MODERATOR: Excellencies, distinguished ladies and gentlemen, we are going to start the press conference. The structure is as follows: the two honorable ministers will make brief remarks and after their remarks there will be a question and answer session. But time is very tight, so we ask that you put your most important questions first. With those remarks, I invite the Honorable Minister Malie to make his remarks.

MINISTER MALIE: Thank you very much, yes. Welcome ladies and gentlemen of the media. This is going to be very short because as has been said, we are running out of time because Ambassador Zoellick and his delegation will be leaving in a short amount of time. So we are going to make it very short.

What is happening is I think we are all very happy and all very fortunate that we have the USTR’s visit in our country, primarily to come and see what we have been able to achieve as a country, as a nation, through the American initiative of AGOA. And also for him to take a look at the countryside because we are now candidates for the Millennium Challenge Account. To see some of the areas that we would like to develop in terms of the water resources, that it would be good for someone to see--at least with a member of the Millennium Challenge council [board], like Ambassador Zoellick--would be able to see and to interpret firsthand.

We are all aware of the fact that AGOA has done a lot for us within a very short period of time. Within 2 years we have moved from 20,000 people employment within the sector of textiles and clothing to over 50,000 currently. We have been able to double our exports to the US from about 120 million three years ago to just over 400 million dollars currently. And those are the achievements that we have been able to have. We have also been able within the period to attract foreign direct investment within the sector in the country to the tune of over 150 million US dollars.

And one of the things we’ve invited the USTR to come and see and observe is this very factory we are conducting this press conference within. He has been able this morning together with his delegation to move around and see precisely what the factory has been able to achieve in this short space of time. And also for him to be able to comprehend when we come up with issues within the AGOA framework and within the SACU FTA and the negotiations that we’re currently locked in with the US, and also within the World Trade Organization on the multilateral trading system arena. For him to be appreciative of the achievements and also the problems that we’re faced with as a country on the ground. So finally that is what this visit was all about. To familiarize the USTR with what is going on and we hope to achieve in the future within this country. We went out yesterday, we went flying over the Katse Dam, we went to Mohale, not for pleasure really but just to familiarize them with the projects that we are trying to put together within the Millennium Challenge Account. And having said that, we are pressed for time and I will turn it over to Ambassador Zoellick to say a few words, and if you have questions to pose be kind enough to be concise and to the point. Thank you.

USTR ZOELLICK: Well first let me join Minister Malie in thanking all of you for joining us. I had the honor this morning of meeting the Prime Minister, but as Minister Malie said, we have had a chance to work together closely over four years on issues such as AGOA, such as the SACU FTA with the United States, such as issues related to the Doha global WTO negotiations. But also I’ve benefited from his counsel and advice and experience on a range of issues and we’ve been able to try to help as well with the Millennium Challenge Account, a new type of aid program, and some assistance on HIV/AIDS. I also had the opportunity to meet yesterday the new Minister of Natural Resources who joined us to go out and look at the dam and some of the water planning operations, and I met the Foreign Minister this morning as well.

We in the United States have great respect for what Lesotho is accomplishing, and that’s one reason why I wanted to come here myself. In part through the efforts of the Minister, Lesotho is the largest apparel exporter in all of sub-Saharan Africa to the United States under AGOA, and as he mentioned that’s over $400 million in exports. Now, AGOA can open the door, but it requires good governance and vision of a country’s leadership to help take advantage of the opportunity. I’ve been extremely impressed over the past four years with the team the Prime Minister has put together, like my colleague Mpho, and about how the government is committed--in a democracy--to trying to make development work.

Because all of you know and we know, that at the end of the day this is about creating jobs and opportunity and hope for people. And that is what we can try to create the foundation for. I want to thank Mr. Wang who made a special effort to be here to show me around this facility. And let me just give you an example of why this is so important. At the end of this year, the forty-year-old trading system’s quota system, which limited how much in the way of textiles and apparel would come from each country to the United States and Europe… that quota system ends and many people expect that the competition from China and India and Pakistan will be very strong. Now AGOA gives an advantage to Lesotho and other countries in sub-Saharan Africa, because you pay zero tariffs where the other countries that are not part of that system pay tariffs ranging from 10-12 to 15-20%.

However, to be able to compete, sub-Saharan Africa needs efficient, integrated production. In the past, much of the garment work, the sewing work, was done in Lesotho and other African countries, but the fabric was made elsewhere. And even the fabric has to be made with cotton elsewhere. Well my first stop on this visit to Africa was to West African countries that grow cotton—Mali, Benin, Senegal—and some of that cotton is coming to Mauritius and some of it Mr. Wang said is coming here, too. So people can be paid in Africa for producing cotton that is made into thread and fabric, people can be paid in Africa for making the fabric, and people can be paid in Africa for actually making the garments. And to be efficient and most competitive, Africa needs to develop these integrated operations. And so, the Minister has been a leader in trying to create the right business environment to create opportunities for investors like Mr. Wang, who operates all around the world—he told me about his operations in Central America, and Mexico and elsewhere.

So I wanted to come, after working so closely with the Minister for four years, to see Lesotho myself. I have the honor of being the first Cabinet member in the United States to visit Lesotho. As the Minister mentioned, in addition to my trade role, I serve on the board of the Millennium Challenge Account, which is a new aid program that is designed to help countries that rank very high in terms of governance standards, particularly fighting corruption and having democracy, and also investing in their people, education and health, and also overall economic progress. And one reason I wanted to come is that I wanted to see the projects that Lesotho is trying to develop for this aid program.

So we have a full range of activities. Even though Lesotho is small and the United States is big, we’re very proud of the work we’ve been able to do. Because first and foremost, in setting a model that we hope to encourage, because as I said to the Prime Minister, the success of Lesotho is a success that we believe we’d share, because it would send a good signal to others. So, I apologize for going on long but I’d be happy to take your questions.

MODERATOR: Ladies and gentlemen of the press, question time.

QUESTION: My name is [unintelligible] and I work for South African Broadcasting Corporation here in Maseru. This week in Namibia, you met with the South African Customs Union trade ministers. What issues did you discuss? That’s the first question. And how soon can we see the US-SACU free trade agreement?

USTR ZOELLICK: Those two questions are interrelated. Because the discussions that we had in Walvis Bay in Namibia, which the Minister here attended, really focused on two issues. One, the US-SACU Free Trade Agreement, and second the global trade negotiations where the Minister’s been very helpful over the past years since we launched that in Doha in 2001.

The SACU-US free trade agreement negotiations had somewhat stalled. So one reason I wanted to come and meet with all five ministers was to try to discuss together: what is our vision for what we want to try to achieve? And what type of agreement, comprehensive agreement, might we develop? And then, what practical steps might we be able to take to get that back on track? Now, keep in mind, while we were starting to negotiate this FTA, our Congress extended AGOA from 2008 to 2015. So over 90 percent of sub-Saharan Africa’s goods come into the United States duty-free already. So one might say well, then, why do a free trade agreement? And the answer really comes to some of the elements beyond the goods trade. And this goes to SACU’s ability to increase its global competitiveness. Because the issue for the future is not just SACU and the United States, but how SACU will compete with India, or China, or Latin America, or Southeast Asia.

So I think we had a good session in terms of discussing why we had a common interest in this agreement. I think I outlined the elements that were important from a U.S. point of view to have in the agreement. I think the SACU ministers need to have time to go back and discuss that. But one thing that I suggested that I think there was a positive response to, was that in the first couple of months of the year we’ll have a senior level official – maybe for me, one of my deputies – to meet with other senior officials above the negotiators to try to again have a sense of the common vision and how we might start to move this forward. So the purpose of it was to have a good discussion like we had. And I think we now have a suggestion that I hope will get us back on track.

The other part of our discussion with the Doha agenda which we also talked about was steps that we want to start to take early in 2005 to move that forward as well. Just one last word on that. In the WTO, the Doha or global trade negotiations, there’s often focus on developed and developing countries. But there’s also much possibility for trade among developing countries. And that’s one issue we also talked about: the opportunities for sub-Saharan African countries to sell more into some of the bigger developing countries. And here I had the opportunity to have a good discussion with the minister from South Africa who I think can play a leadership role in this along with Minister Malie.

QUESTION: I am [unintelligible] from the Public Eye. Can you tell us the role you are playing regarding the issue of wages paid to workers in AGOA factories in Africa and what are you doing to make sure that qualified Basotho workers get good opportunities in these factories?

USTR ZOELLICK: Well first, under AGOA, there are some basic criteria that we in the United States are supposed to examine about countries’ basic labor conditions to qualify for AGOA. Now, these are the basic labor conditions and obviously more particular ones really are the responsibility of the government working with the factories. Now, I saw an article as I came in that the Ambassador showed me, about this issue of Basotho workers and their opportunity to rise in the business. Obviously this is something that is really going to be determined by the people who run the factory. The workers and obviously the government may also be able to encourage various things.

But I’ll tell you why I actually found that article particularly interesting. The first need is to create jobs. You can’t rise in a profession unless you have a job. And the fact that these provisions have helped create jobs for some thirty or forty or fifty thousand Basotho is a real advantage. Now, the second thing is that it was actually to me an encouraging sign of the employment possibilities because once people have a job, then they start to say, I want a better job. But they can’t do that unless they know there’s a pretty good chance to have a job. And so what will undoubtedly happen is that the company itself has to determine, you know, how it can train local individuals. I asked Mr. Wang here if they have some training programs and he said yes they do. Now, different companies have different styles. I’ll give you an example: in the United States there’s a big company called UPS, United Parcel Service. All the executives in that company start out spending some time actually delivering packages so they can learn the business.

So these are aspects that as a government we don’t get involved with all the details, but I’m delighted that the opportunity is starting to be created because clearly there’s an educated workforce in Lesotho, and the people from universities will have opportunities whether here or elsewhere.

Now, you also asked about environmental and other labor conditions. One of the parts that we also have proposed as part of our FTA with SACU is that countries enforce their own labor and environmental laws. Now this is a very sensitive topic, because many developing countries fear that developed countries will set labor standards so high that they won’t be able to compete, and that labor standards could be used to protect developed-country markets. And frankly, there are people in my country that want to do that. They are afraid to compete with workers in Africa and in Asia and in Latin America. So what we say is, we’re not going to tell you what labor laws to have. We will encourage you to meet the basic standards of the International Labor Organization. But you should enforce your own laws. And that’s true for environmental laws more generally.

Last point: I was impressed when the Minister took me yesterday to visit dam sites, how much attention had been devoted in building the dams to some of the environmental concerns and the concerns of the local public, in terms of providing sanitary water opportunities and taking care of the environment. And this makes sense because I will say, you have a beautiful country. And I think one of the other opportunities is tourism here. And you want to keep your country beautiful because I could see you could draw lots of visitors if you create the right hotel and transportation infrastructure. The climate is fantastic, the mountains are beautiful, so there’s lots of opportunity here.

MINISTER MALIE: I’d also like to just add on to this one on labor and environment. We have an inter-ministerial task team which was set up by the Right Honorable, the Prime Minister. And these are some of the issues that we are addressing with him in that task team. And that task team is made up of government ministries, people from the private sector, the industry itself and also from labor and employers associations. So these are issues we have grappled with and are tackling and are trying to make sure that we are above them. We have to really, as USTR has clearly indicated. There are those standards that we have to meet with AGOA, that we have to be certain that we take care of our environment, that we take care of our labor issues, and it’s a priority with us.

MODERATOR: Excuse me, this is the last question. Yes, sir?

QUESTION: I am from Transafrica Media. I would like to know specifically what are some of the rules provided for breaches of some of the rules on workers rights in AGOA like Section 104 to prevent some international complaints which occurred some time ago. And what about the issue of freezing of minimum wages of workers that was done by the state?

USTR ZOELLICK: Let me start and the Minister may want to add to this. Under AGOA, there are the basic criteria to which you referred about workers rights. And the way we operate a transparent process is that at various times during the year, we invite people from around the world to comment if they think countries are not meeting the criteria. So our labor unions can comment, people in Africa can comment. We open it up under what we call our Federal Register… we take comments on it. Now, if we find a problem, our first response is to try to help solve the problem, not to put penalties. Remember because penalties at the end of the day probably don’t help anybody. It’s a question of using that to encourage people to do the right thing.

So we would discuss with a country if there’s a problem so you could try to fix the problem. Now ultimately under AGOA the penalty could be to withdraw the eligibility under AGOA to get the benefits. But that’s a very big step. Because that could be very harmful and in the end, hurt more workers than it helps. So what we try to do is work with countries, and I certainly feel from everything we’ve done with Lesotho that this is a country that realizes that it’s trying to have a trade-off. It’s trying to create jobs, but you can’t pay the same wages that you pay in the United States because the productivity isn’t as high. So how do you try to create the conditions for the economy to grow and develop and people to have opportunity. In the Free Trade Agreement, we try to go a step beyond that, and that’s one of the items that we’re discussing as we proceed.

MINISTER MALIE: I think there are those fundamental human rights that are enshrined in our constitution. And one of those is freedom of association and freedom of choice. And I think we have strived all the time to try to make sure that we go by the primary rule, which is the constitution within this country. When it comes to labor issues, we have a [unintelligible] arrangement whereby government, labor and the employers come together to set minimum wages and to agree, on an annual basis, this is minimum wage we are coming up with. And if there are any freezes or any increments they come up with reasons to be able to do that.

I think we’ve experienced a lot of problems in terms of the sector. One of the major problems has been the surging of the rand. And that has adversely affected the exports that we’re sending out. I think labor together with government and the employers were cognizant of this when they came up and reached an agreement that says that wages in that sector were going to be frozen. Because we’d rather freeze wages than not have them. The question was, do we go this route and encourage some of these companies to be able to come out of the financial difficulties that they were in, or do we go ahead and close some of them? And I think the three parties agreed to the package that is currently on the table. And I’m sure the media is aware of it. And I wasn’t hoping it would come up, it’s an issue that all of us are aware of and what is taking place in this sector.

USTR ZOELLICK: Let me just make one final point. The reason we’re rushing is that I have to get a plane to take me up to Egypt. I started this visit in Europe meeting my European colleagues, [then] West Africa, Southern Africa, Egypt. In some ways, it’s a good window on what is happening. It’s a global market. And in some ways this creates opportunities for developing countries but also big challenges. And one reason that I’ve enjoyed working with Minister Malie is because I’ve learned from him some of the challenges as he just outlined. The balance between wages and job creation and investment… which happens in my country too.

But I would just urge you as you are reporting more generally around Africa, to realize that this requires a sensitive balance and good work by the businesses and the workers and the governments together. Because on the first 3 West African countries that I visited, I don’t think any of them had more than one million dollars of exports under AGOA. This country has over 400 million dollars in exports and it’s a smaller country. So it shows that none of this can be taken for granted. It takes ongoing work, and frankly one reason I wanted to come see for myself is because great things have been accomplished here but together we’re going to have to work to keep them going to increase opportunity and hope for people in Lesotho.

MODERATOR: We have come to the end of the press conference. Thank you.