SACU: FUNCTIONS AND CHALLENGES Portfolio Committee Trade and Industry 11 March 2008

1. SACU: FUNCTIONS AND CHALLENGESPortfolio Committee Trade and Industry11 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 gerharde@tralac.org

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. 24 + 27 ) • Remember Agriculture ( Art. 29 + ATLC ) • TBT + SPS ( Art. 28 + 30 )

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 • Art. 31 • 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?