The EU-SA free trade agreement : implications for selected agricultural products

Corbett, Johannes Kruger (2000-03)

Thesis (MBA)--University of Stellenbosch, 2000.

Thesis

ENGLISH ABSTRACT: As the Trade Development and Co-operation Agreement (TDCA) creates competitive challenges and opportunities, labour and capital will seek the highest returns, dri ving out less efficient performances while bolstering more efficient enterprises and industries. This dynamic process of adjustments will continue throughout the implementation of this agreement. The South African government sees the agreement with the European Union as a step towards restructuring the country's economy and making it part of the rapidly changing world economy. This policy view of the South African government will result in those sectors of the economy that are not internationally competitive, receiving no support from government. Consequently these sectors will decrease in time. Of the three agricultural profiles studied, fresh fruit (deciduous fruit) will benefit the most from the TDCA. The most obvious effect the agreement will have on the sector is the saving on customs duties payable on exports to the EU. An estimate on 1997 trade figures revealed that in the short term the deciduous fruit industry will save approximately RI00 million. Over the implementation period of 10 years, the industry will save about Rl billion. After that, savings amounting to approximately R125 million per annum should be possible. The canned fruit sector is an export-driven industry that exports about 90 per cent of its products, 50 per cent of which is exported to the EU. The export tariffs to the EU are very high. As non-EU member, South Africa is the biggest provider of canned fruit to the EU. Some analyses revealed that the total savings in tariffs for the first year of implementation will be R25 million. The industry stands to save approximately R100 million over the implementation period. At the EU's request, South Africa agreed to negotiate a separate Wine and Spirits Agreement. The EU believes that South Africa's continued use of certain "geographical indications" or terms is in breach of Article 23 of the Trade-related Aspects of Intellectual Property Rights (TRIPs) agreement. The quotas granted by the EU on wine and sparkling wine cover 79 per cent of South African exports to the EU. South Africa granted the EU a 0.26 million litre quota for sparkling wine and a 1 million-litre quota for bottled wine. SA will phase out the use of the terms "port", "sherry", "grappa", ouzo", "korn" , "jagertee" and "pacharan" over agreed time periods. The issue will be taken to the WTO for a ruling in this regard. The EU has agreed to grant SA a duty-free tariff quota for wine but has suspended the tariff quota until the Wine and Spirits agreement has been signed. The EU will also provide financial assistance of 15 million ECU to help restructure the SA wine and spirits sector. The South African agricultural industry should take note of the constantly changing international marketing environment. The Free Trade Agreement (FTA) signed with the European Union opens up new markets and enhances existing ones that must be exploited. It is imperative that every role player should evaluate the level of competitiveness of his or her enterprise. Thus the message is very clear: Agricultural production with an international trading view is the only sustainable road to follow.

AFRIKAANSE OPSOMMING: Soos die Handel, Ontwikkelings en Samewerkingsooreenkoms kompeterende geleenthede en uitdagings skep, sal arbeid en kapitaal verskuif na die hoogste opbrengste beskikbaar. In hierdie proses sal daar wegbeweeg word van onvoldoende prestasies en sal effektiewe ondememings en industriee floreer. Hierdie dinarniese proses van herstruktuering sal voortduur regdeur die implementeringsperiode van hierdie handelsooreenkoms. Die Suid Afrikaanse regering beskou die ooreenkoms met die Europese Unie as 'n belangrike stap in die proses om die land se ekonomie te herstrukltureer en so deel te maak van die vinnig veranderende wereld ekonomie. Hierdie regerings beleid sal daartoe lei dat sektore wat nie intemasionaal mededingend is nie, geen ondersteuning vanaf die regering sal ontvang nie. Met tyd sal hierdie sektore verdwyn. Van die drie landbousektore wat bestudeer is, sal vars vrugte (sagte vrugte) die meeste voordeel trek uit die ooreenkoms. Die besparing van aksynsbelasting op die uitvoere na die Europese Unie is die mees kenmerkendste voordeel vir die sektor. 'n Beraming gebaseer op 1997 handels syfers toon 'n jaarlikse besparing van plus minus R100 miljoen. Deur die hele implementeringsperiode, sal die besparing plus minus Rl biljoen beloop. Na afloop van die implementeringsperiode, sal jaarlikse besparing van plus minus R125 miljoen moontlik wees. Die inmaak vrugte sektor is 'n uitvoer gedrewe industrie wat gemiddeld 90 persent van hul prod uk uitvoer. Van hierdie uitvoere is 50 persent bestem vir die Europese Unie. Die uitvoertariewe na die Europese Unie is baie hoog. As nie-lidland, is Suid Afrika die grootste verskaffer van geblikte vrugte aan die Europese Unie. Beramings voorsien dat die sektor 'n totale besparing vir die eerste jaar van implemetering van plus minus R25 miljoen kan beloop. Die industrie kan soveel as R100 rniljoen oor die implementeringsperiode bespaar. Op die Europese Unie se versoek, het Suid Afrika ingestem om 'n afsonderlike Wyn en Spiritualie ooreenkoms te onderhandel. Die Europese Unie beweer dat Suid Afrika se gebruik van sekere "geografiese aanduidings" of terme, In verbreking is van Artikel 23 van die Handelsverwante Aspekte van die Intellektuele Eiendomsregte Ooreenkoms. Wyn en vonkelwyn kwotas wat deur die Europese Unie aan Suid Afrika toegestaan is, beloop 79 persent van die uitvoere na die Europese Unie. Suid Afrika het die Europese Unie In kwota van 0.26 miljoen liter vir vonkelwyn en 1 miljoen kwota vir gebottelde wyn toegestaan. Voorts sal Suid Afrika die terme "port", "sherry", "grappa", "ouzo", "kom" , "jagertee" and "pacharan" met die ooreengekome peri odes uitfaseer. Die aspek sal egter na die WHO geneem word vir In finale beslissing. Die Europese Unie het ooreengekom om aan Suid Afrika In tarief vrye kwota vir wyn toe te staan, maar het dit opgehef tot tyd en wyl die Wyn en Spiritualie ooreenkoms onderteken is. Die Europese Unie sal ook finansiele ondersteuning van 15 miljoen ECU skenk om die Suid Afrikaanse Wyn en Spiritualiee industrie te help hestruktureer. Suid Afrikaanse Landbou sal notisie moet neem van die konstante verandering in die intemasionale bemarkingsomgewing. Die Vrye Handelsooreenkoms wat geteken is met die Europese Unie, open nuwe markte en sal bestaande markte bevorder. Hierdie geleenthede moet benut word. Dit is baie belangrik dat elke rolspeler sy vlak van kompeterende vermoe moet evalueer, om so sy eie siening oor die ooreenkoms te kan uitspreek. Hieruit is die boodskap dus baie duidelik: Landbou produksie met In intemasionale handels uitkyk, is die enigste volhoubare pad om te volg.

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