THE SOUTH African economy is losing between R350 billion and R840bn a year in untapped trade opportunities with the European Union (EU), especially in agricultural exports, in spite of having Economic Partnership Agreements (EPAs) that have been in place for six years.
These were the findings of a EU-funded study released yesterday, by Trade Research Advisory, an international trade and economic development research advisory firm.
Trade Advisory managing director Martin Cameron yesterday said the EU remained South Africa's biggest trade and investment partner in Africa, representing more than 40 percent of foreign direct investment and around 350 000 direct jobs.
South Africa’s primary exports to the EU are fuels and mining products, machinery and transport equipment, and other semi-manufactured goods, fetching the country R355bn as at the end of 2021.
Cameron, however, said there were still billions of rands in untapped exports in the products such as iron and steel, and non-alloy steel bars and rods to Belgium-Luxembourg.
“The EU as a singular trading entity still poses the most untapped potential over and above what we are already doing with the EU,” he said.
“In the short- to medium-term, we reckon there’s about R350bn worth of exports, and just below R280bn in the medium term and R211bn in the long term.”
Cameron also said countries such as Hungary were potential “new” markets for South Africa’s agriculture-focused products, especially lemons into Europe.
He said the country should now focus on longer term export investment and development on meat products of goats, whether fresh, chilled or frozen.
“This is an opportunity for South Africa. We produce, domestically, a hell of a lot of goats, we don’t export much of them. And the simple reason for that is it’s not formalised and it doesn’t meet the health standards,” he said.
“Australia has capitalised on goats at our expense. They have taken some of our knowledge of farming with goats.
“Australia, in singularity terms, has got the single largest farm of 1.2 million goats specifically targeting the Muslim world.
“The same goes for Texas, for example. Texas has taken the Swiss goat and the South African boerbork and they crossed them. Now they have an animal that gives them both good milk, as a result cheese, and meat, a combination.”
Under the so-called “SADC EPA”, the EU has fully or partially removed customs duties on 98.7 percent of imports from South Africa.
Head of the trade and economic section for Delegation of the EU to South Africa, Roberto Cecutti, said South Africa was not taking full advantage of quota-free, duty-free export trade agreement.
Cecutti said South Africa’s exports to the EU had grown by 30 percent in 2021, and the country had remained a net exporter of agri-food products to the EU with a positive trade balance of R11bn, R4bn more than in 2020.
“What we have noted still in 2021, some of these products still keep being under-utilised. So the quotas are not fully being utilised,” Cecutti said.
“And this is happening for canned fruit, butter, citrus jam. frozen strawberries, milk powder, and white crystalline powder.
“There are many reasons behind it but we are discussing with the dtic and about how we can improve the situation.”
Meanwhile, XA International Trade Advisors said that South Africa was missing a huge opportunity to export to chicken-hungry EU.
XA International Trade Advisors chief executive Donald MacKay said this was because South Africa was simply not ready to export.
“The EU imports 900 000 - 1 million tons of chicken breast per year, and it was buying that breast for about 6 euros per kilogramme in March 2022,” MacKay said.
“South African producers, who have a surplus of chicken breasts, are selling their breasts locally at a third of that price, so the upside for local producers is enormous.
“What’s more, is that South Africa has duty-free status in the EU, which means it pays no duties to sell its products there. The EU has already said that it will buy SA products once the country meets the required health and safety standards.”