UK, SACU com­mit to trade re­la­tions de­spite loom­ing Brexit

Observer on Saturday - - News - By Bodwa Mbingo

The United King­dom has reaf­firmed its com­mit­ment to con­tinue trad­ing with SADC EPA coun­tries un­der the cur­rent trade ar­range­ment de­spite its with­drawal from the Euro­pean Union (EU), oth­er­wise termed as BREXIT.

Swazi­land, Namibia, Botswana, Le­sotho and South Africa are ma­jor meat ex­porters to the EU, whose sales of­fice for the EU is in Es­sex, UK. In a joint state­ment, the South­ern African Cus­toms Union (SACU) and the UK’s Depart­ment of In­ter­na­tional Trade agreed to con­tinue dis­cus­sions to ex­plore ways of en­sur­ing that the ex­ist­ing trade ar­range­ment be­tween the UK and SACU cur­rently gov­erned by the EU-SADC EPA will not be dis­rupted by the UK’s de­par­ture from the EU.

The Eco­nomic Part­ner­ship Agree­ments (EPA) be­tween the SADC-EPA coun­tries (Botswana, Le­sotho, Namibia, Mozam­bique, South Africa and Swazi­land) and the Euro­pean Union (EU) was signed on 10 June 2016 in Kasane, Botswana.

The EU-SADC EPA pro­vi­sion­ally en­tered into force be­tween the SACU coun­tries and the EU on 10 Oc­to­ber 2016.

UK’s Min­is­ter for Trade Pol­icy Lord Price and his coun­ter­parts from SACU mem­ber states met in Jo­han­nes­burg on Wed­nes­day to dis­cuss the trade re­la­tion­ship be­tween the UK and the South­ern African Cus­toms Union (SACU) coun­tries, post Brexit.

“While the UK re­mains a mem­ber of the EU, the EU-SADC EPA will con­tinue to ap­ply to trade be­tween the SADC EPA coun­tries and the UK,” said the joint com­mu­niqué.

Talks in the fu­ture are likely to fo­cus on an ar­range­ment that repli­cates the ef­fects of the EPA once the UK has left the EU and it would also be a tech­ni­cal ex­er­cise to en­sure con­ti­nu­ity in the trad­ing re­la­tion­ship, rather than an op­por­tu­nity to rene­go­ti­ate ex­ist­ing terms.

The EU has been widely held as the world’s best func­tion­ing po­lit­i­cal eco­nomic union model and last year’s with­drawal of the UK from the EU sent shock­waves of po­lit­i­cal and eco­nomic un­cer­tainty all over the world.

For SADC, there are se­ri­ous im­pli­ca­tions that free ac­cess to the UK mar­ket that SADC has en­joyed un­der the EPA (Eco­nomic Part­ner­ship Agree­ment) could come to an end once the UK is com­pletely out of the EU in the next year.

It will mean that new trade deals and ar­range­ments would also have to be made with the UK in the years ahead, which could take time.

Of the SADC coun­tries, the South African econ­omy could have the most neg­a­tive im­pact be­cause of its strong link­age to the UK and be­cause it is the most ex­posed to the global econ­omy.

Given Mozam­bique’s par­tic­i­pa­tion in the SADC EPA, the min­is­ters agreed to con­tinue dis­cus­sions on how best to work with Mozam­bique, in or­der to en­sure con­ti­nu­ity of the EPA for all part­ners.

The Bri­tons voted on 23 June 2016 to leave the EU, fol­low­ing 2015’s Con­ser­va­tive elec­tion vic­tory, which ac­ti­vated a man­i­festo pledg­ing to hold an in/out ref­er­en­dum on Bri­tain’s mem­ber­ship of the Euro­pean Union by the end of 2017.

Leav­ing

The great­est un­cer­tainty as­so­ci­ated with Bri­tain leav­ing the EU is that no coun­try has ever done it be­fore and exit may trig­ger other EU na­tions, to fol­low in the UK’s foot­steps.

Among ad­van­tages of leav­ing the EU is im­me­di­ate cost sav­ing, as the UK would no longer con­trib­ute to the EU bud­get and while Bri­tain risks los­ing some of the ne­go­ti­at­ing power by leav­ing the EU, it would be free to es­tab­lish its own trade agree­ments.

It is how­ever harder to de­ter­mine whether the fi­nan­cial ad­van­tages of EU mem­ber­ship, such as free trade and in­ward in­vest­ment out­weigh the up­front costs.

On the other hand, Bri­tain ben­e­fits from trade deals be­tween the EU and other world pow­ers as the EU is a sin­gle mar­ket in which no tar­iffs are im­posed on im­ports and ex­ports be­tween mem­ber states.

The process to start the for­mal and le­gal process of leav­ing the EU will take two years, but in the mean­time the UK will con­tinue to be a full mem­ber of the Euro­pean Union.

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