South Africa’s rigid black economic empowerment (BEE) targets for equity, employment and management mean that United States firms will have to rearrange their entire business structure “simply to invest” in South Africa, says official opposition leader Tony Leon.
Addressing a meeting in Newcastle, KwaZulu-Natal, the Democratic Alliance leader argued that this appears to be one of the stumbling blocks in the way of the Southern African Customs Union (Sacu) signing a free trade agreement (FTA) with the US.
“No foreign company wants to be told that it must give up 25,1% of its equity on arrival, nor does it want to be told whom to hire and fire, especially when America’s demography is quite different to South Africa’s.
“If South Africa wants to be a global player, we have to play by global rules. We must be honest and admit that there is a trade-off: we can use BEE charters to help a few local investors, but we may be doing so at the cost of attracting foreign investors to our shores — and, consequently, losing out on economic growth and new job creation.”
He said his party is deeply concerned about the slow progress in the negotiations towards a free trade agreement between Sacu and the US.
“The talks were due to be concluded by last December, but now a deal is only expected in December next year, at the very earliest.
“The free trade agreement could be extremely important for the South African economy. It would extend some of the gains we have made through the US Africa Growth and Opportunity Act, which has created — and rescued — tens of thousands of jobs in South Africa and throughout the region.
“The US is clearly moving away from large-scale, global talks and toward regional agreements, such as the one it recently signed with Central America. South Africa should be seizing the opportunity this presents.
“Northern KwaZulu-Natal, for example, where foreign investment, particularly Chinese investment, has created thousands of jobs, could benefit from a Sacu-US agreement.”
A new agreement would make the temporary benefits of the US Africa Growth and Opportunity Act permanent; open up US federal and state procurement processes to Sacu firms by exempting South African companies from “buy America” requirements; increase South African access to US agricultural markets; and allow our exporters to sidestep US rules of origin requirements, he argued. — I-Net Bridge