International and regional trade agreements – all the information

The Top 5 Regional Trade Agreements Benefiting South Africa.

South Africa, as a major player in Africa’s economy, benefits from a number of regional trade agreements that open doors to global markets, facilitate cross-border trade, and promote regional cooperation. These trade agreements enable South Africa to diversify its trade portfolio, reduce import/export costs, and boost economic growth.

As a freight forwarder based in South Africa and servicing global trade partners, we have vast knowledge on these trade agreements and how to make use of them to benefit our clients. By partnering with Inter-Sped you will open yourself up to this source of information and we will ensure that your goods are delivered safely and at the most competitive price possible.

In this article we will explore five key regional trade agreements that significantly benefit South Africa and our businesses across a wide range of industries.

1. Southern African Development Community (SADC) Free Trade Area

The Southern African Development Community (SADC) Free Trade Area (FTA) is one of the most impactful regional trade agreements for South Africa. Established in 2008, the FTA seeks to promote regional integration by reducing tariffs on goods traded between SADC member states, which include the following 16 Southern African countries: Botswana, Democratic Republic of Congo,  Angola, Comoros, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, United Republic of Tanzania, Zambia and Zimbabwe.

Key Benefits:

• Lower Tariffs: South African businesses benefit from reduced tariffs on most goods traded within the region, which lowers the cost of imports and exports.
• Expanded Market Access: The agreement provides access to a market of over 360 million consumers, boosting opportunities for South African exporters.
• Enhanced Intra-regional Trade: SADC promotes trade in goods and services, leading to improved regional cooperation and economic development.
• Simplified Rules of Origin: The agreement establishes clear rules for determining the origin of goods, which facilitates smoother cross-border trade within the region.

By eliminating tariffs on about 85% of goods traded between SADC members, South African businesses enjoy preferential access to regional markets, which strengthens the country’s position as a regional trade hub. Chat to an Inter-Sped consultant to see if this trade agreement could benefit your business.

2. African Continental Free Trade Area (AfCFTA)

Launched in 2021, the African Continental Free Trade Area (AfCFTA) is one of the most ambitious trade agreements in history, aiming to create a single market for goods and services across Africa. South Africa started trading under the African Continental Free Trade Area as of 31 January 2024. With 54 African countries, including South Africa, signing the agreement, AfCFTA seeks to eliminate tariffs on 90% of goods over time and promote deeper economic integration across the continent.

Key Benefits:

• Vast Market Access: AfCFTA opens up a market of over 1.3 billion people with a combined GDP of approximately $3.4 trillion, making it the largest free trade area in the world by population.
• Diversification of Trade: South Africa can diversify its trade partners and reduce its reliance on a few major markets, fostering economic resilience.
• Value Chain Development: AfCFTA encourages the development of regional value chains, allowing South Africa to integrate more fully into African supply chains and strengthen its manufacturing sector.
• Reduced Non-tariff Barriers: The agreement seeks to reduce non-tariff barriers, such as customs delays and excessive regulatory requirements, which are common obstacles to trade in Africa.

South Africa stands to benefit greatly from AfCFTA as it enhances its position as a gateway to the rest of Africa and opens up new opportunities for South African companies to expand across the continent. If you’re looking at increasing your expansion across Africa, let’s connect!

3. European Union-Southern African Development Community Economic Partnership Agreement (EU-SADC EPA)

The EU-SADC Economic Partnership Agreement (EPA), implemented in 2016, is a key trade agreement between the European Union (EU) and the following six SADC countries: South Africa, Botswana, Lesotho, Namibia, Swaziland and Mozambique. The EPA allows for duty-free and quota-free access for most goods exported from the SADC region to the EU market.

Key Benefits:

• Preferential Access to the EU Market: South African goods enjoy 100% duty-free access to the EU, the world’s largest trading bloc, for the majority of exports, which increases South Africa’s competitiveness in the European market. It also removes customs duties on 98.7% of imports coming from SA, this is of course within particular quantity quotas.
• Favourable Rules of Origin: The EPA includes flexible rules of origin, which make it easier for South African goods to qualify for preferential tariffs in the EU, particularly in industries like agriculture and textiles.
• Promotes Export Diversification: The agreement encourages South African businesses to expand their product offerings to the EU market, which is critical for reducing over-reliance on traditional sectors like mining.
• Developmental Cooperation: The EPA includes provisions for developmental cooperation, allowing South Africa to benefit from EU investment in infrastructure, skills development, and capacity-building.

This agreement enhances South Africa’s trade with Europe, providing opportunities for growth and diversification in both goods and services sectors. Are you trading with the European market? Chat to Inter-Sped to help you gain advantages within trade.

4. Southern African Customs Union (SACU)

The Southern African Customs Union (SACU), established in 1910, is the oldest customs union in the world. It includes South Africa, Botswana, Lesotho, Namibia, and Eswatini (formerly Swaziland). SACU’s main goal is to promote free trade among its member states by maintaining a common external tariff on imports from outside the union.

Key Benefits:

• Unified External Tariff: SACU members share a common external tariff for goods entering the union, which simplifies trade policies and reduces administrative burdens for South African companies.
• Revenue Sharing: SACU has a unique revenue-sharing formula that benefits all member states. South Africa plays a leading role in this arrangement and benefits from a stable flow of customs revenues.
• Increased Regional Integration: The customs union promotes the free movement of goods within SACU, allowing South African businesses to access nearby markets without facing trade barriers.
• Common Trade Policy: SACU members adopt a common trade policy when dealing with external countries, giving South Africa a stronger negotiating position in trade agreements.

As a major economy within SACU, South Africa benefits from easier access to neighbouring markets, a unified trade policy, and the economic stability provided by the revenue-sharing arrangement.

5. BRICS Trade Agreement

Although not a formal free trade agreement, South Africa’s membership in BRICS (an economic bloc consisting of Brazil, Russia, India, China, and South Africa) plays a significant role in its international trade strategy. BRICS aims to promote economic cooperation, political collaboration, and cultural exchange among its members. South Africa became a member of the former BRIC in 2010, making this entity now BRICS.

Key Benefits:

• Access to Emerging Markets: BRICS provides South Africa with access to large, fast-growing economies like China and India, which are crucial export destinations for South African goods such as minerals and agricultural products.
• Investment and Infrastructure Development: Through BRICS, South Africa benefits from increased foreign direct investment (FDI) and participation in infrastructure projects funded by institutions like the BRICS New Development Bank.
• Trade Diversification: South Africa can reduce its dependence on traditional markets by expanding trade with other BRICS members, thus enhancing economic resilience.
• Knowledge Sharing and Innovation: Collaboration within BRICS facilitates technology transfer, innovation, and best practices in key sectors like renewable energy, healthcare, and education.

Although not a traditional trade agreement, BRICS has provided South Africa with vital economic partnerships and the opportunity to increase its influence on the global stage.

South Africa’s participation in these regional and international trade agreements significantly boosts its trade prospects, offering a wide range of benefits from reduced tariffs and increased market access to enhanced investment opportunities.

Inter-Sped will partner with you to leverage these agreements to your benefit, allowing you to reduce business costs, expand into new markets, and play a more active role in the global economy. As the country continues to engage with both regional and global partners, these trade agreements will remain key to South Africa’s long-term economic growth and prosperity. Partner with us www.inter-sped.net.