Southern Africa implements pivotal EU trade deal - African Business Magazine
Southern Africa implements pivotal EU trade deal

Southern Africa implements pivotal EU trade deal

Five Southern African nations have begun to implement a crucial trade agreement with the European Union after concluding almost a decade of negotiations. 

The Economic Partnership Agreement, signed by Botswana, Lesotho, Namibia, South Africa and Swaziland, is designed to give African countries expanded access to the EU market while gradually opening African markets to EU products. Mozambique is in the process of ratifying the agreement, while Angola, which took park in negotiations but did not sign, could join at a later stage.

The deal will allow the EU to maintain its position as the pre-eminent trading partner of the fifteen-nation SADC, building on a relationship which in 2015 amounted to around €63bn in traded goods. Until now, the SADC has largely exported minerals and metals to the EU, which in turn has focused on engineering, automotive and chemical exports to Southern Africa.

The agreement is designed to broaden those links while protecting the emerging markets of Southern Africa from stifling European competition. Botswana, Lesotho, Mozambique, Namibia and Swaziland will be granted duty and quota-free access to the EU market, but will also benefit from protective measures covering fragile and growing industries. The EU will be granted market access to the group of about 86%, according to the South African government.

“The agreement that we’re putting in place will support sustainable economic growth and regional integration in southern Africa and is designed to help lift people out of poverty in the years to come.  Africa is the emerging continent and the Economic Partnership Agreements have been designed to maximise this dynamism,” said Cecilia Malmström, the EU’s Commissioner for Trade.

The new pact also expands on a bilateral agreement between the EU and South Africa, by far SADC’s most developed economy, replacing the existing Trade, Cooperation and Development Agreement. South Africa’s Trade and Industry Department estimated that almost all of the country’s products will now have preferential access to the EU, while 96% will enter free of tariffs.

Areas to benefit from improved access include fisheries, agricultural produce, and products put together using components from outside the SADC, which previously could have been excluded. The deal represents a shot in the arm for South Africa’s negotiators, who only recently solved a bitter dispute with the United States over trade access.

Last November, US President Barack Obama threatened South Africa with suspension from the African Growth and Opportunity Act (AGOA), a crucial agreement granting African countries tariff-free access to the US market, amid a row over the exclusion of American meat products. The two sides resolved the dispute in January shortly before the threatened suspension. Swaziland, another party to the new EU agreement, was suspended from AGOA in January 2015 amid US concerns over workers rights in the country.

The EU accounts for around a third of South African imports, while around one-fifth of South African exports – particularly products from the automotive sector – are purchased by EU member states. Having concluded negotiations with the EU, the SADC could now pursue a fresh trading relationship with the United Kingdom, which is looking to seal new deals following its surprise exit from the EU.


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