In many ways, the Southern African Customs Union (SACU) is an unsung success story. SACU is technically a customs union for trade in goods, and has been notified as such to the World Trade Organisation (WTO). It is also an excise union and it has gained important additional de facto features over time. Its origin and unique design have contributed to a successful regional arrangement with benefits way beyond tariffs and customs administration.

SACU is a well-integrated commercial space; albeit one dominated by the presence of South African firms and service providers. To some extent this has been unavoidable. The South African economy is by far the biggest. South African firms have enjoyed first mover advantages and have benefitted from exposure to international markets. South African imports generate more than 90% of the income available to SACU’s unique revenue sharing arrangement; from which the BLNS countries have benefitted substantially.

However, SACU faces very specific challenges. These include policy and institutional challenges, as well as significant difficulties associated with regional disparities. A new customs union Agreement was adopted in 2002 in order to rejuvenate the Organization, to bring it in line with new multilateral developments such as the establishment of the WTO in 1995, and to form a better union in the post-apartheid era. However, the expectations articulated at the time of the adoption of the new Agreement have not materialised. This Trade Brief discusses some of the most recent developments in SACU and the challenges ahead.

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