SACU Agreements - What we do | SACU

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SACU Agreements

SACU Agreement, 2002 (as amended in 2013)

The SACU Agreement of 2002 was signed by the Republic of Botswana, the Kingdom of Lesotho, the Republic of Namibia, the Republic of South Africa and the Kingdom of Swaziland (now Eswatini) and came into force on the 15th July 2004. This Agreement sets out a broad framework for enhanced integration with a new legal and institutional architecture, decision-making structures and revenue sharing formula. It outlines a clear mandate and the objectives of SACU. The SACU Agreement of 2002 was amended in 2013, to provide for the institutionalisation of the SACU Summit. The amendments entered into force on 16th September 2016. 

The following are some of the key features of the SACU Agreement, 2002 (as amended in 2013):

    1. Article 3 of the Agreement provides for the establishment of the Headquarters of SACU in Windhoek, Namibia. This heralded a new dispensation for SACU as an international organisation with a legal personality as well as the capacity to sue and be sued;
    2. several institutions including the SACU Summit are established in terms of Article 7. The institutions have specified mandates to implement the Agreement; 
    3. provision is made for a rules-based dispensation and joint decision-making by the Member States. Decisions in all institutions are taken by consensus, as provided for in Article 17. The exception is the ad hoc Tribunal which, in terms of Article 13, takes decisions by majority vote; and
    4. provision for a Common Negotiation Mechanism is made in Article 31 of the Agreement. This requires external trade policy to be jointly determined by the Member States as articulated in Part Eight. No Member State shall negotiate and enter into new Preferential Trade Agreements with third parties or amend existing Agreements without the consent of the other Member States. The SACU Member States have established a Common Negotiation Mechanism through which a unified approach to negotiations with third parties is pursued.
    Link to the Agreement

    SACU Agreement, 1969

    The 1969 SACU Agreement came into existence as a result of renegotiation of the 1910 Agreement following the independence of Botswana, Lesotho and Swaziland. The latter was concluded between the Governments of the Republic of South Africa, Republic of Botswana, the Kingdom of Lesotho and the Kingdom of Swaziland.

    The objectives of this Agreement were:

      1. the maintenance of free trade among the Member States;
      2. to afford all the Member States equitable benefits arising from trade among them and with other countries; and
      3. to encourage the economic development of the less advanced members of the Customs Union and the diversification of their economies.

      The following were the key features of the SACU Agreement of 1969:

        1. South Africa retained responsibility for setting trade and industry priorities, which determined and set the CET and other trade measures such as excise, anti-dumping, countervailing and safeguard duties on imports into the Custom Union;
        2. all customs and excise duties collected by the four members were pooled into a Consolidated Revenue Fund administered by South Africa;
        3. the shares for the Member States were determined based on a Revenue Sharing Formula, which had an explicit provision for a compensatory payment to Botswana, Lesotho and Swaziland for the loss of fiscal autonomy;
        4. any SACU Member State could enter into a Preferential Trade Agreement (PTA) with third parties, provided that the terms of such an Agreement did not conflict in any way with the provisions of the SACU Agreement; and
        5. a provision for infant industry protection to meet competition from other producers or manufacturers in the Customs Union, which would encourage diversifying growth through industrialisation.
        Link to the Agreement

        SACU Agreement, 1910

        The SACU Agreement of 1910 provided the first formal framework for the operation of SACU and predates both the General Agreement on Tariffs and Trade (GATT) of 1947 and the World Trade Organisation (WTO) of 1995. The economic rationale for the original formation of the Customs Union was primarily to serve the interests of the British Colonial Administration, including facilitating the collection and distribution of revenue from customs duties.

        The main highlights of the SACU Agreement of 1910 were that:

          1. the revenue generated was administered by South Africa and distributed among member countries based on fixed percentage shares determined by an estimate of the customs and excise duty content of imports of the High Commission Territories; and
          2. tariff management was undertaken solely by the South African Government.

          This Agreement was in force and operational until 1969, when it was renegotiated following the independence of Botswana, Lesotho and Swaziland. 

          Link to the Agreement
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