SA, SACU conclude Brexit trade deal

Thursday, September 12, 2019

South Africa, together with other SACU member countries and Mozambique, has concluded a new trade agreement that will govern bilateral trade with the United Kingdom.

“South Africa, together with five other countries in Southern Africa, has concluded a new trade agreement with the United Kingdom. The new agreement will govern the bilateral trading relationship between each of what we call SACUM countries [South Africa, Namibia, Botswana, Lesotho and Eswatini as well as Mozambique] in the event that the UK leaves the European Union (EU) without an agreement between the UK and the UE (commonly referred to as a no deal  Brexit),” said the Minister.

Briefing reporters in Cape Town, Patel said the deal, known as the SACUM-UK Economic Partnership Agreement (EPA), will effectively rollover and replicate the terms of trade in the current SADC-EU-EPA, including tariffs, quotas and rules of origin, among others.

The new agreement comes as the UK is scheduled to leave the EU on 31 October 2019 in what is widely known as Brexit (British exit from the EU).

The new EPA, said Patel, will come into effect in the event that the UK leaves the EU on 31 October and will govern bilateral trade between the six SACUM countries on one side, and the UK on the other.

At the moment, trade between the UK and each of the SACUM countries is facilitated under an EPA between Southern Africa and the EU. The EPA provides preferential access for goods to EU markets and their goods to Southern African markets.

Patel said while the UK is due to exit the EU at the end of next month, recent developments in the British parliament may impact on the process and date of the exit.

Impact on SA economy

“A no deal Brexit… will have a negative impact on the South African economy, jobs and exports,” said Patel, who earlier on Wednesday briefed a Cabinet committee on the concluded agreement with the UK.

“An exit in which the UK leaves the EU without any agreement of succession will add additional cost to exporting and importing goods for both sets of countries, as higher tariff duties will need to be added to the cost of trading between the UK and South Africa,” he said.

This will impact a number of industries, including the vehicle and auto component sectors and food products.

Patel highlighted that processes to bring the new EPA into effect are underway.

The UK remains one of South Africa’s key trading partners. In 2018, the UK was the fourth largest destination for South African exports, with bilateral trade at over R140 billion.

The SACUM agreement, Patel said, will be signed and submitted to Cabinet for approval, and then finally submitted to Parliament for ratification.

“Given the tight timeframes, we’ve also concluded a Memorandum of Understanding (MoU), which will allow trade to continue should ratification not be conclude by end of October,” said the Minister.

The new 31 October Brexit date follows a 23 June referendum held in the UK. The UK was due to leave the EU on 29 March. –