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ACTION AF-08
INFO OCT-01 ISO-00 EB-07 MMO-01 PER-01 ABF-01 SS-15 SP-02
/036 W
--------------------- 089665 /21
R 220644Z DEC 76
FM AMEMBASSY PRETORIA
TO USDOC WASHDC
SECSTATE WASHDC 6480
INFO AMCONSUL JOHANNESBURG
AMCONSUL CAPE TOWN
AMCONSUL DURBAN
LIMITED OFFICIAL USE PRETORIA 5828
E.O. 11652: N/A
TAGS: BFOL, SF, BEXP
SUBJECT: REPORT ON COMMERCIAL RESOURCE ALLOCATION GUIDE (CRAG)
FOR FY 1976
REF: USDOC 19561; PRETORIA 5177
1. THE FOLLOWING FY-1976 REPORT ON CRAG REFLECTS DISCUSSION
AT THE ECONOMIC/COMMERCIAL CONFERENCE HELD IN PRETORIA DECEMBER
14-15. REPORT COVERS FIVE QUARTERS FROM JULY 1, 1975, TO
SEPTEMBER 30, 1976.
2. OBJECTIVES OUTLINED IN FY-1976 CRAG WERE SUBSTANTIALLY
FULFILLED DESPITE PERMANENT STAFFING LOSSES, INCLUDING SHIFT
OF SECOND E/C OFFICER POSITION JOHANNESBURG TO PRIMARILY POLITI-
CAL, CHANGE OF DURBAN E/C SLOT TO POL/ECON AND LOSS OF ONE FSL
POSITION BY ECONOMIC SECTION PRETORIA. IN ADDITION TO THOSE
EXPORT SERVICES CONTEMPLATED IN CRAG, CONSIDERABLE RESOURCES
WERE DEVOTED TO CATALOG DISPLAYS ON HEALTH CARE IN JOHANNESBURG
AND CAPE TOWN AND UPDATING OF OVERSEAS BUSINESS REPORT BY
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JOHANNESBURG AND PRETORIA.
3. FACTORS NOT FULLY ANTICIPATED IN FY-1976 CRAG INCLUDE
(A) POLITICAL TURMOIL IN SOUTHERN AFRICA AND DOMESTIC UNREST
IN SOUTH AFRICA WHICH AFFECTED EMPHASIS GIVEN TO VARIOUS
COMPONENTS OF CRAG PROGRAM; AND (B) FIRST SERIOUS RECESSION IN
SOUTH AFRICA IN POST-WORLD WAR II PERIOD.
4. ALTHOUGH WE HAVE NO ACCESS TO US DATA ON TRADE WITH SOUTH
AFRICA IN 1976, STATISTICS FROM SA SOURCES GIVE IMPRESSION US
MARKET SHARE IS HOLDING UP. (DURING FIRST NINE MONTHS OF 1976,
SA IMPORTS FROM "AMERICA," OVER 95 PERCENT OF WHICH IS US,
ROSE 32 PERCENT IN RAND TERMS WHILE SA IMPORTS WORLDWIDE WERE
UP ONLY 10 PERCENT. SINCE CAPITAL GOODS AND TRANSPORT EQUIPMENT
PREDOMINATE, IT IS PROBABLE FULL EFFECT OF SA RECESSION NOT
YET REFLECTED IN THESE RESULTS.
5. IMPORT DEPOSIT SCHEME IMPOSED IN AUGUST 1976 AND REDUCED
IMPORT LICENSE QUOTAS WERE MAIN ACTIONS TAKEN BY SA AFFECTING
US IMPORTS. BELIEVE, HOWEVER, LATTER STEP, WHICH APPLIED
MOSTLY TO CONSUMER PRODUCTS, HAD MINIMAL EFFECT. DEPOSIT
SCHEME IS SCHEDULED TO END FEBRUARY 1977 AND, IN VIEW IMPROVED
SA BALANCE OF PAYMENTS RESULTS THIRD QUARTER, WE BELIEVE IT
WILL BE LIFTED AS PROMISED.
6. E/C CONFERENCE NOTED DISCREPANCIES BETWEEN RESOURCE
ALLOCATION SHOWN IN CRAG AND ACTUAL TIME SPENT IN VARIOUS
ACTIVITIES BY E/C OFFICERS. SPECIFICALLY 260 OFFICER MAN-DAYS
ON MARKET SURVEYS PROVED TO BE HIGH, AS DID 63 MAN-DAYS ON
TRADE POLICY AND 350 ON MAJOR PROJECTS. FOLLOWING WERE
TOO LOW: CERP REPORTS (125 FSO MAN-DAYS), PUBLICATIONS (5),
VISITORS 660), TRADE OPPORTUNITIES (0). ALSO, SPECIAL
REQUESTS SUCH AS OBR METRIC STANDARDS, LABOR GUIDELINES, ETC.
NOT PROVIDED FOR AND INSUFFICIENT TIME ALLOCATED FOR UPDATING
US AFFILIATES LIST. BELIEVE FY-1977 CRAG, WHICH JUST RECEIVED
BY JOHANNESBURG, MAKES ADJUSTMENT FOR SOME OF THESE DIS-
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CREPANCIES.
7. IN ADDITION TO SHIFTS IN ASSIGNED PERSONNEL, A FACTOR
IMPINGING ON CRAG IS GREATLY INCREASED REPORTING NEEDS ARISING
FROM INTERPLAY OF POLITICAL AND ECONOMIC FORCES IN SA, INCLUDING
POTENTIAL EFFECTS OF FURTHER ECONOMIC ISOLATION, CAPITAL INFLOW
AND INVESTMENT PICTURE, PRESSURES BY SA BUSINESSMEN ON GOVERN-
MENT, BLACK ECONOMIC DEMANDS, US ECONOMIC LEVERAGE AND ROLE OF
US FIRMS IN SA, DRAIN ON ECONOMY FROM MILITARY SPENDING,
ASSESSMENT OF HOMELANDS ECONOMIC POLICIES, SA ECONOMIC RELATIONS
WITH NEIGHBORING STATES, ETC. THESE REQUIREMENTS, WHICH ARE
IN LINE WITH 1976 INSPECTION REPORT ON SOUTH AFRICA, WILL PLACE
ADDED DEMANDS ON OFFICERS RESPONSIBLE FOR IMPLEMENTING FY-1977 CRAG.
8. AS CRAG ANTICIPATED, CONSIDERABLE TIME WAS DEVOTED TO
UPDATING DATA ON LABOR PRACTICES OF US AFFILIATES, ON URGING
FIRMS TO LIBERALIZE TREATMENT OF NON-WHITE EMPLOYEES, AND
PREPARING MATERIAL NEEDED IN CONNECTION WITH CONGRESSIONAL
HEARINGS. NOTWITHSTANDING ARRIVAL OF NEW LABOR OFFICER
JOHANNESBURG, WE ANTICIPATE THIS TOPIC WILL IN FY-1977
CONTINUE TO ABSORB TIME OF ECON/COMMERCIAL STAFF AT ALL
POSTS, PLUS AMBASSADOR AND OTHER OFFICERS OF MISSION
AND CONSULATES. MOREOVER, COMMERCIAL SECTION JOHANNESBURG
OBLIGED TO PROVIDE SECRETARIAL HELP TO LABOR OFFICER.
9. AS FORESEEN IN CRAG, WE ASSISTED IN STAGING TRADE FAIR
AND CATALOG SHOW IN SWAZILAND AND EXHIBIT AT US PAVILION IN
GABORONE. THESE NECESSITATED HEAVY INVESTMENT OF TIME BY
COMMERCIAL OFFICER JOHANNESBURG.
10. AT E/C CONFERENCE QUESTION WAS RAISED OF WHETHER HIGH
COST AND STAFF TIME DEVOTED TO CATALOG SHOWS COULD BE
JUSTIFIED IN TIME OF SEVERE RECESSION. DISAPPOINTING
TURN-OUT IN BOTH CAPE TOWN AND JOHANNESBURG FOR RECENT
MACHINE TOOL EVENT DESPITE INTENSIVE PUBLICITY EFFORTS BOTH
POSTS IS CASE IN POINT. WAS AGREED MATTER SHOULD BE FURTHER
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REVIEWED AFTER FEBRUARY 1977 CATALOG DISPLAY ON PRINTING AND
GRAPHIC ARTS.
11. PRACTICAL DIFFICULTIES FOR US FIRMS BIDDING ON SAG
TENDERS OWING TO TIME ELEMENT (BID USUALLY REQUIRED WITHIN
ONE MONTH) WAS NOTED BY ALL POSTS. AGREED WAS VIRTUAL
NECESSITY FOR US FIRMS TO HAVE SA AGENT TO BID COMPETITVELY.
12. DURING E/C CONFERENCE, PRETORIA DESCRIBED ITS EFFORTS TO
RE-CAST MONTHLY ECONOMIC REPORT TO EMPHASIZE MACRO-ECONOMIC
DEVELOPMENTS, TO TAKE UP INDIVIDUAL COMPANY ACTIONS ONLY AS
THEY AFFECT LARGER PICTURE, AND TO REDUCE OVERALL LENGTH.
CONSENSUS WAS THAT MONTHLY FORMAT NOT WELL ADAPTED TO CURRENT
REPORTING PRIORITIES IN SA AND OTHER ALTERNATIVES SHOULD BE
PROPOSED TO STATE AND COMMERCE. THIS WILL BE SUBJECT
OF SEPARATE MESSAGE.
13. ADEQUACY OF COMMERCIAL LIBRARIES AND FUNDING OF NEW
PUBLICATIONS WILL ALSO BE SUBJECT OF SEPARATE MESSAGE.
14. ECON/COMMERCIAL CONFERENCE FOR FIRST TIME
INCLUDED REPRESENTATIVES FROM EMBASSIES AT MASERU,
MBABANE, GABORONE AND MAPUTO. EXPERIMENT WAS FOUND TO
BE HIGHLY USEFUL AND WE INTEND TO PROVIDE FOR EXPANDED ROLE
OF THESE POSTS IN SUBSEQUENT E/C CONFERENCES. REPS FROM
BLS COUNTRIES ALL STRESSED WIDE ECONOMIC, CULTURAL AND
POLITICAL DIFFERENCES AMONG THEM AND GROWING DILEMMA POSED
BY CLOSE ECONOMIC TIES WITH SOUTH AFRICA AT TIME WHEN POLITICAL
RIFT IS WIDENING. JOHANNESBURG EXPECTS TO BE ABLE TO CONTINUE
COMMERCIAL SUPPORT TO THESE POSTS DESPITE TIGHTER STAFFING AND
HAS OFFERED ON-THE-JOB TRAINING FOR THEIR FSL STAFF.
BOWDLER
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