Trade and Industry

Monday, 25 July 2011

South Africa Trade Relations with the European Union and Asia

  • Year: 2011
  • Organisation: TIPS

This note highlights the pattern of South Africa, European Union and Asia trade over the period 1990-2009. The note pays particular attention to trade flow changes between South Africa and the EU and compares these to the changes in the trade flows between South Africa and Asia. The note also looks at the changes that have occurred within the Asian region, taking a closer look at sub-regions in Asia, namely, Eastern Asia, South Central Asia, South Eastern Asia, and Western Asia.
The trade trends reveal that South Africa's imports have been slowly increasing dominated by Asia. Similarly Asia, in particular East Asia, has emerged as South Africa's major trade partner, dethroning the European Union as an export destination.

With regards to imports, China has, over the years, rose to become a significant exporter to South Africa. The same can be said for Saudi Arabia and the United Arab Emirates. On the other hand, Japan, India, Pakistan and Singapore have lost ground in terms of preference as import sources. Germany and the United Kingdom remained South Africa most important export markets, although the two countries' share of South Africa exports declined.

On closer inspection, there is evidence to suggest that a number of traditional European Union imports commodities that were ranked as in the top ten exports to South Africa that have been replaced by Asian imports and these include; HS27: Mineral fuels, Oil, distillation products, etc.; HS29: Organic chemicals; HS39: Plastics and articles thereof; HS71: Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal & articles thereof; imitation jewellery; coin; HS73: Articles of iron or steel and HS85: Electrical, electronic equipment.

This research note shows that the EU is a significant trading partner to South Africa. Over the years the EU has been South Africa's largest trading block. Post 2005, Asia became a crucial trading partner to South Africa, and based on the previous trends, expectations are for Asia to surpass the EU in terms of value of trade within the next decade.