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South Africa's International Investment Deals

South Africa's International Investment Deals


South Africa has signed 42 bilateral investment agreements since its transition from apartheid in 1994. Its first was with the United Kingdom in 1994. Over the course of the first several years of rule by Nelson Mandela and the African National Congress, the government reached preliminary deals with dozens of global trade partners. On Oct. 28, Pretoria announced it would annul its bilateral investment treaty with Germany signed in September 1995 and ratified in 1998. In fact, the German agreement is the fourth such treaty Pretoria has canceled, all of them with European trading partners -- Belgium, Luxembourg and Spain being the others.

Annulling the treaty with Germany is a legal provision to prevent its automatic renewal. The original agreement, like others Pretoria has negotiated, had a mandate of 10 years followed by renewals every two years. The agreement would automatically renew unless either party stated its intent to terminate it. It is important to note that investments made while the bilateral investment treaties are valid all have clauses guaranteeing existing investment protections for 10 or more years.

The decision not to renew certain bilateral investment treaties is part of a process by the South African government to calibrate its economic policy to fit its maturing domestic political constraints. The mid-1990s, when many of the original bilateral investment treaties were signed, were an immature regulatory period for South Africa. Then, as now, South Africa was the economic leader of Africa, but the country was emerging from years of economic isolation, the result of sanctions placed on the apartheid government. The move to cancel the agreement with Germany does not mean investment protections are removed. Instead, South Africa is building new investment legislation to succeed templates used to negotiate existing bilateral investment treaties, and the country will remain a compelling investment destination.

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