South Africa’s transition from TDCA to EPA: Agricultural market access
The European Union and the Republic of South Africa concluded a Trade, Development and Cooperation Agreement (TDCA) which came into effect on 1 January 2000.
The TDCA “Trade Chapter” will be replaced by the Southern African Development Community (SADC)-EU Economic Partnership Agreement (EPA) when the latter enters into force. The SADC-EU EPA was signed by both parties on 10 June 2016 and began provisional application on 10th October 2016.
In the run up to the expiration of the TDCA Trade Chapter, the South African government published three notices in the Regulation Gazette to reflect the relevant legislative changes:
A notice by the South African Revenue Service (SARS) on 12 October 2016 amending the rules on customs administration for the EPA, including the revised Rules of Origin, the EUR.1 procedure and the enabling of the new market access quotas;
A Final Notice by the Department of Trade and Industry (dti) on 21 October 2016 prohibiting the use of certain EU agricultural product and beer names in accordance with the Rules of Use published as an annexure; and
A notice by the Department of Agriculture, Forestry and Fisheries (DAFF) published on 28 October 2016 giving effect to the procedures for the application, administration and allocation of export quotas under the TDCA/EPA between the EU and South Africa for the year 2017. Given that the EPA has already taken effect as from 10 October 2016, the regulations will be applied on a retrospective basis [Download notice]
Both the TDCA and the EPA packages contain agricultural products to be exported by SA into the EU market under the Tariff Rate Quota (TRQ) regime. While some products are set to retain the same market access conditions as they had under the TDCA, there are a number of agricultural products that will enjoy new and/or expanded TRQs as part of the EPA package. South Africa stands to benefit from improved market access on wine, sugar and ethanol amongst others whereas some of the EU’s meat products will enter the South African Customs Union (SACU) region under new TRQs (see Table 1).
The new market access provisions of the SADC-EU EPA for agricultural products came into effect on 1st November 2016, signifying the fulfilment of two conditions required for the new concessions to become effective: 1) the ratification of the agreement by SACU States, and 2) the bilateral exchange of notifications for Geographic Indications (GI) protocols – both of which were met by the end of October 2016
The Department of Trade and Industry has confirmed that both the EU and South Africa have submitted the required notifications in regard to the protection of their respective GIs in accordance with Protocol 3 of the SADC-EU EPA. The protection covers some wine, spirit and beers names as well as a number of agricultural product names (i.e. the EU protects 105 SA GI names while SA protects 253 EU GIs).
The submitting of these notifications signifies that the new agricultural market access under the SADC-EU EPA became effective for both the EU and South Africa on 1 November 2016.
Table 1: SADC EPA Tariff Rate Quotas (TRQs)
|TDCA-TRQ||EPA-TRQ||Balance of EPA-TRQ for the remaining period|
|Cane/Refined Sugar||-||50 000 tons||8 333 tons|
|Sugar||-||100 000 tons||16 667 tons|
|Ethanol||-||80 000 tons||13 333 tons|
|Active Yeast||-||350 tons||58 tons|
|White crystalline powder||-||500 tons||83 tons|
|Citrus jams||-||100 tons||17 tons|
|Skimmed Milk Powder||-||500 tons||83 tons|
|Butter||-||500 tons||83 tons|
|Strawberry, frozen||370 tons||370 tons||-|
|Canned mixtures of tropical fruit||2 960 tons||2 960 tons||-|
|Canned Mixtures of fruit, other than tropical fruit||27 102 tons||57 156 tons||55 202 tons|
|Frozen orange juice||1 036 tons||3 602 tons||-|
|Wine||50 126 000 litres||110 000 000 litres||25 930 883 litres|
The third column to the right in Table 1 shows the reduced volumes that reflects the outstanding quotas proportional to the remaining number of days in the calendar year, starting from 1st November when the new market access for agriculture under EPA was provisionally implemented. For example, the TDCA quota for wine was 50.1 million litres, and exports under the quota were 32 million litres. The provisional implementation of the EPA as of 1st November 2016 – under which the annual quota has increased to 110 million litres – means that the outstanding balance for South African wine exports for the remainder of the calendar year increases to 26 million litres – calculated on a pro-rata basis.
From an import perspective, the EU will be able to export wheat under a TRQ of 300 000 tons into the Southern African Customs Union (SACU). Wheat from the EU will come to South Africa duty free under two conditions, which are: (1) if it comes between 1st February and 31st October, and (2) if it enters through the ports of Durban and Richards Bay. Meanwhile, the EU can also export barley into SACU free of duty under a TRQ of 10 000 tons. However, this will be reduced pro rata to the remaining number of days of this calendar year starting from 1st November when new market access for agriculture under the EPA was provisionally implemented.
For products that do not have TRQs, market access changes will remain the same for some products. For instance, “perry pears” and bulk “cider apple” exports, South Africa’s market access under the EPA remains the same as that under the TDCA. Bulk exports of South African “perry pears” will still enter the EU duty free between 1st August and 31st December of each year while South African “cider apples” will be duty-free between the 16th September and 15th December. Outside of these window periods, South African “perry pears” will enter the EU market at a duty of €164,50 per 100kg, while “cider apples” will enter the EU market at a duty of €134,90 per 100kg.
For other products, market access changes have taken effect from 1st November. For example, all other pears that are NOT “perry pears” (i.e. pears of variety Nashi, and others) as well as other apples have new concessions which came into effect on the 1st of November. South African “pears of variety Nashi”, as well as “other apples” that are NOT “perry pears” will now enter into the EU duty free between 1st May and 30th June of each year. Outside of this period, South African “pears of variety Nashi” as well as “others” will be subject to the entry price system. Meanwhile, any other apples that are not cider apples will now enter the EU at “entry prices”. This means that the duty of any other apples that are not cider apples can be increased at any time, at the determination of the EU.
For South African sweet oranges, they will still enter the EU market duty free from 1 st June to 15th October. However, the EPA will extend this period to 30th November over the next decade, during which tariffs will gradually phased down the MFN duties by 9% per annum over the period 16th October to 30th November of each year, until 2027. There are no concessions for all other oranges that are not sweet oranges, and therefore a duty of 12% will be maintained between 1st April and 15th October, which will be increased to 16% between 16th October to 31st March, each year, as was the case under the TDCA. For South African lemon exports (citrus limon, citrus limonum), duties will be eliminated between 1st May to 30th October, and lemon exports will enter the EU at entry prices outside this window period.
EU-South Africa End of Implementation Period (EIP) Report
Joint submission to the World Trade Organisation
On 31 October 2016, the Parties to the TDCA submitted a joint EU-South Africa End of Implementation Period (EIP) Report to the World Trade Organisation’s Committee on Regional Trade Agreements. The report covers amendments to the TDCA, provisions on trade in goods, other provisions in the Agreement, and statistical data on trade in goods between the Parties as well as some indications on Parties’ import coverage.
The achievements of the TDCA and those of the Cotonou Agreement, previous ACP-EC agreements in regional cooperation and integration, as well as economic and trade cooperation, form the basis for the now provisionally applied EU-SADC EPA. The latter will be implemented in a complementary and mutually reinforcing manner with respect to its predecessors, subject to its Articles 100 and 111.