SACU DEVELOPMENTS

SACU DEVELOPMENTS

- A briefing -August 2004

SACU DEVELOPMENTS

August 2004

INTERNATIONAL TRADE AND ECONOMIC DEVELOPMENT DIVISION SOUTH AFRICA

NEW DEVELOPMENTS IN SACU

New SACU Agreement in force - 15 July 2004
Progress in establishing and operationalising SACU institutions;
Commission operational;
SACU Secretariat established in Windhoek;
Member States considering SACU Headquarters Agreement with Namibia;

· Workshop on Competition Policy (Art. 40) and Unfair Trade Practices (Art. 41), 0 August 2004;

Transitional arrangements agreed;
SACU Logo - with dti assistance - being designed

RECENT COUNCIL DECISIONS

Ministers of Trade now members of Council;
Council confirmed SA will continue managing revenue pool until July 2006;
New revenue sharing formula in force;
Final decision on either R2 or R3 options for revenue pool management at September 2004 Council meeting;
Review of operations of new formula in three years;

· Standing agenda items for Council meetings: Taxation harmonisation and Single Border Crossing;

· Secretariat to have three directorates: Corporate Services; Trade Facilitation; and Policy Development;

· Recruitment upon completion of job descriptions and conditions of service;

· ITAC to continue (for 1 year) processing SACU tariff applications, and empower BLNS on tariff matters;

· Commission and Secretariat to complete work on annexes on Tariff Board and National Bodies.

SACU WORK PROGAMME

Trade Ministers to play a role in SACU strategic direction;
Ensure SACU structures (the Council, Customs Union Commission and technical liaison committees) work;
SACU Tariff Board yet to be appointed: Transitional measure is ITAC carry out duties of Tariff Board;
Annexes to elaborate key provisions of SACU Agreement: Tariff Board;Tribunal; Industrial Development Policies

The New SACU Agreement: Rationale

SACU has economic & geo-strategic value for SA:
BLNS add a market of Gm people & GDP of over R6Obn

· SA's exports to BLNS 4 times than it imports on average

· SACU fosters regional economic and political stability

· SACU is a regional platform for global integration

Therefore:

- Re-negotiation of SACU into democratic & institutionally a strategic imperative

- Negotiations commenced since 1994 & Agreement concluded in Oct 2002 by Heads of State, and entered into force July 2004

The new SACU Agreement

key provisions

· maintains intra-SACU Free Trade, Common External & Excise Tariffs

· amends the Revenue Sharing Formula

· introduces New Institutions

· gives SACU nature of International Body with Headquarters

· provides for Common Policies on trade, customs, agriculture, industry, competition, & a dispute settlement system

New SACU Institutions

Council of Ministers (supreme trade policy & tariffs decision-making body)

· Tariff Board (recommends tariff decisions to Council) Tribunal (to resolve disputes)

Commission of Senior Officials

- at DG-level, reports to & advises Council, & supervises Secretariat

National Bodies

to receive requests for tariff changes &
investigate & recommend to Tariff Board

· Secretariat

- administrative function & depository of records

- headed by Executive Secretary, have own staff

- HQ decision on basis of joint evaluation of capacity, by scoring agreed criteria

- HQ are in Windhoek

· Rules of procedure & Protocols for above still to be negotiated & annexed to agreement

Recent Developments in SACU

New SACU Agreement in force since 15 July 2004
SACU institutions being established:
Ministers meet as Council
Secretariat being established (Executive head appointed) with 3 directorates: Trade Facilitation; Policy Development; Corporate/ Legal Services
Senior officials meet as Commission
Headquarters Agreement with Namibia to be concluded soon
3^rd party negotiations conducted jointly

Recent Decisions of Council:

Ministers of Trade now members of Council, thus able to shape strategic direction of SACU;
Transitional arrangements agreed:
SA's ITAC to continue processing SACU tariff applications, & help BLNS w/ capacity (for i year, extendable);
SA will continue managing revenue pool until July 2006;
New revenue sharing formula in force;
Model for revenue pool management to be agreed at September 2004 Council meeting;
Operation of new formula to be reviewed in three years;

SACU Immediate Workprogramme

Secretariat business-plan to be finalized & staffing started once job descriptions & conditions of service completed
Rules of procedure to be formulated for key SACU structures (the Council, Customs Union Commission and technical liaison committees), including:
Annexes to elaborate key provisions of SACU Agreement: Tariff Board;Tribunal;
Work to be initiated on policy harmonization

END

ANNEX

The New SACU Agreement

Key Provisions

New Revenue formula

Revenue Sharing Formula has 3 parts:

Customs part: from duties on imports into SACU, & are according each member's imports as % of total SACU imports

Excise part: from duties on SACU-produced goods, are according each member's GDP p.a as % of SACU GDP

Development part: is a new feature, & will be funded from a fixed percentage (initially 15%) of excise part, & shared according each member's per capita GDP,& weighted in favour of LDC members of SACU

ANNEX1

Relationship between ITAC and the New SACU Agreement