Category : Trade Agreement
The Guide to exporting to the United Kingdom under the Economic Partnership Agreement (EPA) between the Southern African Customs Union Member States and Mozambique, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part (the ‘SACUM-UK EPA’) is part of the International Economics Consulting’s work with the United Nations Development Programme (UNDP) and Ministry of Investment, Trade and Industry (MITI) of Botswana. The guide comprises two major sections. The first section aims to demystify rules contained in the various provisions spreading in over 2,560 pages of the agreement in terms digestible by exporters, as well as pinpointing the untapped potential opportunities in the UK market for the private sector in Botswana. The second section lays out the requirements and sources of information to the realization of the potential product exports to the UK market.
UK-Botswana Bilateral trade
Botswana’s export to the UK remains minimal despite the duty-free access to the UK market, previously the SADC-EU EPA and currently the SACUM-UK FTA. The UK is Botswana’s 16th largest export market, which accounted for 0.4% of Botswana’s total exports (by value) in 2019. Botswana and the UK have experienced a decline in bilateral trade over the last 10 years, with Botswana’s exports fell to USD only USD 5.5 million in 2020. Botswana’s export basket to the UK mainly consists of diamonds and a small share of machinery, precision instrument, wood, base metals, and animal production. The UK, on the other hand, has a more diverse export basket to Botswana. Besides non-industrial diamonds re-exported from the UK to Botswana for further processing, other products in the UK’s basket include machinery, vehicles, chemicals, paperboard, etc. There appears untapped potential in the UK market for Botswana’s exports besides precious stones. Export potential analysis shows that the export potential exists for, among others, light manufacturing as well as garments and textiles.
The SACUM-UK EPA
The SACUM-UK EPA is among those early signed trade agreements of the UK. The SACUM-UK EPA was concluded on 9 October 2019 and officially entered into force on 1 January 2021. In essence, the SACUM-UK EPA is a rollover agreement of the SADC-EU EPA to ensure the smooth transition to the new trade relationship for all parties. With the aim to facilitate the continuity in trading relationship and smooth transition of the previously established arrangements between parties, the SACUM-UK EPA allows for the immediate duty-free and quota-free access of all goods (except arms and ammunition) originating in the BELMN countries. Botswana, as other SACU countries, committed to providing a gradual tariff liberalization for the goods originating in and imported from the UK with a similar scope to the commitment made to the EU: 74% of all tariff lines are fully liberalised, 12% partially liberalised, and 14% excluded from liberalisation.
Similar to the EU-SADC EPA, the UK-SACUM EPA Rules of Origin (RoO) support deeper regional integration by allowing broad cumulation rules, i.e., under certain conditions, non-originating materials can be considered as originating, when used in manufacturing another product. In addition to the most frequently used bilateral cumulation under FTAs, the UK-SACUM EPA also allows regional cumulation (cumulation between materials originating in two or more EPA member parties), diagonal cumulation (cumulation of materials originating in other ACP EPA countries, or a UK Overseas Country or Territory (OCT)), cumulation with EU materials and processing, and full cumulation (cumulation of non–originating materials that benefits from MFN duty-free treatment or other preferential duty-free quota-free access to the UK).
With regard to technical barriers to trade and sanitary and phytosanitary measures, the EPA does not foresee any legally binding obligations, but rather a set of “soft law” measures that aim to solve as much as possible the issues raised by those elements. The EPA also provides a set of trade remedy measures that Botswana can resort to as a ‘safety valve’ in cases of severe hardship caused to its economic sectors by trade liberalisation under the EPA. These include safeguard measures in accordance with the multilateral (WTO) trade rules, or measures related to agricultural, food security, infant industry protection, as well as a special transitional mechanism applicable to Botswana, Eswatini, Lesotho, Namibia (BELN) countries.
The way forward
The guide was prepared to add momentum towards Botswana’s trade promotion initiatives by enhancing the business community’s understanding of trade opportunities through the SACUM-UK EPA. While the guide has not been able to cover all possibly traded products, it provides a methodological approach in manageable steps so that trade public officials and private sectors can replicate in evaluating the trade potential and accessing reliable sources of information to strengthen their preparedness for exporting to the UK market under the SACUM-UK EPA.