EU trade boss talks tough

Mark Allix

EUROPEAN commissioner for trade Karel De Gucht yesterday made short shrift of pleasantries in his opening remarks at the second South Africa-EU Business Forum‚ hosted by the Department of International Relations and Cooperation in Pretoria.

De Gucht said European investors were watching South Africa carefully after the country unilaterally cut bilateral investment treaties with some European Union member states‚ including Belgium and Luxembourg‚ and indicated it would do the same with about a dozen other countries.

He said the EU accounted for 88% of total investment stock in South Africa in 2010. This meant about one-third of the country’s roughly R3-trillion economy was based on European investment.

“There was little consultation with us‚” the trade commissioner said at the forum “Building Business Partnerships for Growth and Employment” which took place a day before the sixth South Africa-EU Summit.

This meant there had been no set framework for South Africa’s actions‚ De Gucht said.

His remarks stunned South African delegates‚ including fellow keynote speaker Trade and Industry Minister Rob Davies‚ who last year abruptly called in Belgium’s ambassador to South Africa and told him the country was cancelling its bilateral investment treaty jointly held between Belgium and Luxembourg.

Davies had earlier acknowledged in his opening remarks that the EU was South Africa’s biggest trading partner and investor‚ and said this probably held true for the rest of Africa.

But he said since the global financial crisis‚ South African exports to the EU had dropped significantly and had not recovered to 2008 levels‚ while EU imports into South Africa had grown. “That means we have a growing (trade) deficit with the EU.”

But De Gucht said trade relations between the EU and South Africa had been “mutually beneficial”‚ with each exporting value- added products to the other.

He also said the EU had in the latest negotiations on its economic partnership with South Africa agreed to an “asymmetric” opening of markets to South African agricultural produce.

But he indicated when the EU took into account the unilateral cancelling of the bilateral investment treaty by South Africa‚ it did not feel this was a reciprocal relationship. It might be only a matter of time before European investors looked elsewhere.

“We should encourage exports‚ not restrict them‚” he said.

Afterwards, European business leaders who attended the forum hailed what they perceived as a frank and overdue message to the South African government.

“De Gucht was very clear – and in a good partnership one has to be clear if one wants to improve the partnership‚” said Matthias Boddenberg‚ chief executive of the Southern African-German Chamber of Commerce and Industry.

Italian businessman Ezio Vernetti‚ based in South Africa but covering Africa for shipbuilder Fincantieri‚ said he was struck by the straight talking. “There was a lot of realism in what he said.”

Vernetti said there was a feeling among some European investors that South Africa had an unrealistic view of its appeal.

“Today one looks at the whole world as an investment destination‚” he said. “There seems to be the problem in South Africa where there are more words than facts about attracting investment.

“But having said that‚ anybody who is interested in Africa has two destinations: South Africa and Nigeria. In Nigeria now they are extremely proactive in attracting investors.”– Additional reporting by Nicholas Kotch

Leave a Reply