BRICS Agreement, Forum for China-Africa Cooperation (FOCAC), AGOA and SA-US Trade Relations & South Africa Indian Ocean Rim Association: Department briefing

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International Relations

24 February 2016
Chairperson: Mr M Masango (ANC)
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Meeting Summary

The Committee was given insight into the rationale behind the BRICS Agreement. From a regional perspective the BRICS Agreement served as a catalyst to promote the African Union’s regional integration programme as well as related continental infrastructure programmes. From a domestic dimension SA and its BRICS partners faced similar developmental challenges which provided opportunities for sharing policy advice and exchanges of best practices. BRICS partners now constitute the key trading partners for SA as well as important new investors on issues such as beneficiation and infrastructure development etc. SA’s engagement with BRICS was informed by three strategies ie SA’s National BRICS Strategy, Strategy for BRICS Economic Partnership and a Long Term Strategy for BRICS. Members were provided with detail on each of these Strategies. BRICS leaders also directed that the NDB African Regional Centre (ARC) had to be concurrently established with the NDB Headquarters in Shanghai. SA would primarily engage the NDB as an equal shareholder as well as a borrower. On the NDB addressing domestic challenges, whilst BRICS countries were experiencing lower growth dynamism the original long term projections by Goldman Sachs for economic ascendancy were still intact, namely that “barring disastrous shock affecting all, particularly China, BRICS combined Gross Domestic Product (GDP) 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. The Host Country Agreement between SA and the NDB would be finalised soon. The presentation also contained specific oversight questions with answers provided by the DIRCO.

The Department explained that the Johannesburg Summit of FOCAC was held on the 4 and 5 December 2015. The Summit was attended by 48 Heads Of State and Government. The two main outcomes of the Summit that was adopted were the Johannesburg Declaration and the Johannesburg Implementation Plan (2016-18). The FOCAC partnership had been upgraded to a new strategic level. A total of $60bn had been set aside for funding support. The FOCAC Summit was regarded as a success by both visiting African delegations and the Chinese side. It was the first time that a summit was based on real partnership. The Summit showcased SA’s ability to host events of this nature and that these events conclude in inclusive results for the continent. It was also the first FOCAC Ministerial or Summit where the zero draft outcome documents were not provided by China but was done by SA. The FOCAC definitely had the potential to support SA’s socio economic development needs.

Members asked whether SA fully knew why it was part of the BRICS Agreement. What was the benefit to SA? It even seemed as if SA was one step behind its BRICS partners. The majority of the Committee nevertheless felt that government and the DIRCO should be congratulated on the excellent work that it did on BRICS. The DIRCO was asked what national interest the South African National BRICS Strategy was going to ensure. Members asked how the National Development Bank of BRICS compared to the Asian Infrastructure Investment Bank. The AIIB seemed to be open to all whereas the NDB looked as if it was a closed shop. Given the energy issues that Africa faced concern was raised that the Grand Inga Hydroelectric Project had been placed on the back burner even under the FOCAC. The Project had been dragging on for over 100 years. The DIRCO was asked what the interest rate was that the NDB intended to charge. Members also asked who sat on the Board of the NDB and whether there was equity. What were the conditions attached to the NDB providing financing? The DIRCO was asked whether South Africans would be deployed to the NDB and whether people were being trained in the languages of SA’s BRICS partners. Members asked what the specific projects were that the funds of the FOCAC were going to be used for. Members pointed out that perceptions out there were that China and India were looking towards expanding to Africa because they could not cope with their huge population numbers. The Chairperson stressed that questions on what China, India and the US wanted in Africa needed to be asked. Africa needed to be cautious. Countries always had their own self interest at heart.

The Department explained that bilateral trade between SA and the US increased from R56.1bn in 2001 to R141bn in 2014. SA’s exports to the US amounted to R70.3bn in 2014 and US exports to SA amounted to R71.4bn which meant that SA had a trade deficit of R1.1bn in 2014. For the period January to November 2015, SA enjoyed a trade surplus of R2.3bn. In 2014 major AGOA/Generalised Scheme of Preferences (GSP) beneficiary sectors were vehicles, mineral and metals , chemicals and agricultural products. The AGOA was an act of the US Congress and was a unilateral trade arrangement signed into law in 2000. The AGOA was renewed in June 2015 by ten years with special provision targeting SA (out of cycle review). Following a public hearing held in the US Senate. Following protracted negotiations, South African veterinary experts and their US counterparts successfully resolved the long outstanding SPS issues that threatened continued market access for South African agricultural products into the US market. An Agreement was signed on the 7 January 2016 to admit the three US meats (poultry, pork and beef) into SA by 15 March 2016. The AGOA’s eligibility criteria was set out in legislation and it may mean future suspension or review for SA given US policy concerns about South African policy positions. The Committee was given insight into the impact of the AGOA on the South African economy. SA had to date been the AGOA’s largest and most diversified non-oil exporter utilising the AGOA preferences. 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 GSP. In 2014, major AGOA/GSP beneficiary sectors were vehicles (75%), minerals and metals (12%), chemicals (2.7%) and agricultural products (11%). SA’s exports classified as purely under the AGOA amounted to $1.75bn. SA exported over R23bn worth of vehicles to the US in 2014, supporting 30 000 jobs in Port Elizabeth and the Gauteng Province. SA exported agricultural products worth $175m which represented 57% of agricultural exports to the US. It was 2.1% of SA’s total exports to the US. Implications for SA were elaborated upon.

The Committee was provided with background on the Indian Ocean Rim Association (IORA). There was burgeoning strategic interest in the Indian Ocean Rim and the Blue Economy. The IORA had re-focussed its activities in support of the Oceans and Blue Economy in key sectors ie fisheries and aquaculture, renewable ocean energy, seaports and shipping, seabed exploration and minerals, marine biotechnology, research and development and also in tourism. Leadership of IORA was driven by India, Australia, SA and Indonesia. The United Arab Emirates was the chairperson after SA. SA‘s leadership role was growing. It was Vice Chair (2015-2017) and would be Chairperson (2017-2019).SA was the fourth G20 member state to lead IORA. Benefits totalling $120 000 had been allocated to two special fund projects. Strategic objectives by SA like oceans (blue) economy and sustainable development (alignment with sustainable development goals and Operation Phakisa) as well as maritime peace and security in Rim, especially Africa would be taken by the DIRCO to cabinet for approval.

On the AGOA members felt that SA was being subjected to some level of bullying by the US. Small countries like SA had to protect itself by way of multilaterals. Members were concerned that if poultry was to be imported from the US it would wipe out the local poultry market in SA. Government and the DIRCO should be alert and beware of being bullied into something that was not beneficial to SA. The AGOA issue was considered to be just the tip of the iceberg compared to issues that would come up in the future. SA needed to prepare itself. Members did not appreciate the arrogance of the US in considering the AGOA to be a gift to Africa. Members conceded that there were both good and bad things which flowed from the AGOA. The problem was when the bad exceeded the good. Some members questioned what SA’s real issue with the AGOA was. From the briefing it would seem as if the US had problems with some of SA’s policies. What policies did the US have a problem with? The DIRCO was asked to provide members with specifics on what the US’s requirements were that SA was not meeting. The Chairperson stated that on SA-US trade relations the South African government would consult with trade and labour before taking a position on the AGOA. Members did understand the implications of the AGOA lapsing in that SA would suffer losses but this made it ever more so important for SA to seek out opportunities from elsewhere. On the IORA the DIRCO was asked what the benefit in having dialogue partners were. What did dialogue partners gain from being part of the IORA. The Chairperson on the IORA emphasised the importance of having historically disadvantaged persons trained on shipbuilding etc. 

Meeting report

Opening Remarks

The Chairperson welcomed Deputy Minister, Ms Noamindia Mefeketu, and the Department of International Relations and Cooperation (DIRCO) delegation comprising of Mr Dave Malcomson, Chief Director: Regional Organisations, Ms Yoliswa Maya, Deputy Director General: Americas, Europe and the Caribbean and Mr A Lyle, Deputy Director: USA.

The Chairperson stated that the Committee had taken a decision that there were a number of developments internationally taking place. The world was ever-changing in the continent of Africa, Asia, Europe and the Americas due to various variables ie civil wars, rise of religious fundamentalism, rise of insurgency and rise in terrorism depending on where you stood. There could also be changes in leadership in countries which could affect the body politic of countries. The Committee thus needed to be kept up to date of happenings with regular briefings by DIRCO. This would better capacitate members and enhance the quality of the Committee’s debate.

The Committee had agreed that the briefings on the Brazil, Russia, India, China and SA (BRICS) Agreement and on the Forum for China-Africa Cooperation (FOCAC) would be done back to back and thereafter Members would engage in discussion on both. The same process would be followed with the briefings on the African Growth and Opportunity Act (AGOA) and the Indian Ocean Rim Association (IORA) which was to follow thereafter.

Deputy Minister Mfeketu thanked the Committee for inviting the DIRCO to brief it. There was much happening in the space of international relations and within the DIRCO itself. It was at times difficult to attend meetings as much work had to be done abroad. The senior DIRCO officials present would conduct the briefings and she would deal with politically related questions of Members.

Briefing by the Department of International Relations and Cooperation on the BRICS Agreement

Mr Malcomson gave insight into the rationale behind the BRICS Agreement. From a regional perspective the BRICS Agreement served as a catalyst to promote the African Union’s regional integration programme as well as related continental infrastructure programmes. From a domestic dimension, SA and its BRICS partners faced similar developmental challenges which provided opportunities for sharing policy advice and exchanges of best practices. BRICS partners now constituted the key trading partners for SA as well as important new investors n areas such as beneficiation and infrastructure development etc. SA’s engagement with BRICS was informed by three strategies ie SA’s National BRICS Strategy, Strategy for BRICS Economic Partnership and a Long Term Strategy for BRICS. Members were provided with detail on each of these Strategies.

On BRICS’s evolving architecture, its institution building had formally resulted in BRICS launching its first financial institutions in 2014 ie New Development Bank (NDB) and its Contingent Reserve Arrangement (CRA). BRICS leaders also directed that the NDB African Regional Centre (ARC) had to be concurrently established with the NDB Headquarters in Shanghai. SA would primarily engage the NDB as an equal shareholder as well as a borrower. On the NDB addressing domestic challenges, whilst BRICS countries were experiencing lower growth dynamism the original long term projections by Goldman Sachs for economic ascendancy were still intact, namely that “barring disastrous shock affecting all, particularly China, BRICS combined Gross Domestic Product (GDP) 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. The Host Country Agreement between SA and the NDB would be finalised soon. The presentation also contained specific oversight questions with answers provided by the DIRCO.

Briefing by the Department of International Relations and Cooperation on the Forum for China-Africa Cooperation (FOCAC)

Mr Malcomson explained that the Johannesburg Summit of FOCAC was held on the 4 and 5 December 2015. The Summit was attended by 48 Heads Of State and Government. The two main outcomes of the Summit that were adopted were the Johannesburg Declaration and the Johannesburg Implementation Plan (2016-18). The FOCAC partnership had been upgraded to a new strategic level. A total of $60bn had been set aside for funding support. On strategic focus, the National Development Plan (NDP) identified nine primary challenges. The implementation of the FOCAC was based on four principles and six areas of focus. The FOCAC had a hybrid nature consisting of both bilateral and multilateral elements. On the way forward, engagement had to take place with the Chinese to contextualise implementation of ten new measures. It had to be ensured that maximum benefits were derived for the NDP, the 9 Point Plan, Operation Phakisa and the region through inter-departmental processes culminating in recommendations to cabinet.

The FOCAC Summit was regarded as a success by both visiting African delegations and the Chinese side. It was the first time that a summit was based on real partnership. The Summit showcased SA’s ability to host events of this nature and that these events conclude in inclusive results for the continent. It was also the first FOCAC Ministerial or Summit where the zero draft outcome documents were not provided by China but was done by SA. The FOCAC definitely had the potential to support SA’s socio economic development needs.

Discussion

Deputy Minister Mfeketu said that Mr Malcomson would deal with the technical questions and she would try to deal with the rest.

Mr S Mokgalapa (DA) referred to BRICS and said that there was a notion that SA did not know why it was part of the Agreement whereas the rest of the countries knew exactly why they were part of the Agreement. He referred to page 7 of the presentation on the BRICS and spoke to the South African National BRICS Strategy. He asked what the Strategy was all about. Was it of national interest to SA? He asked why it was regarded as top secret. The Strategy was apparently to address poverty and inequality. Why did SA then have the BRICS Agreement? What was the national interest that the Strategy was going to ensure? He asked what the difference between the BRICS and the FOCAC was. He noted that the FOCAC made mention of the National Development Plan whereas the BRICS did not.

Deputy Minister Mfeketu replied that the NDP and other programmes were prioritised in SA. The $10bn that had been received from China required SA to have concrete programmes to be funded. The same principle applied to the BRICS Agreement. Discussions with the Department of Trade and Industry needed to take place to identify other projects beside infrastructure that could be funded. FOCAC covered the entire African continent whereas under the BRICS Agreement SA would represent the continent.

Mr B Radebe (ANC) asked how the NDB compared to the Asian Infrastructure Investment Bank (AIIB). He pointed out that the AIIB looked like it was open to all, the NDB however looked like a closed shop. It looked as if the NDB would depend on services of China. He noted that the reserves of China would be going down due to the NDB opening. He asked why the NDB was not an open shop. On FOCAC, he said that SA got the entire African Union involved. There was a north to south migration. He was concerned that the Grand Inga Hydroelectric Project had been going on for over 100 years. Even under the FOCAC it was being put on the back burner. The Grand Inga Hydroelectric Project would be good for Africa and SA. He felt that the Project should be a priority.

Deputy Minister Mfeketu replied that perhaps the Grand Inga Hydroelectric Project should be a priority of the NDB. There should perhaps be a project that was at the behest of SA funded by the NDB that could benefit the entire African continent.

Mr Malcomson explained that the NDB was not a closed shop. It would be concretised by its first five BRICS members. There would be a down streaming to interested countries and in the end have shareholders. The BRICS countries would however never have less than 50% ownership of the NDB. The Grand Inga Hydroelectric Project’s timing was out. The New Partnership for Africa’s Development (NEPAD) had pushed the Grand Inga Hydroelectric Project to the forefront. SA had signed a MOU with the Democratic Republic of Congo in which it had guaranteed the off-take of the project. The NDB’s assessment of four projects resulted in the realisation that the Grand Inga Hydroelectric Project was a major project. There was a great deal of work that needed to be done. The cost of the Grand Inga Hydroelectric Project could be around $2.6bn. Groundwork needed to be done first. By April 2016 announcement had to be made of projects to be funded and it was unlikely that the Grand Inga Hydroelectric Project would be one of them.

Mr L Mpumlwana (ANC) asked for greater detail on the North-South Corridor. He also asked what interest rate would be charged by the NDB.

Mr Malcomson, on the North-South Corridor, said that Minister in the Presidency, Mr Jeff Radebe, was leading the process. President Jacob Zuma was chairing it. There was also a Director General’s Steering Committee. The intention was to identify strategic choke points on where blockages were. There was hard and soft infrastructure involved. Work was done to resolve problems at Beitbridge Border Post. Further work was being done in Kenya and Tanzania.

Ms S Kalyan (DA) noted that she needed to do a BRICS 101 course to understand it fully. She asked who sat on the Board of the NDB. Was there equity? She also asked whether the 100 positions that had been advertised were for the running of the NDB or for running projects. She asked whether the R96bn that had been pledged under the FOCAC was the $60bn everyone was aware of. Was the funds allocated to specific use or were they available for use? She noted that SA on BRICS seemed to be a step behind the rest of its partners.

Mr Malcomson said that there was equal shareholding of the five members with regards to the NDB. There would be a Board of Governors that would deal with policy issues and there would be a Board of Directors that would deal with governance issues. The 100 positions were to start the NDB. Some of the positions in the NDB were the President (INDIA), Chief Operations Officer (China), Chief Financial Officer (SA), Chief Risk Officer (Brazil) and Chief Administration Officer (Russia). R96bn was an amount that had been signed bilaterally during a state visit. It was different to the $60bn for the FOCAC projects. Deploying people on the FOCAC was an issue but it was being addressed. SA was the Chairperson of the African Union. People were also deployed to the Southern African Development Community (SADC). Two South Africans were deployed to the NDB.

The Chairperson said that government and the DIRCO should be congratulated for making BRICS a reality given that the International Monetary Fund and the World Bank mainly funded infrastructure projects that kept colonialism alive in Africa. He asked what the NDB was going to fund and what were its conditions. It was common place in Africa and in SA that conditional funds were used elsewhere other than their intended purpose. Many municipalities had done this. If SA not only deployed people but also participated in international forums, did it trainpeople who could speak the languages of its BRICS partners. Were South Africans being deployed at management, leadership and at administrative level? If BRICS was for infrastructure development and industrialisation this should be its main mandate. He noted that both the Programme for Infrastructure Development (PIDA) and the Presidential Infrastructure Champion Initiative (PICI) focused on infrastructure development. Were the two Programmes overlapping? He asked who BRICS was going to prefer to fund. He noted that he shared the same view as Minister Nkoana-Matshabane as was expressed on page three of the BRICS presentation. He noted that each country had to situate itself somewhere. He asked who came up with the name FOCAC and why was China mentioned first. The same applied to the agreement with India, India was mentioned first. He commented that media reports had said that there was a subtle dominance between India and China in Africa. He asked the DIRCO what were the specific projects that the funds of the FOCAC was to be used for. Cabinet should have informed the Committee what the funds were to be used for.

Deputy Minister Mfeketu noted that what Minister Nkoana-Matshabane had said in the presentation answered Mr Mokgalapa's question on national interest. In partnerships different countries looked at different things. Past relationships and multilateral forums also played a role. It also depended on whether countries shared interests and had a history of policy agreements. These were things that came out of emerging economies and hence the need for alternatives to the IMF and the World Bank. The whole developing world had been borrowers from institutions like the IMF and the World Bank with such stringent conditions attached to loans. The situation was such that these countries would pay the loans in perpetuity and never be able to develop. SA was a shareholder and a borrower in the NDB. The conditions of the NDB had to be progressive in order to make countries prosper. SA’s interest was definitely first. SA was part of a progressive movement that held benefits for the country. The FOCAC and BRICS were a work in progress in the Department of Trade and Industry (DTI) and other departments.

Mr Malcomson stated that 52 projects had flowed from the PIDA. Heads of states had become frustrated with the pace of projects and so under PICI heads of state championed projects. He added the PICI projects came out of the PIDA.

The Chairperson asked whether projects dealt with country specific infrastructure.

Mr Malcomson replied that the PICI sought to unpack broader project proposals. For example which parts of roads need to be rehabilitated or what linked the interior with coastal ports. On the North-South Corridor, he noted that President Zuma had presented 19 projects to NEPAD. There had been an increase in priority projects. Initially the Corridor was from Cape Town to Dar-es-Salaam but President Zuma said it was from Cape Town to Cairo. On the matter of the names chosen in the African Union context Africa always came first. The FOCAC was conceptualised in the year 2000. Ever since 2000 SA placed its name first.

Mr Mokgalapa asked what the four projects for BRICS were.

Mr Malcomson explained that the four projects were on electricity, a Limpopo Province water project, the supply of additional water to Gauteng Province and lastly the Grand Inga Hydroelectricity Project.

Ms Kalyan referred to the last page of the FOCAC presentation and asked what the ten new measures were that needed to be contextualised.

Mr Malcomson agreed to provide the Committee with a full list of the measures.

Mr Mokgalapa asked DIRCO to provide the Committee with the four and six principles referred to in the presentation.

Mr Mpumlwana re-asked what the interest rates of the NDB were. He said that perceptions were out there that China and India were looking towards expanding to Africa because they could not cope with their huge populations. Would projects be dealing with such issues?

Deputy Minister Mfeketu thought that what Members were trying to ask was whether China and India was trying to colonise SA.

Mr Mpumlwana said that overpopulation in China and India was a reality. The problem would be solved if they came to Africa. Were there ways to address issues? Xenophobia was already taking place in SA.

The Chairperson said that he had looked at the evolution of human history. What did the Roman and the British Empire hope to achieve? For that matter what was the so called American Empire hoping to achieve. Without politically taking countries over they tend to do it economically. They champion national self interest by way of economics. Questions of what China, India and the US wanted in Africa had to be asked. Why had the US concluded the AGOA? Africa needed to be cautious. Caution was founded. Africans needed to learn languages like Mandarin.

Mr M Lekota (COPE) pointed out that since the emergence of capitalism nations were in constant competition. Countries were competing for space and for business for their own benefit. SA had to ensure that it was benefitting without undermining others. If SA saw that cooperation with India was bringing about more benefits than with the old western countries then SA should go with India.

Deputy Minister Mfeketu said that constructive competition was good. Africa was untapped and everyone wished to get into Africa. Just as countries looked at their own benefit SA needed to look at its own benefit as well. South Africans speaking the languages of the major powers like Russia and China would be a definite benefit.

Briefing by the Department of International Relations and Cooperation on the African Growth and Opportunity Act (AGOA) and SA-US trade relations

Ms Maya undertook the briefing. The briefing provided a snapshot of SA-US trade relations. Bilateral trade between SA and the US increased from R56.1bn in 2001 to R141bn in 2014. SA’s exports to the US amounted to R70.3bn in 2014 and US exports to SA amounted to R71.4bn which meant that SA had a trade deficit of R1.1bn in 2014. For the period January to November 2015, SA enjoyed a trade surplus of R2.3bn. In 2014 major AGOA/Generalised Scheme of Preferences (GSP) beneficiary sectors were vehicles, mineral and metals , chemicals and agricultural products.

AGOA was an act of the US Congress and was a unilateral trade arrangement signed into law in 2000. The AGOA was renewed in June 2015 by ten years with special provision targeting SA (out of cycle review) following a public hearing held in the US Senate. Following protracted negotiations, South African veterinary experts and their US counterparts successfully resolved the long outstanding SPS issues that threatened continued market access for South African agricultural products into the US market. An Agreement was signed on the 7 January 2016 to admit the three US meats (poultry, pork and beef) into SA by 15 March 2016. AGOA’s eligibility criteria was set out in legislation and it may mean future suspension or review for SA given US policy concerns about South African policy positions. The Committee was given insight into the impact of the AGOA on the South African economy. SA had to date been the AGOA’s largest and most diversified non-oil exporter utilising the AGOA preferences. 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 GSP. In 2014, major AGOA/GSP beneficiary sectors were vehicles (75%), minerals and metals (12%), chemicals (2.7%) and agricultural products (11%). SA’s exports classified as purely under the AGOA amounted to $1.75bn. SA exported over R23bn worth of vehicles to the US in 2014, supporting 30 000 jobs in Port Elizabeth and the Gauteng Province. SA exported agricultural products worth $175m which represented 57% of agricultural exports to the US. It was 2.1% of SA’s total exports to the US. Implications for SA were elaborated upon. President Barack Obama issued a notice of suspension on the 11 January 2016. Meeting the 15 March 2016 deadline for imports of US poultry would ensure continued duty free SA agricultural exports to the US and the maintenance of current jobs created by the AGOA in the sector. Failure to meet the 15 March deadline would result in the suspension of duty free access for South African agricultural products. On the future of SA-US trade and investment relations the US was increasingly advocating for a post-AGOA trade relationship with Africa on Free Trade Agreements (FTA). US trade representatives were to submit a report to the US Congress by June 2016 regarding future trade relationships between Africa and the US. The SA government would consult with business and labour before formulating SA’s position on a future trade dispensation with the US. Members were informed that the presentation contained figures on the benefits of the AGOA to South African exporters.

Briefing by the Department of International Relations and Cooperation on SA in the Indian Ocean Rim Association (IORA)

Mr Malcomson undertook the briefing. The Committee was provided with background on the IORA. There was burgeoning strategic interest in the Indian Ocean Rim and the Blue Economy. The IORA had re-focused its activities in support of the Oceans and Blue Economy in key sectors ie fisheries and aquaculture, renewable ocean energy, seaports and shipping, seabed exploration and minerals, marine biotechnology, research and development and also in tourism. Leadership of IORA was driven by India, Australia, SA and Indonesia. The United Arab Emirates was the chairperson after SA. SA‘s leadership role was growing. It was Vice Chair (2015-2017) and would be Chairperson (2017-2019).SA was the fourth G20 member state to lead IORA. Benefits totalling $120 000 had been allocated to two special fund projects. Strategic objectives by SA like oceans (blue) economy and sustainable development (alignment with sustainable development goals and Operation Phakisa ) as well as maritime peace and security in Rim, especially Africa would be taken by the DIRCO to cabinet for approval.

Discussion

Mr Radebe noted that it would seem from the presentations that government was on top of things on international relations. It was evident that like all countries SA was putting itself first. On AGOA , he stated that SA was a small country with a small economy and the only way in which it could protect itself was by way of multilaterals. SA was being subjected to some level of bullying on the AGOA. The Poultry Association of SA said that the US wished to dump 60m tons of poultry on SA which would wipe out the South African market. It was a dangerous situation for SA as it would eventually depend totally on imports. SA’s protection depended on whom it aligned themselves with in the world arena. The AGOA was an act of Congress from the US. Trade issues were discussed at the World Trade Organisation (WTO) and when agricultural development issues were brought up the US shot them down. There was a major impasse between the US and China outside the WTO. The government and the DIRCO should be on the alert and beware of being bullied into something that was not beneficial to SA. The US considered the AGOA to be a gift to Africa. SA did not consider it a gift. The AGOA issue was considered to be the size of a grain of sand in the broader view of things still to come. SA needed to be prepared. He felt that it was actually the US that was getting a gift through the AGOA. The AGOA created 100 000 jobs in the US whereas in SA only 62 000 jobs were created. The US was benefitting by 38 000 jobs.

Deputy Minister Mfeketu responded that President Barack Obama had stated that the AGOA was a gift to SA. The AGOA was a unilateral agreement at the behest of the US. It was one sided US policy that had not been debated. She noted that the FOCAC and the BRICS was different to the AGOA like chalk and cheese.

Mr Mpumlwana agreed that on the AGOA there was indirect benefit to the US but SA should not look a gift horse in the mouth. In SA, European car manufacturers were assembling their vehicles as they were in the US. In a sense SA was not benefitting much. On the chicken issue it was not really small producers that would be affected by the US imports but more so the big players like Rainbow Chickens. He asked if SA exported and imported oil. On AGOA, SA and the US benefitted from the non payment of duties. He felt that the AGOA should be given the green light. The DIRCO was asked on the IORA what the benefit was on having dialogue partners. He hoped that SA was filling strategic positions on the IORA. What was the position regarding quotas? Did quotas depend on the amount of sea area that a country had.

Deputy Minister Mfeketu said that the Indian Ocean was rich and for all intended purposes had mineral deposits. Dialogue partners could be admitted as members or could be given the opportunity to engage in dialogue. Some dialogue partners could have economic and security interests in the Indian Ocean Rim.

Mr Malcomson said that there were no quotas.

Mr M Maila (ANC), on the AGOA, felt that there were encouraging and discouraging aspects. Engagement had brought about a trade surplus. A good thing was that jobs were created in both SA and the US. If the US Congress had determined that SA was a developed country what tool had they used to come to that conclusion. The IORA showed that SA was hard at work and was an important player in the global arena. On the IORA he asked what made a country qualify as a dialogue partner. How did dialogue partners benefit? He asked what the status of less developed countries in IORA was. He noted that maritime peace and security was important especially since the Indian Ocean Rim used to be infested with pirates.

Mr Malcomson, on IORA, said that there was no formal criterion for dialogue partners. They only needed to contribute something.

Mr Mokgalapa asked what SA’s real issue with the AGOA was. He understood that the poultry issue was a sticky one but there had to be something else. How could an issue only with the third largest sector in the AGOA Agreement make the entire Agreement lapse? He also asked why SA had a jobs deficit in both the AGOA and the BRICS Agreements. What was the problem? Did SA not know how to package its benefits in these agreements? He was concerned about the inclusion of Somalia on the IORA. Somalia was renowned for piracy in the Indian Ocean Rim. Was Somalia’s inclusion not a threat to peace and security in the Rim?

Deputy Minister Mfeketu, on the issue of the poultry imports from the US, said that SA was not short of poultry. SA did not want poultry that would cause obesity as it did in the US. SA had not asked for poultry. The US unilaterally decided that if certain conditions were not complied with then the benefits would stop to flow.

Ms Kalyan said that on the AGOA Agreement it seemed as if the US was beating SA with a big stick. The presentation spoke about SA having signed an agreement to allow three meat products from the US to be imported to SA. She assumed that the Minister of Trade and Industry, Mr Rob Davies, had signed the agreement. SA therefore had entered into the agreement willingly. The US seemed to have a problem with SA’s policies. Did it have a problem with SA’s trade policies and international policies? What policies did the US have a problem with? She had heard on the radio earlier that morning that SA was in danger of not meeting the US’s deadline. What was the actual problem with the AGOA? Was the hang-up really about the chickens? Why could the 15 March 2016 deadline not be met? Reference in the presentation was made that 30 000 jobs were created by the motor industry in Gauteng Province and in Port Elizabeth. Did the 30 0000 fall within the 62 000 jobs that were created by the AGOA. On the IORA she asked whether SA had attended the climate change conference and if it had what was SA’s role in it.

Deputy Minister Mfeketu noted that the US wished to dump poultry on SA today; in the future it might be something else. The AGOA not only dealt with trade issues but wished to interfere in the policies of country as well. The US wished to interfere in SA’s Broad Based Black Economic Empowerment (BBBEE), SA’s intellectual property and affirmative action policies. The US wished to have a say in the formulation of SA’s policies. She noted that there were many untapped areas in different regions for SA to trade with.

Ms Maya said beside the problems with poultry having avian flu there were serious problems with US beef and pork. South African veterinarians had raised issues. The US wished to export the shoulder of pork which was riddled with disease and its beef had foot and mouth disease. The import of these meats could wipe out SA’s local meat markets which also meant job losses. The US was forcing its chicken on SA. The shipment of chicken had already left Atlanta and was on its way. The deadline for SA was 15 March 2016. Regarding the US’s interest in SA’s policies the US wished to know what SA‘s trade with Europe was. The US Trade Act of 174 and the AGOA were two pieces of US legislation that had been domesticated. The US was also fighting SA’s Private Security and Intellectual Property Bills. She reiterated the US problem with BBBEE.

Ms T Kenye (ANC) noted that President Obama stated that SA had not met the US’s requirements. What were the requirements? The AGOA was supposed to lapse in March 2016. She was concerned about job losses to be suffered in the agricultural sector.

The Chairperson, on SA-US trade relations, stated that the South African Government would consult with trade and labour before taking a position. The South African Government had to take leadership of labour and chambers of commerce in terms of threats emerging and opportunities elsewhere. Perhaps SA could let the AGOA lapse and seek better opportunities elsewhere. The problem with the AGOA was that it was unilateral and could be withdrawn. SA did have trade relations with the US before the AGOA. He asked that if SA continued to trade with the US and lost the duty free benefits what would be the most serious consequences. He noted the example of the survival spirit of the Afrikaner and Jewish people. The Afrikaners had survived under British colonialism. They had found a space to emerge and were now indigenous Africans. It was interesting how they persevered. The same could be said for the Jewish people.

Mr D Bergman (DA), on the AGOA, asked who needed who more. He noted that sometimes South Africans including himself could have a certain arrogance. The truth of the matter was that if SA lost the AGOA then SA would lose out.

Minister Mfeketu conceded that yes perhaps SA needed the trade with the US more than what they needed SA. The point was that SA needed to find alternatives. If the AGOA lapsed it might be terrible at first with the job losses and other losses but sometimes one just had to bear through the bad times to overcome them. SA needed to make itself the priority. SA had look for other opportunities.

The Chairperson on the IORA asked if SA was training people to be deployed. People needed to be trained in ship building etc. Historically excluded people should be taken on board. He would have liked to have seen figures on how the IORA contributed towards fishing, shipbuilding etc. Perhaps the matter should be seated with Operation Phakisa.

Mr Malcomson explained that SA did have an official at the IORA Secretariat until December 2018. SA had also put forward a candidate for the Secretary-General Position at the IORA. He was not aware of figures on training. There were youths that had been trained. The DIRCO only facilitated opportunities.

Minister Mfeketu said that skills development would be taking place. South Africans would be deployed in countries to gain skills on the ocean economy. South Africans could be trained as researchers etc.

The meeting was adjourned.

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