The free trade agreement between the European Union (EU) and South Africa has been in negotiation for many years. Finally, in October 2019, negotiators from both sides successfully agreed to a deal. This agreement is expected to boost the economic growth of both regions and is considered one of the most significant trade agreements in South Africa`s history.
The EU is South Africa`s largest trading partner, accounting for approximately a third of South Africa`s total trade. Under the new agreement, both parties aim to reduce tariffs on a range of goods and services, and create a favorable trade environment for businesses in both regions. This will lead to an increase in exports from South Africa, particularly in agriculture, wines, and fruits.
The agreement will also benefit EU businesses by providing access to the South African market, including automotive, electronic and chemical goods. The agreement will promote sustainable economic development, particularly in impoverished regions of South Africa. Overall, the free trade agreement is expected to increase trade between the EU and South Africa by around €6 billion per year.
The free trade agreement between the EU and South Africa is particularly significant because it is also linked to other African countries. The agreement will facilitate the development of a continental free trade area that will eventually cover the entire African continent. This will unleash economic opportunities for Africa`s 1.2 billion citizens and create a market of almost $3 trillion. The agreement is also expected to boost intra-African trade and create jobs.
However, the agreement has some challenges. Some sectors in both regions are likely to face competition from the other party. Moreover, local producers in South Africa may be at a disadvantage due to increased competition from EU businesses with access to the South African market. Therefore, measures such as anti-dumping measures, safeguard clauses, and rules of origin will need to be put in place to ensure the protection of both parties.
In conclusion, the free trade agreement between EU and South Africa will undoubtedly help both economies grow and create jobs. It is also a vital step in the development of a continental free trade area, which will open up new opportunities for businesses and promote sustainable economic development in Africa. However, safeguards are necessary to ensure that no sector or business is disproportionately affected by the agreement.