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SA economic growth reliant on EU trade relations

Feb 13 2017 07:08
Lameez Omarjee

Johannesburg – Trade with partners in the west remains a significant contributor to the South African economy, said the International Cooperation, Trade and Security (ICTS) cluster.

The ICTS issued a statement on Sunday, further detailing the announcements made by President Jacob Zuma at the State of the Nation Address (SONA) on Thursday.

Among the points raised by the cluster was the importance of international trade for the country’s economy.

“South Africa’s economic diplomacy remains pivotal to attracting investment, creating jobs, fighting poverty and inequality as well as growing and transforming the economy,” said the ICTS.

The Economic Partnership agreement with the European Union (EU) in September 2016 will provide “new market access opportunities” for South African products, said the cluster.

“Almost all SA products, about 99%, will have preferential market access in the EU, compared to about 95% under the Trade Development Cooperation Agreement (TDCA). About 96% of the products will enter the EU market without being subjected to customs duties or quantitative restrictions.”

The remaining 3% of products will still have access to the EU market, on a “similar “or improved” basis compared to the TDCA.

In turn the South African Customs Union (SACU) has granted the EU market access of 86%.

Recently trade agreements with the EU have come under fire given challenges in the poultry industry.

READ: Chicken fight rocks SA’s trade relations with Europe

Poultry industry players say that the EU is essentially dumping dark meat; chicken legs, thighs and wings, in the South African market below cost, making it difficult for local producers to compete.

This has seen thousands of retrenchments in the poultry industry.

Government has had the challenge of maintaining the terms of the agreement in the face of the poultry sector’s demise.

ALSO READ: Govt can save poultry sector as job losses loom – Fawu

The Food and Allied Workers Union (FAWU) previously told Fin24 that government had the tools necessary to protect the local poultry industry.

Last year government received approval to implement a 13.9% safeguard duty on frozen chicken legs imported from EU. This tariff will apply until July 2017. FAWU general secretary Katishi Masemola said this was far too low and should be closer to 40%.

READ: DTI responds to Malema's poultry tariff hike demand

In January a national committee was established to address the challenges in the industry, according to Minister of Trade and Industry Rob Davies.

The committee includes the Department of Agriculture, Forestry and Fisheries and the International Trade Administration Commission of South Africa (ITAC). 

Read Fin24's top stories trending on Twitter:

south africa  |  eu  |  investment  |  poultry  |  trade  |  economy


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