The European Union – South African Development Community (EU-SADC) Economic Partnership Agreement (EPA) was signed two weeks shy of a referendum in which Britain is set to make a decision on whether to stay part of the European Union (EU) or not.
South Africa’s celebrations of the EPA were beset by uncertainty over the seemingly possible reality of an EU without Britain. A number of analysts have noted the risks associated with the possible departure of Britain from the EU – job losses, threats to global growth, capital and investment flight, among others.
Agbiz economists, Wandile Sihlobo and Tinashe Kapuya, write that an exit of Britain would significantly reduce the value of the EPA agreement, for a number of trade-related reasons. According to them, South Africa’s agricultural exports to Britain have averaged R7,4 billion over the period 2013 to 2015.
This essentially represents the value that a Brexit (the term used for the pending British exit from the EU) will chip away from the EPA, from a South African agricultural market access perspective. Relative to the EU, Britain accounts for an average of 25% of total EU agricultural imports that come from South Africa.
If Brexit happens, South Africa will no longer have a formal trade relation with Britain, and market access benefits that existed through the Trade and Development Cooperation Agreement (TDCA) and the EPA would no longer apply. In principle, South Africa’s agricultural exports to Britain would immediately face generally higher tariffs set at the Most Favoured Nation (MFN) applicable under the World Trade Organisation (WTO).
However, in practice, analysts argue that Britain would probably make some transitional arrangements that would allow for a “soft landing”. If this scenario holds, then South Africa’s agricultural market access provisions would likely be maintained under the existing conditions, at least temporarily, until a new Britain-SACU (Southern African Customs Union) trade agreement is reached. – Agbiz