South Africa clinches trade deal with E.U., imposes import duty on wheat and flour

by Teresa Acklin
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   CAPE TOWN, SOUTH AFRICA — South Africa in recent weeks has clinched a free trade agreement with the European Union and imposed import duties on wheat and flour.

   The free trade agreement — the first to include agricultural products and the first such accord negotiated since the signing of the 1994 GATT world trade deal — should be implemented by next year, according to South African Trade Minister Alec Erwin.

   The agreement would guarantee that 95% of the country's exports to the E.U. and 89% of E.U. exports to South Africa would be tariff-free after 12 years, Mr. Erwin said.

   Economists said the deal could add a percentage point to South Africa's fragile growth rate over the next five years. South Africa in mid-April also imposed a 181 rand (U.S.$29.7) per tonne import levy on wheat and a 272 rand per tonne duty on imported flour. The country's National Chamber of Milling welcomed the introduction of tariff protection for South Africa's wheat farmers in the face of continuing state support for producers in leading wheat-growing countries.

   Jannie de Villiers, N.C.M. executive director, said the wheat duty was higher than expected and would raise local flour and bread prices. On top of the 272 rand, the flour levy has an additional 40% ad valorem duty, which will be phased out over five years. A 20% ad valorem duty on flour-based products also has been approved.

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