Itec
17 July 2007
Sochi: South African Foreign Minister Dr Nkosazana Dlamini Zuma will visit
Sochi, Krasnodar region of the Russian Federation, from Wednesday to Saturday,
18 to 21 July 2007 for the SA-Russia Intergovernmental Trade and Economic
Co-operation (Itec) meeting co-chaired with Russian Minister of Natural
Resources Yuri Trutnev.
Minister Dlamini Zuma has just concluded her visit to India where she led a
senior South African delegation to the India-Brazil-SA Ministerial Summit held
in New Delhi within the context of consolidating trilateral political, economic
and trade relations with India and Brazil and to advance South-South
Relations.
Itec is a mechanism aimed at regulating political, economic and trade
relations between South Africa and the Russian Federation. Since the launch of
Itec, great progress has been made in strengthening bilateral political,
economic and trade relations between the two countries.
The last session of Itec was held in Pretoria in February this year in which
it was agreed that implementation of agreements through the committee is an
area which would be focused on, as the framework for co-operation has already
been established.
One of the advances made through Itec was the establishment of a Joint
Business Council between the two countries launched during President Putin's
state visit to South Africa.
Economic bilateral relations
South Africa's trade with Russia does not reflect its potential and leaves
much room for expansion. The establishment of the Joint South Africa/ Russia
Business Council is now the means to achieve greater trade and economic
co-operation between the business sectors of both countries.
Trade Relations between both countries
Year: 2005
SA exports: US$629 047 000
SA imports: US$449 274 000
Total trade: US$1 078 321 0000
Year: 2006
SA exports: US$264 392 000
SA imports: US$155 555 000
Total trade: US$419 950 000
The bulk of SA exports are made up of vehicle engines (18,8% of exports),
machines and mechanical appliances (14%), fresh grapes (13,8%), flat-rolled
products or iron (10%), pears (6,8%), peaches (3,4%) amounting to almost 70% of
SA exports to Russia. The major import from Russia, accounting for over 65% of
SA imports, is made up of the nickel group of minerals.
The Russian Federation adopted a decree in March 2003, following South
Africa's recognition of Russia as a market economy in support of World Trade
Organisation (WTO) membership, to include South Africa in a list of developing
countries that would enjoy preferential trade tariffs and duties with regard to
exports to Russia.
Bilateral relations also expanded significantly under the umbrella of the
Intergovernmental Trade and Economic Committee (Itec) between South Africa and
the Russian Federation. Strategic direction and a structured and disciplined
policy framework have resulted in substantive action taken by the respective
governments in the strategic minerals and energy sectors through inter alia the
establishment of a joint Task Force on Minerals in support of black economic
empowerment (BEE) objectives. Solid progress in the field of science and
technology relations, especially in terms of the Presidential policy objective
of establishing South Africa as a key player in international astronomy and
deep space research, also characterise the relationship.
Russian tourists at the high end of the market visiting South Africa grew by
42%in 2006.The number of Russian tourists is comparable to those from Greece
and Argentina. The number of South Africans visiting Russia is growing
steadily.
The South African fruit exporting company, Capespan now ranks Russia as its
single largest fruit export market surpassing the UK for the first time last
year. In 2004 Capespan exported fruit produce worth $20 million to Russia out
of a total trade of $56 million and presenting a 30% share of the export market
to Russia. Apple and pear exports have registered an increase in their share of
the South African deliveries to Russia. Demand for grapes has been booming in
Russia, but South African producers have had to fight off competition from
South America and even Namibia.
South African investments in Russia
The SA multinationals Anglo American, Standard Bank, De Beers, JCI,
Barlowworld, Capespan and Bateman have substantial interests in Russia. In
addition, SAB/Miller has established a brewery in the Kaluga Region, which
represented a US$100 million investment, and their product, Golden Barrel Beer,
is highly successful in the local market. Standard Bank also has a growing
presence in Russia as well as Sappi, Protea Hotels and Sun International.
Recently also the MIH Group which includes DSTV, and M-Net also has investments
in the Russian Federation.
South Africa BEE entities also held meetings with prominent Russian entities
including Norilsk Nickel, Renova, Aton Capital, Colliers International,
Rusimport, Transneft, MorPort, Sual, Lukoil, Interfinance Developments and
Crystal Diamond Company. The meetings were constructive and fruitful and a
number of projects of mutual interest were identified. The BEE companies also
instituted reciprocal invitations for follow-up meetings in South Africa to
their Russian counterparts. The Director of Renova recently visited South
Africa and it can be expected that increased interaction between the respective
entities would lead to more substantial trade, economic and investment links
between South Africa and the Russian Federation.
The joint venture company, United Manganese of Kalahari (UMK), between black
economic empowerment groups and the Russian Renova Group of companies, has been
established in order to co-operate on the prospecting, mining and processing of
manganese ore in the Kalahari basin.
Russia's largest steel maker, Evraz, recently said that it would decide
within less than a year whether to buy a bigger stake in Highveld Steel &
Vanadium. Evraz currently has a 24,9% share in Highveld. It is possible that
Evraz could buy Anglo America's Highveld share of 29,2 % in order to introduce
black investors to Highveld.
Issued by: Department of Foreign Affairs
17 July 2007
Source: SAPA
