It is unclear what the details of South Africa’s new trade agreement involve. The ink is yet to dry on the agreement as reports coming from 10 Downing Street strongly suggest Brexit will go ahead by 31 October 2019.
“An exit in which the UK leaves the EU without any agreement of succession would add significant additional costs 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” said Minister Patel.
Brexit will mean that 7.51 % of South Africa’s agricultural exports destined for the UK will face imposed duties or MFN duties.
“This will affect South Africa’s agricultural exports negatively if UK finds itself outside of the customs union – meaning that South African agricultural exports to the British market will suddenly become more expensive and thus reduce demand’ said agricultural economist Lucius Phaleng.
The UK still remains among the top trading partners in South Africa with trading agreements amounting to more than R140 billion.
According to the Ministry, the new agreement will be now known as the SACUM-UK Economic Partnership Agreement. It will replicate the terms of trade present in the existing SADC-EU EPA, including in respect of tariffs, quotas, rules of origin, and health and safety regulations. The new EPA will come into effect in the event that the UK leaves the EU on 31 October 2019.
“We are aware that there remains an on-going debate in the UK regarding Brexit” said Patel. Talks were at advanced stage to avoid disrupting South Africa-UK trading relationships.
“This is important for the thousands of South African workers whose jobs are dependent on this trade; and for the investors who have utilised South Africa as an export base to the UK and the rest of the world,” said Patel.
Phaleng suggests that if UK remained in the EU minimum disruption of free movement of agricultural products will occur. “This means that South African agricultural exports will still continue to enjoy access to UK markets on a duty-free basis under SADC-EU EPA.”
The Ministry was cagey on what the terms of the new agreement included.