1. Gerhard Erasmus tralac Stellenbosch
SACU: FUNCTIONS AND CHALLENGES Portfolio Committee Trade and Industry 11 March 2008
Gerhard Erasmus
tralac
Stellenbosch

2. Overview
What does regional integration entail?
Does SACU pursue regional integration? Does it matter?
Main features of the SACU Agreement
Historical problems
Is SACU equipped for a rules-based system?
The problem of sovereignty
Where are the elements of democracy in SACU?
Common policies: are they possible/desirable?
Will SACU have common institutions? What then?
Contemporary Issues and the challenge for political leadership
What role for National Parliaments?

3. What does regional integration entail?
Why have integration? Separate jurisdictions (states) mean duplication of rules, officials, policies, costs etc
Fragmentation versus common policies and standards
Facilitating trade ++, development and global integration
Institutional and legal aspects – certainty and predictability
Can deal with enforcement, monitoring and violations when sufficiently equipped
It is a process, not a condition
Not the same as mere (discretionary) cooperation
But there is no single blueprint – local needs
It needs a vision and the necessary political will
How to secure regional stability?

4. Does SACU pursue regional integration? Does it matter?
New agreement implies so
Democratic, common policies and common institutions
Why this new agreement? New regional paradigm after 1994
Coping with 21st century (WTO 1995) and integration into global economy
Big question: More than a revenue sharing mechanism?
BLNS and SA tariff and industrial policy – is common policies the way forward? What does this mean?
Single jurisprudence via a Tribunal
Yes it does matter? – otherwise its revenue sharing and dependence
But where is the vision?

5. Main features of the SACU Agreement
A clone of the 1969 Agreement with new aspirations
The Revenue Sharing Formula – where is the trade agenda?
Integrity of the c.e.t. and single customs territory
Common Institutions and Common policies – still to come
Dispute resolution
Council, Commission and Technical Liaison Committees
Decision making through consensus
The Secretariat
Article 31
The TDCA and other 3rd party agreements
How to amend/change it? (Remember Art. 50)

6. Historical Problems
It is a grandfather; with colonial roots
There is a Big Regional Economy
The comfort of the revenue pool
“But we paid a price and still do so….”
ITAC does the technical job
The challenge of development
The challenge of regional stability
The Cotonou Agreement
The TDCA
Then came end of WTO waiver and EPAs

7. Is SACU equipped for a rules-based system?
It is a legal person
But the highest decision-making body is Council
There is no Summit
No provisions about domestic enforcement/compliance
Who will monitor and bring disputes?
Still no Tribunal – second thoughts?
The special problems of the Tariff Board
No recourse in the mean time (see infant industry protection)
Article 25 and the unilateral discretions
Exceptions and legal remedies are ex lege
Article 42 and national constitutions

8. The problem of Sovereignty
The tension between Sovereignty and a rules based dispensation
What does it mean and cover? Best as a legal principle
It is an act of sovereignty to conclude int. agreements
Example of the WTO
A basic issue – can we trust the judges?
What is the judicial function?
Can it work in this uneven landscape?
Are all disputes justiciable?
Will we comply? How?
The right to legal remedies under national constitutions

9. Where are the elements of democracy in SACU?
Remember Preamble and Article 2
Int. Organizations and democracy
It is a governance issue
No equality among states
How are decisions taken?
Where is the transparency and accountability?
The link to the rule of law
Should SACU be democratic?

10. Common policies: are they possible/desirable?
Part 8: a limited list with different requirements
Industrial Development Policy
Agricultural Policy
Competition Policy
Unfair trade practices
But also infant industry protection
Article 42
Can the Tariff Board function without a common tariff/industrial policy?
Is it possible to have these common policies ?

11. Will SACU have common institutions? What then?
Why have Common Institutions? What will they do?
Council and Commission are for the national interests
The Tariff Board and National Bodies
The Tribunal
Common Negotiating Mechanism
Monitoring implementation and compliance
And if there is a violation?
Article 42 and the new Annexes
Role of the Secretariat
Who speaks on behalf of SACU?

12. Contemporary issues and the challenge for political leadership
The tension caused by the EPAs. Why/how did it happen?
The Namibian reservations and the SA concerns
Services and Art 67 of the SADC IEPA
Implementation and Art 105 SADC IEPA
What did the EPAs do to regional integration?
The future of SACU- revenue sharing? SADC?
Does regional integration have a future here?
The perennial issue of capacity
The framework is incomplete. Can it be fixed? How?
Who will take the initiative for new regional policy?

13. What Role for National Parliaments?
Separation of Powers
Executive and policies
Oversight functions (Sections 55 and 56)
International Agreements and Section 231
SACU needs National Bodies and national legislation
Approval of Budgets
Will SACU politicians speak to each other?

31. When will Regionalism Succeed?
The need – why have it?
Political will to make it work (Sovereignty problem)
Sound “constitution” and legal provisions
Who represents the org?
Effective institutions
How will disputes be solved?
Decision-making, lawmaking and flexible growth
Implementation and incorporation
Domestic effects and dom. legitimacy
Rules-based? (Governance)
Regional equilibrium
Transitional arrangements
Private sector, stakeholders and traders

33. Southern Africa Customs Union (SACU)
Prof MG Erasmus
Trade Law Centre for Southern Africa

34. 1. INTRODUCTION
Around for very long time
RSA dominance
1969 Agreement – negotiations after 1994
New Agreement signed in 2002, entered into force in 2004
Trade in goods (but remember Agriculture + Transport)
Common Revenue Pool
RSA + BLNS
Why a new SACU? What objectives? ( Art.2 )
Regional Integration

35. 2. BASIC FEATURES
International legal person ( Art.4 )
HQ in Windhoek – Secretariat
Decisions by consensus ( Art. 17 ) What does this mean?
Domestic effect – International Trade Administration Act + ITAC
How to interpret this Agreement?

36. 3. INSTITUTIONS: THEIR COMPOSITION AND POWERS
Council – Highest Body (Art.8)
Commission – Senior officials (Art.9) Represent
4x Technical Liaison Committees (Art.12) Members
Secretariat (Art.10)
Tariff Board (Art.11) Technical
Tribunal (Art.13)
National Bodies (Art.14)

37. 4. TRADE LIBERALIZATION AND CUSTOMS COOPERATION
Remember Art XXIV, GATT
Free movement of domestic products (Art.18)
Common External Tariff ( MFN and Art.31 Agreement )
A common regime – Art. 20, 21, 22, 23
Freedom of Transit ( Art )
Remember Agriculture ( Art ATLC )
TBT + SPS ( Art )

38. 5. REMEDIES AND DISPUTES
The Tribunal. How does it function?
Trade Data disputes ( Art. 36 )
Art. 18(2). But it has no chapeau, like Art XX GATT
Import & Export Prohibitions and Restrictions ( Art. 25 )
Infant Industries ( Art. 26 )
Unfair Trade Practices – ITAC
Unfair trade intra SACU – Art 41
But what about Safeguards?
Forum shopping?

39. 6. RELATIONSHIPS WITH THIRD PARTIES
Existing 3rd party Agreements
New 3rd party Agreements
Common Negotiating Mechanism
Loss of Customs Revenue
TDCA
New generation agreements ( EFTA, MERCOSUR )

40. 7. COMMON POLICIES
Remember the Preamble
Part 8 – Agriculture, Competition, Industrial Development and Unfair trade practices
Different obligations
Remember Art. 42
Domestic dimension
Who acts on behalf of SACU?
The other angle of SACU Regulations
Does SACU have a law-making feature?

41. 8. TRANSITIONAL PRACTICES AND TECHNICAL ASPECTS
Annexes. Their domestic status?
New members, accession and withdrawals
Transitional provisions ( Art. 50 )

42. 9. The EPA Negotiations
Basis in Cotonou Agreement
WTO Compatibility
Coverage
Implementation Challenges
Capacity needs
The SADC-EPA
The interim EPA of 2007 – what now?