What a no-deal Brexit would mean for Western Cape exports

The Western Cape's economy is closely linked to the United Kingdom, meaning the outcome of this week's Brexit votes are important for the province.

This is according to Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape.

The United Kingdom (UK) was the Western Cape's second largest export market in 2017, after Namibia. The UK is also South Africa's 8th largest export market.

The UK was also the number one source of foreign direct investment into the Western Cape and the number one source of foreign tourists in 2017.

Depending on how this week in the British Parliament plays out, there could be various consequences for the Western Cape's goods – predominantly agricultural products – being exported to the UK.

Wesgro says the SA Parliament may be called upon this week to ratify a new trade agreement between the UK and the Southern African Customs Union plus Mozambique (SACU+M). The governments of the SACU+M countries have been negotiating an agreement with the UK to ensure trade continuity upon the UK's exit from the EU.

According to Wesgro, this agreement is expected to largely be a replication of SA's Economic Partnership Agreement (EPA) with the EU.

No-deal Brexit 

Under a no-deal Brexit, there are two scenarios for South Africa, Wesgro says: a roll-over agreement with the UK or no roll-over agreement.

Should the SACU+M –UK Agreement be in place in time for the 29 March deadline - that is signed and ratified - then SA goods are assured of having preferential access to the UK market the day after Brexit.

If the agreement is not in place in time, then South African goods will also face most favoured nation (MFN) tariffs upon entry into the UK market in the case of a no-deal Brexit. The UK is yet to publish its post-Brexit MFN tariff rates.  

Deadline delay

The third scenario, according to Wesgro, is a delay of the deadline and a return to the drawing board.

"This will happen in the event that the UK prime minister's deal is rejected, that a no-deal Brexit is rejected, and the British Parliament votes for an extension of the 29 March deadline. This will mean extending the uncertainty of what Brexit will look like, and potentially even whether it will happen," said Wesgro.

"There is one scenario, in the short term, where EU goods to the UK could face higher tariffs than South African goods. This would be in the case of no-deal Brexit but a roll-over agreement between South Africa and the UK."

In this case there would, however, still be major disruptions to many SA exports.

Goods at stake

A large number of SA goods destined for the UK are shipped through Rotterdam or other European ports, and these products will get caught up in border disruptions on its way to the UK.

Similarly, many SA exports destined for mainland Europe are transported through the UK.

The Western Cape's top exports to the UK in 2017 were:

  • Fresh grapes;
  • Wine (in containers of 2l or less);
  • Apples;
  • Mandarins/clementines;
  • Wine (in containers of more than 2l);
  • Oranges;
  • Cranberries;
  • Plums/sloes;
  • Peaches/nectarines;
  • Skincare/beauty products/sunscreen;
  • Dried fruit;
  • Raspberries/blackberries/mulberries/loganberries;
  • Lemons/limes;
  • Pears;
  • Lychees/tamarinds/passion fruit;
  • Preserved pears;
  • Hake;
  • Rooibos tea;
  • Preserved peaches;
  • Grapefruit.
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