Establishment of the Southern African Development Community (SADC) Customs Union as envisaged with the establishment of the SADC Free-Trade Agreement in 2008 and cost of the SADC Customs Union

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NATIONAL ASSEMBLY

FOR ORAL REPLY

QUESTION NO: 213 (NO2581E)

PUBLISHED IN QUESTION PAPER NO 7-2012 OF 22 AUGUST 2012

Mr E M Sulliman (ANC) to ask the Minister of International Relations and Cooperation:

(a) Why has the Southern African Development Community (SADC) Customs Union not yet been established as envisaged with the establishment of the SADC Free-Trade Agreement in 2008,(b) what steps has she taken to facilitate the realisation of this goal and (c) what has been the cost of establishing the SADC Customs Union?

REPLY:

(a) The overall goal of SADC on regional economic integration is to facilitate trade and financial liberalization, competitive and diversified industrial development and increased investment for deeper regional integration and poverty eradication through the establishment of a SADC Common Market. The SADC Regional Indicative Strategic Development Plan (RISDP), which is currently under review, had indeed outlined the indicative timelines to establish the SADC Free Trade Area by 2008, the SADC Customs Union by 2010, the SADC Common Market by 2015 and SADC Monetary Union by 2016. 

The SADC Customs Union was not realised in 2010 as planned. The main challenge with the establishment of a Customs Union in SADC is the overlapping membership. Almost all SADC Member States, with the exception of Angola and Mozambique, belong to existing Customs Unions. The establishment of a SADC Customs Union has to be carefully considered at this stage as the implications for the Customs Union are that SADC Member States may then have to choose which Customs Union they want to belong to and may have overall implications for SADC. Technically, a Member State cannot belong to more than one Customs Union because of the Common External Tariff (CET).

(b) In view of these challenges, the SADC Summit during its August 2010 Meeting reaffirmed its commitment to establish a SADC Customs Union and recognised the need to establish synergies between the processes to consolidate the SADC Free Trade Area (FTA), the Customs Union and the COMESA-EAC-SADC Tripartite FTA. The afore-stated Summit endorsed the decision of the Ministerial Task Force to appoint a High Level Expert Group (HLEG) on the SADC Customs Union whose mandate was to consolidate and refine previous technical work undertaken in order to reach agreement and common understanding on key elements namely the parameters, benchmarks and time-lines of a model customs union and its implementation modalities. 

Additionally, it can be stated that the Ministerial Task Force on Regional Economic Integration considered the High Level Expert Group (HLEG) report on the framework for a SADC Customs Union at their 25 November 2011 deliberations that took place in Luanda, Angola. The report of the MTF was considered by the SADC Summit in August 2012 as well as the overall approach to regional integration in SADC. The key issue for consideration is to ensure that SADC adopts and implements a developmental approach to integration to ensure that the region is able to address the critical constraints to development, which are fundamentally the supply-side constraints.

The immediate priority for SADC has to be consolidation of the FTA in terms of the agreed 15 point action plan matrix which focuses on the review of rules of origin, completion of tariff phase downs and removal of non tariff barriers. It is important to ensure full implementation by Member States of the FTA, while on the other hand resolve the issue of overlapping membership before progressing towards a SADC Customs Union. In addition, the SADC Secretariat, in partnership with member states is currently engaged in a review of the RISDP towards reconfiguring the SADC roadmap to guide the regional integration process aligned to realistic, measureable and deliverable milestones and time-lines.

(c) The process and negotiations to establish the SADC Customs Union is still on going and as such, costs cannot be determined.

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