Parliament’s committees have thrown their weight behind the review of the Southern African Customs Union (SACU) agreement of 2002 so that it can support development, industrialisation and economic diversification of the member economies.
The agreement - between Botswana, South Africa, Lesotho, Namibia and Swaziland - in its current form does not enable industrial development as intended, Trade and Industry Minister Rob Davies explained to the portfolio committee on trade and industry and the standing committee on finance on Tuesday.
The committees were briefed by the minister as well as Finance Minister Nhlanhla Nene on the status of the agreement and its shortcomings. The resolution of review will go to the National Assembly for consideration.
There are six priorities that the SA government wants the review to address, when it consults with member states. SA wants the SACU establishment to continue and wants it to allow for the free movement of goods across the union through intra-regional trade.
SA also wants the current revenue sharing model between the member States to be reviewed.
A pressing matter is the current tariff setting architecture, which is not efficient, according to Davies.
Davies explained that there are differing policy perspectives when it comes to tariffs. Currently, SA views tariffs as an instrument of industrial policy – while other governments rely on tariffs as a source of revenue.
In his address Nene showed that SA’s reliance on tariffs for revenue is only 3% of the country’s total revenue collections between 2014/15 and 2018/19. While the remaining countries rely heavily on the tariffs for revenue. For example, tariffs account for 45% of Swaziland's total revenue.
SA will also put forward that the agreement focuses on national development. “The focus should be on industrial development. But not one brass cent has been used on development,” said Davies.
The ministers approached Parliament as it appears that consultations among member nations have reached a stalemate, with some member nations wanting the agreement to be implemented as is.
Parliament’s backing of SA’s arguments could possibly bolster its position during negotiations.