Southern African News | 24 July 2017
UK, SACU commit to trade relations despite looming Brexit
By Magreth Nunuhe
WINDHOEK – The United Kingdom has reaffirmed its commitment to continue trading with SADC EPA countries under the current trade arrangement despite its withdrawal from the European Union (EU).
In a joint statement, the Southern African Customs Union (SACU) and the UK’s Department of International Trade agreed to continue discussions to explore ways of ensuring that the existing trade arrangement between the UK and SACU currently governed by the EU-SADC EPA will not be disrupted by the UK’s departure from the EU.
The Economic Partnership Agreements (EPA) between the SADC-EPA countries (Botswana, Lesotho, Namibia, Mozambique, South Africa and Swaziland) and the European Union (EU) was signed on 10 June 2016 in Kasane, Botswana.
The EU-SADC EPA provisionally entered into force between the SACU countries and the EU on 10 October 2016.
UK’s Minister for Trade Policy Lord Price and his counterparts from SACU member states including Mozambique met in Johannesburg on Wednesday to discuss the trade relationship between the UK and the Southern African Customs Union (SACU) countries, post Brexit.
“While the UK remains a member of the EU, the EU-SADC EPA will continue to apply to trade between the SADC EPA countries and the UK,” said the joint communiqué.
Talks in the future are likely to focus on an arrangement that replicates the effects of the EPA once the UK has left the EU and it would also be a technical exercise to ensure continuity in the trading relationship, rather than an opportunity to renegotiate existing terms.
The EU has been widely held as the world’s best functioning political economic union model and last year’s withdrawal of the UK from the EU sent shockwaves of political and economic uncertainty all over the word.
For SADC, there are serious implications that free access to the UK market that SADC has enjoyed under the EPA (Economic Partnership Agreement) could come to an end once the UK is completely out of the EU in the next year.
It will mean that new trade deals and arrangements would also have to be made with the UK in the years ahead, which could take time.
Namibia, Botswana, Lesotho, Swaziland and South Africa are major meat exporters to the EU, whose sales office for the EU is in Essex, UK.
Of the SADC countries, the South African economy could have the most negative impact because of its strong linkage to the UK and because it is the most exposed to the global economy.
Given Mozambique’s participation in the SADC EPA, the ministers agreed to continue discussions on how best to work with Mozambique, in order to ensure continuity of the EPA for all partners.
The Britons voted on 23 June 2016 to leave the EU, following 2015’s Conservative election victory, which activated a manifesto pledging to hold an in/out referendum on Britain’s membership of the European Union by the end of 2017.
The greatest uncertainty associated with Britain leaving the EU is that no country has ever done it before and exit may trigger other EU nations, to follow in the UK’s footsteps.
Among advantages of leaving the EU is immediate cost saving, as the UK would no longer contribute to the EU budget and while Britain’s risks losing some of the negotiating power by leaving the EU, it would be free to establish its own trade agreements.
It is however harder to determine whether the financial advantages of EU membership, such as free trade and inward investment outweigh the upfront costs.
On the other hand, Britain benefits from trade deals between the EU and other world powers as the EU is a single market in which no tariffs are imposed on imports and exports between member states.
The process to start the formal and legal process of leaving the EU will take two years, but in the meantime the UK will continue to be a full member of the European Union.