SA to iron out post-Brexit trade arrangements with UK by Friday - MPs hear

English Brexit clock
English Brexit clock

Outstanding issues of SA's post-Brexit trade agreement with the UK is expected to be resolved on Friday, Director General of the Department of Trade and Industry(dti) Lionel October said.

October led a team from the dti on Wednesday in a briefing to Parliament's portfolio committee on trade and industry about progress made on the new trade agreement, which is 98% complete.

On Tuesday UK Parliament rejected Prime Minister Theresa May’s Brexit deal. Only 242 members of Parliament voted in favour of it, compared to 391 votes against it, Bloomberg reported.

The UK Parliament will meet on Wednesday to vote whether to leave the EU with a deal or not, and will vote on Thursday whether there needs to be an extension for Brexit.

Britain is supposed to leave the EU on March 29, 2019.

In the meantime the SA government has been working to finalise a trade agreement with the UK, following Brexit.

Trade and Industry Minister Rob Davies previously told the portfolio committee that there is still no certainty on whether Britain would leave the EU with a deal, which is why SA has taken steps to secure a trade agreement.

The UK is SA's second biggest trading partner in the EU and the largest trading partner in the EU for agricultural products.

Currently there is an Economic Partnership Agreement (EPA) between the EU and the Southern African Development Community (SADC), which was entered into on October 10, 2016. The UK, which is still part of the EU trades with SA and other SADC countries under the SADC-EU EPA, the dti's deputy director general for international trade and economic development Xolelwa Mlumbi-Peter explained.

But once the UK leaves the EU, it will no longer be part of the EPA. To avoid trade disruption - it has been agreed that the SADC-EU EPA be rolled over into a standalone trade agreement with the Southern African Customs Union, of which SA is part, and Mozambique and the UK, Mlumbi-Peter said.

The negotiations on the roll-over have "progressed well" Mlumbi-Peter said. Most provisions have been agreed to.

There are however, two outstanding issues.

The first relates to cumulation with the EU – this means the SACU, Mozambique and the UK should be able to continue trade flows and preserve existing value chains with the EU.

"If a 'no deal' Brexit is to materialise, the ability of SA to source input products from the UK for final exportation of beneficiated or manufactured products to the EU and vice versa could be severely compromised," Mlumbi-Peter said.

It is important for each of the parties - the EU, the UK, SACU and Mozambique to have equal treatment, in terms of the EPA. Currently, the UK is requesting better treatment than the EU. SA is vying for the UK and EU inputs to be treated the same, Mlumbi-Peters explained.

The dti had discussed this issue with the UK, which will undergo domestic discussions on the matter before an agreement can be reached, she added.

The second issue is related to Sanitary and Phyto Sanitary (SPS) measures. The EU has regulations placed on SPS requirements for imports on agricultural products. Once the UK leaves the EU, it will have to put in place its own SPS framework.

SACU and Mozambique have requested that during the transition period, the UK will ensure continuity of agricultural trade, by allowing enough time for parties to adjust to the UK's new operational requirements. No agreement on the timeframes have been reached yet, Mlumbi-Peters said.

Additionally a memorandum of understanding or a briding agreement has been proposed to ensure trade can continue uninterrupted if the UK leaves the EU without a deal, Mlumbi-Peters explained.

The arrangement is for the EU-SADC EPA to continue for a period of six months until the rollover agreement is finalised. Mlumbi-Peters added that the bridging instrument is necessary as there will not be enough time for SA's Parliament to ratify the rollover agreement before the house rises next week.

The UK is consulting on a draft of the bridging agreement. 

Ministers of SACU, Mozambique and the UK will meet on Friday March 15, 2019 to resolve the outstanding matters of the roll-over agreement and the bridging agreement, Mlumbi-Peters said.

Davies will also hold a media briefing on the way forward given the latest Brexit developments at 12:30 on Wednesday.

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