South Africa, Mozambique and the UK progress in finalizing a roll-over Economic Partnership Agreement
South Africa Minister for Trade and Industry Dr Rob Davies says progress has been made to finalize a roll-over Economic Partnership Agreement between the Southern African Customs Union (SACU), Mozambique and the United Kingdom (UK).
Minister Davies was briefing the media in Parliament on the rollover of the Economic Partnership Agreement (EPA) between SACU, Mozambique and the UK. SACU and Mozambique have been discussing with the UK the rollover of the EPA to avoid trade disruption post-Brexit.
SACU, Mozambique and the United Kingdom (UK) currently trade under the Southern Africa Development Community (SADC) – European Union (EU) Economic Partnership Agreement (EPA). The SADC-EU EPA provisionally entered into force on 10 October 2016.
Minister Davies said SACU, Mozambique and the UK have agreed on Terms of Reference for the dialogue on the roll-over of the EPA.
“The objective of the process is to ensure as far as possible the continuity of the terms of the SADC-EU EPA following the UK’s exit from the EU by agreeing to a separate trade agreement that mirrors the terms of the SADC-EU EPA. In addition, the dialogue is a technical exercise rather than an opportunity to renegotiate existing terms and seeks to maintain the current effect of the EPA. Therefore, the current SADC-EU EPA will be used as the basis for the future agreement with modifications only to those elements necessary to ensure operability,'' said Davis.
''The Parties have made substantial and substantive progress towards the conclusion of the SACU, Mozambique and UK Economic Partnership Agreement (SACUM-UK EPA). Only two issues remain outstanding. These include cumulation in relation to rules of origin and sanitary and phytosanitary measures or regulatory measures and standards related to food safety and human, animal or plant life or health,” added the Minister.
He, Minister Davies, also indicated that in relation to cumulation, the SADC-EU EPA specifies the conditions under which the parties to the Agreement are able to source input materials amongst or between each other and from third Parties (non-Parties) to the free trade agreement.
Once the UK exits the EU, materials from the EU that are used in manufacturing products in the UK shall not qualify to be considered in determining the origin of the product for purposes of affording eligibility to preferential market access. This would also apply to some EU materials used in manufacturing products in South Africa for exports into the UK.
Davies mentioned that the Parties are continuing to engage with a view to preserve the existing supply-chains. SACU and Mozambique have also made proposals that are being considered by the UK. The proposals aim to preserve existing value-chains and the effects of the SADC-EU EPA and its parameters and ensure mutually beneficial gains, including addressing regional cumulation between SACU countries and Mozambique.
On Sanitary and Phytosanitary measures, Minister Davies stated that the Parties have agreed on the need for the UK to continue to recognize EU model health certificates, establishment listings and other import requirements upon the UK’s exit from the EU in order to ensure continuity in agricultural market access. However, the Parties are still discussing the timelines for continued recognition of these import requirements.
Furthermore, Minister Davies highlighted that the Parties have agreed on the need to conclude a bridging mechanism in the form of a Memorandum of Understanding (MoU).
“The MoU will carry over the effects of the SADC-EU EPA to ensure that there is no disruption of trade on 30 March 2019 if the UK exits the EU without a deal. The MoU will roll-over the effects of the SADC-EU EPA for a period of 6 months, while the roll-over of EPA is either being concluded or the necessary domestic legislative processes for ratification of the SACU, Mozambique and UK EPA are being concluded, added Davies.
South Africa notes that the UK Government has published details of the UK’s temporary tariff regime for a “no deal” scenario. This is a tariff schedule that will apply to general trade with the world. It is the Most-Favoured-Nation (MFN) duties that would be applicable for a transitional period of 12 months should the UK exit the EU on 29 March 2019 without an agreed Withdrawal Agreement.
According to the list, a total of 469 tariff lines will remain dutiable with varying levels and types of duties, including ad valorem, specific, mixed duties; tariff-rate quota based duties. These will affect the following sectors: automotive vehicles, clothing and textile, lamb, beef, pork, poultry, rice, fish, fertiliser, fats and oils, sugar and molasses, ceramics and related products, cheese, tyres and wheels, butter, rum, bananas, fresh beans, bioethanol and spirits, cocoa, polyethylene, clove & vanilla. The dti will undertake an analysis of the implications of the temporary tariff and industry and traders will be advised accordingly.
The UK Parliament will vote on 14 March 2019 on the extension of Article 50. Should this receive a majority vote, the UK will remain in the EU and will continue to be bound by the terms of SADC-EU EPA. South Africa will continue to monitor developments in the UK and will advise traders as appropriate.