The agro-processing industry could lose out big time following the UK’s exit from the EU – unless a new trade deal is negotiated.
Trade and Investment Promotion Agency Wesgro remains in conversation with the United Kingdom (UK) about its exit from the European Union in an effort to mitigate any impact on the Western Cape.
“The UK is one of South Africa’s most important trade, tourism, and investment partners – and its exit from the EU poses an immediate concern for the South African economy with respect to exports and foreign direct investment (FDI) inflows,” said Michael Matongo, Wesgro international trade manager. “A potential negative direct impact of Brexit on South Africa is the loss of preferential trade arrangements with the UK if the UK is not part of the bilateral trade agreements, such as the SADC-EU Economic Partnership Agreement (SADC-EU EPA).”
He said according to research done by the Industrial Development Corporation, automotive and agro-processing industries would be most affected by the absence of the EPA when trading with the UK.
This could impact the Western Cape significantly where agriculture and agroprocessing were important economic contributors.
“Wines, for example, which previously enjoyed a 3.4% tariff, will in all probability now be required to pay a tariff of 10.2% once the UK exits the EU,” he told FTW.
Matongo said a trade mission was being planned to the UK in August this year while ongoing meetings were taking place to keep abreast of the situation around Brexit.
“It is not all negative,” he said. “On the positive side, Brexit may make it possible for South Africa to renegotiate trade agreements and increase exports to the UK. In addition, South Africa may be able to increase its supply of agricultural and agro-processed goods to both the UK and EU due to seasonal differences.”
