Sacu customs union could grow larger: expert

THE trade negotiations between some southern African countries including Namibia with the European Union for an economic partnership agreement (EPA) might be concluded in November this year, a local trade expert says.

‘There are still some outstanding issues, but individual member states of the Southern African Customs Union (Sacu) stood their ground during the protracted negotiations and they are well on track,’ trade expert Wallie Roux said on Friday. It is expected that the comprehensive EPA will be signed in November this year.
Roux was approached by The Namibian to give his view on a possible larger customs union out of Sacu under the Southern African Development Community (Sadc) configuration. The Sadc summit starts in Windhoek this week and it will discuss among other things how to deepen regional integration through trade and economic development. Namibia will take over the chairmanship of Sadc from the Democratic Republic of Congo (DRC) for the next 12 months. The Windhoek summit will also celebrate the 30th Sadc anniversary.
‘In my opinion there will be no Sadc customs union, but rather some countries of southern Africa joining Sacu over the years,’ Roux said. ‘The five-member Sacu with South Africa, Botswana, Lesotho, Namibia and Swaziland is now 100 years old and it is a legal entity with the objective to trade. Sadc is not a legal entity and its 15 member states focus on development and political issues,’ Roux told The Namibian.
The five Sacu states are also members of Sadc. There is a Sadc Treaty in place, which was revised in 2003 and Article 3 says that ‘Sadc shall be an international organisation with capacity and power to enter into contract, own or dispose of movable or immovable property and to sue and to be sued.’
Sadc however has already established a free trade area (FTA) and had the goal to eventually form a Sadc customs union this year, which has not materialised.
Sadc further plans to have a common market in place by 2015, to establish a Sadc monetary union and a Sadc central bank by 2016. A single regional currency for the Sadc monetary union is planned for 2018.
According to Roux, it would be better if Sacu grows bigger slowly. ‘Already Mozambique – also a Sadc member state – has showed interest to join Sacu. This will be a test case as Mozambique’s trade tariffs have to be harmonised with those of Sacu.’
‘If all Sadc member states would join the Sacu customs union, they would have to commit to the Sacu trade agreement and I don’t see this happening,’ Roux opined.
Critical voices have been raised over the past few weeks in South Africa, most prominently the Congress of South African Trade Unions (Cosatu) that the share of revenue earnings of Sacu, which get distributed to all five member states according to a formula, are too big for the four smaller member states.
More of the Sacu revenue earnings should remain in South Africa to be spent on much-needed development projects at home, critics have demanded. Total Sacu revenue payouts in 2008-09 came to R53,1 billion and R51,9 billion in 2009-10.
Namibia received N$8,5 billion annually both years, virtually a third of its national budget. South Africa received about R24 billion annually.
But Roux says there is a development component in the Sacu agreement and plans are that a certain percentage of the common revenue pool would be put into a development fund.
‘The idea is that Sacu member states then can apply for funding for their specific development projects. During the apartheid era, South Africa did not do much development for Namibia, Lesotho or Swaziland for instance, but the revised Sacu agreement of 2002 puts more emphasis on development,’ Roux said.

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