Southern African Customs Union (SACU)

History and Present Status

The Southern African Customs Union came into existence on 11 December 1969 with the signature of the Customs Union Agreement between South Africa, Botswana, Lesotho, Namibia and Swaziland. It entered into force on the 1st of March 1970, thereby replacing the Customs Union Agreement of 1910.

SACU is the oldest Customs Union in the world. It meets annually to discuss matters related to the Agreement. There are also technical liaison committees, namely the Customs Technical Liaison Committee, the Trade and Industry Liaison committee and the Ad hoc Sub-Committee on Agriculture, which meet three times a year.

Its aim is to maintain the free interchange of goods between member countries. It provides for a common external tariff and a common excise tariff to this common customs area. All customs and excise collected in the common customs area are paid into South Africa’ national Revenue Fund. The Revenue is shared among members according to a revenue-sharing formula as described in the agreement. South Africa is the custodian of this pool. Only the BLNS Member States' shares are calculated with South Africa receiving the residual. SACU revenue constitutes a substantial share of the state revenue of the BLNS countries.

Following the formation of the Government of National Unity in South Africa in April 1994, Member States concurred that the present Agreement should be renegotiated in order to democratise SACU and address the current needs of the SACU Member States more effectively.

With this in mind, the Ministers of Trade and Industry of the five member states met in Pretoria on 11 November 1994 to discuss the renegotiation of the 1969 agreement. The Ministers appointed a Customs Union Task Team (CUTT) which was mandated to make recommendations to the Ministers. CUTT has met on numerous occasions in the various Members States and good progress has been made in the renegotiation process.

At a meeting of Ministers of Trade and Finance Departments from the five SACU Member States, held in Centurion, Pretoria on 5 September 2000, the Ministers reached consensus on the principles of underpinning the Institutional reform in the Southern African Customs Union.

The Administrative Institutional structure of the revenue pool that was discussed was agreed to consist of the following:

Council of Ministers: A body represented by one Minister from each SACU member state. It would be the supreme SACU decision-making body and would meet on quarterly basis. The decisions taken by this Council would only be by consensus.

Commission: Administrative body comprised of Senior Officials, three Technical Liaison Committees and an established Agricultural Liaison Committee.

Tribunal: An independent body of experts. It would report directly to the Council of Ministers. The tribunal would be responsible for tariff-setting and the Anti-dumping Mechanism.

Secretariat: Responsible for day to day operations of the pool. It would also be funded from the revenue pool. Its location would be determined by Senior Officials who were directed to meet after a period of a month to develop proposals for the implementation of the revised SACU Institutional Structure.

SACU Ministers further agreed that the revenue share accruing to each Member State should be calculated from three basic components:

  • a share of the customs pool;
  • a share of the excise pool; and
  • a share of a development component

Further, it was agreed that these three different components would be distributed as follows:

The customs component should be allocated according to each country’s share of total intra-SACU trade, including re-exports.

The excise component, net of the development component, should be allocated on the basis of GDP. The development component should be fixed at 15% of the total excise pool and distributed to all SACU members according to the inverse of each country’s GDP/capita.

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2003 Department of Foreign Affairs, Republic of South Africa