EU and S Africa agree trade deal

In a farewell present to President Mandela of South Africa, EU leaders agreed late on Wednesday night to sign a key trade and co-operation agreement with Pretoria that has been in the pipeline for 3 1/2 years. The deal goes a long way towards creating a free trade zone between the two economic blocs.

Mr Mandela was making his final speech to parliament yesterday before retiring, and the telegram from the EU is likely to have added a sweetener to the occasion. The message sees the agreement "as a further step to consolidate and reinforce the strong partnership between EU and South Africa in the economic and commercial fields".

The deal effectively liberalises 94 per cent of trade between the Union and South Africa - over 10 years for the EU and 12 for the South Africans. Current total trade is worth €16 billion a year. The deal is unprecedented between the Union and a distant trading partner in terms of market access, particularly the 100 per cent access in manufacturing goods. The EU, South Africa's largest trading partner, gains access to 86 per cent of its manufacturing market.

Agreement has been held up for some time because of concerns by some southern EU states about farm produce access - three-quarters of South Africa's exports are covered - and the use by the South Africans of the labels Port and Sherry on their produce. South Africa will be allowed to use the designations internally for 12 years before changing to a "new" designation, as yet to be agreed. It is expected the deal will be signed next month and come into force in January.