How to Strike a Trade and Investment Deal with the US

South Africa is one of the few countries that has yet to strike, or at least make considerable progress towards striking, a trade and investment deal with the United States (US) – it won’t be difficult to change that.

Getting a trade and investment pact agreed and implemented with the US is easy, if the following steps are followed.

Dispatch a serious envoy or ambassador to Washington with a mandate to propose a deal and make decisions. Sending a mid-level trade bureaucrat or diplomat is the wrong approach. Attempting to work through layers of committees and dated bureaucratic channels is not how Washington works these days – and insisting on such an approach is just to waste everyone’s time.

That person should arrive in Washington with an ambitious trade and investment pact in his pocket – and talk only about that. No long-winded conversations about history or social justice or trying to explain this and that about South Africa’s unique circumstances. The deal should encompass minerals (which Washington needs), energy (which South Africa needs), and then extend to infrastructure, technology, and mutual bond-buying. Ambition is the key word. Talk about blueberries and chicken is not going to get anyone in Washington excited. The same even applies to the African Growth and Opportunity Act (AGOA). South Africa is a sophisticated economy with deep capital markets and world-beating technology and innovation around its natural resources. AGOA is an aid project for third-world type dustbowl economies and South Africa needs to set its aim far beyond what AGOA might offer.

Reciprocity is a big thing for the Trump administration. The Americans don’t insist on South African investors meeting all manner of social responsibilities to invest in the US and they don’t therefore want South Africa to force their firms to do the same. The deal must offer US investors a clear avenue out of such commitments, which might best be done via special economic zones and the like. America does not threaten the property rights of foreign firms that invest in the US. Reciprocity is again at play here. The deal must make explicit that South Africa will not look to expropriate the assets of American firms that invest in the country – and this will necessitate sending expropriation legislation back to Parliament. The US does not take foreign policy actions that threaten the national security of South Africa, and the deal must make clear that South Africa will cease its various schemes and provocations aimed at undermining global US interests – especially with regards to Iran. A good way to send the right message here might be to propose a new Atlantic security pact between South Africa, the United Kingdom, Argentina, and the US – a proposal that ticks both the ambition and reciprocity boxes and will be very well received (there are few entry points into the Atlantic – Greenland, Panama, and the southern gateway guarded by Simonstown in the east and the Drake Passage off the southern tip of South America in the west).

The above needs to be “nested” in a context free of the snide, superior, and often openly hostile commentary that is regularly directed at the US. This is not just a problem associated with the government and the African National Congress (ANC). The business community too is guilty of persistent petty snideness and comments along the lines that Trump’s administration is depraved and that South Africa should just do without them. Some of South Africa’s most senior business leaders say these things in public! Certainly, it is quite mad to send to Washington anyone with a history of such remarks or association with an organisation known for that sort of thing.

None of this is very difficult to do, it just requires the professional discipline to put strategy in pursuit of national interest ahead of personal insecurities, prejudices, and dated ideology. Follow this instruction list to the letter and a deal can be done within a month.

The public would show strong support for this. Polling is emphatic that South Africans wish to see sound relations between South Africa and the West. South Africans do not share the ideological fixations of their government on foreign policy matters. And even if they did, the material benefits that would accrue to South Africa in lifting the investment rate and thereby the growth and employment rates would quickly put paid to that.

The short-sightedness in all this is that the ANC, more than any other domestic political party, needs improved growth and investment numbers to stall its electoral decline. Yet it is the ANC itself that is central to stalling any deal. If the ANC could read the geo-political room it would see that the US is not interested in regime changes and the like and in fact sees these as very destabilising. From Rodríguez in Venezuela to Lula in Brazil and across much of Africa and the Middle East, the current US administration has seen fit to work with any regime, regardless of its ideological standing, as long as mutual interests are met. South African officials one speaks with, including in business, display no ability to read the room.

There is even a story circulating in elite society and business circles in South Africa that the South African government has bent over backwards in Washington to do a deal with the Americans, that it sent its best people, and that these were broadly welcomed and highly regarded, and that despite all of that the Americans rebuffed them at every turn – out of spite and malice. That is a wholly false narrative. The South Africans sent to Washington approached their objectives with neither strategy nor insight – which is to say they’ve not been very good.

There is parallel here that South African business leaders should think about to understand that last comment especially.

Would it be true to say that South Africa’s investment rate is as low as it is, and its rate of economic growth too, for the reason that the state’s considerable, sincere, and impressive efforts at drawing investment and creating an enabling business environment have been rebuffed by the business community and the banks – out of spite and malice? Of course not – the idea is absurd. The same holds for the argument about how well South Africa’s delegations conducted themselves in Washington.