A Pahad: Business South Africa and US Corporate Councilon Africa
Meeting

13 November 2007

Mr Spicer
Distinguished guests

I wish to express my appreciation for the invitation to address you on South
Africa's Foreign Affairs perspective on "South Africa–United States
relationship," specifically in the context of the upcoming Corporate Council on
Africa's Business Summit to be held in Cape Town historic event that we
enthusiastically welcome. South Africa's first democratic elections in 1994
heralded our entry into the community of nations.

Until 1994 South Africa had been a pariah state which had been, expelled or
suspended from all major international organisations, interalia, the
Organisation of African Unity (OAU), the United Nation (UN) and the
Commonwealth. Also, apartheid South Africa had little or no political,
economic, cultural or social relations with the vast majority of countries in
the world. In 1994 when democratic South Africa joined the international
community we were confronted with an international paradigm that had been
fundamentally restructured.

This was, inter alia, characterised by the:

* collapse of socialism so starkly manifested by the fall of the Berlin
Wall
* the unprecedented spread of globalisation.

As the world sought to come to grips with the new very complex and uncertain
international political and economical world order we were confronted by the
terrorist attacks of 9 November 2001 against United States targets. This led to
a marked shift in UN foreign policy and had a further profound impact on
international relations. This was inter alia characterised by:

* the fight against terrorism becoming a major priority
* the concept of pre-emptive strikes was introduced
* growing rejection of international treaties
* weakening of multilateralism.

Multilateralism is central to South Africa's foreign policy and hence the
exercise of United States foreign policy through options such as unilateral
action and pre-emptive strikes, can contribute to some bilateral policy
differences.

It is in the context of this very complex and dangerous world order that
South Africa seeks to implement our foreign policy objectives, which is to
achieve a "A better South Africa, a better Africa and a better World"

We have identified three main challenges:

* poverty alleviation and sustainable development
* peace, stability and security
* transforming world political and economic governance

Today I will share some perspectives about South Africa's relations with the
Unites States of America to enable us to deal with the three challenges I have
just referred to.

Poverty alleviation and sustainable development

President Mbeki speaking at the International Labour Organisation (ILO) said
"poverty constitutes the deepest and most dangerous structural fault in the
contemporary world economy and global societies. It constitutes the most
challenging structural fault. Logically, this means that the correction of this
fault has to be at the centre of the politics, policies and programmes of our
thinking."

We seek to change this structural fault in conditions of the accelerated
pace of globalisation. As you are aware, key characteristics of globalisation
have been the liberalisation of international trade, the expansion of Foreign
Direct Investment (FDI), mass cross-border financial flows, the growing
strength of multinational co-operations, the unprecedented international
divisions of labour and the weakness of national states, and the phenomenal
development of information technology.

In 2000 the historic UN Millennium Summit Declaration proclaimed that "we
believe that the central challenge we face today is to ensure that
globalisation becomes a positive force for all the world's people. For, while
globalisation offers great opportunities, at present its benefits are very
unevenly shared, while its costs are unevenly distributed. We recognise that
developing countries and countries with economies in transition face special
difficulties in responding to this central challenge. Thus, only through broad
and sustained efforts to create a shared future, based upon our common humanity
in all its diversity, can globalisation be made fully inclusive and
equitable."

What has been achieved?

The President of the World Bank, Robert Zoellick, in October 2007:

"Globalisation offers incredible opportunities. Yet exclusion, grinding
poverty, and environmental damage create dangers. Globalisation has brought
uneven development to billions. In 2000, the countries of the United Nations
established eight Millennium Development Goals (MDGs) ambitious targets to
halve poverty, fight hunger and disease, and deliver basic services to the poor
by 2015.

We fully agree with Mr Zoellick's assertion that:

"Globalisation must not leave the "bottom billion" behind. Inclusive
globalisation is also a matter of self-interest. Poverty breeds instability,
disease, devastation of common resources and the environment. Poverty can lead
to broken societies that can become breeding grounds of those bent on
destruction and to migrations that risk lives."

Zoellick has identified the resources needed to achieve the MDGs:

Every year, malaria strikes some 500 million people worldwide. Yet we could
get close to overcoming this leading killer of African children. It would take
an investment of approximately $3 billion a year over the next few years to
provide every household vulnerable to malaria with treated bed nets, medicines,
and modest amounts of indoor insecticide.

The International Energy Agency estimates that developing countries will
need about $170 billion of investment in the power sector each year over the
next decade just to keep up with electricity needs, with an extra $30 billion
per year to transition to a low carbon energy mix. An additional $30 billion
per year is needed to achieve the MDG of supplying safe water to 1,5 billion
people and sanitation to the two billion people who lack these most basic
necessities, also improving gender equality in poor countries.

There is a need for another $130 billion a year to meet the transportation
infrastructure requirements of growing developing countries, including an
estimated $10 billion a year for maritime container terminals to accommodate
opportunities in trade. And to provide primary education for some 80 million
out-of-school children, another millennium goal, low-income countries will
require about $7 billion per year.

The burning question is: do the developed countries have the political will
to ensure that these resources required will indeed be provided? United Nation
Secretary General, Ban Ki Moon in November 2007 said that "what is most
important at this time is to have strong political will and strong leadership.
We have the resources, we have the technology, we have all the theories, but
what we lack the most is political will. An implementation gap exists between
promises and delivery."

Our foreign policy objective is to bridge the gap between "processes and
delivery" because as the Secretary-General observes:
If we go to Africa, particularly in the sub-Saharan region, there is not a
single country in the sub-Saharan [region] that are on board. Millions of
children die every year before they reach their fifth birthday. And malaria and
AIDS, tuberculosis and other infectious diseases are taking their worst toll on
countries that can least afford it.

And in many cities in developing countries, more than half the population
lives in slums, with little or no access to basic services. I think that
clearly, we are facing an emergency, and in this emergency situation we need an
emergency response, collective and emergency actions. The 2015 target is a
goalpost that can never be moved. The clock is ticking louder and louder every
day. To reach the goals on time, we have to take concerted action now.

Our interaction with the United States of American (USA) and indeed with the
world, is to deal with this "emergency situation", which demands "collective
and emergency actions."

Chairperson,

Today it is increasingly accepted that climate change is intrinsically
linked to poverty alleviation and sustainable development. AU studies indicate
that Africa will suffer the greatest negative consequences of climate change.
Important negotiations on climate change which will take place in Bali,
Indonesia, early in December 2007. It is clear that we need a significant
advance in the multilateral negotiations if we want to build a more inclusive,
flexible and environmentally effective climate regime under the United
Nations.

New initiatives and agreements such as those recently proposed by the US are
welcome, as long as they feed into the multilateral system and are not aimed at
displacing it. We engage with countries outside of the Kyoto Protocol regime,
especially the USA, to ensure that they are dynamically involved in shaping the
post-2012 agreements. In recent years there has been a growing appreciation in
the USA of the importance of Africa to the US' strategic interests.

Allow me to quote from the Council on Foreign Relations Task Force Report
(2006), which I believe captures the growing consensus, in the US at both the
government and corporate level, to deal with Africa. "Africa is becoming
steadily more central to the United States and to the rest of the world in ways
that transcends humanitarian interests. Africa now plays an increasingly
significant role in supplying energy, preventing the spread of terrorism and
the devastation of HIV and AIDS.

Africa's growing importance is reflected in the intensifying competition
with China and other countries for both access to African resources and
influence in the region. Africa is of growing strategic importance to the
Unites States.
It is not valid to treat Africa more as an object or charity than as a diverse
continent with partners that the United States can work to advance shared
objectives. A business as usual approach will squander historic opportunities
to change the course of Africa’s development and advance US interests. Almost
all of the five fold increase in the US aid to Africa over the last ten years
has been in emergency aid.

Most of the increases in assistance have been in emergency aid, rather than
the development aid needed for investments in growth. US trade policies have
also worked against aid recipients, inhibiting their ability to reduce their
dependence on aid. Addressing Africa's poverty will require a more
comprehensive understanding of the obstacles to growth and development,
long-term commitment to priority programs and investments, and recognition by
the US.

Many of the political, economic, and conflict trails that Africa has endured
are now beginning to be overcome. Most African governments are now elected, and
there has been a marked shift toward market economies, trade liberalisation,
and reduction in price and exchange controls. New Partnership for Africa's
Development (Nepad) sets forth a continent-wide agenda for improved governance,
sound economic policies, and regional integration.

However, the composition of African exports over the past three decades has
remained unchanged. Africa is still largely an exporter of raw materials. Its
share of world trade during this same period declined from six to two percent.
Africa needs to increase sub-regional integration, increase its rural and
inland infrastructure, eliminate obstacles to private investment, develop
better credit facilities and undertake customs reform and other forms of trade
facilitation.
Africa enjoys low tariffs of preferential treatment on manufactured goods, but
it faces high tariffs, non-tariffs barriers and subsidies in the United States
(US) and European Union (EU) that greatly reduce its agricultural exports.

Yet agriculture, which employs two-thirds of Africans, has considerable
potential. The EU and US spend $350 billion each year on protectionist measures
and trade subsidies for their respective farming interests. The World Bank
estimates that $270 billion of these support payments are trade-distorting. For
some agricultural products, US tariffs are high as 200%. US cotton subsidies,
which had a negative impact on some of Africa's poorest farmers, were recently
ruled World Trade (WTO) illegal. The WTO issued a similar ruling against EU
sugar subsidies.

President Bush, at the UN in September 2005 promised to eliminate all
subsidies, tariffs, and other obstacles to agricultural trade if all other
countries would do so as well. An agreement on agricultural barriers has become
the major obstacle to an overall agreement in the current Doha trade round.
What do governments and the private sector, in partnership; do to deal with the
untenable situation.

The Task Force recommends that the US advance a policy to help integrate
Africa more fully into the global economy. The new policy would also mean
making Africa as active partners in US programmes to ensure safe and reliable
supplies of energy, combat terrorism, reduce conflict, control pandemic
diseases and enlarge the world community of democracies.

The Task Force identified certain priorities from a comprehensive US policy
on Africa.
* integrate Africa into the global economy
* reform and prioritise US assistance
* confront the true scale and complexity of the HIV and AIDS pandemic
* promote a reliable supply of energy from Africa
* build security against failed states and other sources of terrorism
* answer China's challenge

South Africa's foreign policy engagement with the USA seeks to deal with
many of the fundamental issues that the Task Force has identified.

Bilateral relations

Like most countries in the world, South African experiences all the
challenges that emanate from dealing with such a dominant global economic power
as the US.
* The same democratic principles inform both SA and US policy formulation and
actions. These sentiments have been echoed in various discussions that
transpired between the Presidents over the past few years and have been
publicly contained within the Presidential Joint Media Communiqué released in
June 2005.

This communiqué identified areas for the enhancement of bilateral
co-operation within the broad areas of peace-building and security, expansion
of democracy and freedom, as well as spreading economic growth and well-being.
South African has identified its own strategic and priority areas that underpin
its economic relations, including the imperatives of job creation and sustained
economic growth in the framework of a developmental state, and these priorities
have received the support of the US government and in varying degrees the
business sector.

* The overall bilateral co-operation continues to grow with vast potential
for enhanced interaction.
* Government, private sector and public relations between the US and SA have
continued to grow exponentially.
* Growing interactions with the US have served to highlight the important role
that the US plays in supporting key initiatives of national importance to SA,
such as:
* the Nepad
* the fight against communicable and infectious diseases, including HIV and
AIDS
* trade and investment relations
* support for democratic reform and stability on the African continent
* military to military co-operation Africa Contingency Training Programme
{Acota} and the Phidisa programme)
* enhanced energy co-operation

As many think tanks in the USA have indicated, the political and economic
relationship between SA and the US should be viewed against the background
of:

* The increasing importance of Africa as a source of energy and specifically
oil for the US
* The US security concerns
* The effect of HIV and AIDS and other infectious diseases.

Bilateral Economic Relations

This morning you discussed details of the "good news."

* total US-SA trade is approaching the R 80 billion mark.
* The US is currently the second largest destination of SA exports with a 5,2%
increase noted over the past year.
* The trade balance swung in favour of SA for the first time in 2000

The United States is a net importer of 64 "strategic and critical" minerals
and metals. Varying levels of reserves are held in the national defence
stockpile, the cornerstone of US minerals policy. The US is almost totally
dependent on imports for materials such as chromium, cobalt, manganese,
bauxite, and the platinum-group metals, which is found in abundance in SA. Over
half of the US imports of chromium and platinum-group metals and about one
third of manganese comes from South Africa.

This increase in exports from SA was mostly driven by increases across
several product groups including platinum, diamonds, iron and steel, passenger
vehicles and auto components and aluminium. What is encouraging is that these
exports from SA to the US reflect the changing nature of SA's export basket,
from a supplier of mostly primary products to complex manufactured goods. This
changed export basket reinforces South Africa’s industrial policy, which
advocates more value added export growth.

* base metals which represent 18,6% of all South African exports to the
US
* vehicles/transport equipment represents 7,8%
* Chemicals represent 7,7%
* machinery and electrical equipment represents 7,2% of South African exports
to the US.

As you have discussed, in May 2000, Congress approved African Growth and
Opportunity Act (AGOA) as the new US trade and investment policy for
sub-Saharan Africa (SSA). US trade with and investments in SSA have comprised
only 1-2% of total US global trade. AGOA extends preferential treatment to
imports from eligible countries that are pursuing market reform measures. Data
shows that US imports under AGOA are mostly energy products, but imports of
other products are growing.

During 2005 to 2006, US imports from SSA rose to $59,2 billion. This
increase in imports can be ascribed to a 20% increase in the value of crude oil
imports, as well as increases in the importation of platinum, diamonds and iron
and steel. South Africa is the largest and most diversified supplier of
non-fuel products under AGOA and its Generalised System of Preferences (GSP)
provisions, with exports from South Africa amounting to $1,8 billion in 2006
(US Customs figures). These AGOA exports constituted 24% of total South African
exports to the US.

Although the Southern African Customs Union (Sacu)/United States (US) Free
Trade Agreement reached an impasse, we welcome the decision by both parties to
work towards the conclusion of concrete trade and investment enhancing
agreements.

Investment

The US is an important source for South Africa's foreign direct investments
(FDI) and since 1994 has become South Africa's largest source of FDI. As of
December 2004, the cumulative value of US FDI in South Africa is $5,0 billion,
accounting for nearly nine percent of total FDI. The US is also the largest
portfolio investor in South Africa, comprising 41% of the total. Approximately
700 US companies have a presence in South Africa. Approximately 200 firms have
a direct presence through a subsidiary or sales office and about 500 are
represented through a South African agent, distributor or representative.
Some concrete US-SA projects:

* Ambassador Courville, formerly Special Assistant to US President George W
Bush and Senior Director for Africa at the National Security Council, is a
noted African expert, was accredited as US Ambassador to the AU on 22 December
2006. The first Ambassador from a non-African country accredited solely to the
African Union.
* The US Government has been supportive of the South African Government efforts
to provide bilateral and trilateral assistance in the Africa region. Examples
of their support include: the SA Government and US Government partnership on
the Organisation for Economic Co-operation and Development (OECD) review of the
Implementation of the Paris Declaration of AID Effectiveness, inputs received
from the US Government representatives regarding an alternative donor structure
to the SA National Treasury and the participation of the US Embassy officials
in the South African Government diplomatic training programme developed for and
participated in, by Southern Sudan officials; etc.

US Trade and Development Agency is involved in many Accelerated and Shared
Growth Initiative for South Africa (AsgiSA) related projects. Other areas of
co-operation include; police co-operation, immigration officials' training;
training of prosecutors and magistrates; co-operation to combat trafficking in
persons, military-to-military co-operation, various programmes on the
advancement of human rights with special emphasis on women and children.
The second major challenge we have to confront is:

Peace, Stability and Security:

* The US National Security Strategy published in September 2002, states that
"Africa's great size and diversity requires a security strategy that focuses on
bilateral engagement and builds coalitions of the willing." Thus, the US will
focus on countries with major impact on their neighbourhood such as South
Africa, Nigeria, Kenya, Ghana and Ethiopia, who are anchors for regional
engagement and merit focused attention.

* According to the National Security Strategy, Africa is viewed as a
'playground' for terrorists due to the weakening of government's state control
and power. This created, according to the US, an environment conducive for
terrorists to launder funds and plan further attacks. Therefore, the US will
continue to be actively concerned with areas of conflict in Africa and will
seek to support African states from becoming havens for terrorists.

HIV and AIDS

HIV and AIDS is perceived by the US as a critical element that contributes
to the further weakening of states and their capacity, ability for effective
control. To this end, under the National Security Strategy, HIV and AIDS were
classified as a national security risk.

2.1. Relation between development and security
2.2. African conflicts
2.3. Middle East and Far East
2.4. Nuclear non-proliferation

South Africa-USA security co-operation bilaterally

* Most of US assistance in Africa falls under the Africa Contingency
Training Programme (ACOTA) which is aimed at the establishment of a
peacekeeping training programme. By design, the ACOTA programme is meant solely
for Sub-Sahara African military forces to develop and improve their capacity
and inter-operability for deployment and conducting of peace support and
humanitarian relief operations in Africa. Currently, 23 countries are ACOTA
partners.
* The United States has been forthcoming in offering material and technical
support to AU and UN peacekeeping operations in Africa. It has also
consistently offered support to South Africa's participation in such
operations.
* IMET (international military educational training): Waiver by US President to
non-signature countries of the Art 98 agreements that freed the restrictions on
IMET funding at the end on 2006.
* PHIDISA: Medical research programme with specific emphasis on combating HIV
and AIDS within the South African Defence Force (SANDF). Focus enhancement of
military operability. Envisage $5,5 million to fund anti-retroviral (ARVs) for
SANDF personnel and family members for HIV and AIDS treatment.
* $4 million President's Emergency Plan for Aids Relief (PEPFAR) support for
the SANDF Masibambisane HIV and AIDS education awareness, care and treatment
programmes.

Africom

* Africom, in terms of its stated function and structure, would be a
comprehensive or centralised institution to deal with the multitude of
challenges inherent in Africa's new found strategic importance.
* Africom is a 'one-stop shop' for dispensing US development assistance whilst
also providing security-related training and support under the banner of
transformational diplomacy.

Human rights, good governance, anti corruption

* South African perspectives of "force feeding" of democracy
African Peer Review Mechanism (APRM)
* Resulting from the US-SA Presidential meeting in 2005, a Human Rights Focus
Group was established to facilitate senior level consultations on human rights
with specific emphasis on women and children. At the review meeting held at the
US Embassy (Pretoria) on 12 April 2006, a number of international initiatives
relating to children in armed conflict, and women’s rights in the global arena,
were discussed. The challenge remains to translate the strong political will
and commitment to women and children into concrete results.
* At the level of the African continent, there are initiatives to mainstream a
gender perspective into all AU programmes. The discussions of the previous
SA-US Human Rights Task Team meeting on 3 November 2005, had identified closer
co-operation on the African continent, with the AU and specifically within the
Nepad Framework, on human rights including on women’s and children's rights, as
areas to follow-up.
* The United Nations Security Council (UNSC) has been seized with the issue of
"Children in Armed Conflict" since 1999, however the abuse of children in
conflict areas continues unabated, while the demobilisation, disarmament and
reintegration of child soldiers remains a challenge due to a lack of resources.
At UNGA61 two important new reports added to the debate: the
Secretary-General’s Report on Violence against Women and a UN Independent
Expert Study on Violence against Children. South Africa proposed further
discussion between SA and the US on strengthening mutual action following the
release of these two reports.
* The US, with regard to the Optional Protocol on Children in Armed Conflict,
established two programmes, "Displaced children and Orphans Fund" and the "War
Victims Fund", to assist people with disabilities resulting from war. Bilateral
co-operation is further needed to consider possible actions in priority
areas.
The 3 rd major challenge we confront is:

Transforming global governance, political and economic

The UN must become more effective, efficient, results-orientated,
transparent, accountable and democratic.

Co-operation in United Nations General Assembly (UNGA) and United Nations
Security Council (UNSC)

Tactical differences, interalia, Myanmar and the recent rape resolution.
Bilateral relations have reached a level of maturity that enables us to
non-antagonistically tackle differences that might arise in multilateral
institutions.

Conclusion

There are times in human history when change seems to flood us, cascading in
torrents over national structures, social orders and the common wisdom itself.
Depending on the response of nation, societies and people, the result can
either be a liberating washing away of problems, or a threatening erosion of
the foundations of civilisation itself. We are living in just such an age
today.
We are operating in an international order that is a fundamentally transformed
paradigm that is constantly changing, forever throwing up new challenges and
threatening our very existence.

Former Secretary General of the UN, in September 2006 said "we face a world
whose divisions threaten the very notion of an international community upon
which the UN stands for. The events of the last 10 years have not resolved but
instead, sharpened the challenges of our unjust world economy, world disorder
and contempt for human rights and the rule of law."

We therefore believe that our vision of a global discourse must be
comprehensive and must include the socio-economic and political domains. Such a
vision for the 21st century must be centrally concerned with: social justice
and injustice, exclusion and inclusion, human rights and the denial of human
rights a clear role for the developmental state; providing equality of
opportunities; developing social inclusion and cohesion, promoting peace and
stability regionally and globally promoting sustainable growth and development;
ecological and environmental sustainability; and dealing with the glaring
unequal division of wealth on global, national, and regional levels.

This is the context within which South Africa seeks to develop its all round
relationship with the United States, both at government and non-government
levels.

Thank you.

Issued by: Department of Foreign Affairs
13 November 2007
Source: Department of Foreign Affairs (www.dfa.gov.za)