MBABANE – Rising pressure in key export markets such as the United States is reigniting South Africa’s calls for reforms to the Southern African Customs Union (SACU), as the neighbouring country seeks greater trade flexibility in a shifting global environment.
SA has argued that the current Southern African Customs Union framework, while beneficial for regional integration, limits its ability to swiftly adjust trade policies, negotiate bilateral arrangements and respond to external shocks.
With tightening trade conditions, increased protectionism and tougher compliance requirements in major markets like the US, the need for a more agile trade regime has come into sharper focus.
In recent months, more political and economic experts from the neighbouring country have stressed the need for SACU to be reformed.
In an article published by Daily Maverick last week, the reform of SACU was cited as one of five policy fixes to unlock inclusive growth in the neighbouring country’s agriculture sector.
It was mentioned that as SA’s agribusiness landscape faces unique challenges, urgent policy reforms in land distribution, export strategies and biosecurity could make all the difference.
An argument outlined in the analysis was that some countries may be reluctant to engage deeply with South Africa on trade due to the attachment with SACU.
“To potential partners, the customs union often appears opaque and unpredictable. Many are interested in South Africa itself, not the wider region. Pretoria should, therefore, press for SACU reform while preserving the development programmes that provide social support to neighbouring States,” reads part of the analysis.
It was highlighted that in today’s changing global trade environment, countries must be agile in forming new agreements that sustain their economies.
“For South Africa, unlike other countries in the region, there are pressures in key markets such as the US, and there is a need to expand export markets as the domestic industry increases output across various sectors of the economy. Therefore, the pressure on South Africa’s policymakers and business leaders isn’t the same as in other countries in the region. Thus, South Africa must have the flexibility to move at its own pace in finalising trade matters,” it was highlighted.
Having been founded in 1910, SACU is an African regional economic organisation and is the world’s oldest customs union. It consists of Botswana, Lesotho, Namibia, South Africa and the Kingdom of Eswatini.
The five member States maintain a common external tariff, share customs revenues, and coordinate policies and decision-making on a wide range of trade issues.
They form a single customs territory in which tariffs and other barriers are eliminated on substantially all the trade for products originating in these countries; and there is a common external tariff that applies to nonmembers of SACU.
A decision by SA on SACU will have an impact on Eswatini.
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