South African trade with Europe
Europe is South Africa's biggest source of investment, accounting for almost half of South Africa's total foreign trade.
The recently concluded trade agreement between the European Union (EU) and South Africa - the Trade, Development and Co-operation Agreement (TDCA) - removes 90% of all trade barriers over the next decade. The TDCA has been ratified by all fifteen EU members.
Since the provisional application of the TDCA in January 2000, South African exports to the EU have gone up by 46%. EU exports to South Africa, after growing by almost 20% in the year 2000 and again in the year 2001, remained at the same level over 2002.
Trade, Development and Co-operation Agreement (TDCA)
South Africa's trade relations and development co-operation with the EU are governed by the TDCA, which was signed in 1999. The TDCA's ratification is still ongoing and the agreement is being provisionally applied. The main objective of the TDCA is to create a free-trade area between South Africa and the EU over a 12-year period. The EU and South Africa will, in terms of the agreement, open their markets to each other at a different pace.
The EU remains South Africa's most important economic trading partner, accounting for over 40% of its imports and exports, as well as 70% of foreign direct investment. South Africa's trade surplus with the bloc rose from R6-billion in 1999 to R30-billion at the end of 2001. Against a backdrop of a slowing global economy in 2001, which resulted in a 0.3% drop in EU imports from the rest of the world, South African exports to the EU grew by a further 11%. In May 2002 South Africa had overtaken Algeria, Saudi Arabia, Malaysia and Singapore in overall trade with the EU.
In addition to the TDCA, separate agreements on wines and spirits were signed in January 2002. These agreements - which are also applied provisionally - provide for the reciprocal protection of wine and spirits names, and cover issues such as processes and product specifications.
The EU and South Africa are currently working to solve the technical issues that are pending in areas such as agricultural trade, rules of origin and anti-dumping, amongst others.
The EU recently said it would not make further concessions on domestic support for agricultural products. That's after it offered to eliminate export subsidies, on condition that other wealthy nations did the same. In addition to the elimination of export subsidies, South Africa and other developing countries also want the EU to phase out domestic support for its farmers.
Cotonou Agreement
In 2000 the EU signed a new partnership agreement with the African, Caribbean and Pacific (ACP) states – including South Africa. The agreement – known as the Cotonou Agreement - is a 20-year partnership that replaces the Lomé Convention, which provided the structure for trade and cooperation between ACP states and Europe since 1975. The agreement focuses on poverty reduction as its principal objective, development aid and closer economic and trade cooperation.
For South Africa, in the case of trade and development co-operation, the TDCA takes precedence over the Cotonou Agreement.
Key trading partners
UK
The UK is one of South Africa's most significant trading partners. It is the largest foreign investor in South Africa, with assets worth an estimated R132-billion. It is the third largest supplier to South Africa with a two-way trade in goods and services valued at around R66-billion, and is also the country's third largest trading partner. Many products already enjoy duty free status both ways
and existing tariffs will be gradually phased out over 12 years in line with the TDCA. The majority of UK imports into Southern Africa are manufactured or transported via South Africa.
Germany
Relations between South Africa and Germany have strengthened considerably in the areas of political, economic, scientific, cultural and environmental co-operation since the introduction of the South African-German bilateral commission in 1996.
Germany is one of South Africa's most important trading partners, with trade worth more than R42-billion in 2002. The country is South Africa's most important supplier of imports such as capital goods and technology, and ranks second as a purchaser of South African exports after the United Kingdom (UK). It is a major direct investor in South Africa with an investment volume of around R18-billion, the main sectors being the automotive industry, the chemical industry, and mechanical and electrical engineering. More than 450 German companies provide around 60 000 jobs in South Africa.
France
France and South Africa have strong relations in the areas of trade and industry, arts and culture and science and technology. France supports Nepad and the AU, particularly in the context of the G-8. It has hosted several summits, and meetings supportive of African development and emerging economies in Africa. South Africa signed an agreement on technical assistance with France in 2003.
While the structure of the French-South African exchanges has remained stable since the early 1990s, the performance of French business in South Africa has shown clear progress over the past decade. French exports to South Africa reached R8-billion in 2000, compared to R5.5-billion in 1991. South Africa is now the leading outlet for French companies in sub-Saharan Africa. At the same time, South African exports to France have increased from some R44-million in 1991 to around R57-million in 2000.
Italy
Italy ranks amongst the top ten of South Africa's trading partners, recording R6.7-billion worth of exports and R8-billion worth of imports in 2001. Gold represents some 50-60% of South African exports to Italy – due to Italy's jewellery industry. South African exports to Italy with gold included stand at some R17-billion. Other goods exported include iron, copper, steel, leather, fish and meat. South African imports a range of goods from Italy including electro-mechanical goods, vehicles, furniture, jewellery and ceramics. Bilateral agreements include agreements on the promotion and protection of investments, taxation and transport.
Netherlands and Belgium
A number of co-operative arrangements and development assistance programmes exist between South Africa and the so-called Benelux countries – Belgium, Netherlands and Luxemborg. South Africa is the Netherlands' most important trading partner on the African continent and the
Netherlands ranks in the top ten of the list of South Africa's most important trading partners. The South African - Netherlands Chamber of Commerce was established in 1992, and is one of the leading bi-national chambers in the country. Bilateral trade with the Netherlands was around the R9-billion mark towards 2000.
Switzerland
In 2001, Switzerland ranked as the 5th largest foreign direct investor in South Africa. Major Swiss investors have production facilities or branches in the country, including Nestlé, Novartis, Holcim, Schindler and Sulzer. Approximately 250 to 300 Swiss-owned or managed companies operate in South Africa, jointly employing almost 26 000 people. There is an investment protection agreement in force between Switzerland and South Africa, as well as an agreement ensuring that double taxation is avoided.
SouthAfrica.info reporter
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