EU rallies behind SA with R94bn package

The EU has ramped up its diplomatic and trade ties with SA by announcing an investment package of R94bn during a summit on Thursday as both navigate the Trump administration’s confrontational approach to foreign policy.

The investment package covers areas of mutual interest such as critical raw mineral processing, green hydrogen, renewable energy, transport and digital infrastructure, local vaccine and pharmaceutical production, and resources for skills development.

The investment takes place during SA’s presidency of the Group of 20 (G20), so far shunned by the US, which is due to take over from SA at the helm of the multilateral platform in 2026.

“This partnership is expected, for example, to deliver shortand long-term solutions to enable Sasol to export sustainable fuel, especially aviation fuel, to the EU,” President Cyril Ramaphosa told a media briefing after the summit.

The world has changed since 2018, with conflicts in Ukraine, Sudan, South Sudan, the Democratic Republic of Congo and the move towards protectionism threatening the status quo.

SA is the regional bloc’s largest trading partner in SubSaharan Africa, with R97bn in trade in goods in 2023.

Since the EU-Sadc Economic Partnership Agreement (EUSadc EPA) took effect in 2016, EU-SA trade has surged 42%. Additionally, the EU is the largest source of foreign direct investment (FDI) in SA, accounting for 47% of the country’s FDI.

“It includes funding for the clean energy transition, but also funding to boost vaccine manufacturing,” European Commission president Ursula von der Leyen said during the joint summit in Cape Town.

“SA wants to protect the health of its people. We, Europeans, want to diversify some of our most critical supply chains, and we know that viruses know no borders,” Von der Leyen said.

“That is what I call the true mutual interest. Secondly, today, we’re launching negotiations on the first ever trade and investment partnership. The rationale is simple. The SA economy is growing in size and complexity and you have the ambition to create more added value here in the country,” she said.

President of the European Council António Costa described SA and the EU as “strategic allies” during the meeting while emphasising the commitment to peace, security and sustainable development. “We appreciate SA’s leadership both in the region and the globe,” he said.

In the latest escalation of threats from the US, President Donald Trump threatened to impose a 200% tariff on wine and champagne from the EU as a retaliation for the 50% levy on American bourbon whiskey announced by the EU.

The tariffs imposed by the Trump administration on the EU, Canada, Mexico and China, as well as the retaliatory tariffs, have sparked concerns about their effect on the US economy. China, Canada, and the EU have retaliated with their own tariffs, targeting US exports worth billions of dollars.

Though Trump has not imposed any tariffs on SA, the US has halted funding, citing a range of reasons including the Expropriation Act and broadbased BEE. Trump’s administration threw the global humanitarian community into chaos with a surprise announcement that it would place a pause on all funding pending a 90-day review. SA has not been spared as it receives 17% of its funding for its HIV/Aids programme from the US.

The joint summit declaration noted “with concern the growing challenges to multilateralism because of rising unilateralism and protectionism, which undermine collective efforts to address shared challenges such as climate change, biodiversity loss, unfair trade, global pandemics, rising inequality, irregular migration, serious and organised crime, peace and security, and sustainable and inclusive growth”.

“We stressed the importance of a transparent rules-based multilateral trading system that is nondiscriminatory, fair, open, inclusive, equitable, and sustainable, as a necessity to promote economic growth, development, and poverty reduction. We recognise that the multilateral trading system is facing unprecedented challenges due to the impact of unjustified trade measures and distortive practices, which undermine and render it vulnerable,” the declaration reads.