Johannesburg - South African trade negotiators are heading for a crucial two-day meeting in Swaziland, which starts on Thursday, where they will deliver a crisp ultimatum to SA's neighbours about the future of the Southern African Customs Union (Sacu).
Botswana, Lesotho and Swaziland (BLS) will be given a choice - find a way of getting around the predicament that their economic partnership agreements (Epas) with the European Union (EU) have put Sacu in or face up to the reality that Epas will render the customs union, on which the BLS nations depend for income, to be so ineffective it will be as good as dead.
This is a significant change in position for South Africa, which has been playing hardball to get the BLS countries not to sign the Epas. South Africa has decided to let these states ratify the agreements knowing there's only one way to get around the conundrum Epas pose for Sacu - to renegotiate how Sacu works.
According to the department of trade and industry's (DTI's) Mzukisi Qobo, the Epas would obliterate the prospects of the Sacu member countries - SA, Namibia, Swaziland, Lesotho and Botswana - being able to apply the World Trade Organisation's pre-requisite for a customs union, which is a common external tariff for imports.
Cheap products
"What do you do with the 382 product lines on which signatory countries have received preferential rates from the EU?," asked Qobo. "SA may be forced to monitor its borders in some way."
The DTI is particularly concerned about European products with little value that may flood into SA.
While SA concedes the EU has laced the Epas with enticing short-term benefits, as well as potential for lucrative development aid, it has warned the agreements will ultimately cost Southern African signatory countries their economic sovereignty.
This is done through the "most favoured nation clause", which requires a signatory such as Botswana to extend all trade benefits it offers in future to countries such as India to the EU as well.
No other countries will want to negotiate trade concessions knowing Europe will automatically be extended the same offer, which means that ultimately the Epass would have a chilling effect on the potentially lucrative trade with the Bric countries (Brazil, India and China).
Qobo said this, in turn, would not allow the Sacu members that did sign the Epas to maximise crucial opportunities to diversify their economies.
"Countries will be stunted," he said, adding that the net effect of this would be to undermine the very reason Sacu came into being - to forge regional economic integration.
Sacu exposed
However, Colin McCarthy, associate of the Trade Law Centre of Southern Africa (Tralac) argued the Epass had exposed the last Sacu agreement (concluded in 2002) for what it was - difficult if not impossible to fully implement.
"This whole disagreement (around the Epas) is a symptom of the broader problem in Sacu," said McCarthy. "The agreement doesn't fit the conditions of the region. There are many incompatibilities and problems in Sacu that need to be reconsidered."
South Africa receives just more than half the total customs and excise revenue pool collected in the customs union, leaving other members to get revenue that far exceeds their share of economic activity.
Once the 2002 agreement is fully operational, all members will have an equal say in decision making.
- Fin24.com