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As South Africa’s trade surplus in merchandise goods jumped to R24.7bn in 2019 from the revised R15.23bn for 2018, exporters to the UK can look forward to the minimum non-trade barriers in especially food shipments.
This follows the signing of a trade agreement between the UK and member states of the Southern African Customs Union (Sacu) – which includes SA, Namibia, Botswana, Eswatini and Lesotho – and Mozambique late last year.
The trade agreement follows on the UK’s decision to leave the EU and thus necessitated a novel agreement to replace the current Economic Partnership Agreement (EPA) between the EU and Southern African Development Community (SADC).
“The agreement aims to replicate the effects of the current EU-Southern African Development Community EPA,” Nigel Casey, British High Commissioner to SA, said in a response to emailed questions.
“Once ratified by all state [parties], it will come into force at the end of December 2020 (when the current transition period comes to an end).”SA exports to the UK are heavily skewed towards non-manufactured goods (see graph).
“In both directions, SA and the UK export a wide range of quality products to each other, notably things you can drink and drive,” said Casey.
Metals and gemstones accounted for more than half of exports to the UK last year, according to trade data from Sars.
Vehicle shipments accounted for almost a quarter of goods destined for the UK and fruit, nuts and wine together constituted 13.4%, or R9.1bn, of all exports.
As the government’s haphazard handling of the foot-and-mouth disease outbreak continues unabated, local livestock farmers won’t be counting on exporting meat or other animal-related products (such as hides and skins) to the UK soon.
Neighbours Botswana and Namibia, on the other hand (and even with their endemic FMD zones, but which are far better controlled than in SA), will continue to cash in on red meat exports to the UK.
“The UK also accounted for 24% of total exports of beef from Botswana, and 19% of beef exports from Namibia,” said Casey.
“Signatories have agreed to work together in order to keep SPS [sanitary and phytosanitary] measures to the minimum necessary consistent with WTO [World Trade Organization] provisions and to strengthen regional cooperation in this field.”
In return, during 2018 the UK exported £409m worth of machinery and mechanical appliances, motor vehicles accounting for £335m and beverages, especially whiskey, worth £136m to Sacu and Mozambique, said Casey. Another large component of trade – the trade in services – is almost as big as the shipment of goods.
Sacu and Mozambique imported £2.7bn of services from and exported £1.3bn to the UK, compared with goods exports of £3.5bn to and goods imports of £2.2bn from the UK, according to Casey.
If you look at the whole of Africa, trade between the UK and the continent edged 7.5% higher in 2018 to £36bn in both directions, according to him.The easy movement of people across borders is an important prerequisite of increased trade.
South Africans visiting the UK, however, need visas, which is not the case for Namibian passport holders.“We introduced the requirement here due to concerns about document security,” said Casey.
“I can assure you that no-one would be more delighted than me if and when we were able to conclude that it is no longer necessary to ask our South African friends to apply for a visa to visit the UK.”
He said over 90 000 South Africans visit the UK every year. A large enough number to underline the importance of the UK as a trading partner of SA.
This article originally appeared in the 5 March edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.
