Global Issues
TRADE: SACU Reaches 100th Year Despite Recent Divisions
Leaders rallied behind the Southern African Customs Union (SACU) at its 100th birthday bash on Apr 22, adamant that it remains the region’s best shot at economic sovereignty. Details on how to accomplish this, however, remain sketchy.
Last week, behind closed doors, the SACU Council of Ministers fervently discussed the union’s future in view of the recent economic partnership agreement (EPA) woes but was tight-lipped about the outcomes. For the moment, though, the union seems to be carrying on.
As five motorcades carrying the SACU heads of state and government ground to a halt at the site of the bloc’s prospective headquarters in Windhoek, there was little evidence of the differences that saw the world’s oldest customs union balancing on the edge of an abyss last year (2009).
'The centenary of SACU confirms the close relations of our states — our peoples, our cultures and our economies. It’s a significant moment that highlights the long history of statehood in the sub-region,' waxed Lesotho Prime Minister Pakalitha Mosisili, the last in a long line of speakers.
'A family for the equitable benefit of all members,' cooed King Mswati III of Swaziland. 'The strength of SACU has withstood the test of time,' enthused the host and Namibian president Hifikepunye Pohamba in his opening address, adding that a first ever heads of state summit held earlier that morning saw ‘‘a renewed drive towards optimising the operations of the customs union’’.
But the unveiling of a plague, the cutting of the cake, the reading of a vaguely worded communiqué and an impressive amount of back-slapping and hand-shaking couldn’t entirely conceal the lingering differences. King Mswati described the current revenue sharing formula — disputed by South Africa - as ‘‘pivotal’’, ‘‘unique’’ and a ‘‘model of reference’’.
He also referred to South Africa’s dominance in the union: 'One of the challenges in this integration arrangement is that it involves countries at uneven levels of development.'
This is a sentiment shared by Lesotho that recently saw revenue from the SACU pool plummet by more than 50 percent.
'SACU is a customs union with large disparities in income and economic weight among its member states. It comprises of one large country — South Africa — and several smaller states which, among themselves, have significant differences in GDP (gross domestic product),' said Mosisili, who governs the bloc’s only least developed country (LDC).
Botswana president Seretse Khama Ian Khama used the opportunity to call for the ‘‘inclusion of ‘new generation’ issues in the scope of SACU’’, a big no-no for Namibia and South Africa that are battling the European Union on this in the EPA talks.
These are the so-called Singapore issues of investment, government procurement and competition which, having been defeated at the level of the World Trade Organisation (WTO), the European Union is attempting to re-introduce through the EPAs.
In return, South Africa’s President Jacob Zuma no less than three times referred to SACU’s own house rules that prohibit individual trade deals with third parties. This was a clear reference to the rogue signing of the interim EPA by Botswana, Swaziland and Lesotho in June 2009.
But, below-the-surface skirmishes aside, some still realise that SACU is the only credible option to reach the much desired economic sovereignty threatened by the EPAs. 'The divisive nature of an (EPA) with the European Union exerts pressure on the socio-economic coherence of our Union. It therefore remains imperative that we withstand such pressures, collectively,' insisted Pohamba.
Zuma reminded his counterparts that, 'the combined trade contribution of developing countries is 37 percent and is rising rapidly. We must, therefore, engage with this international reality to enhance our collective development objectives'.
He called for South-South co-operation and for using the union as a building block in the envisaged Southern African Development Community (SADC) Customs Union.
Including Zimbabwe, over half of SADC states are considered LDCs. They are heavily reliant on aid and severely affected by the global economic crisis. 'Exports of textiles in the two crisis years, 2008 and 2009, have decreased by 27 percent and two diamond mines have shut down,' lamented Lesotho’s Mosisili referring to the mountain kingdom’s main exports.
LDCs benefit from inclusion in customs unions as they provide economy of scale; simplify internal trade, common standards and policies; and offer more clout at the WTO and better access to markets through collective trade deals. Indeed, SADC embarked on an ambitious agenda to create customs union by 2015 and a monetary union by 2018, a goal most experts deem unrealistic.
What makes matters confusing is that many SADC countries are members of other trade blocs. An October 2008 tripartite agreement between SADC, Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) in Kampala tried to overcome this by initiating a free trade area encompassing all 26 countries.
Actual standardisation and removal of trade barriers is, however, far off.
The same goes for last year’s hastily launched COMESA customs union. Only a few of the 19 COMESA countries actually signed up and the initiative is nowhere near WTO recognition.
Among this fray of regional groupings with customs union aspirations, SACU is the only one that can rightfully claim it has, as King Mswati pointedly said, 'handsomely delivered for its members. In view of our historic experience, I sincerely believe that SADC, COMESA and other regional organisations have a lot to learn from SACU'.
The question remains how the centenarian with its chequered apartheid past will involve the LDCs along its borders in building an independent economic community.
© Inter Press Service (2010) — All Rights Reserved. Original source: Inter Press Service