As the 31st of January nears, breaths are held to see whether the UK will leave the European Union and whether Brexit will affect South Africa.
Fin24 journalist Lameez Omarjee defines the EU as being the largest trade bloc of the world, consisting of the political and economic union of the 28 member states, and decided to investigate how Brexit will affect South Africa.
Approximately three years have passed since 52% of British voters voted to leave the EU in June 2016. Late December 2019, after three extensions and the step-down of two prime ministers, British parliamentarians settled on the withdrawal agreement. If this agreement is approved by both entities (the UK and the EU) the transition of the UK out of the union will be completed by the end of December 2020.
According to Trudi Hartzenberg, executive director of trade law centre Tralac, Brexit will affect the South African economy without a doubt. The importance of the United Kingdom and South Africa trade agreement is far-reaching. South African businesses and exporters have an interest in the Brexit discussions.
According to the department of trade and industry, the trade between South Africa and the United Kingdom during 2018 amounted to R140bn, with the UK being the fourth largest destination for South African exports.
South Africa and five other Southern African countries (Lesotho, eSwatini, Namibia, Botswana and Mozambique) reached a continuity agreement with the UK in September 2019. This continuity agreement ensures that trade with the UK continues as normal, whether Brexit is realised or not.
“South African businesses will, however, have to monitor the trade agreements between the UK and other countries with a similar export profile to ours,” Hartzenberg suggests. A country that resembles the SA profile is Chile, as they also export fruit products. In an interview with Fin24 Hartzenberg stated that “South Africa does not have full duty-free quota-free access to the UK under the continuity agreement, and for certain products tariff rate quotas apply – so we’ll have to see what other countries negotiate with the UK.”
A surprising fact is that the export of products to other African countries is something South African businesses should venture in, according to Hartzenberg. This is supported by the idea that African countries should attempt to ease the process of trading amongst one another. If you are interested in similiar topics visit Enslins.