Thursday, October 22, 2009

SA sugar producers hopeful of EU trade deal

Zigomo, Muchena (Reuters, Durban)

South African sugar producers are hopeful that the country will conclude an Economic Partnership Agreement (EPA) with the European Union (EU) that would allow them to export sugar into Europe, industry officials have said.

The EU, South Africa’s largest trading partner, unveiled a new trade regime from October 1 that allows the world’s poorest economies duty- and quota-free access into its market.

However, as one of the world’s top 10 exporters of sugar, South Africa fails to qualify as a least developed country (LDC) and will not benefit from the new regulations.

Johann van der Merwe, external affairs director for the South African Sugar Association, said on Thursday that the country would try to gain access into the EU sugar market via the EPA.

“Negotiations are still ongoing but we are hopeful that an agreement will be reached over the EPAs which would allow sugar producers to benefit”, van der Merwe told a briefing. “It would obviously boost earnings for our producers, but at the moment we just have to be patient.”

The 27-member EU has concluded EPAs with several southern African countries, including top diamond producer Botswana, but South Africa along with Angola and Namibia have declined to sign the agreement due to concerns over the text.

South Africa has been critical of an EPA process, arguing that it may undermine trade integration in southern Africa, particularly if each country in the region has different trade deals with the European bloc.

The government has also accused the EU of being too focused on its own commercial interests, thereby undermining efforts to forge a new, fairer trade pact with South Africa.

As talks over the EPA continue, South African sugar producers hope to benefit from the duty- and quota-free access to the EU through their interests in other countries within the region such as Malawi, Mozambique, Swaziland, Tanzania and Zambia.

Durban-based Illovo Sugar, Africa’s biggest producer, said in August that it plans to raise output by 50 percent to nearly 3 million tonnes in the next five years to cash in on the new tariff-free EU access.

Illovo announced a rights issue in July to raise up to R3 billion to finance growth, which will see it expand operations in Malawi, Mozambique, Swaziland, Tanzania and Zambia.