The department of trade & industry says local exporters are “protected” and will continue to have access to the UK market even if Britain leaves the EU without a trade deal in place.
The UK left the EU on January 31, but the 11-month transition period means that the country will stick largely to EU rules until December 31 as trade negotiations continue. However negotiations have been far from smooth raising the spectre of the UK leaving the bloc’s single market and customs union without a deal. This could hit businesses hard as quotas and tariffs on goods kick in with the UK trading on World Trade Organisation terms.
The Southern African Customs Union (Sacu), of which SA is a member, has an in-principle agreement with the UK, signed late in 2019 to replicate the existing economic partnership agreement the customs union has with the EU. Sacu includes SA, Botswana, Lesotho, Namibia and Eswatini. Mozambique is also included in the roll-over deal.
Department of trade & industry director-general Lionel October said at the weekend the roll-over deal was valid and binding.
“As you know, we negotiated an agreement with the UK that in the event of a [no deal] Brexit we will maintain our current duty free access to the UK. We therefore have an insurance policy in the event of a no-deal Brexit. We have protected our exporters ... the agreement is valid and binding and the UK needs it as much as we do, as they also keep the current arrangements,” October said.
The UK is SA’s fifth-largest trading partner. Trade between the two countries increased from R63.7bn in 2012 to just more than R100bn in 2019. SA exports about R64bn worth of goods through the EU customs union, duty free, of which R10bn is from Western Cape industries, such as fruit and wine.
At the moment, trade between the UK and each of the Southern African countries is facilitated under the Sadc-EU Economic Partnership Agreement (EPA), which provides preferential market access for almost all trade between the regions.
On Friday, the UK signed an in principle agreement with Japan, similar to the Sacu one.
Bloomberg reported on Friday that the free-trade agreement with Japan is the UK’s first major post-Brexit accord and a boost to Prime Minister Boris Johnson as negotiations deteriorate with the EU.
The deal, which is expected to boost Britain’s GDP 0.07% compared with 2018 levels over the next 15 years, was agreed in principle by international trade secretary Liz Truss and Japanese foreign minister Toshimitsu Motegi on Friday, Bloomberg reports, quoting a British government statement.
Striking an accord with the world’s third-largest economy has been a priority for Johnson, who is eager to demonstrate the UK's ability to sign trade deals as an independent country, a key plank of the Brexit campaign he led.
The UK benefits from the EU-Japan free-trade agreement. It needed the deal to avoid tariffs on commerce with Japan at the end of the year. The deal’s timing is also useful to Johnson. Trade talks with the EU, Britain’s largest trading partner, deteriorated sharply last week amid a UK plan to breach the Brexit divorce treaty.
With Bloomberg
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