The ratification of trade agreements between the Southern African Customs Union (Sacu) and the Southern Common Market (Mercosur), a South American trade bloc, has been a key driver of the increase in exports to Brazil.
SA exports to Brazil for the year 2018 shot up to $183m from $43m in 2016-2017 as the government’s drive to boost export performance gathers steam.
However, SA producers still accuse Brazil of unfair trade practices, saying that country is dumping chickens and sugar in SA. The sectors have called on the government to impose higher tariffs on the Brazilian goods.
Sacu includes SA, Botswana, Lesotho, Namibia and Eswatini.
In his state of the nation address in February, President Cyril Ramaphosa said to boost economic growth and alleviate unemployment, SA had to find larger markets for its goods and services.
“We will therefore be focusing greater attention on expanding exports. In line with the jobs summit commitments, we will focus on the export of manufactured goods and trade in services such as business process outsourcing and the remote delivery of medical services,” Ramaphosa said at the time.
SA foreign economic representative in Brazil Shanaaz Ebrahim said the agreement between Sacu and Southern Common Market aimed to integrate the economies of member countries through gradual and reciprocal liberalisation of trade and the strengthening of economic co-operation.
“According to trade statistics our trade deficit with Brazil has shrunk considerably in 2018. The deficit is now at $700m, down from $1.2bn in 2017. Part of this was due to the ratification of the Sacu/Mercosur preferential trade agreement, which was ratified in April 2016 where Sacu had offered the [South American trading bloc] tariff line items of about 1,065 products across 16 sectors of which 469 products are 0% import duty free,” Ebrahim said.
She said Mercosur reciprocated by offering Sacu 1,052 product lines of which 778 products are 0% import duty free.
“This offers us a window of opportunity to penetrate the Brazilian market through these 0% import duty-free products. Negotiations of this agreement started in 2000.”
Ebrahim added that SA’s and Brazil’s membership to the Brics multinational agreements benefits both countries.
As Brazil will chair the 11th Brics summit in November, a series of working groups and meetings will be held during the course of 2019 “and we are looking forward to those agreements and substantive ‘implementables’.”
She urged SA companies to familiarise themselves with the list of 0% import duty-free products as that will “orientate them on the viability of their products within the Brazilian market and it would also stand them in best position to draw instant benefits resulting from the … preferential trade agreement”.