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SOUTH AFRICAN TRADE POLICY AND THE SOUTHERN AFRICAN CUSTOMS UNION

SOUTH AFRICAN TRADE POLICY AND THE SOUTHERN AFRICAN CUSTOMS UNION. Colin McCarthy tralac Associate. Topics to be covered. Essential characteristics of a customs union Guidelines in managing the common external tariff (CET)

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SOUTH AFRICAN TRADE POLICY AND THE SOUTHERN AFRICAN CUSTOMS UNION

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  1. SOUTH AFRICAN TRADE POLICY AND THE SOUTHERN AFRICAN CUSTOMS UNION Colin McCarthy tralac Associate

  2. Topics to be covered • Essential characteristics of a customs union • Guidelines in managing the common external tariff (CET) • SACU as a customs union of economic unequals and the core of variable geometry within SADC • Challenges

  3. Essential characteristics of a customs union • Linear progression of deeper integration • A CU is established when a FTA implements a common external tariff (CET) • Implications • Management of CET should be a collective effort • Guidelines required in determining tariff issues • Revenue collections must be distributed

  4. Guidelines in managing the common external tariff • Guidelines depend on the functions of the import tariff, broadly being • Protection of domestic industry and employment • Raising revenue for government • With emphasis on protection tariff becomes a trade instrument that serves industrial policy • With emphasis on revenue a trade-off can develop wrt protection

  5. SACU as a customs union of economic unequals and the core of variable geometry within SADC • Large difference between South Africa and BLNS in economic size and level of development • SACU has unique history with legacy of CET determined by South Africa to serve its industrial development • Oldest operating CU in the world which many believe can serve as the expanding core of the SADC customs union • SACU must be seen in conjunction with the CMA

  6. Challenges • Effective change-over from the 1969 to the 2002 Agreement, especially establishment of SACU institutions • Developing the guidelines that can be used by Tariff Board (still to be established) • Managing SACU as a customs and excise union

  7. Challenges…continued • Reconciling the revenue and protection functions of the tariff • Addressing the BLNS revenue problem • Reconciling industrial development needs of South Africa and BLNS in determining and negotiating the SACU tariff …… • Considering Article 38 of the 2002 SACU Agreement and recognising that we are dealing with a common SACU tariff, hence a SACU trade policy

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