Failure to reach agreement to prevent trade disruptions

TRADE representatives of the Southern African Customs Union (Sacu), Mozambique and the UK failed to reach an agreement on Friday on the roll-over of an Economic Partnership Agreement (EPA) which would have been a first step to prevent trade disruptions between the regions after Brexit.

Trade and Industry Minister Rob Davies said yesterday that differences were narrowed to time frames for the continued recognition of sanitary and phytosanitary import requirements, with both parties acknowledging that market access for agricultural products is critical for Sacu and Mozambique.

Davies said another outstanding issue involved the terms of cumulation which relate to certificates of origin required by exporters to both regions. The rules of origin exist to ensure the benefit of preferential access in terms of a free trade agreement goes to the countries that are party to the agreement.

“The EPA does not provide for cumulation on the basis being advanced by the UK, namely full cumulation with EU material, especially when the EU material is subjected to a higher duty when exported to Sacu and Mozambique, than when the material is exported from the UK. Sacu and Mozambique are unable to give any better treatment to the UK than the EU,” Davies said.

He said if the UK somehow reaches a withdrawal agreement with the EU on Brexit, (its parliament has already voted against it twice), all trade relations with the EU would remain in place until 2020, or until a bilateral agreement between Sacu and the UK is reached.

If Brexit is extended for another three months from March 29, “it gives us time to negotiate the EPA roll-over and for it to go through our Parliament, so if the UK leaves the EU without an agreement, we will have a bilateral agreement in place,” he said.

If at the end of March the UK does not manage to get a withdrawal agreement, southern African exporters would have to rely on import tariffs and tariff rate quotas published last week by the UK government, which will pose challenges for the local automotive industry, which will be subject to higher tariffs than in the current trade regime. However, much of southern Africa’s agriculture exports to the UK were among the 469 products to be rated duty free in terms of the UK’s tariff proposals.

Davies said the trade talks were aimed at navigating the region’s trade with the EU and UK without disruption, through the uncertainties that the world is facing on the trade front from Brexit.