How will the recently signed Tripartite FTA change the institutional landscape for trade and regional integration in Southern and Eastern Africa? The optimism levels for the (Cape to Cairo) benefits which are expected to follow, are high. It is necessary, however, to recognise the extent of the work still to be undertaken before these expectations could materialize. One of the reasons why caution is called for has to do with the challenges involved in finalizing tariff offers and rules of origin; which are the basic building blocks of an FTA. This process will have direct implications for existing regional trade arrangements.

This Trade Brief discusses a particular set of these implications; the consequences of the TFTA (as it stands), for the Southern African Customs Union (SACU) and for its Members (Botswana, Lesotho, Namibia, South Africa and Swaziland).

The present TFTA Agreement is not a comprehensive foundation for an FTA. It will take much more effort and time before such a comprehensive FTA among all 26 member states will become a reality; which cannot be achieved without important trading nations such as South Africa (and SACU) becoming a party. At present it is not yet known whether Pretoria will sign and ratify this Agreement. South Africa may decide to continue to participate in the negotiations to complete Phase I (the built-in agenda) but will presumably wait for a final outcome on Annex I on the Elimination of Customs Duties, Annex II on Trade Remedies and Annex IV on Rules of Origin before a decision on signing and ratification is taken. This has direct implications for SACU; which is a customs union. It has a common external tariff (CET) and a single customs territory. Trade in goods arrangements with third parties have to be concluded jointly.

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