Welcome to tralac’s July newsletter, which focuses on the Southern African Development Community (SADC) – European Union (EU) Economic Partnership Agreement.

The SADC EPA is an important agreement for the six SADC member states that are party to the agreement – Botswana, Lesotho, Namibia, South Africa, eSwatini and Mozambique. It is notable that all, except Mozambique, are also members of the Southern African Customs Union (SACU). Angola, which participated in the negotiations but did not sign and ratify the agreement, may accede to the agreement in the future. The SADC EPA is also the only fully operational African EPA; this agreement also provides a basis for post-Brexit trade with the UK, until a new agreement is negotiated. In the transitional phase, the provisions of the agreement will be ‘rolled-over’ in the domestic legislation of the UK and SADC EPA member states.

This agreement provides all but South Africa with duty-free access to the EU markets; for South Africa, 98.7% of exports to the EU are fully or partially liberalised. A recent trade data update does however indicate that this grouping’s exports to the EU are still predominantly commodities. A series of briefs and updates covers various aspects of the agreement – these are available here.

As with any trade agreement, the SADC EPA provides new opportunities for trade between the parties. Whether this potential is realised or not will depend on a number of factors, including effective implementation. Although provisional application of the agreement began in October 2016, much remains to be done to inform potential traders about the specific provisions in the agreement. Effective implementation also requires, amongst other things, that domestic quality infrastructure be in place and capable of providing the assurance that the requisite standards to gain access to the export market are met. Currently, for example, export of skimmed milk powder and butter from South Africa to the EU is not possible – the EU requirements for monitoring residues and substances in dairy products are not met. This means that the tariff rate quota (TRQ – providing duty-free access to the EU market for specified quantities of these products) cannot be used. The new trade update (and earlier tralac brief on SADC EPA TRQ utilisation, available here) provides data on other TRQs that were not utilised in 2017, and those that are still available for the current year. Feedback from firms suggests that the process of TRQ management could be improved, starting with acknowledgement of applications (even an e-response) with timelines for feedback; and quick turn-around responses are essential.

Concerns about quality infrastructure and the capacity to provide testing and quality assurance services affects not only exports to the EU, but also to other export destinations. This lack of quality infrastructure is failing the private sector; apparently because of fiscal challenges. The SADC EPA includes provisions on development support, and quality infrastructure support is specifically included. We do hope that this is opportunity is taken up.

We look forward to your feedback.

Trudi Hartzenberg and the tralac team