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Factba.se: Australia DFAT Country Briefs - South Africa
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COUNTRY BRIEFS


INTRODUCTION

Australia has a longstanding and friendly bilateral relationship with South Africa underpinned by strong people-to-people links and shared interests in international issues including the World Trade Organization (WTO), the Cairns Group, fisheries enforcement, human rights and people smuggling. South Africa is Australia's largest trading partner in Africa and growth in bilateral merchandise trade continues to be strong. Two-way merchandise trade was $3.88 billion in 2007 (total Australian trade with sub-Saharan Africa was $5.22 billion in 2007).

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POLITICAL OVERVIEW

Since its first post-apartheid all-party elections in 1994, South Africa has developed a firmly entrenched democracy, a free press, and a sound economy. However, serious problems remain, including high levels of crime, unemployment, HIV/AIDS, large income disparities and a shortage of skills among the black population (one of the legacies of apartheid). President Thabo Mbeki's second five-year term finishes in April 2009 and he is constitutionally ineligible for re-election. Jacob Zuma, who replaced President Mbeki as president of the African National Congress (ANC) in December 2007, has indicated he will seek the ANC's nomination as candidate for the 2009 South African presidential elections. The South African Parliament is dominated by the ANC which won 70 per cent of the votes (279 seats) in April 2004 elections. The next parliamentary elections are scheduled to take place in 2009.

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FOREIGN POLICY

South Africa is the economic and political powerhouse of southern Africa and plays a leading role in Africa's regional and international agendas, including through the African Union, the New Partnership for African Development and the Southern African Development Community. In 1994, following the end of the apartheid era, South Africa resumed its seat in the UN General Assembly, rejoined the Commonwealth, and became an active and leading member of the Non-Aligned Movement. South Africa began a two-year term as a non-permanent member of the United Nations Security Council in January 2007.

South Africa has been important in supporting resolutions to conflicts in Africa, including in Burundi and the Democratic Republic of Congo, and more recently in facilitating dialogue in Zimbabwe between the ruling ZANU-PF party and the main opposition party, the Movement for Democratic Change.

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ECONOMIC OVERVIEW

South Africa is the biggest and most advanced economy in Africa. It is an emerging market underpinned by an abundant supply of natural resources; well-developed financial, legal, communications, energy (despite some difficulties which highlighted inadequacies in the system), and transport sectors; an effective and growing stock exchange and a modern infrastructure. With a population of 47.5 million people and gross domestic product per capita estimated to be US$5,906 in 2007, South Africa is an upper-middle income country, although there remain large disparities in income within the country. South Africa's main long-term social and economic challenges are the high rate of unemployment (between 27 and 36 per cent depending on definition), the HIV/AIDS pandemic and high levels of violent crime.

Mining and related activities remain at the centre of the South African economy and account for nearly 40 per cent of earnings from merchandise exports. The manufacturing sector is largely centred on mineral processing and contributes about 18 per cent of GDP. South Africa is one of the world's largest producers and exporters of gold and is a major player in the value-added processing of minerals. The services sector is the largest employer, with over half of total employment, and accounts for over 60 per cent of GDP. The financial sector and institutions in South Africa are highly sophisticated and include banks and financial institutions with the ability to handle complex international financial transactions. South Africa is a net exporter of food, producing a wide variety of products such as fruits, wine, tobacco, sugarcane and corn.

While South Africa's post-apartheid trade policy has been broadly supportive of trade liberalisation, there has been a shift in recent years towards greater government intervention in economic policy-making through industry policy. The change reflects growing concern about large-scale unemployment and the need for rapid job growth.

The South African Ministry of Finance has highlighted the importance of increasing investment in infrastructure, improving municipal planning and service delivery, and reforming the regulatory environment in order to promote business growth and employment.

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BILATERAL RELATIONSHIP

Australia's relations with South Africa are underpinned by strong people-to-people ties. Australia is proud of its role in supporting the anti-apartheid struggle and sporting links, especially cricket and rugby union, are also important. Around 115,000 South African expatriates live in Australia and about 7,500 Australians reside in South Africa. In 2007 approximately 97,000 Australian residents visited South Africa.

Australia and South Africa have a history of cooperation across a range of issues, notably in the Commonwealth, the World Trade Organization (WTO), the Cairns Group, the New World Wine Producers Group, human rights, climate change, fisheries protection, the Commission for the Conservation of Antarctic Marine Living Resources, the Kimberley Process on conflict diamonds, migration and people smuggling, law enforcement, defence relations and customs cooperation.

Australia's relationship with South Africa continues to strengthen. Bilateral agreements are in force covering Extradition (2001), Defence Information (2001), Double Taxation (1999, 2008), Air Services (1995) and Science and Technology Cooperation (2006). Under the Australia-South Africa Climate Change Partnership, finalised in 2006, both countries are collaborating on a range of projects related to climate change.

Since 1994, when South Africa held its first fully democratic elections, Australia has contributed over $120 million in development assistance to South Africa. In 2006-07, the estimated value of Australian aid to South Africa was $5.5 million.

Under Australia's aid strategy for Africa, bilateral support is being superseded by region-wide programs. Major bilateral activities were previously undertaken in public sector reform, local government, vocational education and natural resource management. The program to South Africa now predominantly consists of scholarships, support for trade liberalisation and democracy-building, and community-based NGO projects.

South Africa also plays a key role in Africa's development through its own development assistance program in Africa.

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BILATERAL ECONOMIC AND TRADE RELATIONSHIP

Bilateral economic and trade relations continue to grow. Our 21st largest merchandise trading partner and 16th most significant merchandise export market, South Africa is by far Australia's largest and most dynamic market in Africa. In 2007 two-way merchandise trade was valued at $3.88 billion. Australian exports to South Africa were $2.53 billion (mainly medicaments, meat and civil engineering equipment) and Australian imports from South Africa were $1.35 billion, notably passenger motor vehicles (mainly BMW Series 3 vehicles) worth $663 million, as well as pig iron and motor vehicle parts.

Two-way investment flows between Australia and South Africa have expanded since the end of apartheid. South Africa dominates African investment into Australia. At the end of 2007 (latest figures), investment from South African amounted to $1.2 billion. Although Australian investment in South Africa is smaller - $893 million at the end of 2007 — Australian investment in South Africa's mining sector is steadily increasing. Apart from the mining sector, agriculture, infrastructure and services are other sectors attracting Australian investment to South Africa.

The Australia-South Africa Joint Ministerial Commission has worked to strengthen bilateral economic cooperation. In October 2006, the Australian and South African Trade Ministers met in Canberra for the fourth Joint Ministerial Commission meeting which was well-attended by private sector representatives from both countries.

Australia and South Africa also cooperate in several multilateral trade and economic forums. South Africa is the only African member of the Cairns Group, which is chaired by Australia. The Cairns Group has continued to play a key role in setting the agenda for multilateral agriculture negotiations and pressing the WTO membership to meet in full the far-reaching mandate set for the WTO Doha Round of trade negotiations.

Another forum for economic and trade cooperation between Australia and South Africa is the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). The Association aims to facilitate trade and investment in the region.

South Africa also participates in a number of multilateral economic groupings. South Africa is a key member of the G20 group, along with Brazil, India and China. The G20 aims to represent the interests of developing countries in WTO negotiations, particularly in order to reduce import barriers, domestic support and export subsidies in the agricultural sector.

South Africa is a member of the Southern African Customs Union (SACU), along with Botswana, Lesotho, Namibia and Swaziland. South Africa has a Trade, Development and Cooperation Agreement with the European Union. SACU concluded preferential trade agreements with Mercosur (Argentina, Brazil, Paraguay, Uruguay, Chile and Bolivia) in 2003 and with the European Free Trade Association in 2006. SACU is developing an agreement with the United States and intends to explore trade agreements with India and China in coming years.

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Last Updated: August 2008

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