Trade agreement with the EU a boost for Western Cape exports

1st March 2018 By: Kim Cloete - Creamer Media Correspondent

The Economic Partnership Agreement (EPA) between the European Union (EU) and six Southern African countries has been a boost for the Western Cape, with strong gains for the wine and fishing industries since it came into effect in October 2016. 

The EPA between the EU and the Southern African Customs Union (SACU) member countries – South Africa, Botswana, Lesotho, Namibia and Swaziland – plus Mozambique, allows increased market access for exports.

More than half of South Africa’s fish exports are destined for the EU, with a growth rate of more than 50% since 2013, said the SADC-EU EPA Outreach Initiative. The EPA allows duty-free access to the EU for all fish products.

Cape hake, which makes up 40% of South Africa’s total catch, is by far the most popular fisheries export, followed by squid.

“We have been helped by the EPA which is liberalising all Cape hake lines. We are focusing on the value-add to products such as crumbed fillets and fish cakes,” said Fish SA executive director of commercial fishing Jeremy Marillier.

He told a media event in Cape Town that exports of squid were on the rise. Squid is mostly frozen at sea and exported whole to the EU.

The SADC-EU EPA Outreach Initiative has said that South Africa’s fisheries industry is well prepared to comply with international product health standards. Fish can only be exported to the EU from approved processing plants, freezer or factory vessels and cold stores.

South Africa is not yet authorised to export aquaculture products to the EU, mainly because of supply constraints. The EU says freshwater aquaculture holds great potential if it can reach the scale that allows the industry to look for international markets.

The fishing industry has created about 27 000 jobs across 22 fishing sectors in South Africa, said Marillier.

He said the industry was looking into joint venture partnerships to recapitalise its fishing fleet, replace some of its old trawlers and upgrade fishing harbours.

“We also want to use Cape Town as a gateway for expansion into the African fish market.”

Wesgro trade manager – Europe and special projects Michael Matongo, said exports from the Western Cape were growing and that the province was a major market on the African continent. Its relative size is larger than Kenya’s entire economy.

According to Wesgro, wine remains the Western Cape’s leading export to the EU, followed by grapes, citrus, apples and pears, and fish products. Apricots, cherries and peaches, diamonds, engine parts, fruit and nuts and molluscs complete the list of top exports. 

Matongo said 30% of the Western Cape’s overall exports were to Europe, with 17% going to Asia, 10% to North and South America and 40% within the African continent.

He said Western Cape exporters would be involved in an array of trade exhibitions and missions in 2018 in countries ranging from Austria and Germany to Sweden, France, the UK and the Netherlands.

The SADC-EU EPA replaces the EU’s Trade Development and Cooperation Agreement. Under the new agreement, 98.7% of South Africa’s exports into the EU enter duty free.

Trade expert Catherine Grant Makokera said that exports played an extremely important role in economic activity and employment creation in South Africa.

“An estimated 1.23-million jobs in the South African economy – or more than 10% of total employment – is directly related to exports. The figure jumps to 2.53-million or 21.45% of overall employment if indirect jobs are taken into account.”

South Africa is the EU’s largest trading partner in Africa.