Brexit
by SAVIOUS KWINIKA
JOHANNESBURG, (CAJ News) – BRITAIN’S long-drawn-out exit from the European Union (Brexit) has understandably sent shock waves through the global markets.
The exit was on January 31.
It has left investors in African markets panicking because many economies are already reeling from low commodity prices worsened by subdued global demand.
Several Southern African countries may rest assured that the much-publicised Brexit will not change the trade relationship with the United Kingdom (UK).
Trade with the UK currently takes place under the terms of the Southern African Development Community (SADC)-EU Economic Partnership Agreement (EPA).
The EPA between the SADC EPA Member States and the EU entered into force on October 10, 2016.
SADC EPA Group comprises Botswana, Eswatini (formerly Swaziland), Lesotho, Mozambique, Namibia and South Africa.
Angola had an option to join the agreement in future.
Amid the strong likelihood of Brexit, a new agreement, which is known as the SACUM [South Africa, Namibia, Botswana, Lesotho and Eswatini, as well as Mozambique]-UK EPA was agreed between the parties in September last year.
SACUM-UK EPA retains the terms of trade present in the existing SADC-EU EPA.
It will govern the bilateral trading relationship between each of the SACUM members and the UK in the event that the SADC-EU EPA no longer applies to the UK after December 2020.
Until then, the UK will be treated as a Member State of the EU for the purposes of international agreements.
The transitional period is set to end on December 31, 2020 but can be extended on agreement between the EU and UK.
Ebrahim Patel, the South African Trade and Industry Minister, said SACUM-UK EPA would enable businesses in the country and other members to continue exporting their products to the UK market.
“The preferential market access contained in the SADC-EU EPA was transposed into SACUM-UK EPA,” he explained.
The continued trade ties despite Brexit is a major boost to a South African economy that has been on a freefall in recent months and is in dire need of a boost.
The UK remains one of South Africa’s key trading partners.
In 2018, the UK was the fourth largest destination for South African exports.
Bilateral trade between the two countries amounted to more than R140 billion (£7,26 billion or US$ 9,47 billion).
“South African exporters can plan ahead with confidence in the period ahead. Their legal and regulatory arrangements remain stable and in place, as it was during the period that the UK was part of the EU,” Patel said.
Amelia Tan of the think-tank, Africa Renewal, said while eventually African economies might be severely affected by Britain’s exit, with China, the United States, Brazil, India and others strengthening their relations with Africa, the continent could look elsewhere if its ties with Britain or the EU got complicated in a post-Brexit era.
“For Africa, therefore, it’s probably premature to press the panic button,” she said.
UK’s withdrawal from EU follows a June 2016 referendum, in which 52 percent voted to leave and 48 percent voted to stay.
The government formally announced the country’s withdrawal in March 2017, beginning the Brexit process.
A deadlock in the UK Parliament delayed the process but it was ratified following general elections in the UK.
– CAJ News