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Revenue sharing model of regional customs union to be reviewed soon

Cape Town – Negotiations on the review of the 2002 Southern African Customs Union (SACU) revenue sharing model are set to take place later this month.

This is according to a written response by Finance Minister Nhlanhla Nene to a question by DA MP Choloane Matsepe. Matsepe enquired about the review process as well as details of a reviewed revenue model.

In his response Nene explained that at the Fifth SACU Summit which took place in Swaziland in June 2017, heads of state and government agreed to a review of the SACU agreement. Among the key areas identified for review was the revenue sharing model.

“The review of the revenue sharing formula was to be conducted in such a way that it not only supports the institution and member states in the attaining their respective developmental objectives, but also does not negatively impact the socio-economic stability of SACU member states,” Nene said.

The negotiations on the review are set to start this month, with the ministerial technical task teams from the Department of Trade and Industry and Treasury to hold the first meetings.

The review of the agreement is expected to extend over two years. Various options will be considered to achieve the development objectives of SACU, said Nene. 

According to SACU the objectives of the agreement include facilitating cross-border movement of goods between member states.

Other objectives include creating effective, transparent and democratic institutions to ensure equitable trade benefits to member states, promoting conditions of fair competition in the common customs area and increasing investment opportunities in the common customs area.

Also to enhance the economic development, diversification, industrialisation and competitiveness of member states and facilitate the development of common policies and strategies.

Among the responsibilities of the member states is to jointly determine customs and excise duties, and to apply a common external tariff to non-SACU members, while creating tariff-free trade between members.

All customs and excise duties are then to be transferred to a common revenue pool. Disbursements will be made to member states based on the agreement’s revenue sharing formula.

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