EU-ZA Summit to Address Growing Trade Crisis Caused by EU Subsidies

Trade and Industry Minister Rob Davies briefed the media today on the economic background to this week’s summit between SA and the EU, with a stark warning of a large – and growing – trade deficit this country faces with our largest trading partner.

The culprit is agriculture – with surges in exports from Europe of products which include frozen potato chips and frozen chicken.

The EU is trying to conclude a new trade deal, known as an Economic Partnership Agreement, or EPA, with the SADC region, and in this context SA is seeking better access for our own exports of agricultural products, including processed foods.

Davies said that while trade has grown in recent years, our exports have not yet recovered to the levels of before the global recession.

The negative trade balance with the EU grew to R95bn in 2012.

“Much of the trade deficit is in surges of processed agricultural products from the EU – that gives the background for SADC EPA negotiation with the EU,” said Davies.

As well as submitting a detailed list of areas where ZA wants the EU to open up its markets, Davies noted that ZA has agreed to European demands that traditional high-quality foods from designated regions should be given protection, under a patent-like regime known as Geographic Indication.

In return, ZA is seeking similar protection for rooibos and honeybush teas and for Karoo lamb.

Of more immediate concern is stepped-up EU surveillance on ZA exports of lemons to combat a disease known as citrus black spot.

Davies expressed hopes that president Zuma will be able to make progress on this issue at the Summit, stressing that jobs in South Africa would be threatened if our export market in Europe for citrus is choked off.

Chief Trade negotiator Xavier Carim warned that the EU has set a deadline for implementation of the EPA of October next year, which would effectively mean the discussions would need to be concluded at least 6 months before that.

If not, there will be no major impact on ZA, which has its own free trade accord with the EU.

However, some of our neighbours would lose their privileged access to the EU market, in a way Davies described as “brutal.”

Davies said that the agricultural issue doesn’t involve a level playing field, as some products exported from the EU have been subsidised. This enables them to win market share from unsubsidised local produce.

Tweets of the Day:

Rob Fee (@robfee): Being a DJ is tough because sometimes it’s hard to see through your sunglasses to press play.

Alan Garner (@WolfpackAlan): Growing old is mandatory. Growing up is optional.

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