109 years old, since 1910.
12 December 2019

Report of the Executive Secretary, Ms Tswelopele Moremi, to the 14th Meeting of the SACU Council of Ministers, Gaborone, Botswana

4 April 2008

1. INTRODUCTION

1.1 The year 2007 brought new challenges for SACU, especially with regard to SACU’s relations with third parties, particularly in the context of the EPA negotiations. These challenges will increase in the course of 2008 as integration into the global economy becomes more urgent and the participation in multilateral and regional negotiations becomes more demanding and complex.

1.2 Recent developments point strongly to the need to urgently develop common policies and establish effective institutions to facilitate the achievement of the SACU objectives as outlined in Article 2 of the SACU Agreement.  It is therefore important that institutions such as the Tariff Board and the Tribunal be set up as a matter of urgency and that common policies are developed. In the face of these challenges, efforts to consolidate the Organization along the lines provided for in the Agreement have to be intensified.

1.3 Capacity development within Member States and the SACU institutions will have to be an important feature of the SACU work programme. The day to day tasks of implementing the Agreement for a dynamic Organization requires a particular approach and dedicated capacity.

1.4 This report addresses the implications for SACU of the developments mentioned above. In addition, the report reviews the lessons learned from the establishment of the Secretariat and the EPA negotiations and provides some useful pointers for the future work of SACU.

2. PROMOTING DEEPER REGIONAL INTEGRATION AND CONSOLIDATION OF SACU THROUGH 2002 SACU AGREEMENT

2.1 The SACU Agreement of 2002 is about the promotion of regional and global integration. This is strongly implied and provided for in the agreement. In order to achieve the stated objectives contained in Article 2 of the Agreement, there must be forward movement on integration. Deeper integration is also an imperative for the integration of the SACU economies into the global economy.

2.2 The promotion of deeper integration has to be underpinned by a strong political will and a sustained commitment by all stakeholders. Without this political commitment and vision, regional integration will remain uncertain. An important step in the promotion of deeper integration is the development of a strategy on how to translate the agreed objectives into reality. In this process, Member States must remain committed to the successful implementation of the strategy underpinning the integration process. The responsibility of Member States therefore is to provide an enabling legal framework and to establish the right structures to promote integration.

2.3 Legal and institutional arrangements are important requirements to ensure compliance, monitoring and transparency. Integration becomes a mutually reinforcing and harmonious process when the ensuing practices tally with policies for growth and development across Member States. Hence monitoring implementation to ensure compliance and to deal with new demands is an important aspect of the integration process. Finally there is also a need to continuously engage with other regional organisations facing similar challenges, with a view to sharing experiences.

IMPLEMENTATION OF THE 2002 AGREEMENT TO DATE

2.4 It is worthwhile to note that the SACU Agreement contains binding obligations which all Member States are committed to. SACU has been renegotiated with an objective to create an organization to “cater for the needs of a Customs Union in the 21st century”.

2.5 The 2002 SACU agreement has a strong commitment to common policies and common institutions; elements which were absent in the previous Agreements. This constitutes a platform for deeper integration.  However, SACU is still struggling to translate these decisions into well-functioning institutions and new activities. This means that forward momentum remains absent as long as the development and implementation of common policies is delayed.  Consequently, SACU has not yet matured into what the new Agreement has promised.

2.6 The new SACU Agreement has provided the Organization with a new foundation, new principles, new institutions and a new basis for interaction among the SACU Member States and engaging the external environment. These should be dynamic and responsive structures which should be able to adequately represent SACU. The question to ask is has SACU lived up to these expectations? What has been achieved? Does the evidence indicate a positive forward momentum? Recent experience however suggests that SACU may be less cohesive. This will pose challenges for the achievement of the SACU objectives contained in Article 2 of the Agreement.

2.7 To achieve the objectives of the Agreement requires commitment to consolidation and meaningful integration via common policies and common institutions. If there are no common polices and institutions to promote integration, there will be an imbalance in the structure and functioning of SACU. It therefore stands to reason that all new institutions should be established as a matter of urgency, to perform important tasks which are otherwise neglected and to provide the necessary balance in the activities and direction of SACU. The logical way forward therefore is to re-prioritize and to start with the implementation of the new Agreement in a dedicated and earnest fashion.  This will provide a basis for tackling outstanding issues and for developing the region.  The need to consolidate SACU and to strengthen its institutions must therefore be emphasised once more. This is an absolute necessity if SACU wants to function as an effective organization, meet external challenges and promote deeper integration of the Member States into the global economy. It is within this context that the ongoing study on Consolidation of SACU is assessing implementation gaps in the SACU Agreement and making proposals to address them.

2.8 In addition, inconsistent signals about the future role of SACU may undermine and dilute the mandates accepted when the new Agreement was adopted. These conflicting signals also create uncertainties in the Secretariat on what it is expected to do in terms of the initiatives regarding the functions allocated under Article 10 of the Agreement. Such a development will be a major disservice to a long established organization which has made immense contributions to stability and development in the region. Unless there is consistency in the signals about the future of SACU, determined efforts to establish the remaining institutions and a collective undertaking to develop common policies, the momentum envisaged under the 2002 Agreement will be lost.

A CASE FOR CONSOLIDATING SACU

2.9 Common institutions and policies are essential building blocks for a successful regional integration arrangement. It is here that the commitment to deeper integration and the implementation of the basic objectives will be tested. The Commission and Technical Liaison Committees are continuations of institutions that existed under the 1969 Agreement. Whilst the Agreement provides for a broad mandate the experience has been that the Commission and the Technical Liaison Committees focus more on articulating national interest than SACU wide interests. In order to achieve SACU-wide imperatives, there will be need for a major shift in the mindsets and operation of the Institutions which preceded the 2002 Agreement. This will further compliment the work of the Tariff Board and the Tribunal, as well as the Common Negotiating Mechanism provided for in Article 31 which represent SACU as a collective. The absence of the bodies which should represent the collective undermines efforts to engage the challenges of deeper integration. 

2.10 In the process of consolidating SACU, all parties have to come to grips with the changed nature of the new agreement which came into force in July 2004. There will be need therefore to change attitudes and processes and align them to the principles underpinning the New Agreement. Member States needs to put in place the institutional infrastructure required to give full effect to the philosophy of the New Agreement. Member States through their participation in these Institutions have a responsibility to advance positions that reflect SACU’s interest and not national interest.

3. RELATIONS WITH THIRD PARTIES AND THE CHANGING EXTERNAL ENVIRONMENT

3.1 An Interim SADC Economic Partnership Agreement (IEPA) between the EU on the one hand, and the Members of SACU and Mozambique on the other (but excluding South Africa), was finally initialled at the end of 2007. It covers trade in goods only. The negotiations were difficult at times and the initialling of this document proved to be quite a challenge at the end. This can be explained by the fact that the SADC EPA is probably the most complicated in terms of configuration as well as legal and institutional challenges.

3.2 The absence of common policies and strategies as well as the common negotiating mechanism provided for under Article 31 further compounded the challenges faced during the negotiations of the interim EPA Agreement. As directed by Council at its 13th meeting a series of meetings of the Trade Ministers were held at the beginning of 2008, in Gaborone, Botswana to address some of the immediate challenges facing SACU with an objective of establishing a common position. It is gratifying to note that a consensus is emerging on the need for the Member States to preserve and protect the integrity of SACU by working together in reconciling the differing positions on the EPA negotiations.

3.3 However, while the granting of duty-free-quota free access to goods has been an important gain, assistance to address supply side constraints will determine the real extent of future benefits. The negotiations towards full EPAs will continue in the course of 2008 to cover investment and services. For SACU Member States this will have major consequences in terms of preparation, domestic regulatory reform and coordination with national and regional arrangements and SACU will have to prepare for these challenges. An added challenge that will confront SACU in the 2008 EPA negotiations is the fact that neither services nor investment are covered under the SACU Agreement.  Therefore there are no rules or disciplines from a SACU perspective to cover the negotiations in these areas.

 4. CAPACITY BUILDING IN SACU

4.1 There is an inherited lack of technical skills in SACU on areas concerning its trade and policy agenda. The answer lies in developing dual strategies for capacitating Member States and allowing the Secretariat, national institutions and the other SACU bodies to assist in this process. The Secretariat must be able to perform all the tasks allocated to it expressly or by necessary implication.  There must be technical capacity within the Member States in order to interact with SACU bodies such as the Tariff Board and later to implement rulings of the Tribunal. Capacity building should include the strengthening of the Secretariat by building its analytical capacity to assist Member States in addressing the many challenges of regional and global integration. 

4.2 However, as long as the bigger question regarding the consolidation of SACU and the adoption of common policies are not addressed, this development cannot be completed.  While capacity challenges are faced by other regional organizations, in the case of SACU they are more acute and undermine the full implementation of the new SACU Agreement.

5. THE EXPERIENCE OF ESTABLISHING THE SECRETARIAT

5.1 The Secretariat has also experienced specific operational challenges. The experience with the establishment of the Secretariat has shown that while it was relatively easy to establish the office infrastructure for the Secretariat, it takes much longer to develop cohesive and consistent operational policies and procedures. For instance, the core HR practices such as recruitment, succession, training and development, performance management and rewards are not yet fully operational.

5.2 In addition, it has become clear that there is a specific need for leadership and management development as well as entrenching a suitable Organizational culture. These are issues that confront a young Secretariat and requires that the Secretariat follows principles of a learning Organization.

5.3 The major challenge moving forward is to consolidate the internal operations of the Secretariat and promote cohesiveness. It has also become clear through the Secretariat strategic planning sessions that the current structure of the Organization may not be the most appropriate to facilitate optimal organizational functioning. This issue will have to be carefully considered against the backdrop of the current developments in the region and previous Council decisions.

6. CONCLUSION

6.1 It is becoming increasingly clear that the architecture of regional trade arrangements and integration in Southern Africa needs a re-evaluation and will call for Member States engagement in terms of strategies and substance. It would be fair to say that the region remains in state of flux requiring SACU and the Member States to meet these challenges. SACU will have to play a constructive role in finding new answers. The debates around regional integration and trade arrangements with third parties should provide an impetus to steer developments.

6.2 The issues raised above i.e. promoting deeper integration, consolidation of SACU, capacity development, SACU’s relations with the changing external environment, the need for capacity building in SACU etc. are all critical if SACU is to become a better and more effective organization functioning within an environment of a shared vision. If any of the building blocks is missing or deficient, the whole structure will suffer.

6.3 The experience of establishing the Secretariat suggests that establishing a new institution is an ongoing and complex process.  The establishment of the Tariff Board and the Tribunal will be an even more complex process which will require a dedicated focus.

6.4 Integration is a continuous process and even if pursued incrementally, there must be a commitment to implement the objectives stated in the Agreement.

6.5 A clear strategy for SACU is needed to achieve the stated objectives of the SACU Agreement and provide guidance to Member States and its Officials.