South Africa is due to benefit from a new trade deal with the European Union (EU) that will see almost all South African products having preferential market access in the EU.
The Economic Partnership Agreement (EPA) under the SADC-EU EPA framework replaces the trade provisions of the existing bilateral trade agreement between South Africa and the EU, known as the Trade, Development and Cooperation Agreement (TDCA).
The SADC EPA agreement came into effect on Monday, said the Department of Trade and Industry (dti) and the EU Delegation to the Republic of South Africa in a joint statement.
“Almost all South African products (about 99%) will have preferential market access in the EU, compared to about 95% under the old agreement. About 96% of the products will enter the EU market without being subjected to customs duties or quantitative restrictions,” said the dti and the EU delegation.
The other three percent will still have access, albeit partial, that is similar or improved compared to the TDCA. The Southern African Customs Union (SACU) as a group has granted EU lower market access of 86%, in line with the developmental nature of the agreement.
Intention of the EPA
The EPA is intended to be development-oriented and allows for deeper regional integration. The agreement offers new opportunities for South African exporters and importers in many areas.
“While we can now rest assured that the Rooibos name is safe – at least in Europe – the EPA is far-reaching, and allows South Africa policymakers, with their European partners, space to advance industrial development and use the agreement to ensure the benefits of increased trade are not directed only to big business but also help roll back poverty and create jobs.”
The EU absorbs about one-fifth of all South African exports, while imports account for one third.
While South African exports have traditionally included mostly primary products, agricultural and manufactured goods have gained prominence among the top 10 South African exports. Motor vehicles comprised 21% of South Africa’s exports to the EU last year.
In addition, the bilateral deal concluded between South Africa and the EU on the protection of Geographical Indications (GIs) as part of the whole EPA is of significant benefit to both parties.
“South Africa’s favourite herbal teas would be the beneficiaries of this new trade agreement with the EU. Rooibos, Honeybush and Karoo Lamb are notable beneficiaries which are protected along with 102 wine names of areas like Paarl and Stellenbosch. In contrast, the EU will receive protection on 251 product names.”
About 120 names are for wines; 106 are agricultural product names such as special meats, cheese, olives, cheese, and others, while 20 names are for spirits and five are beer names.
Fisheries that were not covered by the TDCA, will be a notable beneficiary under the EPA.
About 94% of fisheries’ products will now enter the EU market duty and quota free, while the rest will be phased in over a specified period.
Agricultural benefits range from improved market access for more than 30 South African products into the EU to the phasing out of the EU export subsidies.
South Africa will now be allowed to export 150 000 tons of sugar and 80 000 tons of ethanol duty free, while the quota for wine exports to the EU more than doubles from 50 million to 110 million litres.
Other products include flowers, dairy, fruit, fruit juice and yeast. On the EU side wheat, sugar confectionery, barley, cheese, pork, cereal, butter and ice-cream will gain better market access into the SACU.