The UK and Africa Trade Landscape after Brexit

In initial months of 2018, all fifty-four member states of the African Union (AU) signed an agreement for a Continental Free Trade Area (CFTA) in order to make Africa the world’s biggest common market.

Africa’s Relations with the United Kingdom in a Post Brexit Landscape

In initial months of 2018, all fifty-four member states of the African Union (AU) signed an agreement for a Continental Free Trade Area (CFTA) in order to make Africa the world’s biggest common market. The Continental Free Trade Area increased trade within the area by an unparalleled 50% and generated approximately $35 billion in benefits.

During her visit to South Africa in August, the British Prime Minister Theresa May announced that the British government had secured its first post Brexit trade deal: a settlement between the United Kingdom as well as six Southern African countries, which she believed would “build a closer trade and investment partnership in the future that brings even greater benefits for both sides.”

Economic partnership agreement

Trade and Industry Minister of South Africa, Rob Davies, said that Brexit would not disturb the trade relations between both the United Kingdom and South Africa. Davies stated that the Southern African Customs Union (SACU), of which South Africa is a part, is close to finalizing a deal with the United Kingdom to duplicate the present economic partnership agreement which the customs union has with the European Union. Southern African Customs Union is a customs union in Southern Africa which comprises of South Africa, Botswana, Lesotho, Namibia, and Eswatini (Swaziland).

UK: South Africa’s sixth largest global trading partner in the year 2017

The United Kingdom is presently South Africa’s second biggest trading partner in the European Union, in spite of South Africa having a negative trade balance with the European Union. South Africa has a positive trade balance with the United Kingdom, and this has increased considerably over the past few years. The South African and United Kingdom trade balance is presently at about $1.5 billion in South Africa’s favour.

The United Kingdom, who is a major investor in South Africa, is the world’s sixth biggest economy, with a GDP almost nine times the size of South Africa’s. The country was South Africa’s sixth largest global trading partner in the year 2017, with total trade at R79.5 billion (€4.88 billion)

The United Kingdom currently receives about 40% of all fresh food products or agricultural products exported from South Africa to the European Union. The United Kingdom is set to leave the European Union with or without a deal in March 2019. With no agreement in place, Britain would immediately fall outside the European Union’s trade regime.

 

Negotiations with SACU still ongoing

In November British high commissioner to South Africa Nigel Casey confirmed that the United Kingdom is engaged in negotiations with Southern African Customs Union to ensure that there is an agreement in place in the event that the United Kingdom leaves the European Union without a deal, even though it will not have any force and effect in a negotiated withdrawal as transitional arrangements, comprising the continuation of the economic partnership agreement between Southern African Customs Union and the European Union, will apply until end 2020 or end 2022 at the latest. Casey said having a deal in place would offer clarity and conviction to Southern Africa and UK exporters.

Businesslive.co.za reports that with approximately 1.2-billion people on the continent, the agreement is set to generate one of the largest free trade zones in the world. Intra African trade remains very low when compared to other major regions in the world, for example, the European Union and Asia. Davies stated that even though total trade amongst African countries is still low when compared to other continents, he is optimistic that platforms for example IATF will pave the way to escalate business within Africa.

References
  1. 2019. BBC News. [Online]. [5 March 2019]. Available from: https://www.bbc.com/news/uk-47213842
  2. 2016. British Politics and Policy at LSE. [Online]. [5 March 2019]. Available from: https://blogs.lse.ac.uk/politicsandpolicy/return-to-the-commonwealth-uk-africa-trade-after-brexit/
  3. 2019. Freshplazacom. [Online]. [5 March 2019]. Available from: //www.freshplaza.com/article/9055285/brexit-will-not-disrupt-trade-relations-between-uk-and-south-africa/
  4. 2019. The South African. [Online]. [5 March 2019]. Available from: https://www.thesouthafrican.com/south-africa-uk-brexit-trade-deals-latest-news/
  5. 2019. The post-Brexit trade deals that Britain needs to prioritise. . Financial Times. [Online]. [5 March 2019]. Available from: https://www.ft.com/content/c04ebdb6-ee09-11e7-b220-857e26d1aca4
  6. 2019. Sciencedirectcom. [Online]. [5 March 2019]. Available from: https://www.sciencedirect.com/science/article/pii/S2214851518300197
  7. 2018. Devex. [Online]. [5 March 2019]. Available from: https://www.devex.com/news/post-brexit-trade-a-missed-opportunity-for-development-93735

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