1. EU-RSA Free trade agreement -- Partial liberalization of the Dairy and sugar sectors in the EU Motivation: Exploration of importance of sensitive sectors Experiment: 50% reduction unliberalized sensitive sectors: milk and sugar. Implementation: – modification to Base scenario by a change in cmfstart file to set definition

2. Background Information EU Tariff rates reduction –Milk: 87.7%  43.8% –Sugar: 76.4%  38.2% Importance of trading partners in both sectors (milk, sugar) MilkSugar RSA in EU7.135 EU in RSA0.20.1

3. Results Welfare gains in EU and RSA: BasePSLChange Percent change RSA1104.01157.253.24.82 EU824.5856.331.83.86

4. Results Sources of Welfare gain in EU and RSA:

5. Results Increase in South African exports to the EU (qxs)

6. Results Change in EU and RSA’s Sugar and Milk Production (qo)

7. Conclusion Milk and sugar sectors in the EU would face a small loss for the benefit of all Partial liberalization of milk and sugar in the EU-RSA FTA is a Win-Win situation Political economics can explain the protection of these sectors to the detriment of the welfare as a whole.