[Ip-health] Inside US Trade: US Drops FTA with SACU

[Mike Palmedo]

U.S. DROPS FTA WITH SACU, STARTS TRADE AND INVESTMENT WORK PROGRAM

Inside U.S. Trade
April 21, 2006

After almost three years of lagging efforts, the Bush Administration
this week suspended negotiations for a free trade agreement with the
Southern African Customs Union (SACU) and instead launched a new work
program on trade and investment issues.

The joint work program will be developed after further consultations
between the private sector and the U.S. government, according to an
April 18 statement by Deputy U.S. Trade Representative Karan Bhatia. One
U.S. private-sector source said U.S. companies expect to work closely
with the administration on the details of the work program and want to
participate in the new dialogue.

In addition, Bhatia announced that the two sides ?may potentially? seek
to conclude trade- and investment-enhancing agreements. This is an
apparent reference to negotiating bilateral investment treaties (BITs)
and trade and investment framework agreements (TIFAs) with new partners.

But private-sector sources expressed doubts that the SACU countries of
South Africa, Botswana, Lesotho, Namibia and Swaziland will negotiate a
BIT since they had objected strongly to investment rules in the FTA
negotiations (Inside U.S. Trade, May 7, 2004, p. 13). South Africa has a
TIFA with the U.S., but the other four SACU countries do not.

At the African Union Trade Ministerial, Bhatia said the U.S. would be
exploring ways to expand and intensify the trade and investment
relationship with other African countries, including through BITs and
TIFAs. One private-sector source speculated this could include Kenya,
Mauritius and Ghana, which have been mentioned in the past as potential
FTA partners. Bhatia made the point that no African countries at this
point appear to be able to take on the kind of commitments the United
States demands in FTAs.

U.S. private-sector sources said the announcement of the new work
program with SACU means the U.S. government has given up on an FTA with
these countries. However, Bhatia insisted that an FTA with SACU remains
a long-term goal for the United States and that both sides remain
committed to an eventual FTA.

He said the joint work program would address some of the issues that had
been under negotiation in the FTA and could form the building blocks to
such a deal in the future.

Bhatia met with South African Deputy Trade Minister Rob Davies to
formally announce the new trade and investment mechanism, which informed
sources said would be similar to the Swiss-U.S. Trade and Investment
Cooperation Forum announced in January.

U.S. Trade Representative Rob Portman had hinted last month that the
U.S. was ready to end the FTA negotiations in the short-term in a letter
to members of Congress and instead seek an alternative approach (Inside
U.S. Trade, March 31, p. 10).

The FTA talks between the U.S. and SACU were launched in November 2002,
but the two sides were never able to overcome their different demands on
what the scope of the agreement should be, even with the involvement of
senior officials. The sixth and last round of formal negotiations was
held in Atlanta in June 2004, and since then deputies from both sides
repeatedly tried to restart the negotiations without success.