Issued by: Department of Foreign Affairs
Address by Sipho M. Pityana Director-General: Foreign Affairs to the RAU Centre for European Studies in Africa/Konrad Adenauer Foundation Seminar on "South Africa's Foreign Relations and National Wealth Creation" on the "Meaning and importance of economic diplomacy for South Africa in the context of globalisation"
Date: 20 October 2000
Time: 10:00 - 10:30
Venue: Sasol Auditorium,
Rosebank, Johannesburg
Thank you Mr Chairperson, and my thanks to the RAU Centre for European Studies in Africa and the Konrad Adenauer Foundation for organising this seminar on a topic that is so timely and important It is the responsibility of our diplomats to promote, protect, advance and safeguard the country's interest in the world. This broad and all embracing role of diplomacy takes different forms and approaches depending on the circumstances of given historical conjuncture. This includes ensuring that we build ties of friendship based on common objectives in order to co-operate whenever this becomes necessary. We must promote and safeguard our country's security. Indeed the concept of security has to be seen in its broad context as including safe borders as well as socio-economic progress, internal stability and peace. The advancement of the country's economic interests has assumed particular pre-eminence in the era of globalisation, a process of economic development and integration that has often undermined borders and threatened the sovereignty of states. Presumably this kind of activity sits neatly in the realm of economic diplomacy.
Although economic diplomacy occupies a very high place in South Africa's foreign policy objectives and undertakings, any attempt to create a chinese wall with other diplomatic activities would lead to an inadequate comprehension of this area of work. Inter/Intra state conflicts, internal socio-political instability and other related political problems often impact on the economy in ways that warrant that they be addressed if the economic potential of countries is to be fully realised. However, for the purpose of our discussions today we shall engage this subject in isolation.
The birth of our new democracy is partly testimony to the success of economic diplomacy of the anti-apartheid liberation movement which, among other things, persuaded governments and business interests to turn their backs on the erstwhile pariah country. It is no wonder therefore that after our generally peaceful transition to democratic rule in 1994, we immediately prioritised our country's re-integration into a rapidly-globalising world economy. Our task was made difficult by the inward looking and highly protectionist nature of the economy which we inherited.
In a very short space of time, however, we have successfully begun to transform our economy. We have begun to reposition the country so that we are better placed to participate in the global economy as a significant exporter of manufactured and processed goods.
We start from the promise that globalisation is a feature of world economy that we cannot change. While we recognise how unfair globalisation can be, we also believe that our challenge is to engage it, express our concerns in appropriate fora; and more importantly ensure that such opportunities as it offers are seized.
Clearly, if we are to meet the needs and expectations of our fellow citizens in terms of service delivery, job creation, and economic and social development, then we have to lay our claim for a fair share of the global economy.
Our overall strategy and approach is, among other things, intended to improve access to foreign markets for goods and services produced in South Africa. To create opportunities to attract strategic imports that stand to contribute to the growth and advancement of our developing economy; attract foreign direct investment (FDI) in sufficient quantities in order to grow our economy; as well as bring to bear the technological advances and managerial skills competencies that were denied the country during its years of isolation.
Within this broad strategic framework, it is also our desire to advance regional economic integration that will contribute significantly to the prosperity of, not only South Africa, but the SADC region as well. The SADC Trade Protocol which was due to take effect on the 1st of September, must be seen as yet another important step towards an integrated regional market. Eventually, the potential of the region will be developed to the extent that large-scale investment will be attracted, gradually create an enabling environment for enhanced region-wide production capabilities, and the attendant improvements in export capacity.
Even though the export potential of the region is modest by global standards, it remains an important component in the plan to position the region to participate more effectively in the global economy.
It is in this context that the efforts of Presidents Mbeki, Obasanjo of Nigeria and Bouteflika of Algeria towards a comprehensive African economic development strategy must be seen.
Africa accounts for more than fifty percent of the world's gold and platinum deposits, 90% of cobalt, 80% of chrome and other strategic minerals. Therefore we are talking about a very rich and well-endowed continent whose people live in poverty. Her continued marginalisation is manifestation of a structural fault in economic relations in the global system. The heavy debt burden, declining overseas development assistance and foreign direct investments, all combine to undermine her growth and development prospects.
It is for this reason that we try to ensure that our engagement with both Africa and the rest of the world are mutually beneficial.
Of course we realise that conflict resolution and prevention are required in some quarters before we can realistically speak of economic diplomacy being effective. We are indeed hopeful that progress will continue to be made in bringing peace to our region.
The role that multilateral institutions play becomes very important as they increasingly set and administer the rules of the game. These rules then determine relations between individual and groups of countries in certain instances.
In fact, one of the most substantial impacts of globalisation on diplomacy is the huge shift towards the whole multilateral arena.
While negotiating bilateral agreements among states remains, the advantages of working together to seek standard agreements are increasingly being exploited.
The whole range of diplomatic activity is in fact already covered by one multilateral organisation or another, whether it is the World Health Organisation (WHO), the Universal Postal Union, or the International Labour Organisation (ILO) to name but a few. In each case, the multilateral organisation provides a forum at which discussion of global solutions to global problems can be considered. These discussions invariably lead to the drafting of new international agreements, conventions, protocols, or systems for resolving international problems satisfactorily.
However, nowhere is this trend more apparent currently than in the global trade negotiations currently under consideration within the World Trade Organisation. We saw how emotional this issue can be, at the Ministerial Meeting in Seattle at the end of last year. It was an indication of just how seriously nations regard trade, that while the global community was establishing the rest of the international organisations soon after the Second World War, it took until 1995 for the World Trade Organisation to be established. The original concept predates the establishment of the UN to the time of the Bretton Woods Agreements, when the World Bank and the International Monetary Fund were created. There was agreement at that time to the principle of a World Trade Organisation, but unfortunately even the very limited number of nations that met to discuss the issue could not agree on its establishment, dealing as it would with such sensitive issues.
For nearly fifty years we had the General Agreement on Tariffs and Trade (the GATT) with only the Uruguay Round in the eighties and nineties eventually agreeing to establish the WTO.
Even then, on areas of vital concern to developing countries such as agricultural tariffs and subsidies, agreement could not be reached and so we now have to wait until the next Round can be launched to tackle this and other apparently thorny issues, and create a global trading system in which developing countries are at least on a level playing field with the developed countries.
The WTO is undoubtedly one of the most important multilateral arenas for economic diplomacy at this time. The voice of developing countries has not been very prominent in previous GATT Rounds, and many lack the technical capacity to deal with the complexities of global trade. Fortunately in recent times developing countries have been rallying together, and we are confident that we are now better placed to participate meaningfully in future rounds, and that our voice will be heard.
Negotiations in the WTO could perhaps be termed economic diplomacy of the market place, but there is a multiplicity of fora where a parallel and very important economic multilateral debate is taking place. This is the economic development debate, and unlike the WTO where very specific and focussed issues are being negotiated, the development debate is much broader. It is in fact an essential element in the campaign to seek a better and more equitable global economic framework.
While it is true that in global terms, the average per capita income has been rising in recent years, unfortunately the rich are getting considerably richer, while the poorest sectors of society are even poorer. Billions of the world's people have to live on US $1 a day. We feel strongly that the benefits of globalisation need to be more fairly distributed. A disproportionately large number of the world's poorest countries are in Africa.
We owe it to the continent and our future generations to do our best to seek a better deal for Africa; whether it is in New York at the UN General Assembly, at the Economic and Social Council, the UN Development Programme or at Geneva at the UN Conference on Trade and Development Headquarters or at the UNCATD X Conference in Bangkok, at the NAM Conference in Durban, at the Commonwealth Heads of Governments Meeting in Durban, at the South Summit in Havana or at the EU Africa Summit in Cairo. We have to keep up the pressure on the developed countries and continue to engage them in a focussed debate on practical measures to be taken to improve the lot of the poor.
We must do this at the same time as we endeavour to improve South Africa's own economic prospects, our future is in fact inextricably linked to that our neighbours and fellow African countries. This is a dimension of economic diplomacy to which we are devoting many of our resources, because we regard it as very important. Some of the themes that are being addressed in these development fora are of immediate concern to South Africa, but many are of primary concern for the least developed countries, or countries with relatively little economic development. In the former category, issues such as market access and technology transfer are clearly of concern to all African countries, including South Africa. In the latter category, however, we have a range of issues that are not crucial to South Africa per se, but are of compelling concern for many other African countries.
Within this broad context we have to constantly ensure that the specific interests of our country are taken care of. In order to take advantage of the opportunities being created we should, among other things, focus on the export market as our major area of activity, while still meeting local requirements. Only by continued increase in our value-added exports and by developing those sectors where we are truly globally competitive, can we achieve the required economic growth in order to tackle our development needs.
We have a long way to go before we can emulate success stories of export-led growth such a South Korea, but the potential is undoubtedly there, and a concerted effort by all, right across the board, is needed if we are to be successful.
An important feature of our export promotion campaign is our concerted effort to convince buyers in global markets of the quality and reliability of our products and services. We are working towards a scenario where "made in South Africa" will have a special significance for overseas markets in terms of quality and reliability.
In order to become global players, and we are making good progress, we have to think globally. While achieving good market penetration in neighbouring countries is commendable, it is simply not enough. There are many new, unexplored markets out there, and many rivals and competitors. We still have not taken up fully the opportunities open to us to strengthen ties with other countries in order to exploit these.
The more successful we are in increasing our foreign exports, the more foreign investment we will attract. Investment flows have been steady since 1994, but I think we would all agree that we need to address the question of why they have not been larger. According to the SARB Quarterly Bulletin of June 2000, FDI in the past five years reached a peak in 1997 at over R17 billion, but has not reached the same heights since. This surge in investments is accounted for by US companies' buying back the positions they held prior to the sanctions years The reasons given by potential investors for not investing are varied and I am sure we are all familiar with them. What is interesting, and indeed encouraging, is that potential investors acknowledge the soundness of the South African economy, and the potential of both South Africa and the Southern African region.
Many investors who are already engaged in South Africa have indicated an intention to increase their investment in future according to a survey of 1999 on foreign investment conducted by A.T. Kearney. It is those who have not yet invested in South Africa that are reluctant to take the plunge. This suggests that it is fear of the unknown fuelled by negative perceptions that is holding new investors' back. After all, those that are here already, are only too aware of the situation and the problems, and yet they plan to increase their investments. We all know, for example, of the upgrading of South Africa to investment grade by Moody's.
The perceptions about our country are a consequence of our own projection of our nation abroad. This ranges from the excessively negative domestic media coverage of the developments in the country which then extends to some journalists stringing for international news agencies doing the same and sometimes worse; to some in business people who often emphasise those aspects about our society that they most discontented about; to some in labour that also tends to exaggerate their postures in ways that creates an atmosphere of adverserialism that in fact is not bourne out by facts; to some of our ordinary citizens who, in their interaction with tourists often tend to dwell on the negative things about the country.
In this situation, regardless of the amount of investment we make in our missions abroad and the tireless efforts of our diplomats, thew chances of success are reduced. South Africans have to realise that the biggest challenge we face is between us and the world. For us to win we have to be a formidable team that conveys an unambiguous message to the world. "The best place in which to do business and to visit is South Africa" It is a message that will resonate when every South African assumes the responsibility of being their country's ambassador.
I thank you for your attention.
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