Business Report | 31 January 2020
SA’s trades with the UK continues unchanged as the UK leaves the EU
JOHANNESBURG - The United Kingdom (UK) will officially exit the European Union (EU) today.
South Africa has been notified by the EU that in terms of the Withdrawal Agreement concluded and ratified between the EU and the UK, during the transitional period the UK will be treated as a Member State of the Union for the purposes of international agreements concluded by the Union, or by Member States acting on behalf of the Union, or by the Union and its Member States jointly. The transitional period is set to end on 31 December 2020 but can be extended on agreement between the EU and UK.
South Africa’s trade with the UK currently takes place under the terms of the SADC-EU EPA. The Economic Partnership Agreement (EPA) between the Southern African Development Community EPA Member States and the EU (“SADC- EU EPA”) entered into force on 10 October 2016. The Minister of Trade and Industry, Ebrahim Patel explained that during the transitional period provided for in the UK Withdrawal Agreement, the trade between South Africa and the UK will continue unchanged under the SADC-EU EPA.
"South African exporters can plan ahead with confidence in the period ahead. Their legal and regulatory arrangements remain stable and in place as it was during the period that the UK was part of the European Union. 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 between the two countries amounting to more than R140 billion," said Patel.
To avoid the disruption to South Africa’s exports once UK exits the EU and the SADC-EU EPA does not apply to the UK any longer, South Africa and five other countries in the Southern African region engaged with the United Kingdom over a two-year period following announcement of the UK’s intention to leave the EU.
A new agreement, which is known as the SACUM-UK Economic Partnership Agreement, was agreed between the parties in September 2019. The SACUM-UK EPA effectively retains the terms of trade present in the existing SADC-EU EPA and will govern the bilateral trading relationship between each of the SACUM countries (South Africa, Lesotho, Eswatini, Namibia, Botswana and Mozambique) and the UK in the event that the SADC-EU EPA no longer apply to the UK after December 2020.
Patel noted that the SACUM-UK EPA will enable the South African businesses to continue to export their products to the UK market and protect South African jobs once the SADC-EU EPA cease to apply to the UK.
"The preferential market access contained in the SADC-EU EPA was transposed into SACUM-UK EPA. However, additional market access was agreed for South Africa in regards to 13 agricultrural products, including wine and sugar, in the form of new volumes in relations to the Tariff Rate Quotas contained in the EPA with the European Union," said Patel.
The United Kingdom is our fourth largest market for exports, behind China, Germany and the United States; and it is the seventh largest supplier of imported goods. It is estimated that our exports to the United Kingdom supports 56 500 direct jobs and a further 117500 indirect jobs, bringing the total number of jobs supported by exports to the UK to nearly 175000.