Suddenly, southern African economic integration - a buzz word for many years - showed itself as a maybe not practical concept, especially when members are quartered and each fighting to protect its own interests.
My sources in the negotiating process told me that several representatives at the trade meeting in Gaberones openly talked about the disintegration of SACU, the Southern African Customs Union. Not only is it the oldest customs union in the world, it is also the lifeline of Namibia, Botswana, Swaziland and Lesotho. The basic principle is that revenues derived from import and export tariffs go into a pool, administered by South Africa, then divided according to an agreed formula and every country gets its slice, roughly based upon its contribution to the pool. In our case, SACU transfers make up around one third of our fiscal income indicating just how important our SACU membership is to the government's coffers. It is also well documented that the revenue-sharing formula is more to our benefit than South Africa's and were we to administer and collect our own customs and excise (for goods entering and leaving SACU, not Namibia) we would have been less well off.
Fact is, we cannot let go overnight of our revenues from the SACU pool. Currently there are two instances that will gradually erode our income from this source. The first is when South Africa enters into a Free Trade Agreement with the European Union. Since any SA negotiation will naturally include the other SACU members, all will be affected, when in a couple of years, tariffs between SA and Europe are zero save for a list of specially protected items and commodities. We have had an open debate over this issue for three years running and I guess its fair to say that one day, we shall have to be able to do without customs income.
Meanwhile, the looming EPA deadline sort of overtook the theoretical debate around a SA EU FTA, forcing us to face the reality of the immediate and absolute loss of preferential access to the European market, should we fail to reach an agreement with the EU before year-end.
The EPA itself is the second instance that threatens our SACU income. Again, I was hoping that we would negotiate as a pool but the Europeans outsmarted us. As the months dragged on, they insisted that countries negotiate their own EPAs on an individual basis, and they insisted on treating South Africa differently to the rest of the SADC and SACU members. Of course, this put a poke in the spokes.
But at no point during the negotiating process was there ever talk of dissolving SACU. It was only at the infamous Gaberones meeting when the SA negotiating team realised the smaller members were being cornered and South Africa was being singled out for a different agreement with different tariffs, timeframes and conditions. The report they took back to their minister was that SACU is doomed. This past week, Business Day in South Africa said something along those lines when it reported that SA's chief trade negotiator, Xavier Carim, said SACU unity is fragile.
To me this is scary since Lesotho, Swaziland and Botswana were quick to sign EPAs under pressure. If SACU dissolves, that leaves us entirely on our own. We do not have the size or the technical experts to meaningfully engage the European Union in trade negotiations. We need SACU.
But we must also not forget that most people in southern Africa realised many years ago we need to reduce our primary dependence on Europe and we need to boost the trade amongst ourselves. Integrating the Southern African Development Community (SADC) is government policy in all the member countries and there are many multi-lateral agreements in place, all with only one aim, to integrate the region's economies and to increase trade. So when we are faced with a situation where these long-term goals are threatened, I think we need to sit back and reconsider short-term gains (EU access) against long-term development goals (intra-regional SADC trade). Only, it is not that easy since we all need to keep economies running in the meantime. It is no longer a paper exercise or an academic study of trade conditions, it is for real.
There is one consolation. The South African minister of trade issued a statement after we signed the interim EPA last week, which I read as an assurance that SA will not go it alone in any EU dealings. What I found of particular significance is his insistence on the fact that any long-term EPA must have a developmental outcome that promotes regional integration. I hope that also implies an integrated cohesive customs union and that the feature of SACU is not its unravelling, but rather to extend it to many more southern African countries. Only as a unified trading block, will southern Africa be able, in future, to negotiate meaningful agreements when the time comes to talk to Mercosur, the North American Free Trade Area, India and China.