Sacu, Mozambique fail to reach agreement to cushion Brexit impact

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CAPE TOWN – Trade representatives of the Southern African Customs Union (Sacu), Mozambique and UK failed to reach an agreement on Friday on an Economic Partnership Agreement (EPA), which would have been a first step to prevent trade disruptions between the regions after Brexit. Trade and Industry Minister Rob Davies said on Monday that the differences were “narrowed” in relation to timeframes for the continued recognition of sanitary and phytosanitary import requirements, with both parties acknowledging that market access for agricultural access is critical for Sacu and Mozambique. Another issue still not resolved involved the terms of “cumulation,” which relates to certificates of origin required by exporters to both regions. The rules of origin exist to ensure the benefit of preferential access in terms of a free trade agreement, goes to the countries that are party to the agreement. “The EPA does not provide for cumulation on the basis being advanced by the UK, namely full cumulation with EU material, especially when the.EU material is subjected to a higher duty when exported to Sacu and Mozambique, than when the material is exported from the UK. Sacu and Mozambique are unable to give any better treatment to the UK than the EU.” The parties have agreed to continue engaging to revolve the differences, said Davies.

He said if the UK somehow reaches a withdrawal agreement with the EU on the terms of Brexit, (its Parliament has already voted against it twice), all trade relations with the EU would remain in place until 2020, or until a bilateral agreement between Sacu and the UK is reached.

If Brexit is extended for another three months from March 29, “it gives us time to negotiate the EPA roll-over and for it to go through our Parliament, so if the UK leaves the EU without an agreement, we will have a bilateral agreement in place.”

If at the end of March the UK does not manage to get a withdrawal agreement, South African exporters would have to rely on import tariffs and tariff-rate quota’s recently published by the UK government, which will pose some challenges for the local automotive industry.

He said the ongoing trade talks were aimed at navigating the region's trade with the EU and UK without disruption, through the uncertainties that the world is facing on the trade front from Brexit.

BUSINESS REPORT