US embassy cable - 05PRETORIA852

UNCLAS SECTION 01 OF 02 PRETORIA 000852 
 
SIPDIS 
 
DEPT FOR AF/S KGAITHER; AF/EPS CAKUETTEH AND MFLEMING 
USDOC FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND 
COMMERCE ALSO FOR HVINEYARD 
TREASURY FOR OWHYCHE-SHAW 
DEPT PASS USTR FOR PCOLEMAN AND WJACKSON 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, SF, AGOA, USTR 
SUBJECT: INPUT FOR PRESIDENT'S 2005 REPORT ON AGOA 
 
REF:  (A) STATE 24616, (B) 2004 PRETORIA 4098 
 
1.  This cable responds to Reftel A request for post's input 
for the President's 2005 report on AGOA drawing on the 
template provided. 
 
2.  SOUTH AFRICA 
 
Market Economy/Economic Reform/Elimination of Barriers to 
U.S. Trade 
--------------------------------------------- ------------ 
 
The South African government continued to implement prudent 
fiscal and monetary policies.  Inflation fell to 4.3% in 
2004, well within the central bank's target range of 3-6%. 
Economic growth, which at 3.7% exceeded the government's 
expectation of only 2.9% in 2004, combined with improved tax 
collection resulted in a reduction of the budget deficit to 
2.3% of GDP, far lower than the predicted 3.5%.  The new 
budget proposed in February 2005 focused on accelerating 
growth and investment.  In order to alleviate supply-side 
constraints, it called for reducing the regulatory burden on 
small business, reducing taxes, improving the supply of 
skilled labor and cutting transportation costs.  South 
Africa is moving slowly forward with the restructuring of 
state owned enterprises.  The government has made 
improvements in the management and efficiency of South 
Africa's ports.  In 2003 the government divested much of its 
interest in Telkom, the state-owned telecommunications 
giant.  In February 2005 the government finally approved the 
shareholding structure of a second national 
telecommunications operator (SNO), setting the stage for the 
licensing of the new company to begin competing with Telkom 
later in the year.  South Africa is making progress on 
intellectual property rights protection.  Police increased 
seizures of counterfeit goods, but follow-up and prosecution 
have been inadequate.  Copyright protection is a problem.  A 
gap in the counterfeit goods law makes it difficult to seize 
pirated goods that transit through South Africa.  South 
Africa provides national treatment for foreign investors.  A 
bilateral Trade and Investment Framework Agreement and a 
bilateral tax treaty are in force.  The negotiations for a 
free trade agreement between the United States and the 
Southern African Customs Union stalled halfway through 2004 
but Ministerial talks in December 2004 set the stage for 
getting them back on track in 2005. 
 
Rule of Law/Political Pluralism/Anti-Corruption 
--------------------------------------------- -- 
 
3.  South Africa is a multiparty parliamentary democracy, 
and opposition parties operate freely.  While the African 
National Congress holds a sizeable majority in the 
Parliament, several other parties operate actively and 
freely.  National elections were held in April 2004.  The 
government is committed to the rule of law and is working to 
strengthen its judicial and regulatory systems.  The 
judiciary is independent at all levels.  While South Africa 
faces governance and corruption challenges, the government 
has made the fight against corruption a priority. 
 
Poverty Reduction 
----------------- 
 
4.  The government continued to take steps to address 
poverty and vulnerability.  Priorities for the next three 
years are to accelerate economic growth, enhance social 
development, and lower inequality.  Poverty reduction 
measures contained in the February 2005 budget continued the 
trend for increased spending for social infrastructure 
investment, direct income support and improved basic service 
delivery to the poor.  The government proposed more funds 
for social security grants, rural land restitution, housing, 
public transport, teachers and police.  Increasing rates of 
HIV/AIDS and high unemployment are serious obstacles to 
reducing the divide between the rich and poor. 
 
Labor/Child Labor/Human Rights 
------------------------------ 
 
5.  The Constitution provides for equal protection, 
freedom of speech and the press, freedom of assembly, and an 
independent judiciary.  South Africa provides strong worker 
rights protections, including freedom of association and the 
right to organize and bargain collectively.  Approximately 
26 percent of economically active South Africans are members 
of trade unions; 485 trade unions are registered. South 
Africa has ratified ILO conventions 29 and 105, and 
prohibits forced or compulsory labor.  In sectors which 
unions have found it difficult to organize, such as farming 
or domestic work, the Department of Labor has established 
sector-wide minimum wages.  South Africa is actively engaged 
in reducing the incidence of child labor, including the 
worst forms of child labor.  The government is both taking 
preventative measures, including eligibility for income 
grants for poor children under the age of 11 and waivers of 
school fees for poor children, and actively prosecuting 
employers of child labor.  The incidence of HIV/AIDS, 
however, has led to an increase in the number of child- 
headed households.  The SAG prohibits child labor for 
children under the age of 15 or under the minimum school 
leaving age (where the age is 15 or older), and does not 
allow the employment of children over age 15 should that 
employment be detrimental to the child.   Children under age 
15 are allowed limited employment in film, entertainment, 
sports and advertising, if the employer has applied for and 
been granted license by the South African Department of 
Labor.  South Africa has ratified ILO convention 182 on the 
worst forms of child labor.  The latest survey of child 
labor was conducted in 1999, and found that 36 percent of 
children between the ages of 5 and 17 engaged in work of 
some type, most frequently fetching fuel and water.  The 
government has focused high- level attention on the human 
rights issues of law enforcement, however deaths due to 
excessive force by security forces and deaths while in 
police custody were reported. Some police officers have 
reportedly beat, raped, tortured, and otherwise abused 
suspects and detainees. The government has taken action to 
investigate and punish some of those involved. 
 
Public Outreach 
--------------- 
 
6.  Post has engaged actively in public outreach to advance 
AGOA throughout the past year. Even before arriving at post, 
Ambassador Frazer promoted AGOA in her remarks at a 
reception covered by the press at the Corporate Council on 
Africa (CCA) and Good Works International in July.  She also 
advanced AGOA in speeches at the American Chamber of 
Commerce and the South Africa Foundation.  She routinely 
promotes AGOA in her wide-ranging public diplomacy efforts. 
 
7.  An Embassy Economic officer, Alan Tousignant, advanced 
AGOA in an SABC-TV broadcast on NEPAD; a 30-minute live 
radio interview on SABC-FM; speeches at the Metropolitan BEE 
Conference and Expo Africa, the Institute of South Africa, 
and the Women's Business Network; interviews with Channel 
Africa Radio, Engineering News, INet, and African Decisions; 
and a digital video conference with 25 African and European 
students studying in a Master's Program in International 
Trade and Investment with South African universities.  The 
Economic section also routinely advises U.S. and South 
African businesses on AGOA provisions.  The Consul General 
in Durban, Michael Thurston, promoted AGOA at a recent 
National Ports Authority/SA Port Operations hosted 
conference for the Enterprise Florida trade delegation and 
SA business.  Similarly, the PAO in Cape Town, Lou Mazel, 
explained AGOA on live interviews with Cape Talk radio. 
Cape Town also arranged media events with a focus on AGOA 
for such visitors as Codel Goodlatte and Treasury Under 
Secretary John Taylor. 
 
SIPDIS 
 
FRAZER