Southern African Customs Union
Encyclopedia
The Southern African Customs Union (SACU) is a customs union
among five countries of Southern Africa
: Botswana
, Lesotho
, Namibia
, South Africa
and Swaziland
.
and the High Commission Territories of Bechuanaland, Basutoland
and Swaziland
. With the advent of independence for these territories, the agreement was updated and on December 11, 1969 it was relaunched as the SACU with the signing of an agreement between the Republic of South Africa, Botswana
, Lesotho
and Swaziland. The updated union officially entered into force on March 1, 1970. After Namibia
's independence from South Africa in 1990, it joined SACU as its fifth member.
As of 2007, the Executive Secretary of the SACU is Tswelopele C. Moremi.
Its aim is to maintain the free interchange of goods between member countries. It provides for a common external tariff
and a common excise tariff to this common customs area. All customs and excise collected in the common customs area are paid into South Africa’ national Revenue Fund. The Revenue is shared among members according to a revenue-sharing formula as described in the agreement. South Africa is the custodian of this pool. Only the BLNS Member States' shares are calculated with South Africa receiving the residual. SACU revenue constitutes a substantial share of the state revenue of the BLNS countries.
With this in mind, the Ministers of Trade and Industry of the five member states met in Pretoria
on November 11, 1994 to discuss the renegotiation of the 1969 agreement. The Ministers appointed a Customs Union Task Team (CUTT) which was mandated to make recommendations to the Ministers. CUTT has met on numerous occasions in the various Members States and good progress has been made in the renegotiation process.
At a meeting of Ministers of Trade and Finance Departments from the five SACU Member States, held in Centurion, Pretoria on September 5, 2000, the Ministers reached consensus on the principles of underpinning the Institutional reform in the SACU.
The Administrative Institutional structure of the revenue pool that was discussed was agreed to consist of the following:
Council of Ministers: A body represented by one Minister from each SACU member state. It would be the supreme SACU decision-making body and would meet on quarterly basis. The decisions taken by this Council would only be by consensus.
Commission: Administrative body composed of Senior Officials, three Technical Liaison Committees and an established Agricultural Liaison Committee.
Tribunal: An independent body of experts. It would report directly to the Council of Ministers. The tribunal would be responsible for tariff-setting and the Anti-dumping Mechanism.
Secretariat: Responsible for day to day operations of the pool. It would also be funded from the revenue pool. Its location would be determined by Senior Officials who were directed to meet after a period of a month to develop proposals for the implementation of the revised SACU Institutional Structure.
SACU Ministers further agreed that the revenue share accruing to each Member State should be calculated from three basic components:
Further, it was agreed that these three different components would be distributed as follows:
The customs component should be allocated according to each country’s share of total intra-SACU trade, including re-exports.
The excise component, net of the development component, should be allocated on the basis of GDP. The development component should be fixed at 15% of the total excise pool and distributed to all SACU members according to the inverse of each country’s GDP/capita.
While SACU entered into a free trade deal with the four-nation European Free Trade Association
on 1 July 2006, its negotiations with the United States
for a free trade agreement have stalled (as of 8 January 2008).
SACU is also involved in negotiations for a free trade agreement - the Economic Partnership Agreements
(EPA's) - with the EU, and the organisation has corresponded with EU Trade Commissioner, Karel De Gucht
, between February and March 2010, to request that the EU did not demand the ratification and implementation of the EPA’s at the next round of negotiations without the concerns of the SACU countries being addressed. De Gucht replied that he would like to "invite the SADC EPA countries concerned to swiftly complete signature, notification and implementation of the interim EPA", and that "in the meantime, the EU is more than willing to address all pending issues and concerns".
Customs union
A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas...
among five countries of Southern Africa
Southern Africa
Southern Africa is the southernmost region of the African continent, variably defined by geography or geopolitics. Within the region are numerous territories, including the Republic of South Africa ; nowadays, the simpler term South Africa is generally reserved for the country in English.-UN...
: Botswana
Botswana
Botswana, officially the Republic of Botswana , is a landlocked country located in Southern Africa. The citizens are referred to as "Batswana" . Formerly the British protectorate of Bechuanaland, Botswana adopted its new name after becoming independent within the Commonwealth on 30 September 1966...
, Lesotho
Lesotho
Lesotho , officially the Kingdom of Lesotho, is a landlocked country and enclave, surrounded by the Republic of South Africa. It is just over in size with a population of approximately 2,067,000. Its capital and largest city is Maseru. Lesotho is a member of the Commonwealth of Nations. The name...
, Namibia
Namibia
Namibia, officially the Republic of Namibia , is a country in southern Africa whose western border is the Atlantic Ocean. It shares land borders with Angola and Zambia to the north, Botswana to the east and South Africa to the south and east. It gained independence from South Africa on 21 March...
, South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
and Swaziland
Swaziland
Swaziland, officially the Kingdom of Swaziland , and sometimes called Ngwane or Swatini, is a landlocked country in Southern Africa, bordered to the north, south and west by South Africa, and to the east by Mozambique...
.
History
SACU is the oldest still existing customs union in the world. It was established in 1910 as a Customs Union Agreement between the then Union of South AfricaUnion of South Africa
The Union of South Africa is the historic predecessor to the present-day Republic of South Africa. It came into being on 31 May 1910 with the unification of the previously separate colonies of the Cape, Natal, Transvaal and the Orange Free State...
and the High Commission Territories of Bechuanaland, Basutoland
Basutoland
Basutoland or officially the Territory of Basutoland, was a British Crown colony established in 1884 after the Cape Colony's inability to control the territory...
and Swaziland
Swaziland
Swaziland, officially the Kingdom of Swaziland , and sometimes called Ngwane or Swatini, is a landlocked country in Southern Africa, bordered to the north, south and west by South Africa, and to the east by Mozambique...
. With the advent of independence for these territories, the agreement was updated and on December 11, 1969 it was relaunched as the SACU with the signing of an agreement between the Republic of South Africa, Botswana
Botswana
Botswana, officially the Republic of Botswana , is a landlocked country located in Southern Africa. The citizens are referred to as "Batswana" . Formerly the British protectorate of Bechuanaland, Botswana adopted its new name after becoming independent within the Commonwealth on 30 September 1966...
, Lesotho
Lesotho
Lesotho , officially the Kingdom of Lesotho, is a landlocked country and enclave, surrounded by the Republic of South Africa. It is just over in size with a population of approximately 2,067,000. Its capital and largest city is Maseru. Lesotho is a member of the Commonwealth of Nations. The name...
and Swaziland. The updated union officially entered into force on March 1, 1970. After Namibia
Namibia
Namibia, officially the Republic of Namibia , is a country in southern Africa whose western border is the Atlantic Ocean. It shares land borders with Angola and Zambia to the north, Botswana to the east and South Africa to the south and east. It gained independence from South Africa on 21 March...
's independence from South Africa in 1990, it joined SACU as its fifth member.
As of 2007, the Executive Secretary of the SACU is Tswelopele C. Moremi.
Functions and organisation
The union meets annually to discuss matters related to the Agreement. There are also technical liaison committees, namely the Customs Technical Liaison Committee, the Trade and Industry Liaison committee and the Ad hoc Sub-Committee on Agriculture, which meet three times a year.Its aim is to maintain the free interchange of goods between member countries. It provides for a common external tariff
Common external tariff
When a group of countries form a customs union they must introduce a common external tariff. The same customs duties, import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area, regardless of which country within the area they are entering...
and a common excise tariff to this common customs area. All customs and excise collected in the common customs area are paid into South Africa’ national Revenue Fund. The Revenue is shared among members according to a revenue-sharing formula as described in the agreement. South Africa is the custodian of this pool. Only the BLNS Member States' shares are calculated with South Africa receiving the residual. SACU revenue constitutes a substantial share of the state revenue of the BLNS countries.
Latest developments and structure
Following the formation of the Government of National Unity in South Africa in April 1994, Member States concurred that the present Agreement should be renegotiated in order to democratise SACU and address the current needs of the SACU Member States more effectively.With this in mind, the Ministers of Trade and Industry of the five member states met in Pretoria
Pretoria
Pretoria is a city located in the northern part of Gauteng Province, South Africa. It is one of the country's three capital cities, serving as the executive and de facto national capital; the others are Cape Town, the legislative capital, and Bloemfontein, the judicial capital.Pretoria is...
on November 11, 1994 to discuss the renegotiation of the 1969 agreement. The Ministers appointed a Customs Union Task Team (CUTT) which was mandated to make recommendations to the Ministers. CUTT has met on numerous occasions in the various Members States and good progress has been made in the renegotiation process.
At a meeting of Ministers of Trade and Finance Departments from the five SACU Member States, held in Centurion, Pretoria on September 5, 2000, the Ministers reached consensus on the principles of underpinning the Institutional reform in the SACU.
The Administrative Institutional structure of the revenue pool that was discussed was agreed to consist of the following:
Council of Ministers: A body represented by one Minister from each SACU member state. It would be the supreme SACU decision-making body and would meet on quarterly basis. The decisions taken by this Council would only be by consensus.
Commission: Administrative body composed of Senior Officials, three Technical Liaison Committees and an established Agricultural Liaison Committee.
Tribunal: An independent body of experts. It would report directly to the Council of Ministers. The tribunal would be responsible for tariff-setting and the Anti-dumping Mechanism.
Secretariat: Responsible for day to day operations of the pool. It would also be funded from the revenue pool. Its location would be determined by Senior Officials who were directed to meet after a period of a month to develop proposals for the implementation of the revised SACU Institutional Structure.
SACU Ministers further agreed that the revenue share accruing to each Member State should be calculated from three basic components:
- a share of the customs pool;
- a share of the excise pool; and
- a share of a development component
Further, it was agreed that these three different components would be distributed as follows:
The customs component should be allocated according to each country’s share of total intra-SACU trade, including re-exports.
The excise component, net of the development component, should be allocated on the basis of GDP. The development component should be fixed at 15% of the total excise pool and distributed to all SACU members according to the inverse of each country’s GDP/capita.
While SACU entered into a free trade deal with the four-nation European Free Trade Association
European Free Trade Association
The European Free Trade Association or EFTA is a free trade organisation between four European countries that operates parallel to, and is linked to, the European Union . EFTA was established on 3 May 1960 as a trade bloc-alternative for European states who were either unable to, or chose not to,...
on 1 July 2006, its negotiations with the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
for a free trade agreement have stalled (as of 8 January 2008).
SACU is also involved in negotiations for a free trade agreement - the Economic Partnership Agreements
Economic Partnership Agreements
Economic Partnership Agreements are a scheme to create a free trade area between the European Union and the African, Caribbean and Pacific Group of States . They are a response to continuing criticism that the non-reciprocal and discriminating preferential trade agreements offered by the EU are...
(EPA's) - with the EU, and the organisation has corresponded with EU Trade Commissioner, Karel De Gucht
Karel De Gucht
Karel Lodewijk Georgette Emmerence De Gucht is a Belgian politician who has been the European Commissioner for Trade since 2010...
, between February and March 2010, to request that the EU did not demand the ratification and implementation of the EPA’s at the next round of negotiations without the concerns of the SACU countries being addressed. De Gucht replied that he would like to "invite the SADC EPA countries concerned to swiftly complete signature, notification and implementation of the interim EPA", and that "in the meantime, the EU is more than willing to address all pending issues and concerns".
See also
- Trade blocTrade blocA trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, are reduced or eliminated among the participating states.-Description:...
- Common Monetary AreaCommon Monetary AreaThe Common Monetary Area links South Africa, Lesotho and Swaziland into a monetary union. It is allied to the Southern African Customs Union . Namibia automatically became a member upon independence, but withdrew with the introduction of the Namibian dollar in 1993...
- Southern African Development CommunitySouthern African Development CommunityThe Southern African Development Community is an inter-governmental organization headquartered in Gaborone, Botswana. Its goal is to further socio-economic cooperation and integration as well as political and security cooperation among 15 southern African states...
(SADC) - Common Market for Eastern and Southern AfricaCommon Market for Eastern and Southern AfricaThe Common Market for Eastern and Southern Africa, is a free trade area with nineteen member states stretching from Libya to Zimbabwe. COMESA formed in December 1994, replacing a Preferential Trade Area which had existed since 1981...
(COMESA)