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SOUTH AFRICA: New Trade Agreement Between SACU, Mozambique and UK

An updated economic partnership agreement has been signed by the Southern Africa Customs Union (SACU) member states, Mozambique and the United Kingdom. The new arrangement will come into force after Brexit, matching current trading terms with the EU.

South African President, Cyril Ramaphosa, revealed the news after the agreement was initialled by all parties in London on 10 October. SACU (Botswana, Eswatini, Lesotho, Namibia and South Africa) and Mozambique, concluded the agreement negotiations with the UK in September, with various parliamentary ratification procedures needed to bring the agreement into effect currently in progress. In the event they are not concluded before the new Brexit deadline of 31 January 2020, or if the UK leaves at an earlier date, provisions are in place to ensure the new rates will apply in the interim period.

The new agreement will replicate the preferential trade terms regarding tariffs, quotas, rules of origin and health and safety regulations, which are currently covered by the existing Southern African Development Community-EU agreement.

The joint communique issued after the deal was signed stated: “The agreement is intended to provide continuity and certainty in trade amongst the parties when the UK is no longer a member of the European Union.”

Of particular relief to South Africa is that the new agreement ensures that cars assembled there will remain tariff-free on entering the UK. South Africa’s automotive sector accounts for 6.8% of GDP and is a major employer.

Among the other tariff-free imports of South African goods listed in the agreement are citrus, grapes, plums and wine, as well as machinery, textiles and clothing, tea, beef, fresh fruit, fish and nuts. Overall, trade between the UK, SACU countries and Mozambique was worth US$12 billion in 2018.

This agreement is not the first signed by the UK with an African country to safeguard trade in the event of Brexit. Earlier in October, the UK signed a trade and political continuity agreement with Tunisia. In January, the UK also signed another post-Brexit trade continuity agreement with Madagascar, Seychelles, Mauritius and Zimbabwe, the UK-Eastern and Southern African Economic Partnership Agreement.

Content provided by Picture: HKTDC Research
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