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South African wineries will continue to receive the benefit of tariff-free exports to the UK post-Brexit.

The United Kingdom (UK) is set to exit the European Union (EU) at the end of 2020, after which South African wineries will be able to export close to 71.5 million litres tariff-free to the UK.

“The UK has passed an Act in June 2020 confirming that it would not apply for a further extension of the transition period in terms of the Brexit withdrawal agreement. The UK is therefore expected to leave the EU Single Market and Customs Union on 31 December 2020,” says Michael Mokhoro, stakeholder manager of Vinpro and SALBA’s (SA Liquor Brandowners Association) Winebiz desk.

The UK is South Africa’s largest export destination, with total exports at 82 million litres for the year ending 30 October 2020 – packaged wine making up 36% and bulk wine 64%.

EU agreement remains; new UK agreement signed

The Southern African Development Community (SADC), which includes South Africa, has up until now had an Economic Partnership Agreement (EPA) with the EU, which promotes market access through duty-free imports of certain products to EU countries, including wine.

Under the agreement between SADC and the EU, South Africa could export up to 114 million litres to the UK tariff-free. However, the agreement only applied to the UK for as long as would be part of the EU. Following Brexit, the SADC/EU agreement will no longer apply to the UK.

Fortunately, to ensure an uninterrupted flow of exports between South Africa and the UK post-Brexit, the UK and the member states of the Southern African Customs Union (SACU) – namely South Africa, Lesotho, eSwatini, Botswana and Namibia – plus Mozambique, concluded a new SACU-Mozambique/UK EPA in September 2019, which was signed in October 2019. The UK, Lesotho, South Africa, Botswana and Namibia have ratified the agreement, while eSwatini is in the process of finalising their ratification processes.

While the SADC/EU agreement remains intact for South African exports to EU countries, including the benefit of 114 million litres tariff-free exports (increasing by 1 million litres annually), the new SACU-Mozambique/UK agreement will come into force on 1 January 2021 for South African exports to the UK.

70% packaged, 30% bulk

The tariff-free quota for imports of South African wine into the UK of 71.5 million litres in 2021, will apply to 30% bulk and 70% packaged wine, and is set to increase annually by 656 580 litres annually.

“It is important to note that when bag-in-box wine is exported to both the EU and UK, wine in a container holding 2 litres or less of an actual alcoholic strength by volume not exceeding 18% volume will be regarded as bottled, and wine of an actual alcoholic strength by volume not exceeding 18% is regarded as bulk,” Michael says.

Although the wine quota allocation will be accessible from 1 January 2021, Michael says the South African government has decided internally that South African Revenue Service (SARS) should administer the wine quota on the basis of first come, first served.

“The labelling requirements will not change for wine exporters at this stage,” Michael says. The use of the name and address of an importer or bottler (in the case of bulk wine imports) based in the EU, UK or Northern Ireland will be permitted. Labels for bottled wine marketed in the UK can be used until 30 September 2022. As from 1 October 2022, wine marketed in the UK must bear the name and address of an importer or bottler located in UK.

From 1 January to 1 October 2021, the requirements regarding the VI-1 form remain unchanged. The UK has granted the EU a grace period of six months (1 January to 30 June 2021) to use the VI-1 form. The UK has agreed to accept the EU standards for the next twelve months, with the possibility of a further six month extension,” Michael says.

Wine that is bottled in the EU and exported to the UK, and vice versa, should continue to make use of the EU’s Euro1 certificate, which is acceptable in both countries. Export certificates will not be affected by Brexit and remain valid until their expiry date in 2021.

Direct any further enquiries to:

Michael Mokhoro
Stakeholder Relations
Winebiz
Wine and Brandy Industry
Tel: 012 807 6686
Cell: 083 271 7482
E-mail: mmokhoro@salba.co.za

Sam Legare
Directorate: International Trade Promotion
Department of Agriculture, Land Reform and Rural Development
Tel: +27 12 319 8011
Cell: +27 82 616 6970
Fax: +27 12 319 8001
E-mail: SamLe@Dalrrd.gov.za
Web: www.dalrrd.gov.za

 

 

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