Our Brexit opportunity
Douglas Gibson | 27 June 2018
Douglas Gibson on why this is the opportunity of a lifetime for South Africa
Are you becoming tired of Brexit? Don’t be; this is the opportunity of a lifetime for South Africa.
British voters may be switching off on the endless parliamentary debates, knife-edge votes, prime-ministerial compromises and the contortions necessary to accommodate both Conservative and Labour “rebels” in the Brexit negotiations, but we should not.
Poor Theresa May is subjected, virtually every week, to votes that could bring down her government; to conflicting statements by Brexiteers and Remainers in her own party, and by unfriendly and unhelpful remarks by the European Union. Her “Brexit means Brexit” mantra still applies but the negotiations to leave the EU are complicated and difficult, without an end in sight just yet.
For South Africa, the Brexit negotiations and the departure of Britain from the EU – and departure will happen – presents a great opportunity for us. Our foreign policy often pays too much attention to political matters and ideology and too little attention to our trade and economic interests. A positive trade balance between ourselves and other countries brings in much needed foreign currency and employment opportunities; a negative trade balance, on the other hand – where we buy more from them than they buy from us – means the opposite.
South Africa exports R84 billion worth of goods to Germany, for example, but buys imports of R127 billion. This constitutes a very healthy trade balance in Germany’s favour. This needs strenuous efforts to create a better balance.
The trade relationship with the United Kingdom operates in South Africa’s favour. We sell R46 billion in goods to the UK, while buying R33 billion.
One of the chief arguments for leaving the EU by Brexiteers is that it will create new and exciting opportunities for trade all over the world. Britain’s Secretary of State for International Trade, Dr Liam Fox, stated in The Telegraph on 19 June that it was his country’s ambition to become the world’s leading champion of free trade, taking the opportunity provided by its exit from the European Union to develop an explicitly pro-trade independent policy framework. He visited Uganda, Ethiopia, Mozambique and South Africa last year, presenting the UK’s trade policy for Africa and stressing his country’s eagerness to open new markets and to develop existing trade relations.
Fox said that South Africa is a key trading partner to the UK, a long-standing, strong and strategic ally for the UK in Africa and internationally.
“As we become an even more outward looking country, we will continue building on our relationship with South Africa.”
UK exports to South Africa increased by 25% in the last decade and South Africa’s exports to the UK increased by over 5% on an annual basis for the last decade, underlining the importance to both of each other’s markets. South Africa is the third biggest trading partner for the UK in the Commonwealth.
Fox’s African tour followed a visit to London by South Africa’s Minister of Trade and Industry, Dr Rob Davies, in January 2017, and observers were gratified to note that these meetings were a continuation of the on-going high-level engagement between the UK and South Africa to discuss trade and economic relations and the strengthening of ties while working together to identify trade and investment opportunities for both countries as well as the wider Southern Africa and Africa region as the UK prepares to leave the European Union.
On 25 January last year, the Citizen reported Dr Davies as saying “As we work to achieve this, South Africa looks forward to discussing how our trade post-Brexit could build on the recently concluded Economic Partnership Agreement with the EU.”
Davies was right to underline the EU dimension; after all, the EU is a huge and extremely significant trading partner of this country. But so are the UK and the EU each other’s biggest trading partners and that will continue even after Brexit. There can be no either/or, or even us/or them approach; we all need each other.
South Africa (but also the EU and the UK) will need to follow nuanced and sophisticated policies. From our point of view, we should aim firstly at increasing trade with the EU, closing the trade gap as far as this is possible, recognising that the EU clearly benefits more from trade with South Africa than does South Africa in trading with the EU.
At the same time, while trying to preserve our favourable trade balance with the UK, we must take advantage of the Commonwealth ties with the UK to expand trade with that country and make the most of the new opportunities that will arise. There could well be opportunities for taking up some of the slack in post-Brexit trade between the UK and some EU countries.
All of this will demand flexibility and fleetness of foot by our department of Trade and Industry, as well as our diplomats in the department of International Relations and Co-operation. These departments and ministers Davies and Lindiwe Sisulu will have to co-operate very closely with each other, recognising that the Brexit opportunity, with possible radical alterations to the world trade order, comes along only once in a lifetime.
If we are to attract vastly increased foreign investments and sell our goods to the world, we must look as though we know what we are doing. Cut out the populist ideology; focus on trade, business and investment. We must be ready to show the available investment opportunities to potential investors and we must produce the goods that we want to sell. We are going to have to become much smarter at business and investment and manufacture than we have been. If we succeed in this, greater prosperity for all our people becomes a possibility.
Douglas Gibson is a former opposition chief whip and ambassador to Thailand. His website is: douglasgibsonsouthafrica.com.
This article first appeared in The Star.