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Brexit uncertainty remains for South Africa

On Monday Trade and Industry Minister Rob Davies confirmed that the Trade Continuity Agreement between the UK and the Southern African Customs Union (Botswana, Lesotho Namibia, Swaziland and South Africa) and Mozambique has not yet been finalized.

A schedule complied by the UK’s Chair of the International Trade Committee of the House of Commons confirms that it is unlikely that the Trade Continuity Agreement will be finalized before UK is set to leave the EU on 29 March 2019. Minister Davies confirmed that if the Trade Continuity Agreement is not finalized soon (being this week), South Africa will not have the chance to ratify it in Parliament before 29 March 2019.

Minister Davies outlined three possible scenarios for South Africa. Firstly, it could be that Prime Minster May succeeds in obtaining approval for her Brexit deal this week. Should PM May succeed, this would mean that all existing trade agreements that the UK has currently as a result of its EU membership will be extended to the end of 2020. As such South Africa exports as well as UK imports would be dealt with under the current SADC EU Economic Partnership Agreement (EPA).

It is of course possible that PM fails in obtaining Parliamentary approval for her Brexit deal. In that event either one of two scenarios could play out. Firstly the EU could extend the due date for Brexit from the current 29 March 2019 date. In this instance the UK and SACU plus Mozambique could have time to conclude the Trade Continuity Agreement ensuring same or better preferential trade that is currently enjoyed under the SADC EU EPA.

Secondly, it is possible that the UK could leave the EU without any deal. This is still a possibility despite the UK Parliament voting against leaving the EU without a deal as it is not legally binding on the EU. In such a scenario, the UK has published a temporary (12 month) tariff schedule that will apply to all of its trading partners. In some instances, South Africa goods will receive the same treatment that it enjoys under the SADC EU EPA. In other instances, South Africa product will face increased tariffs as well as sanitary and phytosanitary measures.

For more information on the possible implications for South African exports and UK imports, please do not hesitate to contact us.

Rian Geldenhuys
© Trade Law Chambers 2019

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