Windhoek summit marks turning point for SACU

Staff Writer | Thursday April 22, 2010 00:00

 

President Ian Khama is expected to leave for the Namibian capital today to join four other heads of state for the summit which is held under the theme Implementing a Common Agenda Towards Regional Integration in Southern Africa.

This will be the first time that SACU heads of state meet officially, highlighting the importance of the summit that will discuss the future and transformation of the customs union in preparation for the formation of a SADC customs union.

Traditionally, the country's finance and trade ministers drive the union, through the council of ministers.  The Southern African Development Community (SADC), which has 15 member states, including the five SACU members Botswana, Lesotho, Swaziland, Namibia and South Africa, intends to establish a customs union in the next few years.

It is expected that SACU will form the nucleus of the proposed SADC Customs Union, taking into account the enormous groundwork already done by the SACU secretariat on common import and export tariff structures, a single common customs document and trade agreements with other parts of the world.

A statement from the Ministry of Foreign Affairs says the heads of state and government meeting coincides with the commemorative launch of the SACU Centenary and the unveiling of the new vision of the organisation.

The agenda of the SACU summit will focus on developments in SACU since the implementation of the 2002 Agreement, SACU's role as a nucleus for deeper SADC integration and regional economic development. The summit will also discuss SACU's path towards a SADC Economic Community and Monetary Union.  The meeting also comes at a time when there are reports of divisions within SACU over negotiations with the European Union which have seen some members, namely, Botswana, Lesotho and Swaziland sign new Economic Partnership Agreements (EPAs) while South Africa and Namibia declined to sign.There have also been disagreements about the SACU revenue sharing formula as contained in the 2002 Agreement under which Botswana is now expecting a P1 billion payment from South Africa after a SACU arbitration panel ruled in the country's favour following a payout dispute.

According to media reports from Windhoek where the SACU Council of Ministers meeting began on Monday, Botswana, Namibia, Lesotho and Swaziland had complained that the administrator of the SACU revenue pool, South Africa, has cheated them in calculating their annual entitlements.

South Africa is reportedly critical of the current revenue-sharing formula and is demanding a review. All five SACU member states collect customs and excise duties, which are then transferred to the common revenue pool on a quarterly basis.

The SACU Council of Ministers then determines revenue shares with payouts to member states made quarterly.Being the biggest economic player, South Africa generates most of the duties and receives the lion's share from the revenue pool.

The global economic meltdown shrank the funds in this pool on which the national budgets of the four smaller countries largely depend. Recently, the four smaller SACU states submitted a proposal to South Africa to increase the annual revenue share for each member.