Brexit Ambiguity Leaves Southern African Trade Talks in Limbo

JOHANNESBURG (Capital Markets in Africa) – The uncertainty surrounding the U.K.’s departure from the European Union has left trade negotiators from six Southern African nations pondering how their future ties with one of their largest trading partners will pan out.

“Even if there is a deal, it will take months, if not years, to manage the administration around trade and tariffs,” South Africa’s Trade and Industry Minister Rob Davies told reporters in Cape Town on Monday.

South Africa negotiates trade deals with fellow members of the Southern African Customs Union — Lesotho, Namibia, Eswatini and Botswana — and have now been joined by Mozambique in talks on a post-Brexit trade agreement with the U.K. South Africa has the region’s biggest economy, and the U.K. is its eighth-largest trading partner.

Possible Scenarios

• The U.K. and the EU seal an exit agreement by their original March 29 deadline. That would ensure all existing trade accords with SACU remain in force until the end of next year, giving it time to iron out final details of the split, according to Davies.
• British lawmakers vote to postpone the nation’s exit from EU until the end of June. “From South Africa’s perspective this wouldn’t be a bad thing, as it will enable our new parliament, scheduled to come in after the May 8 elections to ratify any new deals,’’ Davies said. “The extra time would also allow us to push our favored position of simply rolling over the Economic Partnership Agreement that SACU has with the EU.”
• The U.K. crashes out of the EU without a deal. The would be the worst-case scenario, because the U.K. would institute tariffs on a list of 469 products, and producers of vehicles and automotive parts, meat and fish would be hard hit, according to Davies. Most other fresh produce from southern Africa, such as fruit and wine, would be largely unaffected, he said.

Source: Bloomberg Business News