logo logo

Angola to start talks on trade deal with EU in bid to diversify from oil

All the versions of this article: [English] [français]

Reuters-18 Aug 2022

Angola to start talks on trade deal with EU in bid to diversify from oil

Angola and the European Union are set to start talks for a trade deal this year after EU and African partners approved a request from the oil-producing nation to join a regional trade bloc, according to an EU document and an official.

The green light to start negotiations came in late July, an EU document shows, shortly before the southern African country holds general elections next week.

"We are now in a position to open formal negotiations, but there is not yet a date agreed with Angola. We expect this to happen in the last quarter of this year," an EU spokesperson told Reuters.

The possible deal would likely increase the export of Angolan products to the EU, and possibly reduce the dominance of oil which currently accounts for nearly all exports by value.

Angolan products such as frozen shrimps, ethyl alcohol, wheat bran and bananas are likely to benefit the most thanks to the expected lift of tariffs, according to EU estimates.

With the boost in trade expected from the deal and EU’s increased need of fuel amid the energy crisis caused by the war in Ukraine, Angola might also export more oil to the 27-nation bloc. Currently China is by far its largest customer, despite oil now faces no import duty in the EU.

Most of Angolan exports to the EU already benefit of preferential treatment because the country had been classed as a least developed nation.

But thanks to its recent oil-fuelled economic growth, it is set to lose that status in 2027. That means it would face tariffs on several products unless it joins the regional trade agreement the EU signed with six southern African nations in 2016.

Under the deal, EU products will also access the Angolan market with lower duties - an advantage for local consumers but a risk to domestic industries if they do not invest to remain competitive.

Under the regional trade deal, the EU entirely removed tariffs and quotas on any imports from Botswana, Lesotho, Mozambique, Namibia, and Eswatini, and almost entirely lifted duties on South African exports, which remain however subject to quotas.

In exchange, the southern African countries removed duties on up to 86% of EU exports.

 source: Reuters