A Perspective on Common Industrial Policies for the Member States of the Southern African Customs UnionPosted on Wednesday, January 16th, 2013 in Highlights, Working Papers
Author: Prof. Colin McCarthy, tralac Associate
The Southern African Customs Union (SACU) is a customs union, as defined by having regional free trade behind a common external tariff (CET). This creates a common customs area covering the markets of Botswana, Lesotho, Namibia, South Africa and Swaziland (BLNS). Contrary to the conventional model of a customs union, SACU is also an excise union. Furthermore, with the exception Botswana, the member states are also organised in the Common Monetary Area (CMA) which effectively integrates Lesotho, Namibia and Swaziland into the South African money and capital market. In the model of linear regional integration, SACU would represent a good example of variable geometry.
The paper addresses the use of industrial policy as a means of encouraging the economic development of SACU member states, the smaller and economically lesser developed countries in particular. The topic is not only relevant because SACU is a customs union of developing but unequal economies but also because the SACU Agreement of 2002 specifically requires the Member States to develop common industrial policies. This makes a close consideration of the rationale and nature of SACU industrial policy a policy and legal imperative.
The way in which SACU currently operates and the challenges the customs union face in terms of designing and implementing an appropriate industrial policy are intimately linked to the unique nature of SACU and of its development since its establishment early in the twentieth century. To explain this uniqueness the paper commences with a brief overview of the salient developments in the history of SACU with an emphasis on facet of industrial policy followed, in consecutive sections, by a discussion of industrial policy and development strategy in the common customs area.
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