SA leaving commercial money on the table, says the EU

A booming demand for goods and supply chain disruptions caused by Covid-19 gave the shipping industry one of its best years. Photo: Getty Images

  • An EU study says SA is not making full use of export opportunities.
  • There is the potential to export more food and motor vehicle components.
  • The bloc says it wants to help SA move towards greener manufacturing.

SA has R350 billion of untapped export potential with the European Union (EU), says a new study funded by the 27-member economic bloc.

Although the EU is by far the largest export market for SAs and SAs benefit from a large number of duty-free items, trade relations with the EU could be exploited to far advantage, the head of the section trade and economic of the EU delegation to SA, Roberto Cecutti said Thursday.

The study, which modeled products with preferential access with respect to potential demand globally, and in particular in European countries, was conducted by the consultancy firm Trade Advisory. It found that products worth R350 billion had short-term, medium-term R280 billion and long-term R210 billion export potential.

In the short term, automotive components and food and agricultural products hold the most untapped potential. In the medium and long term, food and agricultural products, basic steel products, metal products, primary agriculture and textiles have the greatest potential for export growth.

Examples highlighted in the study included the export of ferroalloys to Belgium, lemons and other agricultural products to Hungary, and clothing to Portugal.

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The EU has an asymmetrical economic trade partnership (EPA) with the SADC region, with 96% of SA products not subject to duty with 2.5% of restricted products and 1.3% excluded from free exchange. On the other side of the report, 13.8% of EU goods are excluded from free trade.

Roberto Cecutti

Roberto Cecutti, Head of the Trade and Economy Section, Delegation of the European Union in South Africa.

In the case of restricted items where quotas apply, SA did not use the full quota and could export more butter, fruit in syrup, citrus jam, frozen strawberries, milk powder and white crystalline powder.

Cecutti said the EU wishes to see an increase in SA exports and the EPA, which is undergoing a five-year review, revamped and adapted to take into account new developments.

Martin Cameron of Trade Advisory, who led the study, said: “In the global context there is an opportunity for SA if we do the right things. And one of those things is to simply be aware of the opportunities and then figure out how to access them. “

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Although the EU is SA’s largest export market with 40% and its main export market for motor vehicles (24%), the new climate change regulation could have a huge impact on these if SA does not aligned with greener production methods.

The EU has put in place a carbon border adjustment mechanism that taxes goods on the content of their carbon emissions. SA has three years to adjust to the tax, which will be gradually introduced.

SA will also have to adapt to the production of electric vehicles. European countries have begun to set deadlines beyond which they will not import petrol cars.

“There is a transition period for the carbon border adjustment mechanism and not all products will be covered by it. It covers agriculture, steel and electricity in general. We all have an interest in tackling things through. dialogue SA is already doing a lot through the emissions trading systems they have put in place.

“We also have under the Just Energy Transition Partnership (JetP) $ 8.5 billion that has been invested to support SA. Many things can also be done to help the private sector become greener … We are discussing and we are keeping the channels open, ”Cecutti said.