A no-deal Brexit would be bad for South Africa

Pretoria News - - FRONT PAGE - LUYOLO MKENTANE [email protected]

THE PROSPECT of a no-deal Brexit could have dev­as­tat­ing con­se­quences for the strug­gling South African econ­omy, Trade and In­dus­try Min­is­ter Rob Davies warned on Fri­day.

How­ever, he said South Africa and the UK were on the verge of fi­nal­is­ing an agree­ment aimed at safe­guard­ing their bi­lat­eral trade agree­ments post Brexit.

This as British MPs are set to have what has been dubbed a mean­ing­ful vote on Prime Min­is­ter Theresa May’s Brexit deal to­mor­row, in time be­fore the March 29 dead­line to leave the EU.

The law­mak­ers’ votes will de­cide whether the Brexit deal can pro­ceed.

“A no-deal Brexit could be dis­rup­tive to our trade with the EU. Forty per­cent of our wine ex­ports go to Bri­tain,” said Davies.

In 2016 the EU and six south­ern African na­tions in­clud­ing South Africa signed an Eco­nomic Part­ner­ship Agree­ment (EPA) that was con­sid­ered a vic­tory for South Africa’s trade and in­tel­lec­tual prop­erty in­ter­ests. The deal was hailed for gain­ing greater ac­cess for South African ethanol and some canned fruits. It was also aimed at pro­tect­ing the trade­marks of rooi­bos, hon­ey­bush, Ka­roo lamb and lo­cal wines.

Davies said the EPA was ben­e­fi­cial to the econ­omy as it in­creased the quotas for wine ex­ports, among other things. In terms of geo­graphic in­di­ca­tions the depart­ment was happy that the coun­try got recog­ni­tion for rooi­bos and hon­ey­bush, to name but a few prod­ucts.

“Rooi­bos prod­ucts were be­ing pa­tented by com­pa­nies in Europe, which was an is­sue,” said Davies.

The agree­ment also saw South Africa’s an­nual duty-free quota of 48 mil­lion litres of wine ex­ported to the EU in­creas­ing to 110 mil­lion litres, worth bil­lions of rand.

Ef­fi­cient Group chief econ­o­mist Dawie Roodt said on Fri­day that a no-deal Brexit pos­sessed a big­ger dan­ger for South African ex­ports to the EU.

“In a re­ally bad sce­nario the UK econ­omy can con­tract by 2 per­cent and go into re­ces­sion,” he said, adding this could lead to the UK im­port­ing less, thus af­fect­ing South Africa.

“Also, Lon­don is the world’s fi­nan­cial cen­tre, a hard Brexit will be dis­rup­tive to the fi­nan­cial mar­ket and likely lead to a much weaker pound and a much stronger US dol­lar and euro,” he said.

“That im­plies a weaker rand and that is po­ten­tially a big threat to the South African econ­omy in the short term.”

Econ­o­mists.co.za chief econ­o­mist Mike Schus­sler said the UK was one of South Africa’s big­gest trad­ing part­ners. “Com­mon­wealth coun­tries have al­ways had close re­la­tions with the UK,” he said.

Schus­sler said that a no-deal Brexit could have an im­pact on the lo­cal econ­omy, bat­tling a 27.5 per­cent un­em­ploy­ment rate. How­ever, he stressed that it was dif­fi­cult to say to what ex­tent a no-deal Brexit would af­fect South Africa.

“If Brexit doesn’t work out well the UK’s eco­nomic growth could start de­clin­ing. It’s not go­ing to be easy,” he said.

“We need to be care­ful about how this whole thing plays out. But there is no way that we can in­flu­ence it.”

| AP

A DEMON­STRA­TOR en­ters the emer­gency pub­lic gath­er­ing “Think Anew, Act Anew”, a con­ven­tion on Brexit and a Peo­ple’s Vote, in Lon­don on Fri­day, ahead of the big par­lia­men­tary de­bate on the UK and the EU to­mor­row.

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