarily negotiations of this nature, they are difficult, they are technical and so on. Therefore, now and again, you will hit difficult patches so we need to create a mechanism that enables us to keep the wheels moving, so to speak. So we are looking, I mean it’s a proposal that still undergoes a lot of examination. We are going to be continuing our discussions this evening, but just in general terms we need to establish for ourselves a mechanism that doesn’t necessarily draw in the ministers but somewhere between our negotiators and our ministers. We need to create a tier that on an on-going basis engages with our negotiators, and even when difficulties do arise, that becomes your first port of call in trying to resolve whatever difficulties may have arisen.

So, in general terms, those are some of the issues that we talked about. Perhaps it is important to say that all of us have given unequivocal commitment to continue with this process even as we recognize that there would be difficult areas and areas where it will take longer and perhaps harder work to achieve agreement, but all of us unequivocally have committed ourselves to continuing with this process. I’d like to invite Ambassador Zoellick if he would like to say a few words.

USTR Zoellick: Thank you Mr. Chair. First, let me thank our host and the people of Namibia. It gives me a wonderful opportunity to visit and see a beautiful part of the world and while I have only been here briefly, I can see that Namibia is a very gracious host and I’m very glad I’ve had the opportunity to come for this session. Second, I want to thank my colleagues who I know have extended their stay to be able to be here so we could have what I think was a very, very useful session. Some I have known for many years and some I have just met. We even have a finance minister in our midst. I’m particularly honored. [Laughter.] As the chairman said, I think that they are very useful discussions. We also hope to have some discussions about the Doha agenda and the WTO over dinner. I agree very much with his statement and I think that all that I would add is the fact we’ve built a good relationship under AGOA and the amendments to AGOA – AGOA II and the AGOA Acceleration Act – that have extended it and added Namibia and Botswana to some of the textile benefits, and extended some of the special third party textile benefits.

But we realize that, on the part of United States, that if we want to try to develop a comprehensive free trade agreement with sub-Saharan Africa that SACU is by far the best potential partner. We also recognize that SACU is itself an organization that is in the process of strengthening and developing and so some of the issues that we deal with in a free trade agreement have to take cognizance of those changes within the SACU process. So, I have been pleased in that I think the chairman said we had an opportunity to renew a sense of what our overall vision is and why we are engaged in this effort, have some sense of the elements, and help me gain some additional insights about some of the particular challenges that we face with our partners. And I think we are at least in the process of evolving an approach that can try to get the process moving more effectively so that we can regain some momentum in a project that we all believe is very important for our countries and for SACU itself. So, I really just thank them for not only welcoming my team and me but also frankly for what I felt was a very good, open discussion about some of these issues.

Question: (Brigitte Weidlich from AFP) I’ve got a question to Ambassador Zoellick. Could you perhaps just indicate what insights you gathered about the particular challenges of SACU? And I’ve got a question to the South African minister. What will this mechanism sort of look like? What is the negotiating body to keep what you are saying, keep the wheels going?

Zoellick: Well, as for your question to me, as you probably all know, SACU is one of the oldest customs unions, dating back to 1910, as I recall. But for most of its life it existed mostly as a mechanism to develop some revenue for its members and it is really only in recent years that it started to develop an integrated trade policy for all five members, and really make it a much more effective customs union. Now, in the area of trade, when one deepens integration, countries often start out with merchandise goods, and that’s exactly what SACU did, but in the process of deepening integration, it’s then spread to more agricultural products, now considering services and other dimensions.

The type of free trade agreement that we are talking about -- which is really designed, as one of my colleagues said, as kind of a bootstrap for SACU to be really not just a partner of the United States but globally competitive -- involves a series of other issues – like intellectual property and other topics that are at the heart of comprehensive free trade agreements, and that have the potential of helping SACU be a competitor not only in Africa, but with China and India and Latin America and Southeast Asia and other major developing countries. That means strengthening its involvement with a knowledge economy and dealing with piracy issues, intellectual property rights, but also questions, for example, of opening markets like government procurement. Those are issues that SACU is still working through itself. So, that’s an example of kind of the extension. And SACU, of course, itself has countries at different levels of development. It has what is called the least developed country member.

What I think has distinguished this negotiation from the start is that South Africa, which had done a free trade agreement the European Union, decided that this needed to be done with SACU to help strengthen SACU. And the United States shared that view. So by necessity, as we work through some of these issues, we have to recognize the on-going integration taking place within SACU. And it’s my hope that we help further that integration, not only in terms of rules but in terms of practical economic infrastructure. I know in a separate aspect of our work that for some countries in the region, for their ability to compete globally, they not only need the production capacity but they need the transportation infrastructure, whether be it rail or ports. So, all of these aspects are part of the development strategy, in some cases for us our aid strategy, but also part of our trade strategy.

Minister Mpahlwa: As I said earlier on, I mean this is a proposal that we are still examining so I might not be able to give you an exact shape and form of what it is going to take, but I think what is important is the idea behind it, which is to say that negotiations of this nature, in particular, very often run into difficulties. You know when you have been very close with the process sometimes you just need that outside voice or that outside eye or outside ear that might be able to provide guidance, look at things slightly differently or help to find solutions where, because you are so close to the process that you might not be able to do on your own.

So, the idea there is that at all times we’ve got to make sure that we do have a fairly similar mechanism that enables our negotiators, our negotiating teams, to have a first port of call should difficulties arise. It is precisely designed to ensure that the process keeps going, that it doesn’t stop because difficulties have arisen and ministers can’t meet. So, what therefore one would expect, if I were to look at my own environment in South Africa, there is a deputy minister, there is a director general, (unintelligible). Now, those are senior people, very senior people in our own establishments, and so if one would be looking at creating a mechanism that has got that seniority but also has the potential to provide guidance, especially on policy related matters, that’s where one would be looking at. But I don’t know what exists in other environments, so those are the things that we wish talk about. But what is important is the idea that at no stage must our negotiators find themselves stuck simply because ministers can’t meet and the difficulty (unintelligible) in the negotiations.

Question: (Brigitte Weidlich from AFP) I’ve got a question. The idea was to complete the talks by 2005. It almost appears from what you said Minister that the talks maybe got stuck. In light of the fact that ministers cannot always meet and this new mechanism is to be created, when do you envisage that these talks can be completed and secondly, I believe that labor was a tricky issue, can you perhaps say something about the topic of labor within the SACU-U.S. FTA framework. Thank you.

Minister Mpahlwa: A comprehensive free trade agreement will have many issues that are the subject of negotiation. At the beginning of the process we tried to create some base for us to go into the negotiations, establish some principles, objectives, and began to identify a list of things that we would negotiate around. So, labor would be one of those issues, and it is not even necessarily something that I would say I would want to highlight as having been the most difficult problem in the negotiations. There is a host of issues, and if you were to see that list it’s got about 11 or 13 issues.

So, the issue really is around the mechanism that we are proposing. Certainly, in that host of issues that you have as your list there will be difficulties. I mean, there is no need for us to hide the fact that there areas where it is not easy to find one another. Let’s maybe be practical about this. Take SACU. It’s a customs union, five different countries, we have no history of common policymaking because there was no basis for that. So, if you raise issues of competition, you’ll probably find us sitting in very different places. And here we are engaged in a negotiation.

So, that’s just itself is a very practical illustration of the sort of difficulties that you run into, not so much sometimes because you are in disagreement but simply because, as SACU for example, you’ve got very different dispensations. So, on labor you have different dispensations across the different countries. On intellectual property, you will have different capacities and different dispensations. So, certainly in the context of the negotiation with a single entity called the United States, which has a dispensation, whereas here you’ve probably five different dispensations (unintelligible). So, it’s not an easy process for us as a customs union but the commitment is there for us to continue this process. And, it is a process that is also helping us, as SACU, to better understand our own environment, but also to identify some of the things and the work that we still have to do. In some ways, it shows us that’s the distance we still have to travel to really be a customs union that is truly integrated. The timeline for the mechanism, there is urgency to this, so we are really looking at, when we do finally give shape and form to this, early in 2005, we can have at least a first major meeting of this grouping that will then, on the basis of the discussions that we had today, try and forge a framework for us to deal with a whole variety of issues that we talked about.

Zoellick: Could I add one thing? I think we all have a common sense that this is a very important effort to which we are committed. It’s more important that we do it right than we have an artificial deadline. And that, in particular, what we have suggested we seek as a goal is a comprehensive state-of-the-art free trade agreement. You’ll see the term free trade agreement used a lot around the world, and it often means very different things, as a recent World Bank report talked about. I think at least our suggestion, and the sense I have from our partners, is we want to have something that is very good quality and in the process help SACU with its own integration. So that means is the mechanism that the minister was discussing, that on some of these issues we are going to have to do some more homework. We are going to have to do some trade capacity building. We are going to have to strengthen the capabilities to see what these issues are about. But I think we have a stronger sense of the goals, and as the process the minister describes goes forward, we hope to have a renewed sense of schedule, and perhaps we’ll start with some pieces that we can move forward on. In the meantime, and I think this is an important emphasis, is that speaking for the United States, we want to maintain and even look for ways to enhance some of the special trade preferences that we have offered the SACU countries, and others, through the AGOA process. So, in a way, this deeper dialogue we have helps us identify issues, like the one of the third party fabric issue that has been very important in the region, which we then acted on even as the negotiations go forth. So there is no reason we can’t reap some benefits along the way as we are moving towards what we see as a goal that has a higher purpose.

Assistant USTR for Intergovernmental Affairs and Public Liaison Chris Padilla: Thank you very much.

Question: (one-on-one pull aside with Max Hamata from AP and Southern Times): The Namibian delegation is of the opinion that the U.S. is meddling the issues of trade with labor. They want to discuss trade on its own dimension and not mix the two.

Zoellick: Well, you heard the South African minister speak about this and so I think it is best that I let him speak as chair for SACU. For the United States what I will say is that our Congress urges us to include in our free trade agreements provisions that have countries simply enforce their own labor and environmental laws. So, our position is not to set standards or negotiate standards for other countries but to have them simply enforce their own laws. But as part of that we also have cooperative efforts so that our point is that trade we want to help benefit development, but we also want it to benefit the workforce, labor and environment in countries. And knowing the strong labor background of many of the governments in the region we hope that’s a point that we can work on together but I should let them speak for themselves.

Question: (Max Hamata from AP and "Southern Times") So are you leaving the technical team to negotiate?

Zoellick: No, as the minister, the chair said, what is going to happen is, this gave us a good chance at the ministerial level to sort of say, ok, we sort of slowed the process or stalled, so let’s pull back, see if we have a sense of the same common goals and how we might get it back on track. And I think the exchange here allowed us to identify some of the commonalities, identify some of the sensitivities that people have, and we made some suggestions about process to move forward. But to be fair to the SACU countries they need to have some time to think as a group because this is a lot to digest in a discussion. They’ll need a chance to think about it. I’m sure they’ll get back to us. But I think it makes sense that early in the year we hope to have this process help review some of these issues and then get the negotiations refocused.

Question: (Max Hamata from AP and "Southern Times"): What are you going to do today?

Zoellick: Well, at dinner I think we will refine this process and talk about the Doha negotiations, the WTO. Then, tomorrow I go to Lesotho and Lesotho is a country that we worked with on the Millennium Challenge Account as well as AGOA and they have almost 400 million dollars of exports under AGOA. So the minister is going to take me out to see some of the dam projects they have to develop energy and water resource management in Lesotho. And then from Lesotho I fly on to Egypt. And I have been in Mali, Senegal, and Benin. Thank you.


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