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There will be no Brexit ‘cliff edge’ in UK-SA relations

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There will be no Brexit ‘cliff edge’ in UK-SA relations

Dame Judith Macgregor
Photo by Duane Daws
Dame Judith Macgregor

8th March 2017

By: Terence Creamer
Creamer Media Editor

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Outgoing British High Commissioner to South Africa Dame Judith Macgregor says there will be no “cliff edge” in the trade and investment relationship between the UK and South Africa when Britain leaves the European Union (EU), arguing that there is even potential to strengthen the relationship both bilaterally and through a revitalised Commonwealth.

Speaking at a South Africa Institute of International Relations event ahead of her retirement at the end of March, Macgregor said it was too early to outline the precise mechanisms for ensuring that “no gaps” emerged in a trade relationship that is currently governed by the recently ratified Economic Partnership Agreement (EPA) between the EU and six Southern African countries, including South Africa.

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However, she said there was a commitment from both sides to sustained “EPA-like” terms in the immediate aftermath of Brexit, whereafter the intention was to negotiate an enhanced trade and investment relationship. “All I can say at the moment is that the aim is not to go backwards from that and not to agree anything that would be worse for South Africa than the EPA.”

Similar sentiments have been expressed by South Africa’s Trade and Industry Minister Dr Rob Davies who reported recently that an in-principle understanding had been reached that there would be no damage to existing trade and investment relations as a result of Brexit.

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“We also agreed that the legal commitments under the EPA with the EU, including the UK, will continue to be the basis for our bilateral trade in the immediate future and that those commitments would be carried over into any new arrangement in future. We will have to pay particular attention to questions of how quotas, notably on agricultural products, will be dealt with to avoid any damage to current trade,” Davies said in late January after meeting UK Secretary of State for International Trade Dr Liam Fox.

Macgregor was particularly optimistic of improved access for South African agricultural products such as citrus and wine, but hinted that the UK could seek, in future, to include some of the so-called new trade issues relating to services in a future deal with South Africa.

“Our aim is that we will not have any cliff edge,” she insisted, noting that the UK government’s objective was to facilitate an “orderly transition” not only in its relations with South Africa, but also with the EU and the rest of the world.

Yearly trade between the two countries is approaching £9-billion, while the stock of South African foreign direct investment in the UK stands at £2.7-billion.

“We still consider ourselves to be the single biggest investor in South Africa [and] if you regard this as flows coming through London, that’s probably accurate – in terms of it being British companies, I’m not so sure. But we are still a major, major feature of the investment landscape in South Africa.”

There could also, Macgregor argued, be political benefits for South Africa as a result of Britain’s decision to leave the EU, as a review post the surprise June 23, 2016, referendum result had highlighted the importance of the country’s economic and political relations with South Africa.

On the foreign-relations front, South Africa was considered a critical partner with Macgregor arguing that, while the two countries did not always agree on the means, “we really do agree on the ends”.

“Already I feel a slight political benefit from Brexit, because we have examined all our relationships around the world and I think we already knew we had an important relationship here, but we’ve been reminded of how important a relationship we have here. I think it will mean we will look for more opportunity and we will put more time and energy into that.”

The UK also intended to place more emphasis on the role of the Commonwealth, of which South Africa was a member, both in speaking with a more unified voice on international issues and in enhancing business and trade ties.

South Africa is participating in the inaugural Commonwealth Trade Ministers Meeting, taking place at Lancaster House, London, on March 9 and 10, and will also be active in the Commonwealth Heads of Government Meeting, scheduled to take place in the UK in April 2018.

A Commonwealth trade review for 2015 set a goal of increasing intra-Commonwealth trade to $2.75-trillion by 2030 through lowering bilateral trading costs among members and by building productive capacity in member States.

“We will be looking for a more campaigning Commonwealth and a Commonwealth that has more of a sense of identity,” Macgregor said, while repeating Commonwealth secretary general Baroness Patricia Scotland’s refrain of wanting to “put the wealth back into the Commonwealth”.

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