The New Southern African Customs Union Agreement

From its origins in 1910 the Southern African Customs Union (SACU) has been characterised by striking asymmetries in policies, levels of development and administrative capacity. Following the demise of apartheid in 1994, the five member countries (Botswana, Lesotho, Namibia, South Africa and Swaziland) began negotiations to reform the SACU. Eight years later, a new Agreement was signed in October 2002. In this paper, we outline the main characteristics of the 2002 Agreement and assess whether it addresses the criticisms of the preceding arrangement. Most importantly, the 2002 Agreement introduces shared decision‐making and provides for a sustainable revenue‐sharing arrangement. But varying levels of trade policy capacity along with policy divergences between the members present new challenges. Moreover, the exclusion of Services, Intellectual Property Rights and Singapore issues gives the 2002 Agreement a somewhat jaded appearance. Nevertheless, the reconstituted SACU could form the core of a larger regional customs union that would facilitate a realignment of the existing regional organisations. This will depend on the ongoing trade negotiations with both the EU and the United States. These negotiations will also put pressure on SACU to address excluded issues and reduce cross‐border transaction costs in order to realise the benefits from economic cooperation.