Friday, January 22, 2021

WTO applauds SACU but raises serious concerns

The World Trade Organisation (WTO) loudly praised the southern African Customs Union (SACU) on their commitment to the multilateral trade system but they were warned of infrastructural constraints that lead to some jaded growth rates that were made worse by the global economic downturn.

In its third review of the SACU trade policy issues the Geneva-based organization said┬áSACU countries have had┬á“positive economic performance” during the period under review (2003-2009) that is largely attributed to the reform efforts undertaken by the world’s oldest trade block.

SACU is formed by Botswana, Lesotho, Namibia, South Africa and Swaziland and was founded in 1910. However, South Africa is the big brother in the camp.
“Members┬á(referring to WTO panel) commended the SACU countries on their commitment to the multilateral trading system, and their strong support for DDA ÔÇô Doha Development Agenda.

“However, several members highlighted the complicated nature of SACU countries trade policies arising from overlapping preferential agreements. Negotiation and implementation of such arrangements were not only difficult to manage, given the limited resources of the countries, but could also detract from multilateral efforts,” the WTO said.

The issue of  SACU member states belonging to different regional trade blocks has been a thorny issue for some time and  economic trade commentators have long stated that  countries should not belong to a multi- regional trade blocks.

The Geneva organization, whose trade rules will start to be implemented internationally┬áfrom 2015 without any bias,┬áurged SACU countries to start implementing its 2002 agreement with┬áthe plan to “enlargening the scope of their common regime away from custom-related issues”.

The Geneva organization is well known for landing punitive measures against countries which flout international trade rules including engaging in anti-competitive trade exercises.
One of the measures, which will be expected when the WTO rules take effect in 2015, is the issue of reciprocity and dealing away with preferential status which most of the developing countries have long enjoyed even if they fall outside the principle of Everything but Arms.

“The revenue-sharing formula established under the 2002 SACU Agreement has contributed to increased public revenue in Botswana, Lesotho, Namibia and Swaziland with South Africa continuing to manage the Common Revenue Pool,” WTO┬ástated in a report.
WTO has also praised for simplifying the common external tariff regime and has reduced it from 11.4 percent to 8.1 percent.

However, WTO has said the imposition of non ad valorem rates on some tariff lines creates risk of non compliance by SACU members with their individual tariff binding commitment on ad valorem rates.

“Concerns were also expressed about the tariff lines on which MFN (most favoured nations) applied rates exceeds bounds levels and about relatively large use of anti dumping and other contingency trade remedies by South Africa on behalf the customs union,” the report said, adding that, SACU needs to enhance compliance and notification.

Most of the SACU member states have opened their borders to the gray-import vehicle from Japan and have also turned themselves into markets for counterfeit items mostly from China.

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