SA companies move tentatively into expanded EU

ALAN PEAT IT IS still too early to say whether SA trade with the 10 new members of the European Union (EU) is on the increase, according to Duncan Bonnett of trade consultants, Whitehouse & Associates. But amongst the 10 – Poland, Hungary, Czech Republic, Latvia, Lithuania, Estonia, Slovenia, Slovakia, Malta and Cyprus – there is some obvious potential for two-way trade. And the current base figure for trade between SA and the 10 is so low, that an increase can be expected. In the present figures, SA exports to the new 10 are roughly equivalent to those to Madagascar – an economy with a gross domestic product (GDP) of a mere US$3.5-billion (R21-bn), compared to the total of US$330-bn (R1 980-bn) GDP for the new EU member countries. Meanwhile, the enlarged EU market has close to 400-million extra population in the 10 states, with their membership expected to add 1.3%-2.1% GDP growth for the 10, and 0.7% extra GDP growth to the existing community. “The expanded EU is a reality,” said Bonnett, “and offers a large market for exports, especially for those exporters already dealing with the original 15-member EU. “SA companies are currently moving tentatively into the new region – particularly SA companies in engineering, civils, and the food and beverage sectors.” He does see some competition already brewing in certain markets. “There are possible increases in competition in the iron and steel sectors,” he said, “both in the EU market and SA/Africa.” This, he added, is already apparent in markets for oil and gas pipelines – particularly in North and West African oil-gas countries. Bonnett also feels that there is a need to monitor food products coming out of the EU. “The already lower-cost producers in the ten new member countries will begin to get agricultural subsidies this year,” he told FTW, “which will heighten the price competitiveness of food products from these sources.”