Brexit threatens SA fruit and wine exports

South African fruit and wine

exports could be at risk when

the United Kingdom (UK)

leaves the European Union

(EU) – a move that will see the

newly introduced Economic

Partnership Agreement (EPA)

no longer applying to the

country.

The bilateral trade

agreement between SADC

and the EU is only expected to

apply to the UK as long as they

remain a part of the EU, which

is at present

predicted to be

two years.

While it is

still uncertain

when an exit

strategy from

the EU will

take place – and

how long it will

take – what is

certain is that

any free trade

agreements

will no longer

be applicable,

said Stephen Melzer of law firm

Webber Wentzel.

“Fruit is top of the high-risk

basket because of the number

of goods that may face a tariff

hike after Brexit,” he told a

meeting of the Exporters’ Club

Western Cape recently. “Also

because of the importance of

the UK as a market for South

African exporters to the EU.”

Between 2013 and 2015

South Africa exported an

annual average of £503 million

of ‘sensitive’ fruits – for which

the most favoured nation

(MNF) tariff is likely to be

significantly higher than South

Africa’s current preferential

rate. These exports represent

9% of the UK’s

total imports

from South

Africa during

the period.

Fruits such as

grapes, apples,

citrus, plums,

nectarines,

peaches,

melons and

raspberries are

all among these

sensitive fruits.

Melzer

said MFN

tariffs were what countries

imposed on imports from other

members of the World Trade

Organisation (WTO), unless

the country was part of a

preferential trade agreement.

“Once EPA no longer applies

to the UK they will have

to implement MFN tariffs

until such time as they have

negotiated a new free trade

agreement with South Africa.”

He said the UK was also a

dominant market for South

African wine exports – albeit

not to the same extent as fruit.

“Wine, however, is also a high

risk when it comes to the EPA,

the UK and South Africa.”

South Africa's wine exports

to the UK totalled £148

million or 3% of the total

imports from South Africa

between 2013 and 2015.

“The UK’s share of total

EU imports of high-risk wine

products ranged from 47-71%

during this time,” said Melzer.

He said post Brexit the UK

would no longer be a party to

any free trade agreement.

He said they could very well

negotiate an agreement exactly

like the EPA or even better, but

warned that it would take time

– with MFN tariffs applying in

the interim.

“Claims that it will not

take long to negotiate new

agreements are doubtful.

EPA took nine years of

negotiations before it was

ratified. These agreements by

their very nature are complex

and therefore take time to

negotiate.”

INSERT & CAPTION

Once EPA no longer

applies to the UK

they will have to

implement MFN

tariffs.

– Stephen Melzer