Trade Agreements

Africa

The Department utilises strong government-to-government relations and mechanisms to advance a developmental agenda in Africa that focuses on:

  1. identifying and establishing joint investment projects in partner countries;

  2. promoting two-way trade;

  3. coordinating South African technical co-operation and assistance to support policy and institutional development in partner countries;

  4. promoting cross-border infrastructure development, notably on the basis of the spatial development initiative (SDI) methodology

  5. promoting regional integration through the strengthening and consolidation of the Southern African Customs Union (SACU) and the Southern African Development Community (SADC) free trade agreement; and

  6. negotiating agreements on investment protection and economic co-operation.

Of greater importance, will be accelerated conclusion of enabling agreements under negotiation, and the implementation measures of those that have been ratified.

The Rest of the World

The Department pursues bilateral and regional negotiations and has concluded free trade agreements with the European Union (EU) and the European Free Trade Association (EFTA) comprising Switzerland, Norway, Lichtenstein and Iceland. A preferential trade agreement (PTA) with MERCOSUR comprising Brazil, Argentina, Paraguay and Uruguay entered into force in 2016. While the scope of the market opening is more limited, the PTA will create a legal and institutional framework for managing South Africa’s trade relations with these important countries of the South and offer further opportunities to improve South Africa’s export growth in the coming years. In September 2007, a similar negotiating process was initiated with India. All these negotiations have been pursued alongside South Africa’s partners in the Southern African Customs Union (SACU), comprising Botswana, Lesotho, Namibia and Swaziland, following the entry into force of the new SACU Agreement in 2004 that requires the customs union to negotiate all trade agreements as a bloc.

Over the last decade the importance of building trade and investment relations with the new poles of economic growth in the world, that is developing countries, has become ever more compelling. This inexorable change in the economic geography of the world economy requires more purposeful effort to diversify South Africa’s trade and investment relations to benefit from the rapid and dynamic economic growth in the global south. The Department, along with other departments in government, has made an ongoing contribution to the India-Brazil-South Africa (IBSA) initiative, particularly in negotiating PTAs with MERCOSUR and India. With regard to the People’s Republic of China (PRC), the Department leads an engagement to implement the Partnership for Growth and Development (PGD) that aims to promote value added South African exports to China and increase inward investment in projects for beneficiation. Our objective is to ensure the sustainability and mutual benefit of the relationship with this important trading partner.

The Department continues to contribute to strengthening South Africa’s trade and investment relations with key developed countries. The Trade, Development and Cooperation Agreement (TDCA) with the EU has contributed positively to bilateral economic relations, supported by the 2007 deal on autos. As South Africa’s largest trade and investment partner, relations with the EU remain important and greater attention will be devoted to expanding trade and investment with recently acceded members. Since October 2016, the trade chapter of the TDCA has been folded into the SADC-EU Economic Partnership Agreement. .

Although SACU was unable to conclude a free trade agreement with the USA, a co-operative trade arrangement has been concluded, namely the Trade, Investment and Development Co-operation Agreement (TIDCA) that will build on the trade benefits offered under the Africa Growth and Opportunity Act (AGOA). In this context, the Department will seek to extend and deepen the benefits of AGOA and work to ensure that the engagement with the US supports regional integration in Southern Africa.

South Africa has signed a number of preferential trade agreements with its trading partners in the past few years. The country is also a beneficiary of a number of non-reciprocal trade arrangements among them the African Growth and Opportunity Act and the Generalised System of Preferences of a few developed countries.

Summary of Main Trade Agreements between South Africa and the rest of the World

Type of Agreement Countries Involved Main Objective/Terms Products Involved
Customs Union??
Southern African Customs Union (SACU) Customs Union Botswana, Eswatini, Lesotho, Namibia and South Africa Duty free movement of goods; a common external tariff applied on goods entering any of the countries from outside the SACU All products
Free Trade Agreements (FTAs)
Southern African Development Community (SADC): Protocol on Trade in Goods Free Trade Agreement: Protocol on Trade in Goods Among 13 of the 16 SADC Member States. Angola is in the process to accede to the free trade agreement; the DRC and Comoros have not yet acceded. A FTA, with 85% duty-free trade achieved in 2008. The 15% of trade, constituting the “sensitive list”, was largely liberalised from 2009 to 2012. Most products
Southern African Development Community (SADC): Protocol on Trade in Services Services trade liberalization: Protocol on trade in services Among 15 of the 16 SADC Member States. (Comoros being the exception.) Liberalize trade in services. Seven of the 15 signatory countries have ratified; awaiting a further 3 countries to ratify the Protocol, for it to enter into force. Six services sectors initially (communication, construction, energy, finance, transport, tourism); other sectors might follow in a second round of negotiations.
Trade, Development and Cooperation Agreement (TDCA) (Link: schedule 10 to the Customs and Excise Act, Part 1A:?https://www.sars.gov.za/Legal/Primary-Legislation/Pages/Schedules-to-the-Customs-and-Excise-Act.aspx Free Trade Agreement South Africa and the European Union (EU) The EU offered to liberalise 95% of its duties on South African originating products by 2010. In turn, by 2012, South Africa offered to liberalise 86% of its duties on EU originating products. The TDCA was reviewed, with the aim of broadening the scope of product coverage. This took place under the auspices of the Economic Partnership Agreement (EPA) negotiations between SADC and the EU. Resulting from these negotiations, the TDCA trade chapter was replaced by the SADC-EU Economic Partnership Agreement.
EFTA-SACU Free Trade Agreement (FTA) Free Trade Agreement SACU and the European Free Trade Association (EFTA) – Iceland, Liechtenstein, Norway and Switzerland Tariff reductions on selected goods Industrial goods (including fish and other marine products) and processed agricultural products. Basic agricultural products are covered by bilateral agreements with individual EFTA States
Economic Partnership Agreement between the SADC EPA States, and the European Union and its Member States (Link: schedule 10 to the Customs and Excise Act, Part 1B:?https://www.sars.gov.za/Legal/Primary-Legislation/Pages/Schedules-to-the-Customs-and-Excise-Act.aspx Economic Partnership Agreement South Africa, Botswana, Eswatini, Namibia, Lesotho and Mozambique (referred to as the SADC EPA Group), and the European Union (EU) SA’s core interest has been to harmonise trading regimes between SACU and the EU; to secure further market access in agriculture (beyond the SA-EU Trade Development and Cooperation Agreement (TDCA) provisions) and regain some policy space lost under the TDCA. The agreement covers most products. It replaces the Trade Chapter of the TDCA.
Preferential Trade Agreements (PTAs)
SACU-Southern Common Market (Mercosur) PTA (Link: schedule 10 to the Customs and Excise Act, Part 7:?https://www.sars.gov.za/Legal/Primary-Legislation/Pages/Schedules-to-the-Customs-and-Excise-Act.aspx Preferential Trade Agreement SACU and Argentina, Brazil, Paraguay and Uruguay. (Although Venezuela has since joined MERCOSUR, it is not party to the PTA with SACU.) Tariff reductions on selected goods. It entered into force on 21 October 2016 About 1 000 product lines on each side of the border
Zimbabwe/South Africa bilateral trade agreement Bilateral Preferential Trade Agreement South Africa and Zimbabwe Preferential rates of duty, rebates and quotas on certain goods traded between the two countries Note: the agreement has been in existence since 1964 and was reviewed in 1996. It was terminated in November 2018, following the implementation of the wider-scope SADC free trade area which includes both South Africa and Zimbabwe.
Non-reciprocal Trade Arrangements
Generalised System of Preferences (GSP) Unilateral preferences granted under the enabling clause of the WTO; these preferences are not contractually binding upon the benefactors Offered to South Africa as developing country by:
the EU
Norway
Switzerland
Russia
Turkey
The US
Canada
Japan
Products from developing countries qualify for preferential market access into these markets Selected industrial and agricultural products
Africa Growth and Opportunity Act (AGOA)?https://agoa.info/images/documents/5695/bills-114hr1295enr.pdf Unilateral assistance measure; similar to the GSP programmes but wider in scope Granted by the US to 39 sub-Saharan African countries Preferential access to the US market through lower tariffs or no tariffs on selected products Duty free access to the US market under the combined AGOA/GSP programme stands at approximately 7 000 product tariff lines.
Current Trade Negotiations
SACU-India PTA Preferential Trade Agreement SACU and India Tariff reductions on selected goods SACU and India are in the process of exchanging tariff requests
SADC-EAC-COMESA Tripartite FTA Free Trade Agreement 26 countries with a combined GDP of US$860 billion and a combined population of approximately 590 million people The Tripartite Framework derives its basis from the Lagos Plan of Action and the Abuja Treaty establishing the African Economic Community (AEC), which requires rationalisation of the continent’s regional economic communities. The Tripartite initiative comprises three pillars that will be pursued concurrently, in order to ensure an equitable spread of the benefits of regional integration: market integration, infrastructure development and industrial development The FTA will, as a first phase, cover only trade in goods; services and other trade-related areas will be covered in a second phase. The framework agreement and several annexes have been concluded; ratification in member countries are underway. South Africa has ratified. Ratifications have not yet reached the required number for it to enter into force. Negotiating the tariff liberalization schedules are underway. The negotiating modalities require that duties on 60 to 85% of tariff lines be liberalized upon entry into force; the remaining tariff lines will be subject to negotiation for liberalization, with implementation over a 5 to 8 year period. Work in Phase II has commenced
The African Continental Free Trade Area (AfCFTA) Free Trade Agreement The AfCFTA integrates a market of 55 countries with a combined GDP of over US$ 3.3 trillion and a population of more than 1 billion people. The AfCFTA builds on the Tripartite Free Trade Area (TFTA) with the Common Market for East and Southern Africa (COMESA), East African Community (EAC) and the Southern Africa Development Community (SADC). The AfCFTA therefore presents new market access opportunities in West Africa and North Africa which will be beneficial for the export of South African value added products services. The key objectives of the AfCFTA is to among others, create a single market for Goods, Services, and enhance economic integration in the African Continent in accordance with the Pan African Vision of “An integrated, prosperous and peaceful Africa” enshrined in Agenda 2063; promote structural transformation of the State Parties; boost intra-Africa trade by progressively eliminating tariffs and non-tariff barriers to trade in goods; progressively liberalize trade in services; cooperate on customs matters and the implementation of trade facilitation measures; and design a mechanism for the settlement of disputes concerning their rights and obligations. The AU Assembly launched the AfCFTA negotiations during the 25th Ordinary Summit of Head of States and Governments on 15 June 2015 in Johannesburg, South Africa; adopted the legal instruments establishing the AfCFTA on 21 March 2018 in Kigali, Rwanda and launched the operational phase of the Agreement during the Extra-Ordinary Summit held July 2019 in Niamey, Niger. South Africa signed the Agreement and deposited the instrument of ratification on 1 July 2018 and 10 February 2019, respectively. Effectively, the Agreement entered into force as at 30 May 2019. – Agreement establishing the AfCFTA
– Protocol on Trade in Goods and Annexes
– Protocol on Trade in Services
– Protocol on the Rules and Procedures for the Settlement of Disputes.
Phase II of the negotiations will cover Competition, Intellectual Property and Investment. The AfCFTA is being pursued under the development integration approach which places emphasis on market integration, infrastructure and industrial development, to address Africa’s productive capacity and supply side constraints.
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