U.S. and South Africa: Facing Today’s Challenges for Tomorrow’s Opportunities

Thursday, February 20, 2014
Ambassador Gaspard speaking at UNISA
U.S. Embassy Pretoria

U.S. and South Africa: Facing Today’s Challenges for Tomorrow’s Opportunities: Remarks by Ambassador Patrick H. Gaspard at the University of South Africa
Pretoria
South Africa
February 20, 2014

As Prepared for Delivery

Thank you Vice Chancellor Makhanya for welcoming us. Thank you Professor Labuschagne for that kind introduction. And thank you to IGD and UNISA for letting me come here today to talk about the U.S. and South Africa, and where I think we are in 2014.

Since this institution is a pioneer in distance learning it seems appropriate that I would have this conversation from your grounds after only being in the country for five months. While I've traversed much of South Africa from Polokwane to the Cape of Good Hope, there is still much more to see and grasp than will be possible in my entire term of service. I will have to trust in observations made at close contact and hazy distance - and I will have to depend on the corrections of my friends: distance learning at its best.
And let me hasten to add two flags in advance of all else that follows today. I will side with those who might argue that the totality of my knowledge about the country after a mere five months can fit into a thimble and I will offer that all of my insights are filtered through American interests. That being laid bare, even water from a thimble can contribute to irrigation in the field of ideas, and increasingly Americans recognize the interdependence and mutual opportunity that is a growing feature of this bilateral relationship. I am an American, but I too am an African. And today it feels good to be an American in Africa.

As I considered these remarks and my principal focus on our common challenges and opportunities, I was reminded again how much we share, particularly in strong democratic ideals and institutions when both of our Presidents delivered their State of the Nation addresses within weeks of one another. Both Presidents identified three key areas crucial to the success of our republics: health, education and jobs. The last of these three will comprise our central engagement this morning.

Fundamentally, jobs, trade and economic policy are drivers of these other metrics and will be the prism through which leaders on both sides of the Atlantic will ultimately assess the success of relations between the US and South Africa in the first half of this century. Presidents Obama and Zuma also both dwelled on the crisis in economic inequality and the emergency obligation of our societies to close that deepening divide.

As a subdivision of the economic discussion, the state of labor relations is a key determinant and one I believe I am modestly credentialed to be able to speak to with some passing credibility. I dedicated the bulk of my mature activism to the goal of improving the lives of workers -both on the shop floor and in their communities. I've been on the frontlines of demonstrations that have devolved into near riots, strikes that have been protracted and that have exacted a price from workers and employers. I have counted up the cost. I know something of the difference between tactical tools in a labor dispute and a shared economic strategy that benefits both industry and the workforce. I'll offer up my American experiences with humility and with the full appreciation of a different landscape and context in South Africa as this modern democracy and economy rounds out its twentieth anniversary.

But first I offer some brief and nearly celebratory markers on our partnerships in health and education.  You might have heard a bit of news and debate over the Affordable Health Care Act in the United States, often called "Obamacare." I attribute the gray hairs sneaking in around my temples to my work on the passage of that bill. The law is about making sure Americans receive the health care we all deserve, regardless of pre-existing conditions and income. Even in my relatively wealthy country, there are Americans who grapple with high costs and lack of quality services where they live.

South Africa has had to contend with these same issues, while addressing the inequities of Apartheid and coping with an AIDS pandemic that would strain any health network. Since the early days of the crisis, the U.S. PEPFAR program has invested 4.7 billion dollars, partnering with South Africa to combat HIV/AIDS. And clearly the tide is turning. Under the leadership of Health Minister Motsoaledi, the South African government has put more individuals on anti-retroviral (ARV) treatment-2.4 million-than any other nation, and reduced mother-to-child transmission of HIV to less than 3%. South Africa is the first country in the world taking over the care and treatment programs PEPFAR previously provided.

But it's not just about the numbers. Our partnership has saved and changed lives, and continues to do so. Thirty-eight year old HIV activist Jacob Jabari is one such person. Diagnosed with HIV in 1999, Jacob now dedicates his life to helping others with the virus. ARV treatment saved Jacob's life, while helping to ensure that he did not transmit the disease to his family. Jacob's story is a powerful testament that proves HIV is no longer a death sentence. He now works for the Foundation for Professional Development as a research assistant and provides valuable counseling and testing to couples in his community.

I know that those of us gathered here in the largest school in Africa will concur with Minister Trevor Manuel's claim that "If we change the quality of education, young people will be more employable. They will be skilled to start businesses and that is a starting point to real transformation."

It's not simply about access to education - which is obviously important - but that's really only the first step. We must ensure that all children have access to QUALITY education. Unfortunately, the United States still struggles with our own obligation and responsibility to invest equally in our students and our schools. America has some of the very best schools in the world, and yet too many children are receiving sub-standard education, dropping out, or achieving top grades and not being able to afford college.

When I met with Minister of Basic Education Angie Motshekga last month, we talked about the same struggles here in South Africa and how we can work together to tackle some of these challenges. That's why the U.S. Agency for International Development supports a public-private partnership with South African organizations to develop local solutions to education challenges.

One thing we realized in the United States is that improving educational outcomes in the classroom must start with better trained, more effective teachers. So, here in South Africa, USAID is working with partners in government to develop high quality teacher training modules.

This week I also had the privilege of visiting the Ponelopele Oracle Secondary School in Kaalfontein, Midrand. Praise Ndebele, a 2013 matric whose marks were the highest in Gauteng, studied at the Oracle School. His achievement on the matric exam marked the first time since the start of the National Senior Certificate exams a candidate from a no-fee school was the best in Gauteng, which I think is pretty  spectacular.

I am proud to see how an American company built a beautiful school facility and has continued to engage with staff and support the school through so many creative means - career days, staff development, new and upgraded computer labs, and hands-on technology efforts. It's a great example of the wonderful work American companies are doing in South Africa - which I will expand upon later.

At the Oracle school as I lamented my lack of a descriptive Zulu name a group of students gave me the designation Ambassador Siyakubonga which of course means "we are grateful." I have much gratitude for the spirit of those young people who are the real treasures of South Africa.

Last year, over 1,200 South Africans were enrolled in U.S. universities, and hundreds of U.S. students come here to South Africa to study every year. The U.S. government funds a wide variety of exchanges - such as the world-renowned Fulbright program.

We can build on such successes that connect our educational institutions to local businesses and communities to produce graduates with the right skills needed to get good jobs.

And that is the perfect segue to our conversation on jobs, trade and the economy.

Jobs: isn't that what we all want? Good jobs, in growing fields, with a solid workforce driving the economy. I'm particularly heartened by the role American companies have played in the development of South Africa's economy and the creation of stable, high quality jobs here.

The American Chamber of Commerce in South Africa surveyed 78 of its biggest firms last year. These 78 firms directly employ nearly 70,000 people, and indirectly employ another 75,000 workers here in your country. These companies spend over 320 million Rand on training every year, and spent 500 million Rand in 2010/2011 on skills development, above and beyond the mandatory 1.5 percent of their total payroll taxes in spending on training that the government requires.

Increasing exports and attracting investment is critical for job creation. The U.S. economy has added 8 million new jobs since President Obama was elected. That sounds like a lot, but it is still not enough. Job creation, increasing exports and attracting investment are just as important to us as they are to you here in South Africa.

But there are areas where I think South Africa has some challenges and I'd like to address some of them.

First of all-trade. President Obama has made clear that he wants to expand trade with Africa. Africa is a continent poised for sustainable growth. We believe we can contribute to, as well as benefit from, that growth.

One key way the United States supports jobs and prosperity in South Africa is through the Africa Growth and Opportunity Act, or AGOA. Since 2000, under AGOA, African countries can export duty free to the  United States. In 2012, South Africa exported $2.1 billion, more than 20 billion rand, to the United States under AGOA. Many industries, including several automobile manufacturers, have told us AGOA was critical to their decision to invest in South Africa.

And South Africa exports more manufactured products to the United States under AGOA than any other country. In 2012, South Africa's largest exports to the United States were the 60,000 cars made by companies like BMW and Mercedes, along with $70 million dollars' worth of South African wine. Overall, Americans bought $250 million in South African agricultural products last year, an historic high.

And because we understand and are committed to the mutual benefit to both of our countries when we trade more, we are trying to help. For example, the United States recently eased regulations governing the import of citrus from South Africa, and made plans to expand the number of American ports to which South Africa farmers can ship their crops.

President Obama has made clear that he supports the renewal of AGOA after the current legislation ends in 2015. That said, when he was here last year he emphasized that although the Administration supports South Africa's continued inclusion in AGOA, he needs to be able to show American businesses and Congress there is a level playing field for trade between the U.S. and South Africa.

So when faced with unnecessary barriers, American businesses and law makers naturally ask why we should give AGOA privileges to South African companies when U.S. products are prevented from  accessing this market. It is a legitimate question. And one that is likely to be brought up when AGOA renewal is debated in Congress later this year.

U.S. business has publicly voiced its concerns about trade issues with South Africa to Congress and the Administration. Late last year, a group of 15 major U.S. agricultural associations representing 120,000 farmers and 8,000 agribusinesses released a letter protesting discriminatory South African barriers against U.S. pork, beef and chicken exports. This ad hoc coalition has members in every State and its businesses represent virtually all the companies in the United States that process corn and oil seeds, manufacture feed, and build agricultural machinery. Just one group of the fifteen, the National Chicken Council, represents 200,000 jobs in the United States. They aren't seeking concessions -- just fair treatment. There is a lot at stake for both of us. I hope unnecessary and unscientific barriers against U.S. imports will addressed well ahead of the AGOA renewal debate.

We have all learned that you need to work to preserve good jobs, protect the business environment, and support domestic industry, but not at the expense of competitiveness in trade opportunities today, and the opportunities of tomorrow with new products and innovations.

Because we see the value of increased trade, the United States is moving ahead with new potential agreements with Asia and Europe. The countries we are negotiating with in Asia and the Pacific Rim represent 40 percent of the world's gross domestic product. This Trans-Pacific Partnership agreement, when signed, will fundamentally alter global trade over the next decades by erasing most trade barriers between North America, parts of South America, and major economies in Asia.

South Africa is working on trade arrangements with the BRICS, and we encourage that approach. If you can win fair market access then your economy will benefit with better jobs. But South Africa must endeavor to keep up with the ever-expanding drop in trade barriers, or else it will face a competitive risk. 

Trade facilitation will also be vital to South Africa's economic success. South Africa rates 41 out of 189 for ease of doing business but only 106 out of 189 for ease of exporting. Improving this number will strengthen the South African economy as well as the Southern African economy creating thousands of new jobs.

And it has long been understood that investment follows trade. Investors are looking for policies and laws that balance benefits for workers with protections for companies. And with investment should come job creation that reduces poverty and brings about economic transformation. But the latter does not happen on its own or through the good will of fund managers. 

I said that investment should lead to transformation but I will not share a rhetorical home with those who suppose that investment and trade are elixirs in their own right. Our governments must be alert to historic infrastructures that continue to drive income disparities despite increases in worker productivity in Ohio and in Port Elizabeth. Jobs are critical, but not the whole answer to significant social and economic challenges both our countries face.

President Obama said in his State of the Union address, "After four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by - let alone get ahead. And too many still aren't working at all."

This is a problem that, unfortunately, also plagues South Africa. President Zuma in his address elevated acute inequality as a baseline hindrance to a truly equal society. I recently had the honor of meeting the founder of COSATU, Jay Naidoo, who warns that South Africa must urgently deal with the inequality problem before the conflagration of what James Baldwin called "the fire next time." Following the tragic Marikana incident, Naidoo wrote, "There is growing ferment in our land. The people in our townships, rural areas and squatter camps are bitter that democracy has not delivered the fruits that they see a tiny elite enjoying. They are angry and restless." Addressing South Africa's critically high unemployment and stubborn inequality has to be something that we all commit to as it has implications beyond these borders.

Now this is the point in my remarks where I might be expected to conjure up President Mandela's legacy with the suggestion that this challenge should be met in the spirit of his vision. But you'll forgive me for saying that I'm already finding that evocation to be an empty signifier divorced from political and social justice context - not unlike the ways that Dr King's legacy has been reduced to a dream without his concomitant call for a peace that only comes from economic freedoms. The Mandela who coupled reconciliation with a muscular demand for national reconstruction and development is the appropriate North Star for this moment.

As promised at the top, I would like to now visit in some detail the current dynamic with organized labor and its impact on job stability. This is a delicate topic and one that I've already indicated has a poignant resonance for me.

I want to be clear I don't have a position on any individual labor actions ongoing in South Africa, nor insight into any current negotiations. South Africans have the right to strike enshrined in the Constitution, something your trade unions fought hard for, given the critical role they played during the apartheid struggle.

But clearly the volatility in the South African labor sector has had a serious impact on foreign investment. American companies have told me that high-profile strikes shutting down entire sectors and industries, coupled with the potential for violence, makes it very difficult for them to convince their international boards to take on the risk of investing in South Africa. Remember the 60,000 cars exported to the U.S. in 2012 under AGOA? The numbers will be much lower in 2013 after the assembly plants were shut down for a month and a half due to multiple strikes.

And this will lead to fewer jobs in the long run, not more stability for a vulnerable workforce.

There are plenty of examples of this already. Although Toyota recently announced that it will start building the new Corolla model in Durban, other manufacturers are deciding against investing in South Africa. The CEO of Japanese car company Datsun recently said, "We know that every three years there are  negotiations ... in the motor industry. But it was the duration and strength of the strike that was cause [for] was concern." And reports are now that Datsun has decided to locate its new factory in India, rather than in South Africa.

This news comes three months after BMW, which is already here making cars, publicly announced it was shelving plans to add a new vehicle line to its South African operations. This car would be a global export product and would have added thousands of jobs to the manufacturing sector.

I will favorably stack up my fierce advocacy for the collective voice of workers against anyone. But what I have learned from my experiences in the U.S. is that workers, and the businesses that employ them,  need each other much more than they ever have at any comparable point in history. Technology and globalization are changing the nature of competition and work far faster than ideological battles in government or debates on the shop floor. Manufacturing has mobility undreamt of in the last century.

But the nature of what workers ultimately need has never and will never change. As the great freedom fighter Amilcar Cabral declared: "Always bear in mind that the people are not fighting for ideas, for things in anyone's head. They are fighting to win material benefits, to live better and in peace, to see their lives go forward, to guarantee the future of their children..."

Workers and business owners have a shared investment in this collective future. Both sides need to take a long-term view of how they both can prosper, rather than securing a demand or winning a concession. Everyone's goal should be an economically strong and sustainable industry that employs the largest number of workers with strong wages and benefits. President Zuma spoke to this compact in his national address in ways that would suggests that he sees government's obligation in this as well.

The challenges of the torturous history of economic dislocations demands that we all embrace the goal of closing that chasm - workers, unions, employers, investors, government, faith-based, community. As a unionist I knew that in my world there were lots of tactics to employ to enhance real worker leverage - political lobbying, demonstrations, public solidarity campaigns, capitol and economic pressures to command the attention of corporate boards - and of course strikes. How and when we engaged these tools always needed to be strategic and true to the goal of changing workers lives for the long term.

I can recall working with the lowest wage earners in New York's healthcare industry - mostly women of color who toiled on the frontlines providing healthcare to others but who didn't even have basic coverage for their own children. Well those women won change when they shamed their employers with a march down 5th avenue led by the highest ranking Catholic cardinal in the country. These workers didn't strike but instead used the power of community support and moral suasion to win economic changes.

I can also recall an instance where I was managing a strike of low wage workers and a certain young senator from Illinois who was just beginning to make a national mark called into the workers and publicly embarrassed the employer back to the negotiating table. And I can also recall being an organizer on a transport workers strike that crippled a city, cost businesses billions of dollars and ultimately hurt the  checkbooks of the striking workers themselves.

Leaning into the example of US history, it wasn't until FDR that we created a solid framework for collective bargaining; workers gained voice and had a structure to support them in the exercise of their rights. Because labor law was enforced employers understood that they had a social contract with their work force and we all benefitted. The bottom and top 20% shared equally in the prosperity of our economy creating the largest middle class the world has ever experienced.

While US unions focused on collective bargaining, unions in Germany also wanted co-determination - being at the table to make the business enterprise the best that it could be because workers would share in that growing productivity/prosperity.  Our early history had all workers gaining through the political power of unions.  Ending child labor, winning a 40 hour work week, weekends off, and Social Security and Medicare and civil rights: through union political voice we lifted the  floor.

But when we were only focused on our members and reverted to primarily using disruptive tactics we lost support of the public, transparency with employers and the enforcement arm of the government.  We learned that lesson late but where we did it has made a difference in sustaining a struggling movement in the States.

South African laborists seemed to absorb these lessons from the US and Germany early on judging by tools devised in the first government. The Labor Relations Act and the Companies Act both allow for formal labor participation in company management. But resistance to this participation means that the measure has atrophied.

South Africa also has a strong framework for labor mediation. The impartial Commission for Conciliation, Mediation and Arbitration (CCMA) is positioned to help assure effective negotiation and reconciliation happens when disputes rise. But it can only provide a platform and mediate between parties. It cannot force the parties to settle. Its results are only as good as the input provided by the parties.

Here and in my home the active question is: how do workers demand a share of their hard work in a way that maximizes economic potential? The model cannot continue to be that one waits until after a strike is initiated in order to enter into real negotiations.  And beyond retail wages, how do we change the framework for economic sharing in a substantive way that addresses structural inequality?

The current shape of the conflicts can be a vicious cycle. Workers are exploited, they disrupt the enterprise making the employer lose money, foreign investors go elsewhere, workers fall further into debt and no one speaks for the scores of long-term unemployed who have never had the benefit of a union.

Strike action is an important tool but cannot be the first tool of the labor movement because of its profound impact, in both human and economic terms.

One final chapter, adding to the volatility in the labor sector is regulatory uncertainty. Some of South Africa's schemes to create and implement industrial policies have also created high levels of policy uncertainty for local and foreign investors.

Among the key concerns of investors are evolving localization and other performance requirements, tighter labor markets, and the prospect of weaker property rights. Legislation to implement these changes, some of which are still in draft form, often lacks regulatory certainty.

Specifically, for example, taken together, the Investment Promotion and Protection Investment Act, the draft Mineral and Resources Development Act, and the Private Security Industry Regulatory Authority Act amendments represent a potential weakening of the investment climate. I urge the government to take a close, comprehensive look at the combined effect these bills will have on the investment climate and ask if that is the best way to ensure a broadly shared prosperity.

So that is all. My thimble runneth over. Thank you for your indulgence as I've shared these observations perhaps without much wisdom, but at least with a sincerity and candor I believe befitting of our strong friendship.

We stand shoulder to shoulder together, not only in our challenges but also in our aspirations for the future. Your remarkable Constitution spells out in beautiful detail exactly the type of society you expect to have. We are equally proud of our own constitution. As both of our presidents said this month, we owe it to our people to live up to the shared ideals of equality, prosperity, and human dignity for all.

And as someone who has spent my entire professional career working in the labor movement and in politics, I have to say that I appreciate your scheduling a labor strike and a national political campaign to start off the year. It has made me feel right at home.

Thank you. And now I would be happy to take some questions.

 

 

Related Bureau or Independent Office 

Last updated: August 07, 2014

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