109 years old, since 1910.
18 September 2019

Namibian African Ambassadors And High Commissioners Monthly Meeting - Address By The Executive Secretary Ms Tswelopele Moremi

30 November 2007

Thule Hotel, Windhoek, Namibia

I would like to thank this August Body for inviting me to address the Group of distinguished Ambassadors and High Commissioners of African countries accredited to the Republic of Namibia.

This invitation does allow me an opportunity to inform you on the role of the Southern African Customs Union (SACU), in particular the programmes it is implementing and the challenges it is encountering.

History

As you are aware, the Southern African Customs Union (SACU) is the oldest functional Customs Union in the world having been established in 1910. It comprises of a membership of 5 countries namely Botswana, Lesotho, Namibia, South Africa and Swaziland. SACU became a Customs free zone with no import duties between members except domestic taxes. SACU provided a basic Common External Tariff of 15% ad valorem duty and the revenue generated was administered by RSA and distributed on basis of fixed percentages.

With the independence of the three High Commission Territories in the 1960`s, there was pressure to renegotiate the Agreement to recognise the political and economic changes that are taking place. This led to the signing of the revised Agreement in 1969 which recognises the unbalanced development of the Member States of SACU and sought to compensate the BLNS for the polarisation and price raising effects by using the Stabilisation factor which guaranteed a minimum revenue rate of 17%.

However, the 1969 Agreement still had shortcomings i.e. the absence of democratic decision making in SACU Structures and the absence of clear structures for administration. With the democratic changes that took place in 1994 in RSA there was clear recognition among the parties to renegotiate the 1969 Agreement with a view to take account of these developments. In addition, the conclusion of the Uruguay Multilateral Round in 1994 and the establishment of WTO in 1995 posed a new era of trade liberalisation. It was therefore important that SACU takes account of these developments and review the overall agreement.

2002 SACU Agreement

Consequently, in 2002, SACU became governed by a new legal framework that provides a modern rules-based dispensation that is in line to the idea of a Customs Union as a single, integrated market and a single negotiating entity. The Agreement set out a broad framework for enhanced integration with a legal personality and clear mandate, objectives, institutions, decision making and financing procedures. The Key features include Creation of effective democratic institutions (Tariff Board, Tribunal, Secretariat etc) that provides a joint decision making process. The Agreement further provides dispute settlement and an adoption of common policies as well as a revenue sharing mechanism that calculates on a transparent and predictable basis shares for all Member States.

SACU Governance Structures

The governance structures of SACU is composed of a Council of Ministers which is the highest Decision Making Body and is composed of Ministers Responsible for Trade and Industry and Ministers of Finance. The Customs Union Commission at the level of Permanent/Principal Secretaries provides advice to the Council of Ministers on technical issues across the spectrum. Then there are the Technical Liaison Committees at the level of technical officers, which provides advice to the Commission on technical issues pertaining specialised areas. These areas may range from agriculture, trade and industry, transport, customs and financial issues.

Another important institution which is in the process of being established is the Tariff Board. These will consist of experts drawn from all Member States and this body shall make recommendations to Council on the level and changes of customs duties, rebates refunds etc. The Status of its establishment is that currently, Member States are still developing the necessary infrastructure (legislative reform and establishment of national bodies) and hence the International Trade Administration of South Africa was given a mandate to act as de facto SACU Tariff board. There are also capacity interventions ongoing such that ITAC is busy training officials from BLNS on tariff investigations and trade remedies.

Another institution which is in the preparatory stage of being established is the Tribunal. The composition of the Tribunal will be 3 members, except as determined by Council and the body will be responsible for disputes regarding interpretation or application of Agreement or any issue referred by Council. The Status regarding its establishment is that a roadmap for the establishment of a Tribunal is planned for January 2009 and a detailed paper on scope of issues to be handled by Tribunal, jurisdiction and enforcement issues has been prepared. The process of developing an Annex on the Tribunal is currently underway.

SACU Work Programme

SACU`s work programme is structured around three functions namely, the Trade Facilitation and Revenue Management, Policy Development and Research and Regional Integration.

Trade Facilitation

On the Trade Facilitation function, we are at a stage whereby we have adopted the 5 customs initiatives. These are instituting a model for a one stop border post arrangement in SACU; the introduction of the Single Administrative Document form as a common customs declaration; putting in place a Joint Border Controls programme of cooperation; ensured electronic data interchange where certain data fields to be exchanged have been identified; and a capacity building programme where capacity building priorities are identified and we are in process of developing modules as a result. In addition, SACU is continuously working with the World Customs Organisation to develop a Customs Reform and Modernisation programme. Other trade facilitation work entails a developed Annex on Mutual Administrative Assistance, SACU Single Origin Annex, Audit of intra-SACU Trade data and Resolved definition issues around the intra-SACU trade data.

Around the areas of Revenue Management, the Agreement provides for a Common Revenue Pool and outlines a three component revenue distribution formula which is the customs, excise and developmental components. All additional duties from Member States are paid in the CRP and shared on the basis of an agreed formula. The Implementation of the new RSF have progressed to a point where currently Revenue management options are considered The revenue issues are important to SACU and hence a Finance Technical Committee was established to primarily examine and monitor the trends in collections of customs and excise revenue.

Regional Integration

To address the challenge for deeper Regional Integration, the SACU Council of Ministers established a Task Team in September 2006 consisting of Permanent Secretaries of Trade and Industry as well as Finance.

The primary mandate of the SACU Task Team is to address issues of accelerating the implementation for the 2002 SACU Agreement and to advise Council on issues and challenges for deeper Regional Integration. One of the key task of the Task Team is to advice and formulate a SACU position on the proposed SADC Customs Union. Taking into cognizance what is currently happening in the region, especially as regards to the decision taking by SADC in October 2006 to fast track establishment of a SADC Customs Union, SACU considered various options for a SADC Customs Union and what implication it would have on SACU.

The preferred model currently is for SACU to offer itself as a model for a SADC Customs Union. To ensure preparatory work to this regard, two studies have been commissioned namely to analyze the impact of the proposed SADC FTA And Customs Union on SACU Member States by 2010 and a comprehensive analysis on the Consolidation of SACU.

Policy Development & Research

The obligations of SACU in this area are contained in Part Eight of the Agreement - Common Policies. Specific areas include industrial policies and strategies (Article 38), agricultural policies (Article 39), competition policies, laws and regulations (Article 40), and policies and instruments to address unfair trade practices (Article 41).

The current Activities in the policy development function is ensuring ongoing research in Industrial Policy where ambition papers are prepared currently by member states which seek out the framework for producing a common elements. There is currently a policy audit of the Agricultural Policy ongoing to develop a Cooperation mechanism as envisaged in the agreement. The Competition Policy is at an advanced stage of an annex being developed on the Cooperation mechanism and an Annex on UTPs. There is also sectoral work such as on the development of a Textile and Clothing Sector Strategy.

Trade Negotiations

On the Multilateral & Bilateral Trade Negotiations, the obligations of SACU in this area are contained in Part 5 of the Agreement - Trade Liberalisation. It specifically refers to Article 31 on Trade Relations with Third Parties whereby it supports SACU in this function through coordination and assistance in the negotiation of trade agreements with third parties as envisaged in Article 10.8. It also assists in the development of a Common Negotiating Mechanism and assists Member States in the ratification and implementation of concluded Trade Agreements as well commission research on trade negotiations on behalf of Member States.

Current activities in Trade Negotiations include SACU-EFTA FTA; SADC-EC EPA; SACU-MERCOSUR PTA; SACU-USA TICA; SACU-India PTA; and the WTO Doha Round. Other trade matters include the Common Negotiating Mechanism; Notification of SACU to the WTO; and the WTO Trade Policy Review for SACU.

Challenges

The challenges for SACU lies in its implementation of the SACU Agreement.

The major challenge is that SACU Member States are also members of SADC and therefore there is need to harmonise policies with those of SADC and defining its future role on the regional integration agenda.

The regional developments of the Regional Economic Communities started as SACU was trying to revitalize itself within the regional sphere. SACU is currently at a point where it is consolidating as well as to keep pace with the regional integration dynamics. There are therefore efforts ongoing to make it a model organization. There is a need for a clear recognition of the achievements made by SACU and has a important role to play at a continental level.

SACU is at a juncture where in order to play that role of deepening regional integration requires that it is pursuing clear policies and action programmes. We are aware that regional integration brings both opportunities and challenges and such as Southern Africa pursues greater integration in the context of a very dynamic World Economy, SACU aims to play a catalytic role in ensuring that its Member States improves its trade competitiveness and enhance economic development at a regional level.

I thank you.