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Cablegate: Strategy On the Way Forward for the Fta

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 PRETORIA 004042

SIPDIS

SENSITIVE BUT UNCLASSIFIED

DEPT PASS USTR FOR DUSTR SHINER AND AUSTR LISER FROM AMB
FRAZER

E.O. 12958: N/A
TAGS: ETRD ECON SF
SUBJECT: STRATEGY ON THE WAY FORWARD FOR THE FTA


1. (SBU) Summary. In order to reinvigorate the Free Trade
Agreement talks between the United States and the Southern
African Customs Union (SACU), post proposes the following way
forward: (A) clarifying senior political buy-in, including
possibly raising the level of the negotiators; (B) changing
the negotiating environment to gain greater leverage; and (C)
reinforcing the need for a definite deadline to energize and
push the talks to conclusion. End summary.

2. (SBU) What can the United States do to make progress on
the Free Trade Agreement negotiations with the Southern
African Customs Union? So far, there has been little
movement. The media reported recently that as a result of
the Paris talks in July between senior U.S. and SACU
officials both sides "had agreed to focus on a number of
issues that could be dealt with quickly -- market access,
industrial tariffs, agriculture and services." There needs
to be more than "focus." We have focused on these issues for
over a year. We need to negotiate based on clear guidance
from senior leadership that SACU wants an FTA with the United
States. With a renewed SACU political commitment, we think
both sides can negotiate a clear win-win agreement. In order
to get there, the United States will have to push by:

-- Clarifying senior political buy-in, including possibly
raising the level of the negotiators;

-- Changing the negotiating environment to gain greater
leverage; and

-- Reinforcing the need for a definite deadline to energize
and push the talks to conclusion.

In this cable, post presents (a) the problems/obstacles to
the negotiations, (b) an approach to gain leverage, and (c)
suggested next steps.

Problems/obstacles
-----------------------

3. (SBU) There are many reasons for lack of progress on the
FTA talks. SACU has less expertise and experience in
negotiating. There are capacity and logistical constraints.
SACU is also negotiating as SACU for the first time. In
spite of these limitations, most of the working groups have
managed to examine in detail the issues that need to be
negotiated. After six rounds of negotiations it is not a
question of understanding the issues. After the last round
in June, SACU negotiators asserted they had gone as far as
their negotiating mandate allows. To get over this obstacle,
we need to take the negotiations to a higher level. SACU
leaders need to recommit to the FTA and to direct their
negotiators accordingly, or to negotiate at a higher level.

Key analytical assumptions
---------------------------------

4. (SBU) Differences in the respective goals and posture by
the United States and SACU have to be considered in
determining the way forward. The main issue blocking
progress is a fundamentally different point of view about the
goals of the FTA. The United States is ambitious and wants
total liberalization in as many sectors as possible. SACU,
on the other hand, is very much lacking in ambition. It
wants to give as little as possible and protect as many
sectors and products as it can. As a result, the U.S.
posture is offensive and the SACU posture is defensive.

5. (SBU) SACU's defensiveness comes through on virtually
every single issue. While the United States is trying to
find a way forward, SACU is continually telling us why it
cannot do certain things. The SACU refrain is asymmetry,
special and differential treatment, partial liberalization,
exclusions, and balance. The major area where SACU has been
offensive is in making the unrealistic demand that the United
States amend its trade remedy laws on dumping and
countervailing duties.

Stick to goals
--------------

6. (SBU) The United States should stick to all of its
original goals as announced at the outset of the
negotiations. An FTA with SACU should meet the same
standards as the FTAs that we have negotiated with other
developed countries. There is no compelling reason why the
first comprehensive U.S. FTA in sub-Saharan Africa should
come with an asterisk (*FTA-lite). This could set a bad
precedent for other FTA negotiations.

Reinforce a deadline
--------------------

7. (SBU) It is vital that the United States maintain and
reinforce the tool of the deadline. If the U.S. team opts to
play defense against a SACU team that is also playing
defense, we are never going to move the ball forward.
Moreover, without a clock ticking, there is no incentive to
end the game. The agreed upon December 2004 deadline for the
negotiations has been a key factor driving the talks. The
deadline underscores the need to conclude the talks. If at
the eleventh hour we are convinced there is a way to get an
acceptable agreement and the only obstacle is time, then we
can agree to an extension of the deadline. Alternatively, at
that time we could assess that we tried our best but simply
were not able to conclude a decent agreement; we terminate
the negotiations and move on.

8. (SBU) What has happened to relax the pressure on SACU?
The passage of AGOA III extending AGOA benefits to 2015 has
given SACU a longer comfort period for preferential access to
the U.S. market. As a result, SACU feels it can afford to
allow the FTA talks to meander along indefinitely. The
record of the missed deadlines of the Doha Development Agenda
(notwithstanding the progress in Geneva) has also created
complacency about deadlines: If the WTO can miss deadlines,
so can SACU. Lastly, both U.S. and SACU negotiators have
been suggesting publicly that the December 2004 deadline will
not be met.

Play offense
------------

9. (SBU) Unless Washington is prepared for endless rounds of
FTA talks, we think the United States has to go on the
offensive. SACU will not give us anything unless they have
to. If we cannot get what we want, then we should divert our
resources to do FTAs with countries that truly are
"like-minded" trading partners. Others in sub-Saharan Africa
would welcome the opportunity to negotiate a gold standard
FTA with the United States. Other developing countries have
managed to negotiate an FTA in less than a year. The simple
reason is they wanted it. SACU's tactics raise doubts about
whether SACU will agree to the FTA we envision, unless there
is senior SACU political direction to do so. Remarks by
various SACU negotiators suggest they think the United States
wants and needs this more than SACU does. We need to
disabuse everybody of this attitude. We need to be prepared
to walk away from these negotiations.

Meet longer, if necessary
-------------------------

10. (SBU) We have worked to accommodate SACU, but there
should be limits to our flexibility. If SACU cannot
negotiate with us because of other commitments, then the FTA
is not a SACU priority. Ministers need to redirect their
negotiators on the end goal. If there is to be a Round 7, it
has to be more than a rehash of the exchange of views as in
the previous six rounds. There should be an agreement
beforehand on the modalities for the negotiations in market
access in goods, non-agricultural goods, textiles and
apparel, and services. The negotiators should also move
forward on negotiating the Phase 2 issues (labor,
environment, e-commerce, financial services, intellectual
property rights, government procurement, legal framework); to
do otherwise suggests these issues are less important to the
United States. If we need to meet longer than previous
rounds, let us do so.

Political level exchanges
-------------------------

11. (SBU) There has to be a frank exchange at the political
level on the need to negotiate and to conclude by a deadline.
We would propose that Deputy U.S. Trade Representative
Josette Shiner visit southern Africa soon to meet with SACU
trade ministers to discuss the way forward. We would also
recommend that senior U.S. officials raise the FTA in their
bilateral meetings with their SACU counterparts from now
until December. The upcoming UNGA meetings in New York
provide opportunities for Secretary Powell to push the FTA
with the SACU heads of state and foreign ministers.

12. (SBU) In the AGOA Acceleration Act signed by President
Bush in July, Section 3 (9) on the Statement of Policy states
that Congress supports "a comprehensive and ambitious trade
agreement with the Southern African Customs Union, covering
all products and sectors, in order to mature the economic
relationship between sub-Saharan Africa and the United
States." Our suggested approach aims for a successful
agreement that will carry out the full ambition of AGOA.
FRAZER

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