SACU: Taking stock and considering future developments – September 2014
The Trade Law Centre (tralac) in collaboration with the Konrad Adenauer Foundation hosted a workshop in Windhoek, Namibia on 5 September 2014, to discuss the Southern African Customs Union (SACU) developments.
A very lively discussion amongst participants from government departments, the private sector, civil society organizations, the diplomatic community and the SACU Secretariat covered a very broad range of issues that are pertinent to the future of the world’s oldest functioning customs union. The discussion focused on legal and institutional issues, industrial policy and regional integration developments in Africa.
The 2002 SACU Agreement entered into force in July 2004; a decade later it is interesting to reflect on the developments since then, and to look ahead at SACU’s future agenda.
Presenters and participants reflected on the ambition of the 2002 Agreement to establish an institutional architecture for a new SACU, to develop common policies in key areas and to establish a common negotiating mechanism for international trade negotiations with third parties. Key institutions provided for in the Agreement do not exist yet. In particular the SACU Tariff Board and the Tribunal have not been established. Management of the common external tariff, including the assessment of tariff applications would be the task of the SACU Tariff Board. In its absence, South Africa’s International Trade Administration Commission (ITAC) fulfils this role, in terms of a mandate from the SACU Council of Ministers of Trade and Finance. This has been the case since 2005. The Council has not met since July 2013, and information on matters related to the establishment of the Tariff Board is hard to come by.
Without a Tribunal there is no avenue for regional dispute settlement; there is however indication that practical trade-related matters that could well be resolved at a regional level, are being brought, for example, in the case of Namibia to the national courts.
At this stage there seems to be very little impetus to establish the regional institutions. South Africa, which as the regional hegemon, could be expected to provide a leadership function in this regard, does not appear to be pushing this agenda. It is perhaps fair to ask what the likelihood of establishing a SACU Tariff Board is?
Industrial development is featuring prominently on both the SACU and Southern African Development Community (SADC) agendas. SACU member states are currently reviewing the first phase of a study to develop common policies on industrial development, as provided for in Part 8 of the SACU Agreement. A meeting to discuss the situation analysis was scheduled to take place during the first week of September, but has been postponed. Discussion on regional industrial policy matters is complex; with industrial policy usually viewed as a national policy prerogative. It is not clear exactly what a regional industrial policy is. Discussion on industrial development in the SACU context needs to take into account the broader fault lines of global industrial organization and restructuring. The role of global value chains, how different value chains are structured, how they function, what drives them; are all important questions to consider.
A key focus of an industrialization discussion needs to include the development of a services agenda. Competitive services inputs are essential to industrial competitiveness. Services are not explicitly covered in the SACU Agreement, but that does not preclude the possibility of developing a services agenda that focuses on priorities such as regulatory reform and harmonization in key services sectors. Such an approach also provides an opportunity to promote coherence in the infrastructure development, trade facilitation and services agendas. SACU has undertaken a sector study on transport, for example, and is currently commissioning a study on cabotage and third country rule, matters. This presents an opportunity to develop a transport sector development strategy, which can contribute to market integration and lowering the costs of doing business in SACU.
Situating SACU in a broader regional integration context is important. This raises important questions about SACU in the context of SADC, the Tripartite Free Trade Area (FTA) negotiations, and also in the context of the envisaged Continental FTA. Here it is important to appraise not only the challenges associated with implementation of commitments, a perennial problem in Africa, but also to interrogate the fundamental paradigm of regional integration. Is the linear model of integration, that tracks progress from an FTA to a customs union and beyond, the most appropriate to address the current development challenges that Africa faces. New thinking and new approaches may well be appropriate to address the practical challenges that the current paradigm seems unable to negotiate effectively.
The demands of the 21st century global economy, the current opportunities, associated with the resources boom, that many African countries enjoy, require new approaches in many respects. Focus on services, trade facilitation, infrastructure development, can support the region’s ambition to industrialise and become competitive. Involvement of the private sector in regional policy processes is key; lessons from experience in Asia confirm that the development of a competitiveness strategy can benefit from the practical experience and insights of the private sector. After all investment, production and trade are their core business; governments can learn from them. Fundamental to the new thinking must be rules-based governance. Transparency, predictability and certainty are not only good governance principles, but make sound sense for business that will contribute to addressing the fundamental development challenges of the region.