Building capacity to help Africa trade better

Southern Africa and the trading relationship with the European Union

Trade Briefs

Southern Africa and the trading relationship with the European Union

Southern Africa and the trading relationship with the European Union

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The trading relationship between the Southern African region and the EU is at a crossroads, where there are two major directions possible for the region plus numerous side roads that may or may not lead anywhere. Those two major roads are for (a) a consolidation within the Southern African Customs Union (SACU) behind South Africa and the Trade and Development Cooperation Agreement (TDCA) and (b) for South Africa and the non-South African members of SACU (Botswana, Lesotho, Namibia and Swaziland, the so-called ‘BLNS’ countries) to continue on somewhat parallel pathways both within the TDCA but with the BLNS negotiating as a team that includes Mozambique, Angola and Tanzania (MAT) along with South Africa as an observer partner for the best possible deal with the EU under the wider Economic Partnership Agreements (EPA).

This Trade Brief argues that SACU, as the world’s oldest and one of the most efficiently functioning customs unions, should forget the EPA option with the EU and rather pursue an enhanced Customs Union-to-Customs Union bilateral deal. The stark realities are (1) on imports, all of SACU are intertwined and bound by the common tariff, (b) the enhanced export preferential opportunities that the BLNS enjoy to the EU are firstly probably able to be cemented by negotiations within a SACU agreement and secondly, as this note will show, are not really significant and the rhetoric surrounding their preferences may not match their value.

This leaves MAT (Mozambique, Angola and Tanzania) in limbo. Tanzania’s future lies far to the north as part of the East African Community, that Mozambique could and possibly should seriously discuss with SACU the option of full membership of SACU, and that Angola has a way to go along the road to stable governance but could then also discuss membership of SACU if it considers that to be beneficial later. Meanwhile, some sort of interim arrangement for at least Mozambique and possibly also Angola could be considered as co-members of SACU for the purpose of the EU/TDCA arrangement. Reverting to Tanzania, it is just not possible for a country to be part of two Customs Unions – end of story.

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