Cool heads needed

The world's oldest customs union, the Southern African Customs Union (SACU) in its present format is at a cross roads. If the present tensions in the negotiations with the European Union (EU) are not resolved it will impact massively on the economy of the southern African region.

A famous 18th century British politician once cautioned that a state has no permanent friends, only permanent interests. It was true then, and still is today, and it seems this truth lies at the root of the current increasingly unsavory debate among the seven SACU members.

In June, Botswana, Lesotho, Swaziland and Mozambique decided after long deliberations to sign an interim Economic Partnership Agreement (EPA) with the EU, South Africa and Namibia, with Angola abstaining resulting in unexpected battle lines between erstwhile partners to be drawn.

The decision by four SACU members to sign an interim agreement, which is considered by the non-signatories as detrimental to their future individual and collective well being, is causing tension not only within SACU, but is also placing future trade relations with the EU in jeopardy.

SACU has, since its inception, been dominated and steered by South Africa.

In the past, the smaller member states paid little attention and left it to South Africa to manage the customs union. They seemed content and satisfied with South Africa running an arrangement that to a large extent took care of their financial requirements.

For most of its existence, the states belonging to SACU acted in unison, and dissent was almost non-existent.

The decision by the four states to break with tradition and sign an interim EPA with the EU despite its opposition came as a shock to the South African government. The argument of the signatories that they are keen to diversify trade and investment away from overwhelming dependence on South Africa, contributed to Pretoria's consternation.

Self interest convinced the four that it is preferable to sign the interim EPA. The obvious dilemma is how to strike a balance between the interests of the individual SACU member states and that of the customs union.

Botswana, supported by the other three signatories, justified their option as a deliberate policy decision to protect their future commercial interests. With their respective economies precariously hinging on a few commodities (beef, diamonds, sugar and textiles) all mainly destined for EU markets, it is argued that it will be economic suicide not to sign the interim EPA.

Should the EU decide to penalise SACU members for not responding positively to what is on the negotiation table, the consequences could be devastating. If the EU should for example decide on punitive measures and install the stricter Generalised System of Preferences (GSP),  Botswana might have to sacrifice up to 80% of the value of its exports to Europe with an adverse social impact on about 600 000 of its population. Similar situations will also develop in some of the other SACU countries.

All the legal, economic, political and other complexities and constraints aside, it is self interest that is threatening the future of the SACU.

While some SACU members maintain that their survival is at stake, South Africa is of the opinion that the prescriptiveness and arrogance of the EU should be countered and that negotiations should be conducted on an equal basis and not one-sided with the EU enforcing its will onto weaker trade partners.

The merit of the South African view is commendable, but it can be argued that some restraint and less aggression by South Africa might be advisable. As it stands at the moment, it seems as if the misgivings of the South African government is directed more against some of its SACU partners with the EU standing by, ready to exploit the opportunities that might still arise from this family feud.

Emotionally charged threats by the South African Trade and Industry minister that the country will have to consider patrolling the borders with Botswana, Lesotho and Swaziland to prevent EU products from reaching South Africa is not only contra-productive, but unhelpful in attempts to reach an amicable solution.

It is also highly unlikely that the signatories of the interim EPA, with their vulnerable economies under threat, will take much solace from the South African view that the SACU's main value is not as a captive market for South African exports, as it use to be under the apartheid regime.

In the current global context, as this argument goes, the value of the SACU must lie in its ability to be transformed into a vehicle for advancing and deepening integration at a sub-regional level. It should also act as an anchor in the broader South African Development Community (SADC) regional project and as a platform for harmonising engagement in wider global trade relations.

Under the constraints of the current global economic meltdown, however, there is little notion for such stirring visions when the economy of weak states is under duress.

As the dominant partner in the SACU and the biggest contributor to its finances, it is understandable that South Africa should be the gate keeper. But this responsibility also requires flexibility and respect for the views of others.

Is it not possible that South Africa's current stance can be construed as the flip side of the stance taken by the EU which is personified by an non-accommodating attitude, arrogance condescension and bullying tactics?

The SACU in its present format is clearly at a cross roads. Dismantling it will impact massively on the economy of the southern African region. Not only is the SACU deeply enmeshed in the economies of its members, but in the absence of a well defined replacement for the regional economic structure, former member states will be free to do as they wish. This can even result in a debilitating trade war. The logical outcome of such a "free for all" is economic uncertainty, flight of foreign capital from the region and yet another exodus of jobless and poor people from former SACU countries to South Africa.

The nightmare scenario that will follow is, as experts warn, hardly in anyone's interest.