The possible implications of BREXIT on South Africa’s trade relations with the United Kingdom

South Africa, through the Department of Trade and Industry, has followed with interest the BREXIT referendum in the United Kingdom (UK) and the final vote to leave the EU.

In 2015, the UK was 8th largest trading partner of SA. South Africa’s export to the UK was R41 billion and imports was R35 billion. The UK is and will remain an important trading partner for South Africa.

The UK will have a period of two years to negotiate their exit from the EU after formal notice to withdraw from the EU has been given. Until the end of that 2 year period, the Common International Trade Policy (CITP) of the EU would continue to apply to SA’s exports to the UK. The CITP includes the current free trade agreement between SA and the EU, called the Trade, Development and Cooperation Agreement (or TDCA). It will also cover the Economic Partnership Agreement (EPA) that was signed on the 10th of June 2016 in Botswana. Therefore, UK rights and obligations under the existing EU Treaties will continue to apply during this period. There will therefore be no immediate implications for SA exports into UK.

SA/SACU and the UK would therefore have at least two years to review their future trade relationship. One of the options open to the UK would be to join European Free Trade Area (EFTA). EFTA has a free trade agreement with the EU and forms part of the European Economic Area. Importantly, EFTA also has free trade agreement with the Southern African Customs Union (SACU) that South Africa is part of. SACU and EFTA have already started a review of this agreement. Another option would be for the UK and SACU to negotiate a bilateral free trade agreement and one possibility would be to base it on the EPA.

The SA Government will consider all the options available and start engagements with the UK.

Source: The Presidency Republic of South Africa

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