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Davies: SA has a few 'fallbacks' in the event of a no-deal Brexit

Mar 13 2019 14:21
Lameez Omarjee

SA still has a few "fallbacks" in the event of a no-deal Brexit, Trade and Industry Minister Rob Davies said.

The minister on Wednesday briefed journalists on the progress made in trade arrangements between the Southern African Customs Union and Mozambique with the UK, following Brexit. The intention of the negotiations is to ensure that trade can continue, uninterrupted, if the UK crashes out of the EU without a deal on March 29.

In such an event, then trade arrangements would revert to those set out in the World Trade Organisation, back in the 1990s. These arrangements would result in higher tariffs than those in an existing trade agreement with the Southern African Development Community and the EU, of which SA is part, Davies explained.

The UK Parliament will on Wednesday evening vote whether to leave the EU without a deal, and on Thursday another vote is scheduled to determine if the Brexit deadline will be extended. In the meantime the country published a schedule of tariffs it would charge its trading partners for a period of 12 months, in the event of a no-deal Brexit.

Davies said the "first prize" would be to have a trade agreement finalised with the UK, and then ratified by SA Parliament next week, to ensure trade is uninterrupted. However, Parliament will be rising so the chances of this happening are slim. The second option is to have a memorandum of understanding or bridging agreement which will apply for six months.

"An MoU will be the best endeavor, and we can implement this best endeavour," he said.

Davies said that reaching an agreement in the interim would be mutually beneficial for both parties. He gave an example that currently whiskey imports from the UK are duty free. Under the WTO rules, duties will be R4.50/l.

"So those of you that enjoy scotch whiskey will be very interested to ensure we have an agreement," Davies said. "It works both ways."

The second fallback is to trade with the UK, based on the new 12-month schedule. This will be benefical in some regards, for example grapes and citrus products will be duty free. But there will also be drawbacks, as vehicles would not be duty free. Duties of 10% would be imposed on vehicles, and Davies said this would mean SA would pull out of exporting vehicles to the UK altogether

There are also duties on beef, pork, lamb and sugar.

Winemakers can rest assured that they will not have to pay duties for the next 12 months, Davies quipped.

"Our exporters can take comfort in [the fact that] some areas and some (product) lines can export to the UK duty free."

Divorce

Responding to a question on whether it would be best for the UK to leave the EU with a deal or not, Davies said it is not for SA to say what the British need to decide for themselves.

"I do not think it is wise to share our own views," he said.

Davies instead said it was a priority to ensure that trade with both the EU and UK continues.

"If two friends divorce, you do not have to pick sides. You can try to be a friend to both of them afterwards. That is where we (SA) are. We want to continue relations with both of them," he said.

rob davies  |  sa economy  |  brexit  |  uk economy  |  trade
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