SACU trade split a result of EU bullying, says DTI

No choice for minorities…..

sacu logoThe department of trade and industry is not blaming SACU members for signing EU trade agreements despite SA protests, since in reality “a gun had been held to their heads” and, as small countries, they had been presented with little choice but to sign.

This was said by Dr Rob Davies, minister of department of trade and industry (DTI), when advising the portfolio committee on trade and industry of a number of important decisions that were shortly to be made regarding the future of the South African Customs Union (SACU).


Although the revenue generated from the SACU was significant for smaller economies within the union of South Africa, Botswana, Lesotho, Namibia and Swaziland (BLNS), a major decrease in customs revenue during the current global economic recession and “significant disagreements” amongst BLNS members, particularly over the EU trade agreements, had caused a slowing down of the development of new partnership agreements.

Minister Davies said South Africa had proposed a 5-point plan.   However, progress towards a satisfactory relationship between the parties “had been rather uneven”.    , Whilst 50% of the revenue was shared between the partners other than South Africa and South Africa contributed as much as 98% towards revenue, tariffs were in one way or another set to benefit South African industry as the most industrialised country in the partnership.  The other parties were sensitive to this, he said.

Starting again

sacu mapMinister Davies said that currently, DTI was busy with the implementation and promotion of the new SACU agreement “which in the past had a long history of uneven colonial and apartheid arrangements which were first established in 1910 to serve British colonial interests.”

A new SACU agreement had been put into force in 2004, he said and had served until now. A common external tariff was maintained under the agreement, which allowed for free trade within the SACU market.

New development plan

The 5-point plan for a future agreement, the result of a summit talks meeting, was to investigate whether customs revenue should go to industrial development projects; whether revenue be used to develop value chains from one country to another; how to prevent the proliferation in smuggling; the necessity to build a centralised secretariat to run the SACU and, finally, how to strengthen the engagement with foreign countries on trade matters.

For South Africa, Dr Davies maintained the key aspect of any plan was to contribute in a way that gave financial certainty for BLNS members for financing of regional infrastructure plans and for industrial development projects. He maintained that if these countries grew, then South Africa would benefit from increased markets.

He further added that little progress had been made “due to the lack of change in the financial flow of the revenue”, indicating that a key reason for lack of progress was because of divergences in policy perspective and policy priorities among members of the SACU.

Motives in doubt

Looking ahead, the minister said differences were emerging as a result of clashing views on the role of tariffs since South Africa viewed tariffs as tools of industrial policy, while for other countries tariffs were mainly viewed as a source of revenue. “This is primarily an issue of the countries who view themselves as consumers rather than producers”, he said.

“In addition, without common industrial and trade policies among SACU members, consensus decision-making was continually at risk of gridlock.”

Two core challenges remained unresolved within the SACU, minister Davies told parliamentarians.    First, was the development of common policies among countries that varied dramatically in terms of economic size and population, as well as levels of economic, legislative and institutional development.     Secondly, there was a lack of an effective decision-making procedures within the general body that was able to take into account differences amongst the members.

“As such, the next steps that South Africa took were vital to the process”, he said.

Frank talks

Minister Davies said South Africa had now to re-assess how best to advance development and integration in SACU and then have an open discussion among SACU members.  The development of a common approach to trade and industrial policy was the most urgent matter, he said, with a discussion on appropriate decision-making procedures on sensitive trade and industry matters.

Parliamentarians asked whether, since this appeared an uphill battle, DTI should not rather instead concentrate on advancing the Southern African Development Community (SADC) but minister Davies said that whilst the SACU was indeed not the most important entity in the region, it was an important aspect in the broader goal of creating harmony in the region and better trading prospects.

The main priority for regional integration, he said, was the creation of large regional markets that could serve industrial integration between countries and, meanwhile, the SACU issue had to be resolved along the way.

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