The Botswana Meat Commission (BMC), the sole exporter of the local beef to the European Union (EU) region has said that it does not anticipate any immediate impact on its exports to both the United Kingdom (UK) and EU despite the decision by the former to quit the latter.
In a referendum that sent global markets tumbling on Thursday, the citizens of the United Kingdom have since voted to quit the regional economic bloc.
Following the Thursday referendum vote, there have been worries that Brexit could weaken trade ties between UK and Africa including Botswana. There is also worry that an exit from EU by UK would have dire consequences for development assistance on the continent.
Botswana primarily exports beef to a number of countries in Europe including the United Kingdom.
Apart from beef, Botswana also exports diamonds (more than 60% of total exports), copper and nickel, and textiles. Official figures show that Botswana’s main exports partners are United Kingdom (56% of total exports), South Africa, Israel and Belgium.
Head of Communications at BMC, Brian Dioka said Friday that the state owned meat agency does not expect any immediate negative outcome on local beef export due to Brexit.
Although there is fear that the anticipated renegotiation of some of the trade agreements between UK and African states including Botswana could end up being a lengthy process, which could cause a decrease in trade volumes between the U.K. and Africa, Dioka says negotiations on any new deal with UK can only be expected in three to four years.
Indeed, a Brexit would prompt the United Kingdom to renegotiate over 100 trade agreements.
“At the moment our main worry is the exchange rate, as you saw today the British Pound performed dismally at the money markets. The exchange rate if it persists at today’s rate could affect our bottomline. However things could normalise next week if the markets could correct itself” Dioka said Friday.
FRESH TRADE NEGOTIATIONS LOOMING
Following the vote to pull out, it is expected that the UK will have a period of over two years to negotiate their exit from the European Union after formal notice to withdraw has been given. Until the end of that period, the Common International Trade Policy (CITP) of the EU would continue to apply to Botswana’s exports to the UK.
The policy includes the current Trade, Development and Cooperation Agreement (TDCA), which is a free trade agreement between Botswana and the EU.
The Botswana government chief spokesperson, Dr Jeff Ramsay said Friday that it is too early to speculate on whether Botswana will seek a fresh trade deal with the UK from the exit.
“One does not expect any major immediate impact. But it is too early to speculate as the terms of the UK’s now anticipated withdrawal are currently unknown.
However one of the options open to the UK would be to join the European Free Trade Area (EFTA) which has a free trade agreement with the EU and forms part of the European Economic Area. Importantly, EFTA also has free trade agreement with the Southern African Customs Union (SACU) that South Africa is part of.
SACU, which Botswana is a member of and EFTA have already started a review of this agreement. Another option would be for the UK and SACU to negotiate a bilateral free trade agreement and one possibility would be to base it on the EPA.”