South African shock at Brexit vote

The international marketing magazine for fresh produce buyers in Europe
Fred Meintjes

BY FRED MEINTJES

South African shock at Brexit vote

Although immediate changes are not expected, there could be long-term ramifications, the South Africans say

South African shock at Brexit vote

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The South African fruit industry and other trade sources have reacted with shock at the UK's decision late last week to end its membership of the European Union.

The UK was South Africa’s eighth largest trading partner last year, and the country's exports to the UK account for R41bn, with imports at R35bn.

South African fruit sources say that while they do not expect immediate changes, the UK separation would cause problems in the longer term, particularly as there could be a sstained period of uncertainty.

The South African currency reacted to the British vote with the rand dropping further against the US dollar, but the currency strengthened somewhat against the British pound.

Government sources were quick to calm the waters, with the South African Presidency pointing out that the UK would have a period of two years to negotiate their exit from the European Union after formal notice to withdraw has been given. Until the end of that two year period, the Common International Trade Policy (CITP) of the EU would continue to apply to South Africa's exports to the UK.

This policy includes the current Trade, Development and Cooperation Agreement (TDCA), which is a free trade agreement between South Africa and the EU.

The Presidency said it would also cover the Economic Partnership Agreement (EPA), signed on 10 June 2016 in Botswana.

“Therefore, UK rights and obligations under the existing EU Treaties will continue to apply during this period. There will therefore be no immediate implications for South African exports into UK.”

South Africa and the UK would have two years to review their future trade relationship, the statement continued.

“One of the options open to the UK would be to join the European Free Trade Area (EFTA) which has a free trade agreement with the EU and forms part of the European Economic Area. Importantly, EFTA also has free trade agreements with the Southern African Customs Union (SACU) that South Africa is part of," the presidency noted.

“SACU and EFTA have already started a review of this agreement. Another option would be for the UK and SACU to negotiate a bilateral free trade agreement and one possibility would be to base it on the EPA.”

The government would consider all options available and start engagements with the UK, the presidency added..
 

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