Finance Minister says South Africa has a new trade deal with the UK. File Photo: IOL

CAPE TOWN – South Africa, with five other countries in the region, has concluded a new trade agreement with the UK, Trade and Industry Minister Ebrahim Patel said yesterday.

Investors and businesses tend to hold off on investment decisions in times of political uncertainty, but the new agreement meant there was now certainty and a legal framework for trade with the UK in the event that the UK left  the EU without an agreement between them, which was currently scheduled for October 31, he said at a briefing.

The agreement would govern the trade relationship and tariffs between South Africa, Lesotho, Eswatini, Namibia, Botswana and Mozambique (Sacum), and the UK.

Patel said negotiators had worked often until late hours and in multiple locations, to get the agreement in place over two years.

A  no-deal Brexit would have added additional costs to exporting and importing goods for both sets of countries, as higher tariffs would have needed to be added to the cost of trading between the UK and South Africa.

In 2018, the UK was the fourth largest destination for South African exports, with bilateral trade of more than R140 billion a year.

The new agreement, to be known as the Sacum-UK Economic Partnership Agreement, replicates the terms of the agreement in the existing Economic Partnership Agreement (EPA) with the EU, including relating to tariffs, quotas, rules of origin and health and safety regulations.

Some customisation took place, such as for wine, which enjoys a duty free quota to the EU, as the quota had to be adjusted for the UK, without sacrificing local interests, he said. 

The agreement would be reviewed over time if a no-deal Brexit takes place.

Once endorsed by the Cabinet, the agreement would be submitted to Parliament for ratification, and would also require ratification by the parliaments of the six other countries.

Given the time available until October 31, a Memorandum of Understanding had been agreed to allow trade to continue on the agreed terms of the EPA, in the event the ratification process has not been completed by the date that the UK might leave the EU. 

“We are aware there remains an on-going debate in the UK regarding Brexit, including timing and the terms of exit. 

"However we are pleased that regardless of the outcome of these processes, our trading relationship with the UK can continue without disruption,” said Patel.

North West University Business School economist Professor Raymond Parsons said: "Given the important stake which both countries have in each other's economies, the emergence of a new SA-UK trade deal injects more certainty and predictability into their future mutual trading relations, whatever happens on October 31. 

"The deal therefore helps to ensure that business between the UK and SA  can continue as normal and as far as possible be 'business as usual' after Brexit."  

BUSINESS REPORT