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

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?

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?

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?

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)

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

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

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

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?

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 ?

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?

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?

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?

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

Southern Africa Customs Union (SACU) Prof MG Erasmus Trade Law Centre for Southern Africa gerharde@tralac.org

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

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?

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)

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 )

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?

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 )

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?

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

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?