Trade Agreements – The Department of Trade Industry and Competition

thedtic.gov.za/sectors-and-services-2/1-4-2-trade-and-export/market-access/trade-agreements

Trade Agreements

Africa

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

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

ii. promoting two-way trade;

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

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

v. 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

vi. 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.

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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 Countries Main Products

Agreement Involved Objective/Terms Involved

Customs Union

Southern African Customs Union (SACU) Customs Botswana, Duty free All products
Union Eswatini, movement of
Lesotho, goods; a
Namibia and common external
South Africa tariff applied on
goods entering
any of the
countries from
outside the
SACU

Free Trade Agreements (FTAs)

Southern African Development Community (SADC): Free Trade Among 13 of A FTA, with 85% Most products
Protocol on Trade in Goods Agreement: the 16 SADC duty-free trade
Protocol on Member achieved in
Trade in States. 2008. The 15%
Goods Angola is in of trade,
the process constituting the
to accede to “sensitive list”,
the free trade was largely
agreement; liberalised from
the DRC and 2009 to 2012.
Comoros
have not yet
acceded.

Southern African Development Community (SADC): Services Among 15 of Liberalize trade Six services
Protocol on Trade in Services trade the 16 SADC in services. sectors initially
liberalization: Member Seven of the 15 (communication,
Protocol on States. signatory construction,
trade in (Comoros countries have energy, finance,
services being the ratified; awaiting transport,
exception.) a further 3 tourism); other
countries to ratify sectors might
the Protocol, for follow in a
it to enter into second round of
force. negotiations.

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Trade, Development and Cooperation Agreement Free Trade South Africa The EU offered The TDCA was
(TDCA) (Link: schedule 10 to the Customs and Excise Agreement and the to liberalise 95% reviewed, with
Act, Part 1A: https://www.sars.gov.za/Legal/Primary- European of its duties on the aim of
Legislation/Pages/Schedules-to-the-Customs-and- Union (EU) South African broadening the
Excise-Act.aspx originating scope of
products by product
2010. In turn, by coverage. This
2012, South took place
Africa offered to under the
liberalise 86% of auspices of the
its duties on EU Economic
originating Partnership
products. 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 SACU and Tariff reductions Industrial goods
Agreement the European on selected (including fish
Free Trade goods and other
Association marine
(EFTA) – products) and
Iceland, processed
Liechtenstein, agricultural
Norway and products. Basic
Switzerland agricultural
products are
covered by
bilateral
agreements with
individual EFTA
States

Economic Partnership Agreement between the SADC Economic South Africa, SA’s core interest The agreement
EPA States, and the European Union and its Member Partnership Botswana, has been to covers most
States (Link: schedule 10 to the Customs and Excise Agreement Eswatini, harmonise products. It
Act, Part 1B: https://www.sars.gov.za/Legal/Primary- Namibia, trading regimes replaces the
Legislation/Pages/Schedules-to-the-Customs-and- Lesotho and between SACU Trade Chapter
Excise-Act.aspx Mozambique and the EU; to of the TDCA.
(referred to secure further
as the SADC market access in
EPA Group), agriculture
and the (beyond the SA-
European EU Trade
Union (EU) Development
and Cooperation
Agreement
(TDCA)
provisions) and
regain some
policy space lost
under the TDCA.

Preferential Trade Agreements (PTAs)

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SACU-Southern Common Market (Mercosur) PTA Preferential SACU and Tariff reductions About 1 000
(Link: schedule 10 to the Customs and Excise Act, Part Trade Argentina, on selected product lines on
7: https://www.sars.gov.za/Legal/Primary- Agreement Brazil, goods. It entered each side of the
Legislation/Pages/Schedules-to-the-Customs-and- Paraguay and into force on 21 border
Excise-Act.aspx Uruguay. October 2016
(Although
Venezuela
has since
joined
MERCOSUR,
it is not party
to the PTA
with SACU.)

Zimbabwe/South Africa bilateral trade agreement Bilateral South Africa Preferential rates Note: the
Preferential and of duty, rebates agreement has
Trade Zimbabwe and quotas on been in
Agreement certain goods existence since
traded between 1964 and was
the two countries 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 Offered to Products from Selected

preferences South Africa developing industrial and
granted as developing countries qualify agricultural
under the country by: for preferential products
enabling the EU market access
clause of the Norway into these
WTO; these Switzerland markets
preferences Russia
are not Turkey
contractually The US
binding upon Canada
the Japan
benefactors

Africa Growth and Opportunity Act Unilateral Granted by Preferential Duty free
(AGOA) https://agoa.info/images/documents/5695/bills- assistance the US to 39 access to the US access to the
114hr1295enr.pdf measure; sub-Saharan market through US market
similar to the African lower tariffs or no under the
GSP countries tariffs on combined
programmes selected AGOA/GSP
but wider in products programme
scope stands at
approximately 7
000 product
tariff lines.

Current Trade Negotiations

SACU-India PTA Preferential SACU and Tariff reductions SACU and India
Trade India on selected are in the
Agreement goods process of
exchanging tariff
requests

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SADC-EAC-COMESA Tripartite FTA Free Trade 26 countries The Tripartite The FTA will, as
Agreement with a Framework a first phase,
combined derives its basis cover only trade
GDP of from the Lagos in goods;
US$860 Plan of Action services and
billion and a and the Abuja other trade-
combined Treaty related areas
population of establishing the will be covered
approximately African in a second
590 million Economic phase. The
people Community framework
(AEC), which agreement and
requires several annexes
rationalisation of have been
the continent’s concluded;
regional ratification in
economic member
communities. countries are
The Tripartite underway.
initiative South Africa has
comprises three ratified.
pillars that will be Ratifications
pursued have not yet
concurrently, in reached the
order to ensure required number
an equitable for it to enter
spread of the into force.
benefits of Negotiating the
regional tariff
integration: liberalization
market schedules are
integration, underway. The
infrastructure negotiating
development and modalities
industrial require that
development 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 The AfCFTA The key – Agreement
Agreement integrates a objectives of the establishing the
market of 55 AfCFTA is to AfCFTA
countries with among others, – Protocol on
a combined create a single Trade in Goods
GDP of over market for and Annexes
US$ 3.3 Goods, Services, – Protocol on
trillion and a and enhance Trade in
population of economic Services
more than 1 integration in the – Protocol on
billion people. African Continent the Rules and
The AfCFTA in accordance Procedures for
builds on the with the Pan the Settlement
Tripartite Free African Vision of of Disputes.
Trade Area “An integrated, Phase II of the
(TFTA) with prosperous and negotiations will
the Common peaceful Africa” cover
Market for enshrined in Competition,
East and Agenda 2063; Intellectual
Southern promote Property and
Africa structural Investment. The
(COMESA), transformation of AfCFTA is being
East African the State Parties; pursued under
Community boost intra-Africa the

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(EAC) and trade by development
the Southern progressively integration
Africa eliminating tariffs approach which
Development and non-tariff places
Community barriers to trade emphasis on
(SADC). The in goods; market
AfCFTA progressively integration,
therefore liberalize trade in infrastructure
presents new services; and industrial
market cooperate on development, to
access customs matters address Africa’s
opportunities and the productive
in West Africa implementation capacity and
and North of trade supply side
Africa which facilitation constraints.
will be measures; and
beneficial for design a
the export of mechanism for
South African the settlement of
value added disputes
products concerning their
services. 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.

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