Foreign Affairs on South Africa–Sweden Bi-national Commission

26 September 2007

South Africa–Sweden Bi-national Commission (BNC)

Let me say something about the South Africa–Sweden Bi-national Commission, I
do not have to tell you that South Africa and Sweden have a very special
relationship. Our relations with Sweden are very strongly based on the support
and the solidarity shown by Sweden in the dark days of apartheid. As you are
aware, this support came also from the entire Nordic community. This has always
informed a very strong basis and foundation for our relations with Sweden.

A number of years ago the Heads of State of the two countries, as a result
of this very strong relationship and the solidarity that exists between South
Africa and Sweden, in 1999 decided that in order to give further substance to
relations between both countries, a Bi-national Commission would be created.
The first session took place in 2000 and since then four sessions have been
held. The one in Sweden next week will be the fifth session of the BNC.

Before I go into the BNC, I would like to say something about the relations
between our two countries as I have said these are excellent. We utilise the
BNC, to amongst others, have a very active and in depth political dialogue
between South Africa and Sweden on issues related to our bilateral relations,
regional and continental and global issues where we share many common
positions. The Deputy President will be hosted by the Deputy Prime Minister
while in Sweden for the BNC deliberations.

Sweden's foreign policy has not changed significantly under the new
government. The foreign policy of Sweden has always been based on respect for
human rights and international law and working very closely with the developing
world. In terms of our relations under the new government, it has been more of
the same with excellent co-operation between the two countries and
governments.

Regarding development co-operation since 1994 South Africa has worked very
closely with Sweden a host of issues in terms of development co-operation to
reduce poverty, inequality and vulnerability. There are various highly
commendable projects in many of the provinces. We have been working very
closely with them in the health sector to, amongst others, combat HIV and AIDS
and Swedish International Development Agency (SIDA) has been an excellent
partner in that they have very closely aligned their support and assistance to
South Africa with our own national objectives and priorities in the various
sectors in which we co-operate.

Our trade relations are growing apace right now, the total trade between
South Africa and Sweden amounts to R10 billion coming off a very low base in
1994. However, South Africa imports much more, double the amount that we
export. We import approximately R6,5 billion from Sweden and we export about
R3,5 billion. These are one of the issues of the BNC: to address this skewed
trade relationship.

Perhaps I can just say that the BNC has been structured in such a manner
that we have three committees: political affairs committee, economic affairs
committee and social affairs committee. As I mentioned, the political affairs
committee obviously looks at our bilateral relations, closer co-operation
between the Ministries of Foreign Affairs of Sweden and South Africa. We also
created a Peace and Security Working Group (PSWG) with regard to Africa which
meets on a regular basis to discuss issues on the continent and region.

In fact, Sweden has been a very valuable partner for South Africa in terms
of engaging in trilateral projects in Africa. We will continue to discuss this
when we are in Sweden and I am sure there are projects on which we will agree,
particularly in areas related to South Sudan. We co-operate very closely in
terms of defence. South Africa has decided to buy Grippen planes from SAAB/BAE
that is in the process of being delivered to South Africa.

On broader foreign policy issues, like United Nations reform, peacekeeping,
the human rights council, we share common positions. We have very fruitful and
constructive discussions on many issues in the political affairs committee. The
Economic Affairs committee has the objective to further actively promote
economic ties.

In South Africa we have a number of Swedish companies, Volvo, SAAB and
Ericson who have investments in South Africa. The agenda will include issues of
expanded co-operation within the context of Accelerated and Shared Growth
Initiative for South Africa (AsgiSA). What is very encouraging is that we are
in the process of agreeing with Sweden on a formal partnership between Sweden
and South Africa on skills development in a Joint Initiative on Priority Skills
Acquisition (Jipsa) context.

The Swedish Embassy recently hosted an economic awareness week in order to
create opportunities and increase awareness of the trading opportunities in
Sweden. As a result of this, I have been told that there have been some
positive developments and an increasing amount of South African exporters to
Sweden. Deputy President Mlambo-Ngcuka will have two major engagements in this
regard: a business breakfast where 15 to 20 top Swedish businesspeople will be
present. This will be followed by an investment conference where the Deputy
President and her counterpart will focus particularly on increased investment
from Sweden to South Africa.

There are other issues related to this such as corporate social
responsibility and the World Trade Organisation (WTO). A sizeable South African
business delegation will accompany the Deputy President to Sweden to
participate in this investment seminar jointly hosted by South Africa and
Sweden. The third committee is the Social Affairs committee headed by the South
African Department of Treasury and the Swedish Department of Development. This
committee focuses on co-operation in the field of health, communicable
diseases, science and technology and the education field.

This particular committee focuses on the development co-operation between
the two countries which continues to expand. The Deputy President will arrive
in Sweden on 3 October 2007 and will meet her counterpart following which they
will jointly open the plenary of the BNC. The committees will then break-away
to deliberate and will report back the next day on the progress that has been
made. Deputy President will have a host of engagements that day, including
inter-alia, with SAAB Grippen, the Swedish Ministers for Employment, Education
and Science. The focus of which will be skills development within the context
of Jipsa. We hope to enable a formal government-to-government skills
development partnership.

The Deputy President will lay a wreath at the grave of Olav Palmer who
played a very important role in the struggle against apartheid. There will be a
business breakfast the next day providing an opportunity for engagement between
captains of industry from South Africa and Sweden. This will be followed by the
investment seminar I referred to earlier.

The Deputy President will visit the Swedish Institute of International
Affairs to deliver an address on Africa during which she will focus on
developments within Southern African Development Community (SADC), the African
Union (AU) and New Partnership for Africa's Development (Nepad) with the
objective to further promote the African agenda. The Deputy President will also
visit the top research hospital in Sweden, particularly in the field of
communicable diseases. We will discuss the possibility of skills development in
the health sector.

Visit to South Africa by German Chancellor Angela Merkel

This will be a long-awaited visit to South Africa by Chancellor Merkel.
President Mbeki had a constructive meeting with Chancellor Merkel last year
during the World Cup. It was a very lengthy meeting that looked at bilateral
issues, issues related to Africa and wider global issues. President Mbeki and
Chancellor Merkel also met at Heiligendamm at the Group of Eight (G8) Summit
earlier this year where Chancellor Merkel played a key and highly constructive
role in guiding the G8 through their policies and approach towards the main
global issues in the world climate change was one of the major issues at the
summit. Germany also played an important role to keep Africa on the agenda of
the summit and we are grateful to Chancellor Merkel for her constructive role
in that regard.

Our relations with Germany since 1994 have evolved into a very strong
political, economic and social partnership and have shown considerable growth
in many areas. South Africa instituted a Bi-national Commission with Germany in
1996 which functions very well and has served as an important vehicle through
which to expand and consolidate our relations.

Special mention should be made of the role German business is playing in
South Africa in various sectors and the impact on job creation in South Africa.
You are aware of the involvement of some of the major automobile companies in
South Africa. We continue to see increasing investments in plant and production
facilities thereby creating jobs. In this context the Motor Investment
Development Plan (MIDP) will be discussed by Chancellor Merkel when she is
here.

South Africa ranks as number 30 as a source country for Germany's imports
and number 22 globally as an export destination. Right now, although it varies
at times, Germany is South Africa's largest import partner and the fourth
largest export partner after Japan, the United States and the United
Kingdom.

The total trade between South Africa and Germany totals R90 billion. It is a
significant trade between the two countries. Once again, the trade balance is
in Germany's favour. We import approximately R57 billion and export R26
billion. Although still heavily skewed in Germany's favour, we were happy to
note that in 2006, South Africa's exports to Germany increased by approximately
20% whereas in the same period German exports to South Africa grew by seven
percent. What was also encouraging is that the list of exports to Germany
increasingly reflects manufactured and semi-manufactured goods. Export of raw
materials is still important but we are happy to note that finished and
semi-finished products are gaining ground. Germany is an important trading and
investment partner for South Africa.

There are other issues like German tourism to South Africa that continues to
grow. This presently amounts to 250 000 German tourists visiting South Africa
annually. Germany, together with the United Kingdom, is presently one of the
biggest source markets for South African tourism. We are looking forward to
using this visit to further consolidate and strengthen our relations with
Germany.

We need to expand our political dialogue with Germany and we believe there
exist a lot of potential to expand our economic relations. In this regard, we
are looking at some of the smaller and medium sized companies who are not yet
in South Africa. We are going to embark on a drive with the assistance of the
Department of Trade and Industry to attract some of the smaller and medium
sized enterprises from Germany to South Africa to invest in our country and to
create jobs. You are all aware that the smaller and medium sized enterprises
form the backbone of the German economy. We will focus on this.

In the context of economic ties, we have been working closely with Germany
Deputy President Mlambo-Ngcuka hosted the Minister-President of
Baden-Württemberg Günther H Oettinger in August. In this meeting with the
Deputy President, we focused strongly on the issue of skills development and we
hope that during this visit, apart from the need for expanded political
dialogue and economic relations, we would also like to enter into a partnership
with Germany on the issue of skills development, similar to that we have with
Sweden.

I mentioned the question of the G8 and the constructive role played by the
Chancellor at Heiligendamm. We will therefore, apart from the bilateral issues,
focus on the African challenges and we will continue to appeal to Germany and
the others in the G8 to honour their commitments to Africa. There has been very
strong support on the part of Germany for the African agenda, amongst others,
support for the African Union (AU).

Germany supports, through the European Union, the funding of various peace
initiatives in Africa viz. the peace training centre in Ghana, €325 million for
the peace mission in Burundi and €250 million via the European Union for AU
peace initiatives. Germany currently contributes 8 000 troops to peacekeeping
initiatives under the UN mandate. Germany recently decided to increase its
troop deployment to Afghanistan and has a presence in Sierra Leone, Kosovo,
Sudan, Liberia, Ethiopia, Eritrea, India and Pakistan. Germany therefore has a
very active and well established role in peacekeeping.

Germany is also a strong supporter of Nepad and this will also be one of the
issues that will be discussed.

Chancellor Merkel will arrive in South Africa on 4 October 2007 and hold
discussions with President Mbeki on 5 October. The Chancellor will be
accompanied a number of key business personalities from Germany who will
participate in a business roundtable where they will meet with their South
African counterparts. This will be followed by a report back to both principals
on how relations will be expanded.

As you are aware, there was a very strong commitment from Chancellor Merkel
to support South Africa in its hosting of the 2010 Soccer World Cup. The Local
Organising Committee (LOC) has been to Germany many times as have German
experts visited South Africa. There will therefore be an event at Soccer City
later on 5 October 2007, where there will be fruitful discussions on
co-operation between Germany and South Africa. The existing co-operation is
excellent. The Chancellor will conclude the day by speaking at a gala
dinner.

She will visit Cape Town on conclusion of the visit to Gauteng. We are
looking forward to Chancellor Merkel's first visit to South Africa and raising
issues with her. We will review regional political developments. As you are
aware Chancellor Merkel has been playing a very constructive role within the EU
context and we would want to hear her views on developments within the European
Union.

We will also discuss the German Chairmanship and the G8 and look towards the
Chairmanship of Japan in 2008. Within this context we will look at the African
Union, Nepad, developments in SADC, conflict reconstruction and post conflict
reconstruction and development and peacekeeping including the need to look at
resolving the crisis in Darfur, the implementation of the Comprehensive Peace
Agreement, Somalia, etc. We will also discuss matters of multilateral
importance, the World Trade Organisation and Doha Developmental Round and a
matter that is very close to President Mbeki and Chancellor Merkel climate
change, Iran, the Middle East situation.

South Africa–European Union Troika Ministerial Meeting

In 2004 President Mbeki paid a visit to the European Union and after his
discussions the EU took a decision to re-appraise in the European Commission
and European Union of its relations with South Africa. Relations at that time
were very good and constructive but the Commission felt that South
Africa–European Union relations had to be elevated beyond the framework
provided for by the South Africa–European Union Trade and Development
Co-operation Agreement (TDCA) and to move it into a substantive strategic
partnership along the lines of relations the EU has with countries like Russia,
China, India and Brazil.

These discussions then began and in November 2005, at the South
Africa-European Union Development Co-operation Committee we discussed this
proposal by the EU and it was decided that steps needed to be taken to ensure
that South Africa–EU relations developed into a truly strategic partnership.
This was the declaration of intent in November 2005. You may recall that in
February 2006, Louis Michel presented President Mbeki with a non paper entitled
South Africa–EU relations wherein the EU expressed its desire to elevate its
relations with South Africa to a higher level. The President responded to this
and indicated that we are prepared to engage the EU on this.

It was obviously of critical important that should we enter into such an
arrangement with the EU that we would want to this mechanism to promote the
interest of the region and continent. That was contained in all the subsequent
documentation. We made this very clear that we would always, in our engagement
with the EU, factor in our relations with the region and continent. This was
taken forward in a number of meetings including the South Africa–EU Ministerial
Troika. The parties agreed that on the Strategic Partnership and that we should
continue to work on a joint country strategic paper and look at a joint action
plan containing all the elements I just highlighted.

Following this meeting of 14 May 2007, we agreed on a joint action plan for
the establishment of a South Africa–EU strategic partnership. Perhaps I can
just highlight some of the issues that are contained in this joint action plan,
high level political talks in a Troika format twice a year, once in Europe and
one in South Africa; ongoing high level ad hoc meetings on issues of common
interest; joint co-operation council consisting of senior officials to meet
twice a year; and provision for a regular summit with President Mbeki, members
of the EU troika and other EU members where necessary.

This Strategic Partnership has elevated South Africa's relations with the EU
and the forthcoming South Africa-EU Ministerial Troika meeting will further
strengthen and consolidate this relationship to which we have agreed. We will
also focus strongly on trade and economic issues. We would like to use this
mechanism to further strengthen trade relations with the European Union and
also to revitalise the South Africa-European Union TDCA. As I mentioned, the
TDCA will continue to function and remain the cornerstone of our relations.

The Strategic Partnership can be considered a TDCA+. This TDCA was signed in
1999 and came into force in 2004. Since then we have been talking to the TDCA
to build on and expand the TDCA because this makes provision for a review
within five-years of its entering into force. We have been engaging the EU in
four negotiating groups, political dialogue, economic, trade and development
co-operation to expand and broaden the TDCA.

In these various negotiating groupings we have agreed on a host of new
issues we will discuss with the EU in the spirit of the strategic partnership
and for instance, in the political dialogue negotiating group we are looking at
issues of money laundering, combating trade in illicit drugs, international
terrorism, combating organised crime. We are really then in the process of
expanding the TDCA as a pillar of our relations with the EU.

As far as the review of the trade chapters of the TDCA are concerned that
was de-linked from this broader review and is being considered within the
context of the EU-SADC Economic Partnership Agreement (EPA) negotiations, to
harmonise the TDCA with the SADC-EU EPA negotiations is not an easy road. We
are having constructive discussions in taking both these issues forward.

This meeting will take place on 10 October 2007 and will be co-chaired by
Minister Dlamini Zuma and the Portuguese Foreign Minister Luis Armado and EU
President at the moment. Some of the issues that will be discussed are
bilateral issues: the environment, migration, peace and security co-operation,
dialogue on human rights, on the regional issues we will talk about the
EU-Africa Summit, EU-SADC EPA negotiations, United Nations Security Council
issues where both sides have great interests, the Doha negotiations,
post-election and post-conflict areas in Africa. The important thing is to take
the Strategic Partnership and TDCA review processes forward in a meaningful
way.

Questions and answers

Question: Ambassador, will the German Chancellor address Parliament?
Answer: Unfortunately, Parliament will be in recess and will therefore not be
able to. Had the dates permitted, she would have addressed Parliament. It is
expected that she will present her keynote address at the gala dinner on the
evening of 5 October 2007.

Question: Ambassador, you mentioned the South Africa and the European Union
Troika could you please elaborate?
Answer: It is South Africa and the European Union Troika consisting of the
current President (Portugal), future President (Slovenia) and EU
Commission.

Question: Ambassador, can you indicate South Africa's position on
(inaudible)
Answer: As you are aware, if the EPA is not concluded by the end of the year or
before the waiver of the Cotonou Agreement, there was a waiver on the Cotonou
Agreement because it does not comply with WTO rules, at the end of the year and
we not have the EPAs in place, there could be negative consequences for
countries in the SADC region, particularly Botswana, Namibia and Swaziland.

We as South Africa would not really be affected because we have the TDCA in
place but for these countries they will have to revert to the more onerous
general system of preferences (GSP). It is important to work towards the
conclusion of the agreement by the end of the year.

I can just say that we have made progress on a number of areas and we
continue to narrow down the differences and divergences between both parties.
One of the major areas of contention is the issue of the inclusion of so-called
new generation issues in the EPA agreement. My colleagues in the Department of
Trade and Industry (DTI) assure me they are confident that this EPA can be
finalised before the Cotonou Agreement expires.

In latest discussions, they have made progress on some of the issues
including market access. South Africa and some of our partners in the region
have been reluctant to make commitments on new generation issues such as
government procurement and competition, etc. For us to make commitments in the
limited time will be difficult. You will require concessions from both sides.
The EU continues to define development issues in a way that serves the
interests of the EU. We need to discuss the impact of legally binding issues
and new generation issues on countries within southern Africa.

Issued by: Department of Foreign Affairs
26 September 2007