Southern Africa - Trade Policy

In recent press reports the South African Minister of Trade and Industry and a senior trade official warned about trade barriers and border controls between South Africa and those SACU members which had signed an EPA with the EU. They claim that the common external tariff would actually cease to exist; bringing about the end of SACU in the technical sense. There would be separate tariff regimes and the Common Revenue Pool would be another victim. The latter development may be viewed by some in South Africa as good news; with billions more to spend locally.

These issues have been around for some time and have not been attended to at the highest levels in SACU. Now they threaten the region with potentially catastrophic consequences; should public revenue sources in neighbouring states evaporate and border controls be enforced. It will be a mistake to think that South Africa would be left intact. The concomitant regional turmoil will spill across borders; as events in Zimbabwe have taught us. There will be instability, retaliations and perhaps a mini trade war. Not bad for the oldest customs union in the world.

The diplomatic fallout will go wider. The AU may have a new crisis on its agenda as its plans for deeper regional integration in Africa (all the way to an African common market) are threatened. It would be forgiven if confused by the fickleness of Ubuntu in Africa. Others may want to read up again on the promises made when Nepad was launched. Closer home there may be question marks about recently announced plans for a Tripartite FTA between SADC, COMESA and the EAC. Will it face the same challenges a few years down the road when problems typically associated with regional and global integration have to be faced? Is this a sign of deep seated weaknesses in the institutions underpinning regional arrangements in Africa when exposed to multilateral rules?

These developments should not become a regional crisis and should be attended to at the highest levels. The Minister’s statements were not contained in an official communiqué issued by the South African Government. What is the official South African policy? The BLNS countries, SACU and eventually the EU are all involved and should eventually play a role in defusing matters. This is a complicated package of different issues and should not be dealt with further via press interviews.

Before the various legal, trade related and tariff angles are tackled important preparatory discussions should first be held; at the right level and in the appropriate forum. There should be a plan of action on how to resolve this looming crisis. This requires a strategy and a distinction between procedure and substance. There are several technical issues to sort out, but that requires the resolve to do so. Do the SACU Members have the necessary commitment to work out a joint solution? The recent press reports unfortunately create the impression that Pretoria has already decided what should happen and that it will unilaterally implement its views.

Technically complicated matters (about which there are no agreement ) such as Article 31 of the SACU Agreement, how tariffs may converge by 2012 when the TDCA will be implemented, how the EU should accommodate SA and Namibian concerns (as it should) and other issues cannot be resolved through unilateral statements. When discussions about a solution have been started it may even become necessary to opt for mediation.

Who will set the ball rolling and display the leadership now required?

Gerhard Erasmus, a tralac Associate, asks the question: What is happening to SACU?

http://www.tralac.org/cgi-bin/giga.cgi?cmd=cause_dir_news_item&news_id=68342&cause_id=1694

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