SADC trade with EU remains imbalanced, says Rob Davies
The trade agreement signed with the EU in 2016 is a big improvement on the previous one, but SADC exports are still dominated by raw materials
The economic partnership agreement six southern African states have with the EU, while beneficial, remains structurally imbalanced, trade and industry minister Rob Davies said on Monday.
Exports from the southern African states continued to be dominated by raw materials such as mineral commodities, the minister said in an interview ahead of the the first meeting in Cape Town on Tuesday of the joint council of the EU-Southern African Development Community (SADC) economic partnership. Davies and EU trade commissioner Cecilia Malmström will attend the meeting.
SA, Botswana, Eswatini, Lesotho, Mozambique and Namibia signed the economic partnership agreement with the EU in 2016 and it came into force in October of that year. It replaced and improved upon the trade chapter of the trade development and co-operation agreement between SA and the EU that entered into force in 2000.
Through the economic partnership agreement SA gained improved market access into the EU for agricultural products such as wine, sugar, ethanol and fruit, as well as for fisheries.
SA exports to the EU increased from R214bn in 2015 to R262bn in 2017 being led by vehicles which contributed 26% of its total exports to the EU in 2017, followed by precious stones and metals (17%), nuclear reactors (8%), edible fruit and nuts (8%) and ores, slag and ash (7%).
Davies said the EU had a trade surplus with SA but this had been reducing.
“Although SA has managed to increase exports of value-added products to the EU, thus contributing to SA’s industrial development objectives, there is still a need for further improvement in changing the structure of trade,” Davies said.
The core objective of the joint efforts in implementing the agreement must be to ensure that it enables sustainable development through changing the structure of trade, including the fundamental structural imbalance in the trade between the parties, and promote enhanced value-added trade.”
Davies said southern African states needed to take advantage of the opportunities provided to them by the agreement.
He said the first meeting of the joint council would provide an opportunity for the ministers of the southern African states involved in the agreement and the EU to discuss the state of play in the trade between the parties and how the agreement could contribute to inclusive and sustainable development. Also to be discussed will be the mechanisms for resolving disputes.
The EU is likely to raise the special safeguard duty that SA imposed on European poultry exports and SA will raise the issue of citrus black spot, a blemish on the skin of oranges which has been used to exclude southern African citrus exports to the EU.
“I am not sure whether we are going to resolve these issues specifically,” Davies noted.
A number of procedural issues will also be discussed such as the approval of the rules of procedures of the various committees created to oversee the implementation of the agreement.
According to EU statistics, its exports to southern African members of the economic partnership agreement in 2017 amounted to €25.8bn whereas imports amounted to €27.436bn, giving the EU a negative trade balance of €1.6bn.