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Risks of Brexit for South Africa minimal, but not zero

FRESH PLAZA / 22 OCTOBER 2019 - 15.57 / STAFF REPORTER

As Brexit unfolds without a clear and predictable outcome, the question remains: What are the implications of various possible outcomes for South Africa and the region’s agriculture sector?

Last weekend, the House of Commons was expected to vote on the Brexit deal from PM Johnson. However, the House of Commons voted to seek an extension of the 31 October 2019 deadline for Brexit. The extension is meant to effectively prevent a possible no-deal situation by end of this month in the event that there is no agreement on Johnson’s deal. The deal is now expected to be discussed early this week in the House of Commons, while the request for an extension is being considered by the European Union (EU) parliament.

Despite all the various outcomes of the Brexit situation, an important recent development has been the conclusion of an economic partnership agreement (EPA) between the UK, the Southern African Customs Union (SACU) and Mozambique in September 2019 (the SACU-Mozambique-UK Economic Partnership Agreement).

The purpose of this agreement is to ensure the continuity of uninterrupted flow of goods and services between the territories. In essence, the agreement maintains the same arrangements that exist with the UK while still being part of the EU.

While much has been written about Brexit over the past three years, there are two points which have been overlooked in the discussions as far as agriculture is concerned, in light of the SACU-Mozambique-UK EPA.

The first is the provisions the SACU-Mozambique-UK EPA offers, more specifically, in relation to safeguards, as well as import and export quotas of specific products. For South Africa, the benefits of this trade arrangement will be new quotas on agricultural products such as wine, which will add to the ones that already exist with the EU. This is important because the UK is a major market for South African wine.

More generally, the UK is the second-biggest destination for South Africa’s agricultural products in the EU, and the world at large. The UK accounts for 8% of the value of South Africa’s agricultural exports to the world, the latter which were estimated at $10.6-billion in 2018, according to Trade Map data.

The second point is that for citrus – a leading agricultural export for South Africa – the sub-sector will expect to no longer be bound by costly and unnecessary emergency measures for citrus black spot (CBS). This is mainly because the UK carries limited risk as there are no commercial orchards in the country. Therefore, South Africa’s market access in the UK will be enhanced.

Within the EU, Spain – the world’s leading exporter of citrus – had consistently lobbied for restrictions of South Africa’s citrus due to CBS, against scientific evidence that suggested the contrary. This effectively put South Africa’s citrus industry at a competitive disadvantage, even in low-risk CBS markets such as the UK, which have no orchards.

According to an article on dailymaverick.co.za, regardless of the outcome of the Brexit negotiation process, South Africa’s agricultural sector is now in a much better space due to the aforementioned SACU-Mozambique-UK Economic Partnership Agreement, which ensures continuity in trade. Credit to South Africa’s Department of Trade, Industry and Competition for having the foresight and the urgency to negotiate the agreement, and conclude it before the Brexit deadline.

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LINK : https://www.freshplaza.com/article/9155369/risks-of-brexit-for-south-africa-minimal-but-not-zero/

Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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