Honey the Hamster

The agreement essentially covers five areas of cooperation, namely political dialogue, development cooperation, trade and trade-related cooperation, economic cooperation and cooperation in other areas. Its main objective is to create a free trade area between South Africa and the EU over a period of 12 years (i.e. until 2012). The agreement covers a number of areas and contains a clause on future developments that will extend the scope of cooperation. Finally, the TDCA provides for close cooperation in a wide range of trade-related areas, including customs services, the free movement of services and capital, and technical barriers such as certification and standardization. The Ministry of Trade and Industry (DTI), Ms. Niki Kruger, Senior Director of Trade Negotiations, attended the briefing. Trade relations between South Africa and the EU were governed by the TDCA, which provided for the conclusion of a free trade agreement over a transitional period of twelve years. The TDCA was the most ambitious cooperation agreement ever concluded with a Third World country. The CDA entered into force on 1 May 2004 and its full implementation has been in force since the end of 2012. The agreement provided for the liberalisation of 95% of EU imports from South Africa within ten years and 86% of South African imports from the EU in twelve years, which entered into full force in 2012.

Trade between South Africa and the EU increased from ZAR 150 billion in 2000 to ZAR 407 billion in 2014. Since the interim implementation, trade has increased by 231%. The scope of the agreement covered around 90% of current trade between South Africa and the EU. The agreement covered a wide range of cooperation, including trade-related issues such as competition and intellectual property, financial assistance, development cooperation, economic cooperation and political dialogue. South Africa has entered into an economic partnership with the EU under its SACU 2014. The advantages of the TDCA were that it was a legal instrument that linked South Africa`s trade relations with the EU. Since the conclusion of the TDCA, market access has been improved for both the EU and South Africa. The TDCA also provided for the development of additional protocols to facilitate the smooth accession of new members to the EU, as well as the extension of trade preferences.

Since the signing of the TDCA, there have been three enlargements of the EU. The first took place in 2004 with the accession of the Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia to the EU. Bulgaria and Romania joined in 2007. Croatia was the last member of the EU in July 2013. The aim of the briefing was therefore for Parliament to ratify the Protocol on Croatia`s accession to the EU. The Additional Protocol created a legal basis for the extension of the TDCA to Croatia. The idea was to ensure that Croatia benefits from the TDCA and that exports from South Africa to Croatia receive preferential treatment. The DTI essentially requested the Committee to expedite the protocol. The delays could not take place because the export duties were far too expensive.

Opportunities and challenges have been identified. With the enlargement of the EU, there would be a greater economic challenge for South African economic operators, but also a greater export opportunity. Currently, the EU accounts for 40% of South Africa`s total trade. With the current enlargement, the EU`s population is expected to increase by more than 4 million. This would create an even larger market for South African exports. It was also expected that TDCA would have an overall positive impact on trade between South Africa and Croatia. South Africa`s main exports to Croatia included mineral products, base metals, prepared foods, beverages, cement and plant products. Croatia, on the other hand, exported machinery and mechanical equipment, vehicles and timber to South Africa.

Other opportunities existed for South Africa in sectors such as agriculture, machinery, transport and electrical equipment, which South African exporters could take advantage of once South Africa`s preferential access to Croatia came into force. Croatia`s accession to the EU had the potential to create jobs in various sectors and promote economic growth. Croatia`s accession to the EU was expected to present more opportunities than threats for South Africa. Trade between Bulgaria and South Africa increased from R443 million in 2004 to R1.4 billion in 2014. Trade with Romania increased from R654 million in 2007 to R3.8 billion in 2013. Members were assured that consultations had taken place on the protocol. Prior to the signing of the protocol, the DTI had consulted NEDLAC on Croatia`s accession to the EU. Industry representatives had not identified any sensitive areas and had agreed to sign the Additional Protocol to Croatia. DTI also consulted with stakeholders such as DIRCO, DOJ, DAFF and SARS.

The Minister of Trade and Industry approved the signing of the Additional Protocol on the Inclusion of Croatia. The European Parliament had approved the protocol. Once the South African Parliament has approved the Protocol, it will enter into force. SARS was the implementing agent for the agreement. SARS would implement the Additional Protocol within its current organizational framework. The implementation date will be published by SARS as soon as Parliament has ratified the Additional Protocol. The DTI would inform relevant stakeholders and economic operators of the implementation date through various export media and councils. In the short and medium term, no radical changes in South Africa`s trade and economic relations with the EU were foreseen following Croatia`s accession. As the EU is South Africa`s main trading partner, market penetration was adequate and the duty-free market access framework was already in place. This has allowed for a seamless expansion into the Croatian market for South African companies trading with the EU. T: The inclusion of Croatia in the TDCA has created a number of new opportunities for South African companies to expand their exports to Croatia or enter a new export market. Discussion The Chair referred to page 4 of the background paper and asked whether Economic Partnership Agreements would be concluded through SACU or with individual SACU Member States.

Mrs Kruger replied that she would try to answer most of the questions asked, but that she would also give written answers to the committee if necessary. As for how the agreement affected SACU`s trade relations with the EU, there was currently only the TDCA between South Africa and the EU. Both Lesotho and Swaziland had unilateral agreements with the EU in which they enjoyed preferential access. Botswana, Lesotho and Swaziland introduced the trade part of the TDCA because there was a common external tariff. There would be an agreement that would regulate the SACU agreement with the EU. Mr.B Nthebe (ANC, North-West) said he believed the agreement was not contrary to South African domestic law. If the agreement covered 90% of trade, which covered the remaining 10%. He pointed out that the briefing talked about modernization, what kind of modernization was it? The political climate was also mentioned. He asked what the DTI was doing with the situation of refugees in the EU and how this would affect the political climate.

He said the briefing did not address the balance that needs to be achieved to protect locally made South African products. There were fears that local industry would be isolated by importing cheaper industrial products from the EU. He gave the example of the local timber sector, which could suffer if cheaper wood products could be imported. DTI was also asked how cooperatives could be introduced into agriculture. Ms Kruger explained that when the TDCA was negotiated, the DTI had negotiated better access to the agricultural market and therefore new access to the EU market had been achieved, hence the value of 90%. She would not comment on the political climate issues. Croatia participated in the discussion on the TDCA. There was a joint operations committee that met annually and dealt with a variety of topics that could range from aerospace to water issues. Cooperation and development issues were also discussed. Mr.

W. Faber (DA, Northern Cape) asked whether there were incentives for Croatian import and export duties and, if so, what types of incentives existed? Were there any tax breaks and was it on both sides of the agreement? He also asked whether South Africa offered incentives to South African companies. .