The EU has put a deal on the South African table: we’ll lift the block on South African sugar and allow duty-free access to wine and in return we’d like your help with stalled trade deals for sub-Saharan Africa.
The EU is the world’s biggest sugar importer and 11 years ago talks were started with 70 African, Caribbean and Pacific countries to offer access to Europe’s 500-million consumers. South Africa already has a free-trade deal with Europe and worried it will be worse off if its neighbours have better EU access. The hope is that if South Africa now puts it’s support behind the wider Africa – Europe free trade agreement then it will have a beneficial ripple effect across the continent.
This proposal broadens the 1999 agreement and offers a bigger duty-free sugar quota – high tariffs mean that the EU has hitherto effectively blocked access to South African sugar since arpartheid.
The EU is a really important market for South African wine; of the 410 million litres exported last year, 65% went to Europe making it by far the biggest export market. Part of this new deal proposes expanding South Africa’s duty-free quota of about 95-million litres a year.
The reason the sub-Saharan trade deal is languishing is that there’s a wariness of opening up markets to EU goods, fearing lost tariff revenues and new competition at a time of growing Chinese imports. China’s trade with Africa has bloomed: $91bn in 2009 and an expected $200bn this year. The concern is that if the country does a deal, their local industries will suffer and be unable to compete with cheap Chinese imports. But on the flip side, if they don’t forge deals they’ll face high tariffs on exports to Europe which could pose a serious problem for industries like Kenya’s cut flowers.
The EU has set itself a deadline of October 2014 to wrap up a string of free-trade deals with African, Caribbean and Pacific countries and EU trade chief Karel De Gucht met with Trade and Industry Minister Rob Davies earlier this week.