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The New Southern African Customs Union Agreement
Africa Region Working Paper Series No. 57
Robert Kirk, Trade Policy Adviser, SADC Secretariat
Matthew Stern, Economist, World Bank, South Africa Country Office
E-mail: mstern@worldbank.org
June 2003
This document has been posted with the permission of the author.
The findings, interpretations, and conclusions expressed in this paper are entirely those of the author.
They do not necessarily represent the views of the World Bank Group, its Executive Directors, or the countries they represent and should not be attributed to them.
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Abstract
The Southern African Customs Union (SACU)-Botswana, Lesotho, Namibia, South Africa and Swaziland-has been renegotiated
to take account of the new socio-political environment in the region following the demise of apartheid.
After eight years of negotiations a new Agreement was signed in October 2002. From its origins in 1910 SACU
has been characterized by striking asymmetries in policies, levels of development and administrative capacity.
In this paper, we outline the main characteristics of the 2002 Agreement and assess whether it meets the negotiators
original objectives. The 2002 Agreement clearly addresses the main criticisms of the 1969 Agreement by promoting shared
decision-making and allowing for a new revenue sharing arrangement that seeks to support fiscal stability.
The varying levels of trade policy capacity along with policy divergences between the members present new challenges. Moreover, the
exclusion of Services, Intellectual Property Rights and the Singapore issues gives the 2002 Agreement a somewhat jaded
appearance. Nevertheless, the reconstituted SACU could form the core of a larger regional customs union that would
facilitate a realignment of the existing regional organizations. This will depend on the ongoing trade negotiations
with both the EU and the United States. Moves towards North-South Free Trade Agreements will put pressure on SACU to
address the excluded 'new' issues as well as the need to reduce cross border transaction costs in order to realize the
benefits from economic cooperation.
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