SA loses some control in new SACU agreement addressing economic inequities

FOLLOWING PARLIAMENT’s recent approval of the new Southern African Customs Union (SACU) agreement - which replaces the 1969 agreement - South Africa’s control of the agreement has been considerably diminished. Trade consultants Deloitte & Touche noted the following implications in minister of trade and industry Alec Erwin’s announcement to parliament. l SA will relinquish its dominant position in SACU - especially in setting customs tariffs; l The council of ministers representing all the SACU member states will make final decisions on all matters related to SACU in a democratic manner; l The rather loose relationship that at present exists between the SACU members will be replaced by a coherent organisation with appropriate democratic institutions and a secretariat (in Windhoek, Namibia) to administer and co-ordinate the operations of the new agreement; l Certain provisions in the agreement are an effort to address the large differences in economic development between SA and the other member states; l There is a move towards larger policy harmonisation and co-ordination; l Trade negotiations will be conducted by SACU and not by SA on its own (unless agreed otherwise); and l A more equitable and sustainable revenue-sharing formula will replace the 1969 formula without financially destabilising SA’s SACU partners.