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Southern African Customs Union (SACU)’s trade and tariff profile


Southern African Customs Union (SACU)’s trade and tariff profile

Southern African Customs Union (SACU)’s trade and tariff profile

The members of SACU are Botswana, Lesotho, Eswatini, Namibia and South Africa. SACU’s objectives include to, inter alia, facilitate cross-border movement of goods between member states; promote integration of member states into the global economy through trade and investment.[1]

Intra-SACU merchandise trade

In 2017, intra-SACU imports amounted to US$13.8 billion. Namibia was the leading importer of products from other SACU countries accounting for 30% of the intra-SACU imports, followed by Botswana (27%), South Africa (23%), Lesotho (11%) and Eswatini (9%). Top intra-SACU import products included petroleum oils, diamonds as well as motor vehicles and iron or steel articles.

Intra-SACU exports amounted to US$14 billion. South Africa dominated the intra-SACU exports, accounting for 71%, ahead of Namibia (13%), Eswatini (9%), Botswana (5%) and Lesotho (2%). Top intra-SACU export products included diamonds, petroleum oils and gold.

SACU’s external trade relations

As a customs union, SACU negotiates on merchandise trade matters as a bloc. It has a free trade agreement (FTA), which entered into force in May 2008, with the European Union Free Trade Association (EFTA) states – Norway, Switzerland, Lichtenstein and Iceland. The FTA includes bilateral side agreements between SACU and all EFTA states except Lichtenstein on agriculture. SACU has also a Preferential Trade Agreement with the Common Market of the South (MERCOSUR); its members are Argentina, Brazil, Paraguay and Uruguay. This agreement entered into force in April 2016.

SACU members (along with Mozambique) are parties to the Economic Partnership Agreement (EPA) with the European Union, which has been provisionally applied since October 2016. In 2017, the EU accounted for 27% and 21% of SACU’s imports and exports from the rest of the world, respectively. Germany, the UK and Italy are the top source markets for products imported by SACU. Germany, Belgium and the UK are the top destination markets for products exported by SACU.

SACU has a Trade, Investment and Development Cooperative Agreement with the United States (US) to foster trade, investment and development, which entered into force in July 2008. In addition, SACU countries are currently all eligible beneficiaries of the African Growth and Opportunity Act (AGOA). AGOA is a US legislation that enhances market access for sub-Saharan African countries.

SACU is currently negotiating an FTA with India, the African Continental Free Trade Area (AfCFTA) and the Tripartite Free Trade Area (TFTA).

In 2017, SACU’s imports from the rest of the world were worth over US$98 billion, while exports amounted to US$102 billion. SACU’s main exports included primary-based natural resource products such as precious metals and stones; iron and ore, mineral products and some agricultural products. The customs union’s main imports from the rest of the world include value-added manufactured products (e.g. machinery, electrical equipment; and vehicles). China, the US and Germany are the major trading partners of SACU, both as importers and exporters.

South Africa dominates SACU’s trade with the rest of the world. The country is source for 87% of SACU’s exports to the world and the destination for 84% SACU imports from the world.

Much of Botswana, Lesotho, Namibia and Eswatini’s trade is with South Africa. These countries also export various products to the rest of the world. For example, Botswana exports diamonds to Belgium and India. Eswatini exports sugar to Spain, the UK and Portugal. Namibia’s exports copper and diamond products to Switzerland.

SACU’s trade in services

The SACU Agreement does not cover trade in services. In 2008, the SACU Council of Ministers agreed to incorporate trade in services (investment and intellectual property rights) into the SACU Agenda but this has not materialised. Despite this, several services sectors are integrated across SACU. SACU’s services trade with the rest of the world is dominated by South Africa.

Common Monetary Area (CMA)

Except for Botswana, all SACU members are part of the CMA, which provides for full convertibility of the South African Rand. Even though it does not belong to the CMA, Botswana’s Pula is pegged to a basket of currencies heavily weighted to the Rand. That means South Africa’s monetary and exchange policy is transmitted across SACU. Furthermore, SACU’s transport network is well connected, and the domestic legal regimes share Common Law and Roman-Dutch traditions.

SACU’s tariff profile

SACU countries have a single customs territory with no customs duties between them. They apply a common external tariff (CET) on imports from non-SACU countries. Duties applied on imports differ depending on the origin/source and type of product.

SACU countries apply Most Favoured Nation (MFN) tariffs on all products coming into the customs union, except for products originating from the EU, EFTA, SADC and MERCOSUR, which are charged preferential duties in accordance with their respective trade agreements with SACU.

SACU’s highest MFN applied duties are levied on tobacco and clothing products. The ad valorem equivalent MFN applied tariff for unstemmed and unstripped tobacco is 142.77% and for stemmed and stripped tobacco is 111.36%.

The MFN applied tariff on clothing ranges between 40% and 45%; except for second-hand clothes. The same duty rates are applied to all imports of sugar and second-hand clothes regardless of their origin. A specific duty of 213.1c/kg is applied on sugar imports, and 60% or 2500c/kg for second-hand clothes imports.

The highest average MFN applied tariffs are for knitted clothes (41.3%); non-knitted clothes (40%); other clothing (28.7%); carpets (26.6%); leather products (26.4%); umbrellas (25.8%); and footwear (22.2%).

[1] Art. 2 of the 2002 SACU Agreement.

About the Author(s)

Talkmore Chidede

Talkmore Chidede holds a Doctor of Laws (LL.D) degree in International Investment Law from the University of the Western Cape. Talkmore also holds a Master of Laws (LL.M) degree (Cum Laude) in International Trade and Investment Law and a Bachelor of Laws (LL.B) degree, both from the University of Fort Hare. His research interests include international investment law, international trade law, regional economic integration and international commercial arbitration.

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