South Africa to benefit from EU trade pact

22 July 2014

South Africa stands to gain significantly from the Economic Partnership Agreement recently concluded between a subgroup of the Southern African Development Community (SADC) and the European Union (EU), says Trade and Industry Minister Rob Davies.

Briefing the media in Pretoria on Monday, Davies said the new trade pact gave South Africa marked benefits over the existing bilateral Trade, Development and Co-operation Agreement with the EU.

The benefits included improved market access for 32 agricultural products, with a significant improvement in access to the EU market for wine (110-million litres duty-free), sugar (150 000 tons duty-free) and ethanol (80 000 tons duty-free).

There was also improved access to EU markets for South African exports of flowers, and of some dairy, fruit and fruit products.

After 10 years of preparation and negotiation, the deal was initialled last Tuesday by the EU, the five members of the Southern African Customs Union – South Africa, Namibia, Botswana, Lesotho and Swaziland – as well as Mozambique and Angola.

The EU is the SADC’s largest trading partner, with South Africa accounting for the largest share of the SADC’s trade with the EU.

Davies said the talks had been difficult, with South Africa objecting to the EU’s demand for a prohibition on export taxes, and for what it saw as a lack of give and take, especially over more access for its agricultural and agro-processed goods, as well as the final wording on export taxes and geographic indicators.

Being stubborn had paid off, Davies said, as the outcome was more favourable for South Africa than the EU’s original offer.

“In trade negotiations, you have to learn to say no, and this is what we did because we did not approve of other elements of the agreement. This then opened up negotiations, and we tend to benefit from the outcome.”

Compared to the TDCA, the new agreement allowed improved access for certain agricultural products, some policy space for export taxes, as well as some additional agricultural safeguards, Davies said.

In return, the EU has gained geographic indicator status for several of its wines, cheeses, speciality meats and beers, while South Africa has won the same recognition for its rooibos and honeybush teas, Karoo lamb and some of its wines.

This will mean that, once the deal has been ratified, only products produced in the relevant geographical areas can be marketed under the relevant trade names.

Davies said the agreement will go through a two-month legal vetting process before being presented to the Cabinet for approval and to Parliament for ratification. The agreement will then be signed, and will enter into force once all the countries party to it have concluded their own approval processes. This was likely to take around eight months.

Davies said negotiating the agreement was a major achievement for the region, establishing a legal basis for a relationship between African countries participating in a future free trade agreement and Europe.

SAnews.gov.za and SAinfo reporter