Some Implications of Brexit for Southern African Trade Relations
Seldom has a single political event revealed such an astounding degree of failure to grasp and prepare for the consequences of an act of self-inflicted harm. The Economist writes of ‘anarchy’ after the Brexit vote, with “Britain sailing into a storm with no one at the wheel…. Political turmoil follows the referendum result as it is clear that no-one really knows what will happen next.” The consequences will be global in scale.
The single most serious challenge now is to contain the consequences of uncertainty: about the future relationship with the EU, developments in financial markets, and to the formal trade relations of the UK and its many trading partners, including Africa. Major investment and other company decisions (e.g. whether to relocate from London) are in limbo pending some indication as to the direction that the negotiations on which the UK must now embark, may take. The UK’s credit ratings have already been downgraded, while the pound has sunk to new lows. More may follow.
Exit from the EU means that most aspects of secure international agreements, including the multilateral systems of the World Trade Organization (WTO), will now have to be renegotiated. Apart from the huge demands on national technical capacity (which is said to be lacking), most of these negotiations will involve unknown territory and will take a long time to complete. There has never been an exit from the EU before. The uncertainty will linger and cause considerable damage to domestic and international markets and commerce.
This Trade Brief discusses the trade implications of Brexit for the SADC EPA and will mention some of the related predicaments which the UK now faces. This episode serves as a lesson too of the costs involved in undoing well integrated regional integration arrangements. Southern African governments should ensure that their needs and the continuation of certainty in reciprocal market access arrangements will get the urgent attention which they merit. This will be a difficult task but these are matters which cannot be left to decisions of Her Majesty’s Government alone. We need well thought-through responses and diplomatic initiatives of our own. Technical issues need to be clarified in order to support such initiatives.
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