RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/114
24 March 2003
(03-1629)
Trade Policy Review Body
TRADE POLICY REVIEW
SOUTHERN AFRICAN CUSTOMS UNION
Report by the Secretariat
This report, prepared for the second Trade Policy Review of the Southern
African Customs Union (SACU), has been drawn up by the WTO Secretariat on
its own responsibility.  The Secretariat has, as required by the Agreement
establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh
Agreement Establishing the World Trade Organization), sought clarification
from the Governments of the SACU Member countries on their trade policies
and practices.
Any technical questions arising from this report may be addressed to
Mr. Ricardo Barba (tel: 739 5088) or Mr. Jacques Degbelo (tel: 739 5583).
Documents WT/TPR/G/114 contain the policy statements submitted by the
Governments of Botswana, the Kingdom of Lesotho, Namibia, South Africa and
the Kingdom of Swaziland, respectively.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on the Southern African Customs Union.SACU WT/TPR/S/114
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS
(1) T HE ECONOMIC ENVIRONMENT vii
(2) I NSTITUTIONAL FRAMEWORK viii
(3) T RADE POLICY INSTRUMENTS ix
(4) T RADE POLICY AND TRADING PARTNERS x
I. ECONOMIC ENVIRONMENT 1
(1) M AIN CHARACTERISTICS 1
(2) M ACROECONOMIC DEVELOPMENTS 2
(3) T RADE AND INVESTMENT PERFORMANCE 2
(4) O UTLOOK 3
II. THE COMMON REGIME 5
(1) O VERVIEW 5
(2) S OUTHERN AFRICAN CUSTOMS UNION (SACU) 6
(i) The 1969 SACU Agreement 6(ii) The 2002 SACU Agreement 8
(3) T
HE COMMON MONETARY AREA (CMA) 12
(4) S OUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC) 13
(5) P ARTICIPATION IN THE WTO 15
(6) O THER COMMON TRADE ARRANGEMENTS 16
(i) The Cotonou Agreement 16(ii) The African Growth and Opportunity Act (AGOA) 17
(iii) The African Union (AU) and African Economic Community (AEC) 17
(iv) Generalized System of Preferences (GSP) 18
III. TRADE POLICIES AND PRACTICES BY MEASURE 19
(1) I
NTRODUCTION 19
(2) C USTOMS PROCEDURES 20
(i) Customs clearance and valuation 20
(ii) Rules of origin 21
(3) T ARIFFS , AND OTHER CHARGES AND TAXES 22
(i) General features 22(ii) MFN applied tariff structure 23(iii) MFN bound tariffs 26
(iv) Tariff preferences 28
(v) Other duties and charges 29
(vi) Duty and tax concessions 32
(4) C ONTINGENCY TRADE REMEDIES 33
(i) Anti-dumping and countervailing measures 33(ii) Safeguard measures 36WT/TPR/S/114 Trade Policy Review
Page iv
Page
(5) S TANDARDS AND TECHNICAL REGULATIONS 37
REFERENCES 39
APPENDIX TABLES 41
ANNEX 1:  BOTSWANA 49
ANNEX 2:  KINGDOM OF LESOTHO 107
ANNEX 3:  NAMIBIA 153
ANNEX 4:  SOUTH AFRICA 213
ANNEX 5:  KINGDOM OF SWAZILAND 307SACU WT/TPR/S/114
Page v
CHARTS
Page
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 MFN tariff distribution by sector (ISIC1 definitions) 25
III.2 Tariff escalation by ISIC 2-digit, 2002 26
III.3 Cumulative distribution of pos t-Uruguay Round bound tariffs 28
III.4 Anti-dumping measures, January 1995 to June 2002 35
TABLES
I. ECONOMIC ENVIRONMENT
I.1 SACU's selected socio-economic indicators, 1997-01 1
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Strucutre of MFN tariffs of SACU, 1997-02 19
III.2 MFN tariff distribution, by type of duty, 2002 23III.3 Formula and compound duties, 2002 23III.4 Tariff bindings in SACU, post-Uruguay Round 27III.5 Binding of other duties and charges (ODCs) by SACU members, January 2003 29III.6 Products subject to ad valorem  excise duties 31
III.7 Products eligible for rebates of customs and excise duties 32
III.8 Countervailing measures, 1 July 1998 to 30 June 2002 36
APPENDIX TABLES
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Tariff quotas on agricultural products, 15 April 1994 43
AIII.2 SACU's tariff by HS chapter, 2002 45SACU WT/TPR/S/114
Page vii
SUMMARY OBSERVATIONS
(1) THE ECONOMIC ENVIRONMENT
1. The Southern African Customs Union
(SACU), in place since 1910, is the oldest
customs union in the world. The re-negotiationof its 1969 Agreement, that replaced the 1910
Customs Union Arrangement, was concluded
in 2002.  However, the 1969 SACU Agreement
is still in place, the 2002 Agreement having yet
to be ratified by all parties.
2. Since their last Trade Policy Review
(TPR) in 1998, the five member states of
SACU (Botswana, Lesotho, Namibia, South
Africa, and Swaziland), have continued their
economic reform programmes.  Furtherliberalization of trade and investment, driven
both by their commitments in the WTO, and by
their participation in bilateral and regional
trade agreements, have been major features in
this process.
3. SACU countries have very different
levels of economic scale, structure, anddevelopment.  Botswana and South Africa are
upper middle-income countries (although very
different in economic structure), Namibia and
Swaziland are lower middle-income countries,
and Lesotho is a least developed country.However, all SACU countries face common
challenges such as eradicating poverty;
combating HIV/AIDS; promoting sustainable
economic growth and development, and a
more equitable income distribution; reducinghigh unemployment rates; and being more
fully integrated into the world economy.
4. Monetary and exchange rate policies
within SACU are largely led by South Africa.
Indeed, Lesotho, Namibia, South Africa andSwaziland have a Common Monetary Area
(CMA) Agreement, where the loti (Lesotho's
currency), the Namibian dollar and the
lilangeni (Swaziland's currency) are pegged
to, and freely convertible into, the South
African rand at par.  Although a non-member
of the CMA, Botswana has pegged its currency(pula) to a basket of currencies, including the
rand, and has generally contained itsfluctuations against the rand.  This monetary
stance and the constraint on customs revenue
due to SACU membership somewhat discipline
fiscal policy within the customs union. This
relative harmonization of policies has resulted
in comparable levels of inflation (around 7%per year) throughout SACU.  Nevertheless, the
lack of formal harmonization of fiscal policies
leaves substantial leeway for expenditure-
induced public deficits.  SACU countries have
generally been also slow in implementing
structural reforms.
5. SACU members (except South Africa)
depend on a limited number of products.  The
share of agriculture in SACU's GDP
decreased somewhat during the last few years,but it remains an important sector with
linkages to other activities.  Food insecurity in
Lesotho, Namibia, and Swaziland has
increased recently due to several factors,
including unfavourable weather conditions
(drought and floods), making emergency food
aid necessary.  Food-security objective hasdriven the move towards tariffs as the main
trade policy instrument in the sector, although
some non-tariff measures still exist.
6. Mining and quarrying provides a key
anchor for growth and development,particularly in Botswana, Namibia, and South
Africa, where mineral taxation, for example,
has enabled the improvement of basic
infrastructure and social services.
Furthermore, the sector is one of the mostimportant foreign exchange sources and a
magnet for foreign in vestment in these
countries.  Large mineral endowment has
meant low tariff protection, and private
investment continues to be activelyencouraged in the sector.
7. Certain labour-intensive
manufacturing activities, particularly textiles
and clothing, have expanded strongly in recent
years throughout SACU, largely as a result of
new incentives provided under non-reciprocal
preferential arrangements.  The generaldevelopment of the manufacturing sector,
however, has largely been hampered by
supply-side constraints, such as highWT/TPR/S/114 Trade Policy Review
Page viii
production costs, limited access to financing,
low capacity utilization, and low quality of
products.  Moreover, subject to concessions,
the tariff structure (mainly the relatively high
rates on semi-finished goods) is not conducive
to investment in certain manufacturingactivities.
8. Export opportunities in the services
sector remain largely unexploited, other than
in South Africa and to some extent in
Botswana and Namibia.  In tourism, forexample, where SACU's  attractions are
among the best in Africa, inadequacies in
infrastructure and marketing/promotion,
financial constraints, and lack of skilled
labour have constrained the development ofthe subsector.  Further liberalization and
investment in services, in general, should
improve the efficiency of other economic
activities and the competitiveness of  SACU's
exports, especially by reducing costs related
to, inter alia, telecommunications, transport,
and energy.
(2) I
NSTITUTIONAL FRAMEWORK
9. SACU's trade regime remains
basically the same as at the last Review.  The
2002 SACU Agreement introduces significant
changes in the modus operandi of the commoncustoms area, by creating, inter alia, a new
institutional structure (a Council of Ministers,
a Customs Union Commission, a Secretariat, a
Tariff Board, Technical Liaison Committees,
and a Tribunal); a dispute settlementmechanism; the requir ement to have common
policies on industrial development,
agriculture, competition, and unfair trade
practices; and a new system regarding the
common revenue pool and sharing formula.
10. In terms of coverage of trade policy
instruments, the 2002 SACU Agreement is not
fundamentally different from the 1969 one.
Indeed, applied customs tariffs, excise duties,
customs valuation, rules of origin, and
contingency trade remedies remain the only
domains of trade policy that, so far, areformally harmonized throughout SACU.
Nevertheless, democratization of SACU's tradepolicy formulation is to significantly increase,
with the discretion to set customs tariffs moved
from South Africa's Board on Tariffs and
Trade to the SACU Tariff Board.  In addition,
further policy harmonization, as recommended
by the 2002 SACU Agreement, will increaseregional trade and, if combined with
multilateral liberalization and outward-
orientation, will foster the integration of
SACU into the world economy.
11. SACU countries are all original WTO
Members.  Botswana, Lesotho, Namibia, and
Swaziland (BLNS) are neither signatories nor
observers to any of the WTO plurilateral
agreements, whereas South Africa is an
observer to the Agreement on GovernmentProcurement. All SACU countries accord at
least MFN treatment to all their trading
partners.  They support the Doha Development
Agenda, which they consider as an opportunity
to address some of the current imbalances
existing in the WTO Agreements and to
improve the conditions of access by theirexports into other markets.  SACU members
have not been directly involved, either as a
complainant or as a defendant, in any WTO
dispute settlement proceedings. SACU
countries have benefited from regular WTOtechnical assistance.  They have also been
assisted by other bilateral, regional, and
multilateral agencies in trade-related issues;
and have requested further assistance to, inter
alia, set up the national and regionalinstitutions needed to fulfil the objectives of
the customs union enshrined in the 2002
SACU Agreement.
12. All SACU countries participate in the
Southern African Development Community(SADC).  Some of them are signatories to
other trade arrangements.  For instance,
Namibia and Swaziland are members of the
Common Market for Eastern and Southern
Africa (COMESA), a waiver so far allowing
delayed implementation of trade-related
provisions of the COMESA Treaty by them,and the Regional Integration Facilitation
Forum (RIFF).  The European Union and
South Africa have concluded  the Trade,
Development and Cooperation AgreementSACU WT/TPR/S/114
Page ix
(TDCA).  Moreover, South Africa, Botswana,
and Namibia are involved in bilateral trade
agreements.  SACU member states are also
currently negotiating trading arrangements
with Mercosur, and the U.S., and are
consulting on the possibility of negotiatingother agreements.
13. SACU members are also eligible for
non-reciprocal preferential treatment under
the Generalized System of Preferences (GSP);
the Cotonou Agreement with the EU (exceptSouth Africa); and the U.S. African Growth
and Opportunity Act (AGOA), where BLNS
receive "Lesser developed beneficiary" status
allowing them, at least in the short run, to
source textile and clothing inputs fromanywhere in the world.  As an LDC, Lesotho is
eligible for the "Everything but Arms"
initiative of the EU and participates in the
Integrated Framework for Trade-related
Technical Assistance.
14. SACU countries' trading regime is
highly complex, as a result of theirmembership in several trade agreements with
different provisions, goals, geographical and
product coverage, and trade liberalization
agenda. This structure of relationships is
difficult for small admin istrations to manage.
The moves to negotiate even more free-trade
agreements, risk further complicating their
trade regime and detracting from multilateral
efforts, given the limited resources available.
(3) T
RADE POLICY INSTRUMENTS
15. SACU's applied MFN tariff structure
has been somewhat simplified, and the simple
average MFN applied rate declined from 15%
in 1997 to 11.4% in 2002.  By ISIC sector,
tariff protection on manufacturing is 11.8%(down from 15.6% in 1997); tariffs average
5.5% in agriculture (down from 5.6% in
1997); and 0.7% in mining and quarrying
(down from 1.4% in 1997).  Using the WTO
definition, tariff protection for agricultural
products is 9.6% (up from 9.4% in 1997),
against 11.6% for non-agricultural products(down from 15.7% in 1997).16. The tariff remains complex, still
comprising ad valorem, specific, mixed,
compound, and formula duties.  The
application of formula duties, based on
reference prices, can hardly ensure
compliance by SACU members with theirobligations under the WTO Customs Valuation
Agreement, nor does the imposition of non-ad
valorem tariffs by SACU members while their
binding commitments have been made at ad
valorem rates.  MFN applied tariffs aresubstantially dispersed, and in aggregate,
display mixed escalation (positive from first to
second stage of processing and negative from
semi-finished to fully-processed products).
Tariff reforms have eroded the margins oftariff escalation (more those of negative than
positive escalation).  Therefore, further tariff
rationalization, through simplification of the
structure and reduction of rates, should
introduce more transparency in the tariff
regime, reduce the need for concessions, and
provide a more neutral, and hence lessdistorting, duty structure.
17. During the Uruguay Round, South
Africa, on behalf of all SACU countries, bound
about 96% of the tariff lines at the HS eight-
digit level.  However, there are somedifferences in tariff bindings among some
SACU members.  For Namibia, South Africa,
and Swaziland, the simple average of the final
bound rate is 20.9%, with tariffs on
agricultural products (WTO definition) boundat ceiling rates averaging 43.5%, and tariffs
on non-agricultural products bound at ceiling
rates averaging 18.1%.  For Botswana, tariff
bindings on WTO agricultural products are
identical to those of Namibia, South Africa,and Swaziland, with the exception of dairy
products, wheat, maize, rice, groundnuts and
sunflower seeds, and raw cotton (on which
tariffs are bound at 20%).  Tariff bindings on
non-agricultural products are the same as
those of South Africa, except for soda ash, and
small tractors, on which tariffs are bound at arate of 20%.  Lesotho's bindings differ from
those of Namibia, South Africa, and Swaziland
in that tariffs agricultural products are bound
at a ceiling rate of 200%, while on non-
agricultural products they are bound at aWT/TPR/S/114 Trade Policy Review
Page x
ceiling rate of 60%.  WTO binding
commitments by SACU countries leave ample
margins for discretionary increases in applied
rates.
18. In addition to customs tariffs, imports
are also subject to excise duties (for a group ofproducts), levies, and value added tax (VAT)
or sales tax.  Each SACU country sets its own
VAT or sales tax. Botswana, Namibia, and
South Africa levy VAT at different rates;
whereas Lesotho, and Swaziland still imposesales taxes at different rates too.  Certain key
non-tariff trade policy measures, such as
quantitative restrictions, customs procedures,
standards and technical regulations, sanitary
and phytosanitary measures, competitionpolicy, and internal taxes, are also not
harmonized.  Differences between SACU
members in such areas may distort trade
flows, and undermine the utility of having a
common external tariff (CET).  Therefore,
harmonizing policies in these areas (as
envisaged in the 2002 SACU Agreement)throughout the customs union would be more
trade-friendly by reducing transaction costs
for traders, and discouraging smuggling and
tax evasion.  This would help SACU to
promote economic integration within theregion, and between the SACU area and the
rest of the world.
19. Due to their SACU membership, BLNS
are required to implem ent the anti-dumping,
countervailing, and safeguard measuresdetermined by South Africa.  During the
period under review, South Africa, and by
extension SACU, continued to be among the
leading initiators of anti-dumping actions
among the WTO Members.  These actionsgenerally reflect South African needs, and may
therefore neglect the specific circumstances of
BLNS.  The need to develop contingency trade
legislation at the SACU level is a priority
acknowledged by all SACU members, in order
to lock in the increasing liberalization of their
markets.  In general, all SACU countries haveindividually taken steps to enhance protection
of intellectual property rights.  Progress in
restructuring, including privatizing publicenterprises, in each SACU country, has been
slow.
20. In South Africa, a wide variety of
incentives are still available to local
producers in general, and exporters in
particular.  Some of the incentives are subjectto local-content requirements.  South Africa
has also established export processing zones
to foster international competitiveness,
particularly of its small, medium, and micro
enterprises.  With a few exceptions, importpermits are maintained on health, sanitary,
phytosanitary and environmental grounds, or
under international conventions to which
South Africa is a signatory.  South Africa has
continued to reform its governmentprocurement system, with a view to increasing
local-content of the purchases.  A new
Competition Act was enacted in 1998 to
further address the high levels of
concentration present in the economy, and
anti-competitive business practices.
21. BLNS have no competition policy.
Their autonomous trade policy initiatives have
been confined to, inter alia, preferences to
local suppliers under public procurement
regimes, some quantitative restrictions, infant
industry protection, internal taxation, and taxconcessions for exporters and other selected
activities.  In areas such as standards and
technical regulations, and sanitary and
phytosanitary measures, practices in BLNS
are de facto or de jure based on those of SouthAfrica, with the institutions of the latter being
focal points in certain cases.
(4) T
RADE POLICY AND TRADING 
PARTNERS
22. Three SACU members have resident
delegations in Geneva and participate actively
in the WTO.  The two non-resident members
plan to open missions in Geneva shortly.  In
general, SACU members urge for more
initiatives which will multilaterally liberalize
trade in areas of particular interest to
developing countries.SACU WT/TPR/S/114
Page xi
23. Since the last Review, SACU countries
have continued the process of economic and
trade reforms, although to different degrees.
Most of the smaller SACU member states have
introduced, or are in the process of
formulating, trade-related legislation whichwill bring their trade regimes both more up to
date and into greater conformity with WTO
provisions.  This development "on paper"
needs to be encouraged and stimulated.
24. The 2002 SACU Agreement is meant
to further integrate member states, reduce
economic distortions, and  ensure a more
balanced outcome and more stable flow of
funds to its members as a result of the new
revenue sharing formula, allowing them toplan ahead more effectively their fiscal
budgets.  However, a decline of SACU's
customs and excise revenues could result from
further tariff liberalization initiatives, both at
the multilateral and preferential levels; for
instance, full implementation of the TDCA is
expected to reduce SACU's customs revenue.Moreover, increases in health-related
budgetary expenditure, notably on HIV/AIDS
and poverty-related diseases, will have long-
term repercussions throughout the customs
union.  Therefore, further fiscal reforms,including moving towards other sources of
income different from the SACU revenue pool,
would be necessary.  More generally, the
impact of the HIV/AIDS pandemic, combined
with acute poverty, is sapping the structure ofthe domestic workforce and of society in
general, and represents the greatest challenge
to SACU governments and their partners.25. SACU member states now face some
hard challenges in dealing with trade policy
questions. The restructuring of the SACU
mechanisms themselves, while increasing
democratization of the union, carries risks that
the process will become heavier, morebureaucratic and possibly subject to
"hijacking" by entrenched national interests.
Their membership in an increasing number of
overlapping preferential arrangements will
make the trade regime more discriminatory,more complex, and more difficult to manage.
The combination of free-trade areas and
customs unions in SADC and COMESA, the
TDCA, and potential free trade agreements
with the United States and Mercosur, whilemaintaining relatively high and dispersed
MFN duties, will mean that other developed
and developing markets will face substantial
discrimination.  To this must be added the
complexities of rules attached to some of these
various agreements.
26. Improvement of SACU's multilateral
commitments, both on goods and services, is
therefore necessary to increase the
evenhandedness, predictability and credibility
of the trade regime.  MFN liberalization would
also ensure that SACU and associated tradeagreements did not become inward-looking
discriminatory arrangements, thereby
benefiting all members.  Continued structural
reforms, including privatization, and further
tariff rationalization would also contribute tobetter resource allocation.  Such efforts will
improve SACU's ability to attract investment.
Trading partners could help by ensuring that
their markets are fully open to goods produced
in SACU and by providing more technicalassistance.SACU WT/TPR/S/114
Page 1
I. ECONOMIC ENVIRONMENT
(1) MAIN CHARACTERISTICS
1. The five Member States of the Southern  African Customs Union (SACU), Botswana,
Lesotho, Namibia, South Africa, and Swaziland, cove r a land area of 2.7 million square kilometres.
In 2001, SACU countries had a combined population of around 51 million (Table I.1);  South Africa
accounted for 44 million (86.3% of the total). About half of SACU's population lives in urban centres,
and is concentrated mainly around the capital cities.  Botswana, Namibia, and particularly South
Africa, have relatively well developed basic infrastructure, such as transportation and
telecommunications networks, and social services (e.g. education and health); whereas Lesotho and
Swaziland are rural countries, heavily dependent on their neighbours for access to world markets
because of their very limited infrastructure facilities and landlocked position.
Table I.1
SACU's selected socio-economic indicators, 1997-01
1997 1998 1999 2000 2001
Area ('000 km) 2674.8 2674.8 2674.8 2674.8 2674.8
Population (million) 47.3 48.3 49.4 50.2 50.8
Urban (%) 47.4 47.7 47.9 .. ..
Density (per cent per km) 17.7 18.1 18.5 18.8 19.0
Population growth rate (per cent per year) 2.4 2.2 2.2 1.7 1.1
Life expectancy 51.6 50.0 48.6 .. ..
GDP (US$ million) 159,770.0 144,082.3 141,386.6 138,583.5 124,323.3
GDP per capita (US$) 3,377.8 2,980.6 2,862.7 2,759.0 2,447.3
Share of real GDP (per cent)
Agriculture 4.8 4.5 4.6 4.7 4.5
Mining and quarrying 7.8 7.9 7.6 7.4 7.6
Manufacturing 20.0 19.5 19.0 19.1 19.1
Water, electricity and construction 6.8 6.8 6.7 6.8 6.8
Services 60.5 61.3 62.1 62.0 62.0
Exports of goods and non-factor services (US$ million) 42,344.1 39,979.8 38,655.0 42,396.6 40,800.1
Imports of goods and non-factor services (US$ million) 41,306.9 39,221.7 36,413.5 38,848.2 36,248.2
(Exports + imports) /GDP (per cent) 52.4 55.0 53.1 58.6 62.0
.. Not available.
Source : IMF (2003), IFS, January;  IMF Staff Country Report N°00/13; Reserve Bank, online www.reservebank.co.za; 
Bank of Namibia, Quarterly bulletin , p.45;  Bank of Namibia online information; Central Bank of Lesotho, online 
information ; and Republic of Botswana (2002), Annual Economic Report .
2. The five SACU states are at different levels of economic development. Botswana and
South Africa are classified as upper middle-income countries (Annexes 1 and 4, respectively), whileNamibia and Swaziland are considered as lower middle-income countries (Annexes 3 and 5), and
Lesotho is a least developed country (Annex 2). However, all SACU countries face common
challenges relating to acute poverty problems, high prevalence of the HIV/AIDS pandemic
(section (4) below), very distorted and unequal income distribution, and high unemployment rates
(amongst the highest in the world).WT/TPR/S/114 Trade Policy Review
Page 2
3. The shares of the different sectors in the ec onomy of SACU have remained stable since its
last Trade Policy Review (TPR). In 2001, services accounted for 62% of SACU's GDP (up from
60.5% in 1997), followed by manufacturing with 19.1% (down from 20% in 1997), mining and
quarrying with 7.6% (down from 7.8%), and agricu lture with 4.5% (down from 4.8%). Nevertheless,
while the economy of South Africa is relatively diversified (Annex 4, Chapter I(1)), Botswana,
Lesotho, Namibia, and Swaziland (BLNS) are de pendent on a limited number of products, such as
diamonds and beef for Botswana (Annex 1, Chapte r I(1)); diamonds, fish and meat for Namibia
(Annex 3, Chapter I(1)); water, clothing and textil es for Lesotho (Annex 2, Chapter I(1)); and sugar,
and chemicals for food industries for Swaziland (Annex 5, Chapter I(1)).
(2) MACROECONOMIC DEVELOPMENTS
4. SACU countries have individually experience d generally modest economic growth since
1997 (except for Botswana with higher real GDP growth rates).  This performance reflects, inter alia ,
low levels of investment, high production costs aggravated by substantial depreciation of local
currencies, and bad weather conditions (drought and floods) in recent years. As a result of the
depreciation, SACU's total nominal GDP declined  from US$159.7 billion in 1997 to US$124.3 billion
in 2001, despite the positive growth of its real GDP.
5. Monetary policy within SACU is largely led by  South Africa.  Lesotho, Namibia, Swaziland,
and South Africa form a Common Monetary Area (CMA), within which the loti (Lesotho's currency),
the Namibian dollar, and the lilangeni (Swaziland's currency) are pegged to the South African rand at
par (Chapter II(3)). Although not a member of the CM A, Botswana has pegged its currency (pula) to a
basket of currencies, including the rand, and has contained its fluctuations against the rand (Annex 1,
Chapter I(2)). In practice, therefore, BLNS c ountries follow, to a great extent, South Africa's
monetary and exchange rate policies (Annex 4, Chapter I(2)).
6. The monetary stance and the constraint on customs revenue due to SACU membership
discipline fiscal policy somewhat within the customs union. This relative harmonization of policies
has resulted in comparable levels of inflati on (around 7% per year) throughout SACU. Nevertheless,
the lack of formal harmonization of fiscal policies leaves room for expenditure-induced public deficit.
Moreover, SACU countries have generally been  slow in implementing structural reforms.
(3) TRADE AND INVESTMENT PERFORMANCE
7. The economies of the SACU countries are increasingly dependent on international trade.
The ratio of their total imports and exports to GDP increased from 52.4% in 1997 to 62% in 2001
(Table I.1).
8. Since the last Review, the SACU, as a whole,  has run an increasing goods and non-factor
services surplus, which rose from US$1,037.2 million in 1997 to US$4,551.9 in 2001  (Table I.1),
partly as a result of the real depreciation of the national currencies led by the South African rand. This
increasing trade surplus is mainly the result of the positive performance by Botswana, and
South Africa, whereas Lesotho, Namibia, and Swaziland  have continued to have trade deficits since
the last TPR (Chapter I(3) in end Annex).1
                                                     
1 There is a lack of reliable trade statistics in th e SACU area, partly because of the difficulties of
collecting import and export data within the customs union. Once within the SACU area, goods circulate freely;internal border controls within the customs area are not strong; and products originally destined for the smallermarkets, like Lesotho and Swaziland, may well be broken-bulk within South Africa, the main port of entry ofgoods from outside SACU.SACU WT/TPR/S/114
Page 3
9. Traditionally, intra-SACU trade has been characterized by the importance of South Africa in
BLNS trade. It is estimated that around three quarters of total BLNS trade is with South Africa,
whereas South Africa's trade with its SACU partners is relatively minor, given its diversification in
terms of export destinations and import sources (Annex 4, Chapter I(3)). In 1998/99, the total trade
surplus between South Africa and the BLNS exceeded R20 billion.2
10. Outside SACU, the EU, especially the United Kingdom, continues to be the main export
market for SACU countries, followed by the United States, especially since the introduction of the
African Growth and Opportunity Act (AGOA) in Ap ril 2000 (Chapter II(6)). Exports from SACU to
the Southern African Development Community (SADC) increased from R3 billion to R22 billion
during 1990-00, a weighted annual average growth rate of 22%.3 Amongst the leading export products
of the SACU countries outside the common customs union are: diamonds, platinum group metals,meat, fish, textile, clothing, and sugar and related products. Outside SACU, imports largely originate
from the EU, United States, and other African countries. Imports consist mainly of machinery, metals,
transport equipment (including vehicles), food and beverages, and supplies for the clothing industry.
11. Foreign direct investment (FDI) inflows into SACU  have been low, albeit on a rising trend. In
terms of sectoral distribution, FDI inflows are largely channelled to mining and quarrying,manufacturing, particularly the clothing industry,  and finance and services.  By origin, the EU
followed by the United States and some Asian countries are the main sources of FDI into SACU.
Since the last TPR of SACU, South Africa has beco me one of the leading investors in the economies
of its SACU partners (Annex 4, Chapter I(3)).
(4) O
UTLOOK
12. SACU's economic outlook depends on global economic prospects, especially in the EU and
the United States, the two principal destinations for products outside the customs union. WithinSACU, South Africa remains the engine of growt h. An improvement in the performance of certain
SACU industries, such as textiles and clothing, is foreseen through continued multilateral
liberalization, and market-access conditions under, inter alia, the African Growth and Opportunity Act
(AGOA), the Cotonou Agreement, the Trade, Development and Cooperation Agreement (TDCA)
between the EU and South Africa, and SADC.
13. Once fully implemented, the 2002 SACU Agreemen t is expected to: make its members more
efficient through economies of scale resulting from the harmonization of certain key non-tariff trade
policy measures, such as customs procedures; result in a more cohesive regional market by
developing common policies on industrial developmen t, agriculture, competition, and unfair trade
practices; and increase intra-SACU trade.
14. The new revenue-sharing formula of the 2002 SACU Agreement is also meant to ensure a
more stable flow of funds to its members, allowing them to plan their fiscal budgets more effectively.
Nevertheless, a decline of SACU's customs and excise revenues could result from further tariff
liberalization initiatives, both at the multilateral and preferential levels. In particular, full
implementation of the TDCA migh t reduce SACU's customs revenue.
15. The average annual growth rate of SACU's population decreased from 2.4% in 1997 to 1.1%
in 2001, largely as a result of HIV/AIDS. The high prevalence of this pandemic has compounded
SACU countries' development challenges, and has contributed to the reduction of life expectancy
from 51.6 years in 1997 to 48.6 years in 1999.
                                                     
2 DTI (2001).
3 DTI (2001).WT/TPR/S/114 Trade Policy Review
Page 4
16. The expected increase in direct HIV/AIDS-rel ated budget expenditure will have long-term
budgetary repercussions throughout the customs union. Moreover, continued depreciation of the
South African rand, and by extension of the BLNS national currencies, could further undermine the
efforts to bring inflation under control, even if  this might somewhat enhance SACU's external
competitiveness. Increases in world oil prices and unfavourable weather conditions might also exert
inflationary pressures.
17. SACU's economic outlook also depends on the evolution of the New Partnership for Africa's
Development (NEPAD), aimed at eradicating poverty, placing African countries, both individually
and collectively, on a sustainable growth and development path, and promoting the integration of the
continent into the globalization process (Annex 4, Chapter I(4)).SACU WT/TPR/S/114
Page 5
II. THE COMMON REGIME
(1) OVERVIEW
1. The Southern African Customs Union (SACU) is  the oldest customs union in the world.  The
ancestry of the present SACU can be traced back  to the 1889 Customs Union Convention between the
Colony of the Cape of Good Hope, and the Orange Free State. Lesotho (then Basutoland) joined the
Union on 1 July 1891, and Botswana (then Bechuanaland) on 1 July 1893.  Swaziland acceded to theUnion on 11 October 1904. In 1910, Cape Colony, Natal, Orange Free State and Transvaal joined to
form the Union of South Africa, and a new Customs Union arrangement was signed between South
Africa and the three High Commission territories of the former British protectorates of Botswana,
Lesotho, and Swaziland.  The arrangement came into force on 1 July 1910.
2. The SACU Agreement was concluded on 11 December 1969
4, and entered into force on
1 March 1970, thereby replacing the 1910 Customs Union arrangement.5  Namibia became the fifth
de jure  member of SACU on 10 July 1990;  it had been a  de facto  member during the time it was
administered by South Africa.6  A revision of the 1969 SACU Agreement was completed in 2002.
3. Under the SACU Agreement, members could enter separately into trade agreements with
countries outside the customs union.  Therefore, in addition to the Southern African DevelopmentCommunity (SADC), in which all the SACU members participate, some members are signatories to
other trade arrangements, such as the Common Market for Eastern and Southern Africa (COMESA)
7,
and the Regional Integration Facilitation Forum (R IFF), of which only Namibia and Swaziland are
members (Annexes 3, and 5, respectively);  and the Trade, Development and Cooperation Agreement
between the European Union  and South Africa (the  TDCA) (Annex 4).  However, a waiver allows
delayed implementation by Namibia and Swaziland of trade-related provisions of the COMESA
Treaty; so far, their trade is not affected by the Treaty.
4. Apart from the TDCA, South Africa also has bilateral trade agreements with Malawi, and
Zimbabwe (Annex 4).8  Botswana has bilateral trade agreements with Malawi and Zimbabwe
(Annex 1), while Namibia has a bilateral trade agreement with Zimbabwe (Annex 3).  Lesotho and
Swaziland do not have any bilateral trade agreements.
5. SACU members are also eligible for non-reci procal preferential treatment under the
Generalized System of Preferences (GSP); the Cotonou Agreement with the EU (except
South Africa); and the U.S. African Growth an d Opportunity Act (AGOA).  None of the SACU
members is a signatory to the Agreement on the Global System of Trade Preferences among
Developing Countries (GSTP).
                                                     
4 Botswana and Lesotho became independent in 1966, and Swaziland in 1968.
5 With the exception of the revenue sharing formul a, which went into effect retroactively from
1 April 1969.
6 Namibia became independent on 21 March 1990.
7 Lesotho withdrew from COMESA in 1997.
8 South Africa also grants preferential tariff treatme nt to a list of products from Mozambique, which are
admitted duty free, within annual quota limits.  See WTO (1998).WT/TPR/S/114 Trade Policy Review
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(2) SOUTHERN AFRICAN CUSTOMS UNION (SACU)
(i) The 1969 SACU Agreement
6. The 1969 SACU Agreement was aimed at:  (i) creating a customs union;  (ii) economic
development of the customs union as a whole, but in particular of the less advanced members
(Botswana, Lesotho, and Swaziland)9, and diversifying their economies;  and (iii) sharing benefits
equitably among all the members of the customs union.
7. Under the 1969 Agreement, members apply the customs, excise, sales, anti-dumping,
countervailing, and safeguard duties, as well as related laws, set by South Africa, to goods imported to
the common customs area from countries outside the Union.10  Rebates, refunds, and drawbacks
granted by members must be identical, except in specified circumstances.  A SACU member country
with prior concurrence of all the other members may enter separately into a preferential trade
agreement, or amend other trade agreements with a third country outside the common customs area,
provided the terms of such agreements or amendm ents do not conflict in any way with the provisions
of the SACU Agreement.  Members may not impose duties or quantitative restrictions on goods
imported, exported or re-exported within the SACU area, except in specified exceptional
circumstances.  Each member has its own legislation on quantitative restrictions on goods importedfrom outside the SACU area. The BLNS countries, but not South Africa, may, following consultation,
apply additional duties or increase duties for protection of infant industries.
11  Exceptional trade
restrictions by a member may also be justified on,  inter alia , economic, social, and cultural grounds.
8. Subject to specified conditions, the right of freedom of transit across members' territories is
provided for under the 1969 Agreement. Duties are collected at the place of entry into the common
customs area. As the external trade of land-locked Botswana, Lesotho, and Swaziland is directed
through South Africa, as well as much of Namibia's international trade, South Africa collects virtuallyall customs duties and excise taxes. All customs, excise, sales, and additional duties collected by the
five members are pooled in a Consolidated Revenue Fund (CRF) of South Africa.  The shares of
Botswana, Lesotho, Namibia, and Swaziland (the BLNS countries) are determined on the basis of a
revenue-sharing formula and the residual (after the BLNS countries have been paid) is allocated to
South Africa.
9. Awareness that the 1969 Agreement had to be renegotiated dates back to the latter half of the
1970s, when SACU members recognized that the existing Agreement did not encourage greater
economic integration.  Indeed, during the period 1969-94, the SACU Agreement provided a pragmatic
framework for trade, but not for regional integration.  The renegotiations were to make SACU more
democratic, to develop common sectoral policies and strategies, to further harmonize trade policies,and in general to address the current needs of all the member countries more effectively. Once SACU
becomes consolidated, any future trade agreemen t between any of its members and a third party
should flow out of a common SACU mandate (section (ii) below).
10. The Ministers responsible for SACU matters of the five member states met in Pretoria on
11 November 1994 to discuss the renegotiation of the 1969 Agreement, and appointed a CustomsUnion task team mandated to make recommendations to the Ministers.  The key issues on the agenda
                                                     
9 Namibia became member of the SACU Agreement in 1990.
10 Article 5 of the 1969 Agreement requires South Africa to afford the other members adequate
opportunity for consultations before imposing, amending or abrogating customs duties, except in specifiedcases.
11 Protection of infant industries is normally allowed for a maximum of eight years.  Botswana,
Namibia, and Swaziland have made limited use of this provision.  See WTO (1998).SACU WT/TPR/S/114
Page 7
were:  (i) the technical revision of the revenue-sharing formula, including the level of compensation to
BLNS states for the disadvantages of forming a customs union with South Africa (loss of fiscal
discretion, price-raising, and industrial polarization effects);  (ii) time lags in distribution of revenue
by South Africa;  (iii) the review of the manage ment and institutional aspects of the SACU system;
and (iv) the need for a dispute settlement mechanism.12
11. Under the 1969 Agreement, the pooled revenue (in the CRF) is distributed to the BLNS
countries according to a formula, with South Africa receiving the residual.13  Shares from the revenue
pool motivated the participation of the BLNS countries in the customs union.  In 2001/02, receipts
from the SACU revenue pool as share of the to tal revenue were: 51.6% for Lesotho; 51% for
Swaziland; and 28.4% for Namibia.  Income from the SACU revenue pool  accounted for only 13%  of
total revenue for Botswana in 2001/02, due to the importance of the diamond sector income (Annex 1,Chapter IV(2)).
12. The problem for South Africa with the formula is the steady reduction of its share of the
pooled revenue, with the consequent negative effect on its public budget. Receipts from the SACU
revenue pool for South Africa decreased from 62.8% of total revenue in 1997/98 to 55% in 2001/02.
Moreover, BLNS countries called for increased compensation for the disadvantages of forming acustoms union with South Africa, and the incorporation of a development component in the formula
to address the economic imbalances and ensure stability in the region.
13. Under the 1969 SACU Agreement, th e Customs Union Commission, comprising
representatives of all five members, is the supr eme consultative body of SACU, with three liaison
Committees on customs, trade and industry, and transport, but without a permanent secretariat.  The
Commission has competence to discuss any matter arising out of the SACU Agreement;  it meets at
least once a year in member countries by rotation, and the Chairperson is from the host country.  Anymember country, however, can at any time ask for a meeting of the Commission to be convened to
discuss matters connected with the Agreement. It has been necessary to institutionalize the meetings
of the Commission and to set up a small permanent secretariat to oversee and coordinate the
operations of the customs union. Moreover, the BLNS countries consider the Board on Tariffs and
Trade (BTT) as an institution of the South African Government, since it has no BLNS-countryrepresentation.
14. The 1969 SACU Agreement does not provide for a dispute settlement mechanism. The
Customs Union Commission or member countries settle conflicts or difficulties bilaterally by
consensus. The new 2002 SACU Agreement provides for a dispute settlement mechanism, which will
provide mutually acceptable solutions to problems that may arise between member countries on theoperation and/or interpretation of the Agreement.
                                                     
12 The loss of fiscal discretion results from the fact that South Africa sets the common tariff and excise
tax schedules for the customs union; such import duties are to protect South African producers from non-SACUcompetition (this is the price-raising effect).  The in dustrial polarization effect results from the fact that
industries serving the customs union market were located  primarily in South Africa.  Furthermore, payment of
revenue to BLNS countries is made up to two years after the relevant statistics on which the distribution is
based. In order to address the problem relating to lagged payment, initial estimated amounts are calculated and
remitted in the year that the payment is due, and revised when final data are made available two years later. Thedifferences between the initial estimates and subsequent estimates are then remitted to the countries involved.
13 See WTO (1998) for a comprehensive description of the revenue-sharing formula as amended up to
1978.WT/TPR/S/114 Trade Policy Review
Page 8
(ii) The 2002 SACU Agreement
15. On 21 October 2002, after eight years of negotiations, a new SACU Agreement was signed in
Gaborone, Botswana. The agreement still has to be ratified by members under their respective
constitutional procedures. The Agreement will enter into force thirty days after the deposit of the
instruments of ratification by all member states. The objectives of the 2002 SACU Agreement defined
in its Article 2 are: (a) to facilitate the cross-border movement of goods between the territories of themember states; (b) to create effective, transparent, and democratic institutions which will ensure
equitable trade benefits to member states; (c) to promote conditions of fair competition in the common
customs area; (d) to substantially increase investment opportunities in the common customs area; (e)
to enhance the economic development, diversification, industrialization and competitiveness of
member states; (f) to promote the integration of member states into the global economy throughenhanced trade and investment; (g) to facilitate th e equitable sharing of revenue arising from customs
and excise duties levied by member states; and (h) to facilitate the development of common policies
and strategies.
16. Under the Agreement trading arrangements would only be possible with SACU as a whole,
and not with individual SACU members. Under Article 31 member states may maintain preferentialtrade and other related arrangements existing at the time of the entry into force of the Agreement;
shall establish a common negotiating mechanism for the purpose of undertaking negotiations with
third parties; but shall not negotiate and enter into new preferential trade agreements with third parties
or amend existing agreements without the consent of the other members. SACU member states are
currently negotiating trading arrangements with MERCOSUR, and the United States, and are
consulting on the possibility of negotiating other agreements.
17. The Agreement introduced, inter alia , a new institutional structure; a new system of
managing and sharing the common revenue pool; a dispute settlement mechanism; and  the need to
have common policies with respect to industrial development, agriculture, competition policy, and
unfair trade practices.
(a) Institutional structure
18. Article 7 of the 2002 SACU Agreement provides for the establishment of six institutions:
Council of Ministers, Customs Union Commission, Secretariat, Tariff Board, Technical Liaison
Committees, and a Tribunal.
19. The Council of Ministers is the supreme deci sion-making authority on SACU matters. It is
responsible for the overall policy direction and functioning of SACU institutions, including the
formulation of policy mandates, procedures, and gu idelines for the SACU institutions; overseeing the
implementation of the policies of SACU; and ap proving customs tariffs, rebates, refunds or
drawbacks and trade-related  remedies. The Council is also responsible for the appointment of the
Executive Secretary and the members of the Tariff Board, and for approving the budgets of the
Secretariat, the Tariff Board, and the Tribunal. The Council consists of at least one Minister from each
member state;  and meets at least once a quarter, unless agreed otherwise. It is chaired in turn by eachmember state for one year.
20. The Customs Union Commission is responsible for the implementation of the Agreement;
overseeing the management of the common revenue pool in accordance with the policy guidelines
decided by the Council, and supervising the work of the Secretariat. The Commission consists of
senior officials from each member state and meets at least once a quarter or at the request of a
member state. Its chairperson is appointed by the member state chairing the Council.SACU WT/TPR/S/114
Page 9
21. The Secretariat is responsible for: the day-to-day administration of the Agreement;
coordinating and monitoring the implementation of the decisions of the Council and the Commission;
arranging meetings, disseminating information and keeping minutes of meetings of the SACU
institutions (it is the depositary of all records of SACU); assisting in the harmonization of national
policies and strategies of member states in so far as they relate to SACU; keeping a record of all
transactions into and out of the common revenue pool; and assisting in the negotiation of tradeagreements with third parties. The Secretariat is headed by an Executive Secretary, citizen of a
member state, and its staff is determined by the Commission. The Secretariat will be based in
Windhoek, Namibia, where the headquarters of SACU will be established.
22. The Tariff Board is responsible for making recommendations to the Council on the level  of
and changes to customs, anti-dumping, counterva iling, and safeguard duties on goods imported from
outside the common customs area, and rebates, refunds or duty drawbacks, based on directives by the
Council as provided for in Article 8 of the Agreement. The Tariff Board will be an independent
institution, consisting of experts drawn from member states. Article 14 of the Agreement calls
members to establish specialized, independent and dedicated National Bodies or designate
institutions, entrusted with receiving requests for tariff changes and other related SACU issues. TheNational Bodies will carry out preliminary investigations and recommend any tariff changes
necessary to the Tariff Board. The National Bodies will also study, investigate, and determine the
impact of tariffs within respective member states, and periodically propose such changes as may be
deemed necessary and make recommendations to the Commission through the Secretariat.
23. Four Technical Liaison Committees on matters related to agriculture, customs, trade and
industry, and transport will advise and assist the Commission in its work. The Council has the
authority to determine and alter the terms of reference of those Committees.
24. The Tribunal will adjudicate on any issue concerni ng the application or interpretation of the
Agreement, or any dispute arising thereunder at the request of the Council. The Tribunal will also
play an advisory role on any issue referred to it by the Council. The determination of the Tribunal will
be final and binding. The parties to the dispute are to choose the members of the Tribunal from
amongst a pool of names, approved by the Council, and kept by the Secretariat. The Tribunal shall becomposed of three members, except as otherwise de termined by the Council, and will decide by a
majority vote. It is to be assisted by the Secretariat in its work. The Tribunal will determine its own
rules of procedure.
(b) Common revenue pool and sharing formula
25. Articles 32 to 37, and Annex A of the 2002 SACU Agreement, refer to the new common
revenue pool and sharing formula. Article 32 stipulates that all customs, excise, and additional duties
collected in the common customs area are paid into the common revenue pool, within three months of
the end of each quarter of a financial year (commencing on 1
 April). South Africa is to manage the
common revenue pool for two years from the entr y into force of the Agreement (Article 33).
Thereafter, a member state or SACU institution is to be appointed by the Council to manage it, and
specify the accounts into which the common revenue pool is to be paid and from which all SACU
payments are to be made. All transactions into and out of the common revenue pool are reported to
the Secretariat, and are subject to regular audits. A special Task Force has been created to investigate
issues relating to the establishment of a long-term management mechanism for the common revenue
pool. The Task Force is due to complete its work before September 2003.WT/TPR/S/114 Trade Policy Review
Page 10
26. For distribution purposes, the pooled revenue is categorized and SACU members agreed that
their respective shares during any financial year wi ll be calculated from each of the three distinct
components, net of the budgeted cost of financing the Secretariat, the Tariff Board, and the Tribunal14:
(a) the customs component, consisting of all customs duties actually collected, will be
distributed on the basis of each country's pe rcentage share of total intra-SACU imports,
excluding re-exports;
(b) the excise component, consisting of all excise duties actually collected on goods produced
in the Common Customs area (net of the development component), will be allocated on the
basis of each country's share of total SACU GDP; and
(c)  the development component (a form of development assistance), will be funded initially
from 15% of the total excise component15, and distributed on the basis of each country's GDP
per capita: countries with lower income per capita will receive more.
27. Under the new formula, the concept of South Africa's share being the residual after
calculating the shares of the other countries, which was in the 1978 formula, has disappeared. Instead,
each member's share is specifically calculated (Box II.1). The new formula also eliminates the
revenue floor, and the time-lag between actual trade and distribution of tax receipts is made shorter.Nonetheless, a decline of customs and excise revenues is expected because of further tariff
liberalization initiatives, both at the multilateral and preferential levels, particularly from the free-
trade agreement between South Africa and the EU. SACU members acknowledge that in order to
promote long-term economic growth, they need to move towards sources of income other than the
SACU revenue pool, and advance their fiscal reform process.
(c) Dispute settlement mechanism
28. The 2002 SACU Agreement provides for a disput e settlement mechanism in order to solve
problems that may arise between member countries about the application and/or interpretation of the
Agreement.  In the event of any dispute or differ ence arising from the Agreement, the parties shall
first meet and negotiate in an attempt to settle the dispute before referring the matter to the Tribunal.
16
If the matter is not resolved, it is referred to an ad hoc  Tribunal, an independent body of experts,
which shall decide by a majority vote;  its determination will be final and binding.  At the request ofthe Council, the Tribunal shall consider any is sue and furnish the Council with its recommendations.
29. According to Article 15, any difference or dispute arising out of the 2002 Agreement that
does not directly affect the interests of all member states, may be the subject of direct consultations
between the affected parties. The affected parties are to report the results of their consultations to the
Commission before its next meeting.
                                                     
14 SACU members agreed that the budgeted cost of financing the Secretariat, the Tariff Board, and the
Tribunal for the related financial year, will be deducted proportionately from each component of the common
revenue pool before distribution to member states.
15 This 15% share of the excise component is to be re viewed from time to time and adjusted if agreed to
by all SACU members.
16 Article 13.6 of the Agreement.SACU WT/TPR/S/114
Page 11
Box II.1: The 2002 SACU Revenue-sharing formula of SACU
The revenue sharing formula of the 2002 SACU Agreement, for a given financial year, is:
Ri = C (Ai/A) + (0.85) E (GDPi/GDP) + 20*(0.15) E (1-((Yi/Y)-1)/10)where:Ri = revenue share of SACU country i;i = Botswana, Lesotho, Namibia, South Africa or Swaziland;C = all customs duties actually collected on goods imported into SACU, less the cost of financing the
Secretariat, the Tariff Board, and the Tribunal, less the customs duties rebated or refunded;
Ai = c.i.f. value (at the border) of imports of SACU country i from all other SACU members, less re-
exports;
A = total c.i.f. value (at the border) of intra-SACU imports, less re-exports;E = all excise duties actually collected on goods produced in the SACU area, less the cost of financing
the Secretariat, the Tariff Board, and the Tribunal, less the excise duties rebated or refunded;
GDPi = Gross domestic product of SACU country i;GDP = total gross Domestic product of SACU members;Yi = Gross domestic product per capita of SACU country i;Y = average gross domestic product per capita of all SACU members.
After some algebraic manipulations, Ri becomes:Ri = C (Ai/A) + (0.85) E (GDPi/GDP) + (0.3) E (11- Yi/Y)The customs component: C (Ai/A)The pooled customs revenue will be di stributed according to intra-SACU imports. On the basis of 1998/99 trade,
South Africa would have contributed about 80% to the customs component, and its share of this component wouldhave been 20.5% (in 1998/99 South Africa's intra-SACU imports were R7,520 million, while total intra-SACUimports amounted to R36,706 million). On the same basis, the BLNS would have contributed around 20% to the
customs component, and their shares of the customs pool would have been: Botswana (26.6%), Lesotho (13.4%),Namibia (24.9%), and Swaziland (14.6%). These shares are expected to remain stable over time, though the size ofthe customs pool (C) will depend upon the value of imports and changes to the SACU tariff regime.
The excise component: (0.85) E (GDPi/GDP)
The size of the excise component has been set initially at 85% of the excise pool, and will be distributed on the basis
of the GDP of each of the SACU countries. In 1998, South Africa's GDP represented 92.8% of SACU's total GDP,and its share of this component would have been 78.9% (92.8 times 0.85). The remainder of the 85% of the excisecomponent would have been distributed as follows: Botswana (3.0%), Lesotho (0.5%), Namibia (1.8%), andSwaziland (0.8%).
The development component: (0.3) E (11- Yi/Y)The size of the development component has been set initially at 15% of the excise pool, and will be distributed
inversely to each country's GDP per capit a: the smaller the GDP pe r capita, the greater the share of the development
pool. In 1998, GDP per capita in the SACU area was: Botswana (R17,968), Lesotho (R2,395), Namibia (R9,615),South Africa (R17,578), and Swaziland (R7,024); this leads to an average GDP per capita of R10,916. On this basis,the 15% share of the development component would have been distributed as follows: Botswana (2.80%), Lesotho(3.23%), Namibia (3.04%), South Africa (2.82%), and Swaziland (3.11%).
The composition of SACU payment by component:On the basis of the previous figures, the BLNS countries would largely derive their total SACU revenues from the
customs component: Namibia (83.7%), Botswana (82.1%), Swaziland (78.9%), and Lesotho (78.2%); while SouthAfrica would receive 20.1% from this component. South Africa would get the majority of its SACU revenue fromthe excise component (77.2%), followed by Botswana (9.3%), Namibia (6.1%), Swaziland (4.3%), and Lesotho(2.9%). The development component is relatively more important for Lesotho and Swaziland (18.9% and 16.8%,respectively, of their total SACU revenues), followed by Namibia (10.2%), Botswana (8.6%), and South Africa(2.7%).
Source: SACU Agreement 2002, and DTI (2001).WT/TPR/S/114 Trade Policy Review
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(d) Common policies
30. In an attempt to foster economic integrati on, the 2002 SACU Agreement recognizes the need
to develop common policies amongst the members on industrial development (Article 38), agriculture
(Article 39), competition policies (Article 40), and unfair trade practices (Article 41).17 SACU
members agreed to: develop common industrial policies and strategies, so as to achieve balanced
industrial development of the common customs area; cooperate on agricultural policies in order toensure the coordinated development of the agricultural sector within the common customs area;
cooperate with each other to have and implement competition policies (including laws and
regulations) in each member state (so far only South Africa has enacted competition law); and to
develop, on the advice of the Commission, policies and instruments to address unfair trade practices
between member states.
31. The 2002 Agreement also calls for customs cooperation (Article 23) to facilitate the
simplification and harmonization of trade documenta tion and procedures. SACU countries shall strive
to harmonize product standards and technical regulations within the common customs area
(Article 28). Regarding SPS matters, however, the 2002 Agreement reserves the right of each member
to apply measures in accordance with their national SPS laws and international standards (Article 30)(see also Chapter III(5) below).
(3) T
HE COMMON MONETARY AREA (CMA)
32. In July 1986, the Common Monetary Area (CMA) replaced the Rand Monetary Area
(RMA)18, a trilateral agreement between Lesotho, South Africa, and Swaziland.  On 6 February 1992,
Namibia officially joined the CMA (since then, also known as the Multilateral Monetary Agreement
(MMA)) it had been a de facto  member from the beginning.  Botswana is not a member of the
CMA.19 The Agreement aims to achieve monetary stability in the region, better economic and
financial cooperation among members for sustained economic development, and encourage the
advancement of the less developed members. The administering organ is the Common Monetary Area
Commission, comprising a representative of each me mber country and any advisers the country may
appoint. The Commission meets at least once a year  and its decisions are by consensus. Members
consult regularly on monetary issues.
33. The Agreement provides for free flow of funds within the monetary area (with the possibility
of limited exceptions) and a right of access by Lesotho, Namibia, and Swaziland (LNS) to
South Africa's capital and money markets The loti (Lesotho's currency), the Namibian dollar, and the
lilangeni (Swaziland), are pegged to the South African rand at par, and banknotes issued by LNS are
freely convertible into rand. The rand is legal tender in Lesotho and Namibia, but not in Swaziland,although it circulates freely.  For flexibility purposes, and to accomodate country-specific needs, each
of the LNS countries entered into a bilateral monetary agreement with South Africa to supplement the
MMA. Each member is responsible for its monetary policy, and the control of its financial
institutions. However, by pegging their currencies to the rand, monetary stability and macroeconomic
environment for growth in LNS hinge on the poli cies pursued by the South African Reserve Bank
(SARB).
                                                     
17 Article 10 of the 2001 Agreement, stipulates that the Secretariat shall assist in the harmonization of
national policies and strategies of members in so far as they relate to SACU.
18 In December 1974, the RMA, a tripartite arrangement between Lesotho, South Africa, and
Swaziland, replaced the informal agreement on money and currency between Botswana, Lesotho, South Africa,and Swaziland. Namibia, still administered by South Africa at the time, also formed part of the RMA.
19 The Botswana pula is not a currency of the CMA. Nevertheless, Botswana maintains a crawling peg
system based on a basket of the South African rand and the IMF's Special Drawing Right (SDR).SACU WT/TPR/S/114
Page 13
34. Any dispute must be settled amicably and in good faith, otherwise, the dispute must be
submitted to a tribunal, which will be appointed jointly by the members.
(4) SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)
35. The SADC Treaty was signed in 1992 with the objective of creating a development
community that would achieve economic integration, including trade.20  Through regional cooperation
and integration, the Community aims to provide balanced economic growth and development,political stability, and security for all member states. Membership comprises the five SACU countries
and nine others.
21 The Treaty provides a framework to coordinate, harmonize, and rationalize policies,
and to develop strategies for sustainable development.  It is based on the fundamental principles of
sovereign equality of member states;  solidarity, peace, and security;  human rights, democracy, and
the rule of law;  and equity, balance, and mutual benefit.  Decisions and agreements are legallybinding on members, and the Treaty provides for several protocols in specific areas, such as trade,
finance, and investment.
36. The Trade Protocol, signed in 1996, is aimed at  progressively establishing a SADC free-trade
area, initially over eight years.  However, progress has been slow.  The Protocol was implemented in
September 2000 after ratification by 11 members.
22  To establish the FTA, products have been
grouped under three main categories (A, B, and C).  Category A products (mostly capital goods and
equipment) were liberalized in the first year. This category constitutes about 76% of SACU's trade
with SADC, and carries the zero tariff rate in SA CU countries. Category B products (e.g. goods that
constitute important sources of customs revenue) are to be liberalized gradually by 2008.23
Category C consists of products deemed sensitive by member states (e.g. imports sensitive todomestic industries such as sugar for SACU countries);  these goods, limited to a maximum of 15% of
each member's total merchandise trade, are to be liberalized between 2005 and 2012.  In addition, afourth category of products, Category E, covers products ineligible for preferential treatment under
general and security exceptions permissible under Articles 9 and 10 of the Protocol.  These are
expected to make up a small list of products, so that by 2012 about 98% of SADC merchandise trade
will be subject to zero tariffs.  The phase-down offers are country specific.  Implementation of the
Protocol is based on the principle of reciprocity, i.e. tariff preferences will be extended only tomember states that have submitted their instruments of implementation.
37. SADC members made "different iated offers" to non-SACU SADC countries plus Botswana,
Lesotho, Swaziland, and Namibia, and "general offe rs" to South Africa.  Moreover, SACU members
made offers to the other SADC members for immediate reductions to achieve zero tariffs after five
years, except for sensitive products.  SADC offers to SACU countries are differentiated. Offers fortariff reduction to BLNS countries are heavily front-loaded, while offers to South Africa are mid- to
back-loaded.  Offers by the other SADC members to South Africa thereby delay tariff reductions on
category A and B products.  Moreover, tariff reduct ions on the sensitive products (Category C) are
further delayed from the eighth to the twelfth year.  This asymmetrical implementation is seen as a
means of enhancing equity in the region since Sout h Africa, the principal SACU member, is far more
                                                     
20 SADC replaced the Southern African De velopment Coordination Conference (SADCC).
21 Angola, the Democratic Republic of Congo, Malawi, Mauritius, Mozambique, Seychelles, Tanzania,
Zambia, and Zimbabwe.
22 Angola, Democratic Republic of Congo, and the Seychelles have not yet ratified the Protocol.
Angola is expected to sign soon, and the Democratic Republic of Congo has indicated its readiness to sign.
23 Category B was further sub-divided into three categories.  Tariff rates are to be reduced gradually,
commencing in the third year for sub-category B1 products; in the fifth year for sub-category B2 products;  andin the seventh or eighth year for sub-category B3 products. Category A and B products cover an estimated 85%of goods traded among SADC members.WT/TPR/S/114 Trade Policy Review
Page 14
developed than other SADC members.  Zimbabwe and Mauritius also agreed to start their tariff
reductions earlier than other non-SACU members.
38. At the August 2000 SADC Summit, in Windhoek, member countries were given six months
to make the necessary national constitutional amendments and to deposit their respective instruments
of implementation.24 All five SACU countries have ratified the Trade Protocol, and they have a single
tariff schedule of concessions vis-à-vis  the SADC free-trade area. All eleven SADC countries
currently participating in the Trade Protocol have deposited their implementation instruments.
39. On 31 March 2000, a draft regulation on mutual assistance and cooperation in customs
matters was approved (Appendix I to Annex II of  the SADC Protocol on Trade as amended), which,
inter alia , allows for joint inspections. The SADC Subcommittee on Customs Cooperation and Trade
Facilitation finalized discussions on customs documentation (i.e. the format of bills of entry andcertificates of origin), and commenced the monitoring process for removal of non-tariff barriers by
member states by establishing systems in place for the electronic validation of the certificates of
origin. Substantial progress has already been made on harmonizing customs and trade documentation.
SADC rules of origin are being negotiated in many cases on a product-by-product basis. Protracted
negotiations on specific rules of origin are continuing for certain products, including wheat flour andproducts thereof, electrical products, and optical, photographic, measuring, and surgical instruments.
25
40. On sugar, the long-term objective is to establ ish full liberalization of trade within the SADC
region from 2013. This will depend on a review of the prevailing conditions five years after entry into
force of the agreement. SACU improved its initial tariff-free quota (45,000 tons per annum
cumulative to be shared amongst all the SADC surplus producers) with an additional 20,000 tons (per
annum at a reduced rate) only available to non- SACU SADC surplus producers. The SADC sugar
market access and cooperation agreement has now been  incorporated as an Annex to the amendedTrade Protocol.
41. A derogation for textiles and clothing has been granted to least developed members of  SADC
(Malawi, Mozambique, Tanzania, and Zambia) allowing  them to export to SACU countries (duty-free
but subject to quota) single-stage produced textiles and clothing, for five years starting from
1
 August 2001.26 Exports above the quota are subject to "double stage transformation" rules of origin.
There will be a mid-term review of performance under these arrangements in 2003.
42. While the Trade Protocol has identified several non-tariff measures to be eliminated, such as
import quotas, customs procedures, and export subsidies, it excludes other important non-tariff
barriers, such as local-content requirements, levies and other border charges, and import (and export)
licensing.27
43. The SADC Protocol on Tribunal provides for a tribunal to be established to adjudicate
members' disputes arising from the treaty, and from subsidiary instruments, that cannot be settled by
consultation.28  Its composition, powers, functions, procedures, and other related matters are
prescribed in the Protocol;  the rules of procedure were agreed by SADC members in August 2000.29
                                                     
24 There is no deadline, as such, for the implementation of the Trade Protocol.
25 For example, for electrical machinery, some members want to prevent "single assembly" of white
goods, while for plastics they want to prevent the use of imported plastic waste.  See Imani Development
(Malawi) Ltd. (2001a), p. 24.
26 Coughlin and Undenge (2001).
27 Imani Development (Malawi) Ltd. (2001b).
28 Article 32 of the Treaty.
29 SADC online information.  Available at:  http://www.sadc.int/overview/works.htm.SACU WT/TPR/S/114
Page 15
Creation of the Tribunal, however, will not take place until after the conclusion of current
reorganization plans for SADC;  decisions will be final and binding.  In the meantime, Annex IV of
the SADC Amendment Protocol of 2000 provides a dispute settlement mechanism for trade dispute
issues based on the WTO model.
44. SADC intends to extend trade liberalization to services, but negotiations are yet to commence.
The SADC Free Trade Area has not yet been notified to the WTO.  However, according to theauthorities, the Protocol will be notified under Article XXIV of GATT 1994.
(5) P
ARTICIPATION IN THE WTO
45. SACU countries are individually original WTO Members.30 BLNS countries are neither
signatories nor observers to any of the WTO plurilateral agreements, whereas South Africa is an
observer to the Agreement on Government Procur ement. SACU members have not been directly
involved, either as complainant or as defendant, in any WTO dispute settlement proceedings. All
SACU countries accord at least MFN tr eatment to all their trading partners.
46. SACU countries attach great importance to th e outcome of the Doha Ministerial Conference
of 2001. They note that the Doha Ministerial Declaration puts development at the centre of the WTO
agenda and the agreed negotiating process. The Doha Development Agenda (DDA) offers the WTOan opportunity to correct some of the imbalances and inequities existing in current WTO agreements,
and gives a fresh impetus to addressing developmental issues. For instance, the agreement to put
anti-dumping rules on the negotiating agenda will provide an opportunity to tackle some of the
concerns raised by many developing and least developed countries about the abuse of these trade
remedies by other trading partners. Notwithstanding the opportunities it offers, the DDA bears unique
challenges and implications for SACU countries. These include the broadening of the scope and depth
of issues under negotiation, e.g. environment.
47. The DDA puts development concerns at the centre of the multilateral trade agenda. According
to SACU countries, to achieve a truly developmen tal outcome, the WTO must ensure: (i) that the
outcomes of Doha negotiations support poverty-reducing economic growth, and (ii) provide space for
developing and least developed countries to pursue appropriate national policies that enhance welfare
and foster economic development. The outcome of these negotiations must also strengthen andsupport the regional integration initiatives in the SACU countries and other regional trading
arrangements on the African continent.
48. To determine how to participate fully in th e Doha development process, SACU countries
must have the capacity to define and analyse negotiating positions in the light of clearly identified
national and regional development priorities.  They have indicated that technical assistance andcapacity building must extend well beyond the fi fth WTO Ministerial Conference in view of the
enormity of the challenge facing developing countries. This assistance should support analytical and
operational research at the country and regional levels, be aimed at mobilizing constituencies that
have an interest in domestic policy reform, and be provided through multilateral initiatives.  Technical
assistance, including in capacity building, will be required for SACU countries to set up theinstitutions necessary to fulfil the objectives of the customs union enshrined in the 2002 SACU
Agreement.
49. SACU's priorities in the WTO include: the need to address the outstanding implementation
issues emanating from the Uruguay Round and as mandated by the DDA; the commitment to ensuring
                                                     
30 Botswana joined the GATT on 28 August 1987, Lesotho on 8 January 1988, Namibia on
15 September 1992, South Africa on 13 June 1948, and Swaziland on 8 February 1993.WT/TPR/S/114 Trade Policy Review
Page 16
that the developmental concerns of developing and least-developed countries are reflected in the final
outcome of these negotiations; the elimination of all tariff and non-tariff barriers, particularly those on
products of export interest to developing and least developed countries; and the provision of
meaningful technical assistance, including in capac ity building, that will allow developing and least
developed countries to participate fully and effectively in all negotiations, and ultimately to take
advantage of the opportunities offered by the multilateral trading system.  In addition, SACUcountries want developed WTO Members to meet their market-access commitments in sectors of
export interest to developing countries, including agriculture, and adopt special arrangements for least
developed countries through bound duty-free and quota-free market access for all their products.
(6) O
THER COMMON TRADE ARRANGEMENTS
(i) The Cotonou Agreement
50. SACU members are signatories to the Cotonou Agreement (successor to the Lomé
Convention), between the EU and 77 countries in Africa, the Caribbean, and the Pacific (ACP).31
South Africa, however, was excluded from most of the trade provisions of the Lomé IV Convention
and, as a result, it is excluded from the trade provisions of the Cotonou Agreement. South Africa has a
separate, bilateral free-trade agreement with the EU (Annex 4).  The Cotonou Agreement maintains
most non-reciprocal trade preferences granted by the EU to ACP States, and has been ratified by all
SACU members.  A decision to grant the waiver requested by the parties to the Agreement from the
obligations under Article I:1 of GATT 1994 (MFN treatment) was taken by WTO Members at the
Doha Ministerial Conference, for the period up to 31 December 2007.32  By then, new WTO-
compatible trading arrangements are to be concluded, removing barriers progressively between the
parties and enhancing cooperation in all areas relevant to trade, including the formation of free-trade
areas within a transitional period.  ACP-EU negotiations began in September 2002, and are aimed atestablishing economic partnership agreements (EPA s) on a bilateral basis or between the EU and
regional groupings (regional economic partnership agreements). The latter agreements are expected
to commence by 1 January 2008 at the latest.  BLNS  countries are eligible for EPAs, which would be
based on reciprocal liberalization, thereby requiring in principle ACP states to extend preferential
access progressively to EU exports.
51. Under the Cotonou Agreement, the EU grants non-reciprocal trade preferences to most
imports originating from ACP states, subject to a safeguard clause and rules of origin.
33  For certain
products (bananas, beef and veal, and sugar), the EU provides special market access under
"commodity protocols".  The Cotonou Agreement abolished STABEX, SYSMIN, and the rum
protocol of the Lomé Convention.
52. The EU is an important market for SACU's main  exports of sugar, meat, and meat products,
which enter the EU at zero tariffs. According to  BLNS authorities, complex procedures, including
rules of origin, undermine the preferences.  Moreover, the recent Everything But Arms (EBA)
initiative, which grants additional preferences to least developed countries (Annex (2)), and the EU's
own multilateral tariff reductions, have reduced their importance.
                                                     
31 The Cotonou Agreement was signed on 23 June 2000.  The fourth Lomé Convention expired at the
end of February 2000.
32 WTO document WT/MIN(01)/15,14 November 2001.  The full text of the Cotonou Agreement has
been communicated to WTO Members (WTO document G/C/W/187/Add.3 of 14 April 2000).
33 The rules of origin require that qualifying products be either "wholly obtained or significantly
worked or processed" in one or more ACP states.  The latter definition is based on the product being sufficientlymodified in the ACP state for it to be classified under a different four-digit HS tariff line.SACU WT/TPR/S/114
Page 17
53. BLNS countries have received financial assistance from the EU under, inter alia,  the
European Development Fund (EDF) through the National or Regional Indicative Programmes;  and
the European Investment Bank for commercial loans.
(ii) The African Growth and Opportunity Act (AGOA)
54. The African Growth and Opportunity Act (AGOA), contained in the U.S. Trade and
Development Act of 2000, offers free access to some manufacturing products originating insub-Saharan African countries.  A high-level dialogue on trade and investment under the
U.S.-Sub-Saharan Africa Trade and Economic Forum has also been established and is now
operational.  African countries eligible for preferential treatment under the AGOA will receive GSP
treatment (exempt from the "competitive needs" limitations of the general GSP treatment by the
United States) in the U.S. market until the end of September 2008 (in contrast to general GSPtreatment which is renewed on an annual basis in the United States), and will qualify for an expanded
list of GSP products (beyond that available to other countries).
34  All eligible African countries are
entitled to duty-free and quota-free access to the U.S. market for apparel made from U.S. fabric, yarn
or thread. The legislation provides for an upper volume limit on such imports, rising from 1.5% of
"aggregate square metre equivalent" of all U.S. apparel imports to 3.5%, over an eight-year period.
55. To be eligible, African countries must make progress in establishing a market-based
economy;  developing political pluralism and the rule of law;  eliminating discriminatory barriers to
U.S. trade and investment;  protecting intellectual property;  combating corruption;  protecting human
and worker rights;  and removing certain practices of child labour.35  Although the apparel benefits in
principle took effect from 17 October 2000, countries must have in place an effective visa system to
prevent illegal trans-shipment and use of counterfeit documentation, as well as effective enforcement
and verification procedures. On 31 December 2001, after the required annual review, all five SACUcountries were declared eligible for tariff preferences under the AGOA, and recognized as qualifying
for textile and apparel benefits.
56. By modifying certain provisions of AGOA, the Trade Act of 2002 (also known as AGOA II),
expanded preferential access for imports from beneficiary sub-Saharan African countries. These
modifications are effective immediately upon en actment. Among other changes, AGOA II allows
producers from Botswana and Namibia to profit from the "lesser developed beneficiary sub-Saharan
country" provision, and to use third-country fabric in qualifying apparel.
(iii) The African Union (AU) and African Economic Community (AEC)
57. All SACU countries are members of the African Union (AU). The AU, launched in
July 2001, replaced the Organization of African Unity (OAU) in July 2002.  The Charter establishingthe OAU was signed by 30 African nations on 25 May 1963.
36  All SACU countries, like the other
members of the OAU, signed the Abuja (Nigeria) Treaty Establishing the AEC in June 1991, as
provided for by the 1980 Lagos Plan of Action.  Its main aim is to promote integration and
harmonization within Africa.  The Treaty provides  for the creation of a pan-African economic and
monetary union (with a parliament) in six stages, over a period of 34 years.  The organs andheadquarters of the AEC are those of the AU.
                                                     
34 The list of manufactured goods (some 1,800 tariff lines) covered by AGOA includes products such
as footwear, luggage, handbags, and watches.  See WTO document WT/COMTD/N/1/Add.3, 1 March 2001 forthe list of eligible products notified by the United States to the WTO.
35 African Growth and Opportunity Act [Online].  Available at:  www.agoa.gov/index.html.
36 All African countries are memb ers of the AU, except Morocco.WT/TPR/S/114 Trade Policy Review
Page 18
(iv) Generalized System of Preferences (GSP)
58. SACU countries also benefit from non-reciprocal preferential treatment from many
industrialized countries under the Generalized System of Preferences (GSP).37
                                                     
37 SACU countries are not signatories to th e Agreement on the Global System of Trade
Preferences (GSTP) among Developing Countries.SACU WT/TPR/S/114
Page 19
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) I NTRODUCTION
1. Trade policies and practices within the SACU have  remained basically the same since its last
Trade Policy Review in 1998. However, the recent re-negotiation of the SACU Agreement will mean
significant changes in the modus operandi  of the common customs area.  In particular,
"democratization" of SACU's trade policy will increase significantly with the transfer of discretion toset tariff rates from South Africa's Board on Tariff s and Trade to the SACU Council of Ministers.
2. Applied customs tariffs, excise duties, customs valuation, rules of origin, and contingency
trade remedies are the only areas of trade policy that have been harmonized throughout SACU. The
tariff structure has been somewhat simplified, and the simple average MFN duty rate declined from
15% in 1997 to 11.4% in 2002 (Table III.1). However, the tariff remains complex, still comprising ad
valorem , specific, mixed, compound, and formula duties. The application of formula duties, based on
reference prices, does not ensure compliance by SACU members with their obligations under the
WTO Agreement on Implementation of Article VII of the GATT 1994 (Customs Valuation); nor does
the imposition of non- ad valorem  tariff rates while SACU members have made their binding
commitments ad valorem  rates. Moreover, differences in internal taxes between SACU members
distort trade flows, and somewhat undermin e the utility of a common external tariff.
3. Due to their SACU membership, BLNS countrie s apply the anti-dumping, countervailing, and
safeguard measures imposed by South Africa. Ov er 1995-01, South Africa, and by extension SACU,
was among the leading initiators of anti-dumping actions in the WTO. These actions are generally
tailor-made to South African needs, and therefore neglect the specific circumstances of BLNS
countries.  The need to develop contingency trad e legislation at the SA CU level is a priority
acknowledged by all SACU members, in order to lock-in the increasing liberalization of theirmarkets.
4. SACU countries currently lack a common policy on certain key trade areas such as customs
procedures, and standards and technical regulations. Developing common trade policies and strategies
in these areas, as provided for by the 2002 SACU Agreement, would help to reduce transaction costs
for traders by creating a single cohesive regional market, and would provide SACU members with amore solid basis towards greater integration into the world economy.
Table III.1
Structure of MFN tariffs of SACU, 1997-02
(Per cent)
1997 2000 2001 2002 U.R.a
1. Bound tariff lines (% of all tariff lines)b96.4 96.4 96.4 96.2 96.4
2. Duty-free tariff lines (% of all tariff lines) 42.4 44.6 44.5 43.7 9.9
3. Non- ad valorem  tariffs (% of all tariff lines) 25.6 24.8 24.6 25.0 0.0
4. Tariff quotas (% of all tariff lines) 8.1 7.4 7.2 7.3 7.2
5. Non- ad valorem  tariffs with no AVEs (% of all lines) 25.6 24.8 24.6 25.0 0.0
6. Simple average bound rate .. .. .. .. 20.9
Agricultural products (HS01-24) .. .. .. .. 46.8
Non-agricutural products (HS25-97) .. .. .. .. 18.1
Agricultural products (WTO def.)c.. .. .. .. 43.5
Non-agricultural products (WTO def.)d.. .. .. .. 18.1
7. Overall standard deviation of bound rates .. .. .. .. 25.5
8. Simple average applied rate 15.0 12.8 12.0 11.4 n.a.
Agricultural products (HS01-24) 11.4 11.3 11.4 11.5 n.a.
Non-agricutural products (HS25-97) 15.4 12.9 12.0 11.4 n.a.
Table III.1 (cont'd)WT/TPR/S/114 Trade Policy Review
Page 20
1997 2000 2001 2002 U.R.a
Agricultural products (WTO def.)c9.4 9.3 9.4 9.6 n.a.
Non-agricultural products (WTO def.)d15.7 13.1 12.3 11.6 n.a.
9. Domestic tariff "spikes" (% of all tariff lines)e4.0 5.8 4.5 3.9 2.1
10. International tariff "spikes" (% of all tariff lines)f39.4 34.4 34.1 34.8 50.9
11. Overall standard deviation of applied rates 17.8 15.1 13.9 12.6 n.a.
12. "Nuisance" applied rates (% of all tariff lines)g0.2 0.0 0.0 0.0 n.a.
.. Not available.
n.a. Not applicable.
a Namibia, South Africa, and Swaziland's final bound rates statistics. Botswana concessions are the same except on some products  
(see Table III.4 note b and c). Lesotho bound its tariff at a ceiling rate of 200% on agricultural products and of 60% on non-agricultural products.
b Refers to Botswana, Namibia, South Africa, and Swaziland. Lesotho bound 100% of its tariff.
c WTO Agreement on Agriculture.d Exclude petroleum.
e Domestic tariff spikes are defined as those exceeding three times the overall simple average applied rate (indicator 8.).
f International tariff peaks are defined as those exceeding 15%.g Nuisance rates are those greater than zero, but less than or equal to 2%.
Note: Indicators 1 and 4 are calculated taking into account all tariff lines (i.e. in-quota and out-of-quota lines).
Source: WTO Secretariat calculations, based on data provided by South Africa.
(2) C USTOMS PROCEDURES
5. There have been no major changes to customs procedures within the SACU area since its last
TPR.  In general, all SACU countries apply th e customs laws set by South Africa (mainly the
Customs and Excise Act, Act No. 91 of 1964 of Sout h Africa, as amended) to goods imported into the
common customs area from outside the union.  However, customs procedures are not completely
harmonized throughout SACU, and some differences exist at the borders.
6. Article 23 of the 2002 SACU Agreement calls for all five members to take appropriate
measures, including customs cooperation, to ensure that the provisions of the Agreement are
effectively and harmoniously applied.  In particular, members shall take measures necessary to
facilitate the simplification and harmonization of trade documentation and procedures. The
harmonization of SACU's customs procedures woul d foster economic development of the region by
facilitating cross-border movement of goods, both wi thin the customs union, and with the rest of the
world. Ensuring common and modern customs admi nistration would reduce transaction costs for
shippers, and would increase predictability and transparency of the customs regime, while taking
advantage of economies of scale in processing data.
(i) Customs clearance and valuation
7. Goods imported from outside the SACU area must be declared on a bill of entry38, while
those traded within the customs union have to be declared on a transfer traffic form. Goods entering
the SACU area may be declared at the first port of entry into the customs union (usually a South
African port), or may be removed in bond from the port of entry to a bonded warehouse in a SACU
                                                     
38 In general, within seven days from the date goods are deemed to have been imported into a SACU
country, importers must declare their entry to customs on the bill of entry (WTO, 1998).SACU WT/TPR/S/114
Page 21
country, where they are cleared for home consumption.39  Imports of goods are randomly checked by
the relevant customs administration.
8. There has been no change to customs valuation provisions in the SACU area in recent years;
SACU countries did not request delayed applic ation of the WTO Agreement on Implementation of
Article VII of the GATT 1994 (Customs Valuation Agreement). Under the 1964 Customs and Excise
Act of South Africa, as amended, the value, for customs duty purposes, of merchandise imported intothe SACU area is the actual f.o.b. transaction price of the goods.
40 In the case of suspected under- or
over-valuation, the goods concerned are detained by customs officers for examination and
investigation. The importer is made aware of the suspicion and is required to submit acceptable
evidence in respect of the actual price. The docu ments provided by the importer are compared with
those relating to previous imports of similar items.
9. If the transaction value cannot be ascertained  in terms of the Act, the customs administration
can determine a value, subject to appeal by the importer to the Courts. Appeals against a valuation
decision must be made within one year from the date of determination. According to the authorities,
no appeal has gone as far as the High Court; all queries have been handled by the customs
administration. Nevertheless, the application of formula duties (based on reference prices) to certainproducts, does not ensure compliance by SACU members with their obligations under the WTO
Agreement on Customs Valuation (sections (3)(i) and (3)(ii)).
(ii) Rules of origin
10. SACU countries have both preferential and non-preferential rules of origin. The non-
preferential rules of origin have so far been set for the union by South Africa. Under the 1964
Customs and Excise Act  of South Africa (Section 46), as amended, a good is regarded as having been
produced or manufactured in any particular territory if at least 25% of its production cost isrepresented by materials produced and labour performed in that territory, and if the last process in its
production or manufacture has taken place in that territory.
41
11. SACU countries also apply rules of origin for preferential purposes (on a reciprocal basis)
under regional trade agreements such as the Southern African Development Community (SADC)
Trade Protocol (Chapter II(4)), and under bilatera l trade agreements to which they are individually
signatories (see Annexes). Moreover, origin criteria are specifically set for the purpose of non-
reciprocal preferential treatment by more developed countries, including the United States under
AGOA, the EU under the Cotonou Agr eement, and some industrialized countries under the GSP
(Chapter II(6)).
                                                     
39 Containers, temporarily imported, human remains, goods deemed not to have commercial value,
goods imported under an international carnet, and goods of a dutiable value not over R500, do not need to becleared through customs (WTO, 1998).
40 The Laws and Regulations on customs valuation were notified to the WTO (WTO document
G/VAL/N/1/ZAF, 30 August 1996.
41 The South African Commissioner for Customs and Excise may, from time to time, at the request of
the Board on Tariffs and Trade, add other criteria or in crease the prescribed percenta ge in regard to specific
imported goods from a particular territory (WTO, 1998).WT/TPR/S/114 Trade Policy Review
Page 22
(3) T ARIFFS , AND OTHER CHARGES AND TAXES
(i) General features
12.  Under the 1969 SACU Agreement, South Afri ca's Board on Tariffs and Trade (BTT) sets
customs, sales, and excise duties to be appl ied by SACU members. Under the 2002 Agreement,
however, the SACU Council of Minist ers will have responsibility for policy decisions including tariff
changes. Recommendations on tariff changes are to be made by a Tariff Board, and suggestions byNational Bodies (Chapter II(ii)(a)). This may reduce the ability of domestic producers from any
SACU country (not only South Africa) to obtai n tariff protection. BLNS countries may, as a
temporary measure, levy additional duties on imports (including those from South Africa) to protect
their infant industries.
42  Protection afforded to an infant industry cannot exceed eight years, unless
otherwise determined by the Council of Minister s. A similar provision already exists in the 1969
SACU Agreement.
13. In general, goods imported to the SACU area may be subject to four types of charges:
ordinary customs duties, excise duties, levies, and VAT or sales tax. Although the tariff structure has
been somewhat simplified since the previous Revi ew of SACU in 1998, it remains complex. The 2002
tariff is based on the 2002 Harmonized Commodity Description and Coding System (HS). The total
number of eight-digit tariff lines increased slightly from 7,814 in 1997 to 7,909 in 2002, mainly due to
the change in HS nomenclature from the 1996 version.
14. The tariff still comprises the same types of duties as in 1998, i.e. ad valorem , specific, mixed,
compound, and formula duties based on reference pr ices (Table III.2). Around three-fourths of all
tariff lines (5,933 lines at the HS eight-digit level) bear ad valorem  rates (39 bands), of which more
than half are duty-free (3,430 lines); the rates range from 0 to 55%.43  In 1997, 74.4% of all tariff lines
were ad valorem (45 bands), with rates ranging from 0 to 57.5%.44  The number of lines with specific
duties fell from 218 in 1997 to 195 in 2002; those with compound duties from 6 to 2; and with
formula duties from 28 to 5;  lines with mixed duties increased from 1,738 to 1,774.45 Ad valorem
components of certain non- ad valorem  duties range up to 60%.
15. Mixed duties (three different types) apply mainly to fish, beverages, sugar, wool and apparel
products (Table III.2).  Specific duties apply mainly to agricultural products (181 lines) such as
products of the milling industry, fishing products, beverages, spirit and vinegar, sugar and sugar
confectionery, and petroleum products. Formula duties  are levied on preserved tomatoes, corn-flour,
cherries, and two kinds of tobacco. Compound duties apply to two lines: wheat or meslin flour, and
mineral water in sealed containers (Table III.3).
16. In the Uruguay Round, South Africa on behalf of SACU countries committed itself to apply
tariff quotas to a range of agricultural products, under the minimum market-access commitments, at
maximum tariffs of 20% of the bound rates. Products subject to the commitments include animal
products, potatoes, vegetables, fruits, cereals, coffee, tea, oil seeds, sugar, food preparations, wine and
spirits, vinegar, tobacco, and cotton. Initial quotas are expected to increase for, inter alia , meat of
sheep, fresh milk and cream, cheese, eggs, certain cereals, potatoes, and sugar (Table AIII.1).
                                                     
42 An infant industry is defined as an industry established in the area of BLNS for not more than 8
years. Article 26 of the 2001 SACU Agreement.
43 The conversion of non- ad valorem  duties into ad valorem  tariff rates would substantially increase the
number of tiers, the maximum value, and certain averages.
44 WTO (1998), Trade Policy Review of  SACU, Geneva.
45 The number of mixed duties in WTO (1998) comprises both mixed and "other" duties.SACU WT/TPR/S/114
Page 23
Table III.2
MFN tariff distribution, by type of duty, 2002
Type of duty Number
of lines
(8-digit
HS)Examples
(HS chapters)
Ad valorem 5,933 All HS chapters
Specific 195 02, 03, 04, 07, 08, 09, 10, 11, 12, 16, 17, 19, 20, 21, 22, 24, 27, 38, 52, 63
Compound 2 11, 22
Mixed 1,774
Type 1 (25% or 70c/kg.) 65 03, 16, 20, 62 , 63, 64
Type 2 (325c/kg with a maximum of 39%.) 114 07, 16, 19, 20, 27, 52, 55, 63
Type 3 (22% or 27% with a maximum of
2880c/kg.)1,595 51, 52, 54, 55, 58, 59, 60, 61, 62
Formula 5 19, 20, 24
Total lines 7,909
Source : WTO Secretariat estimates, based on data provided by South Africa.
Table III.3
Formula and compound duties, 2002
HS Heading Product description Duty
Formula duties
20021090 Other tomatoes prepared or preserved otherwise than by vinegar or acetic acid 110¢/kg. less 80%
19019010 Cornflour 10% or 55¢/kg. less 90%
20060030 Cherries, drained or glace 20% or 215¢/kg. less 80%
24011000 Tobacco, not stemmed or stripped 15% or 860¢/kg. less 85%
24012000 Tobacco, partly or wholly stemmed or stripped 15% or 860¢/kg. less 85%
Compound duties
11010000 Wheat or meslin flour 20% plus 29.4¢/ kg.
22029020 Other non-alcoholic beverages: in sealed containers holding 2.5l or less (excluding
those in collapsible plastic tubes and those with a basis of milk)25% plus 1.04¢/ litre
Source : WTO Secretariat, based on data provided by South Africa.
(ii) MFN applied tariff structure
17. For the purpose of tariff analysis, specific duties, as well as specific components of compound
duties, have been ignored. Only ad valorem  duties, even when referred to as minima or maxima, as
well as the ad valorem  components of compound duties, are used for the calculations.46 For this
reason, the analysis may, to a certain extent, be misleading. For instance, the elimination of the
specific components of compound duties is likely to introduce a downward bias in the estimates.
Furthermore, the ad valorem  equivalents of certain non- ad valorem  duties may be relatively high;
formula duties in particular may range up to extremely high rates (Box III.1).
                                                     
46 Thus the analysis is based on 7,713 tariff lines, out of a total number of 7,909 lines, i.e. 196 lines
(195 specific duties, and 1 formula duty) were not taken into account.WT/TPR/S/114 Trade Policy Review
Page 24
Box III.1:  Selected aspects of the SACU tariff structure
Formula duties were designed to combat "disruptive competition" (e.g. dumping, export subsidies, distress selling
in cases of temporary surplus, arbitrary pricing in non-market economies, and price manipulation in intra-group
transactions) by maintaining domestic prices above set fl oors.  For this purpose, formula duties are automatically
adjusted with changes in international prices.  The formula duty generally applies the higher of two rates and is
based on the relationship between the f.o.b. import price and a reference price:  either an ad valorem  duty applies,
or the amount of customs duty payable on each unit of th e good is calculated as the difference between the
reference price and the f.o.b. price net of the otherwise payable ad valorem  amount of duty.
Let θ be the ad valorem rate, P m the reference price and P z the f.o.b. import price, the formula-duty system can be
summarized as follows:  if P z ≥ Pm , then the ad valorem  rate θ applies;  otherwise, i.e. if P m > P z, the amount of
duty payable (D c) is calculated using the following formula:
Dc = P m - (1 - θ)Pz.
The ad valorem  equivalent rate θc that yields D c is:
θc = D c/Pz = (P m - (1 - θ)Pz) / P z = (P m /Pz) + θ - 1.
This expression means that, for a given reference price P m and an ad valorem  rate θ, the ad valorem  equivalent, θc,
increases as f.o.b. prices decline.  Since (P m/Pz) is higher than 1, then {(P m/Pz )-1} is positive and θ is lower than
θc, which may take any value between θ, its lowest level, and infinity.  Therefore, the maximum tariff protection is
indefinite, the maximum ad valorem  rates formerly set for certain form ula duties having been eliminated.
For example, on drained or glacé cherries, the formula duty  applies 20% if the import price is at least 215¢/kg.,
otherwise if the f.o.b. import price is lower than 215¢/kg., the amount of duty payable will be 215¢/kg. less 80%
of the import price.  If the import price is 100¢/kg. for example, the duty payable will amount to:  Dc = 215¢ - (1 -
0.2)100¢ = 135¢/kg.;  therefore, the ad valorem  equivalent rate θc will be 135%.  On products such as tomatoes
prepared or preserved otherwise than by vinegar or acetic acid, no minimum ad valorem  rate is explicitly
specified.
Likewise, the level of protection afforded domestic producers by means of specific duties is not immediately
obvious and needs to be assessed; the duty-collection ratio (the ratio of tariff revenue to the import value) and the
ad valorem equivalent (the ratio of specific duties to im port prices) are generally used as estimates.
The duty-collection ratio underestimates the level of tariff  protection because the actual tariff revenue, as a result
of tariff exemptions and concessions, preferential tariff treatment, and inefficiencies in collection, does not reflect
the real tariff burden borne by fully dutiable imports.  Sin ce it is based on data that already included the impact of
tariff protection, this method can only be used (with caution) for a retrospective assessment;  it cannot be used to
assess the impact of a change in tariff for which revenue and import value have not been observed.  Therefore, the
method based on ad valorem  equivalents (AVEs), although limited by the estimate of an average price for the
wide variety of goods embodied in each  tariff line, is generally preferred.
Variations in import prices through fluctuations of world prices and/or exchange rates may continually affect the
structure of a given tariff with specific duties and make it difficult to assess the level of tariff protection (inversely
linked to the world prices and to the exchange rates) afforded domestic producers.  In a world of floating exchange
rates, such an assessment should be continual even if the tariff and world prices (in the currencies of exporting
countries) remain fixed.
Specific duties provide disparate levels of protection to domestic production of similar goods:  the basis of the
tariff being the unit of imported goods, its impact tends to be higher for relatively heavy/voluminous and cheap
products than for sophisticated high-value supplies within the same tariff category.  Since, for a given product,
import price may vary from one importer to another, so (inversely) does the level of tariff protection.  Moreover,
although the use of specific duties removes certain constraints resulting from obligations under the relevant WTO
Agreement, it provides no gains in terms of customs valuation, which has to be undertaken in any case for
internal-taxation purposes, for instance, the value-added tax (which is worldwide ad valorem ) or the sales tax,
depending on the SACU country.  Therefore, despite the seeming simplicity of their administration, specific duties
lack transparency and predictability.
Awareness of the shortcomings of the tariff, including its complexity, has led to widespread duty and tax
concessions granted to ensure positive escalation, with a view to further increasing the effective rate of protection.
Source:   WTO (1998), Trade Policy Review:  Southern African Customs Union, Geneva.SACU WT/TPR/S/114
Page 25
18. Subject to the preceding observations, the simple average rate of the 2002 applied MFN tariff
is 11.4% (Table AIII.2), down from 15% in 1997; while the standard deviation was reduced from
17.8% in 1997 to 12.6% in 2002. The coefficient of variation of 1.10 (down from 1.18 in 1997) still
depicts substantial relative dispersion of the tariff rates. The modal rate (the rate occurring most
frequently) is zero, and applies to some 43.4% of all tariff lines (down from 43.6% in 1997)
(Chart III.1). Duty-free items include: live animals, products of animal origin, ores, fertilizers, cork,pulp of wood, silk, some minerals (e.g. nickel, lead, zinc), and other base metals. Subject to the
limitations of the present analysis, relatively high tariffs apply to: some textile products (over 60% on
worn clothing and other worn articles (HS 6309 items)); 30% or above for articles of apparel, tobacco,
and carpets; and higher than 20% for footwear, umbrellas, beverages, preparations of cereals, fish and
crustaceans, and meat and edible meat offal.
19. By the International Standard Industrial Classification (ISIC) (Revision 2) of the UN, tariff
protection on manufacturing averages 11.8%, down from 15.6% in 1997. Tariffs average 5.5% in
agriculture (Major Division 1 of ISIC; down from  5.6% in 1997), and 0.7% in mining and quarrying
(down from 1.4% in 1997). Using the WTO definition
47, tariff protection is 9.6% for agricultural
products (up from 9.4% in 1997), against 11.6% fo r non-agricultural products (down from 15.7% in
1997).
                                                     
47 WTO definition of agriculture:  HS Chapte rs 01-24 less fish and fishery products (HS 0301-0307,
0509, 051191, 1504, 1603-1605 and 230120) plus some selected products (HS 290543, 290544, 290545, 3301,3501-3505, 380910, 382311-382319, 382360, 382370, 382460, 4101-4103, 4301, 5001-5003, 5105-5103, 5201-5203, 5301 and 5302).43.4
42.1
91.3
55.912.0
12.1
8.7
11.215.4
15.8
11.622.2
23.1
7.61.3
1.3
0.63.3
3.50.0
0.0
05001,0001,5002,0002,5003,0003,500
All products
Manufacturing
Mining
Agriculture
Duty Free 0- 10% 10- 20% 20- 30% 30- 40% 40- 50% >50%Chart III.1
MFN tariff distribution b y sector (ISIC1 definitions )a, 
Number of lines
a
Source:Labels are share by sector. Due to non- ad valorem  duties, they may not sum up to 100%.
WTO Secretariat calculations, based on data provided b y South Africa.WT/TPR/S/114 Trade Policy Review
Page 26
20. Tariff reforms have eroded the margins of tariff escalation (affecting negative more than
positive escalation). Nevertheless, in aggregate, the tariff still displays: positive escalation from first-
stage processed products, with an average tariff rate of 4.7% (down from 4.9% in 1997), to
semi-finished products, with an average rate of 12.9% (down from 18.6% in 1997); and negative
escalation from semi-finished to fully-processed products on which tariffs average 11.2% (down from
13.8% in 1997) (Chart III.2). Tariff escalation is mi xed in chemicals, petroleum, coal, rubber and
plastics, and basic metal industries. It is positive in all the other industries. This result is somewhat
misleading for the reasons discussed in the preceding observations and the provision of duty
concessions (not taken into account in the analysis).  Therefore, further tariff rationalization, through
simplification of the structure and reduction of rates, should introduce more transparency in the tariff
regime and reduce the need for concessions.
(iii) MFN bound tariffs
21. During the Uruguay Round, South Africa, on beha lf of all SACU countries, bound about 96%
of the tariff lines at the HS eight-digit level (Table III.4).48 However, Botswana and Lesotho have
some differences in tariff bindings compared to the other SACU members. All bindings are at  ad
valorem  rates, including lines to which specific, mixed, compound, or formula duties apply
(section (ii) above, and Box III.1).
                                                     
48 Calculated on the basis of the 2001 tariff schedule. This differs from the percentage in the previous
report because the total number of tariff lines fell from 12,681 to 7,819.0.05.010.015.020.025.030.035.0Raw materials Semi-processed Fully processedChart III.2
Tariff escalation by ISIC 2-digit, 2002
Per cent
Source : WTO Secretariat estimates, based on data provided b y South Africa.All 
productsFood, 
beveragesTextiles, 
apparelWood 
productsPaper, 
printingChemicals, 
plasticsNon-
metallic 
mineral 
productsBasic 
metal 
productsFabricated 
metal 
productsOther 
manufac-
turing
SACU WT/TPR/S/114
Page 27
Table III.4
Tariff bindings in SACU, post-Uruguay Round a
Number of
tariff
linesaAverage Maximum Fully
boundPartially
boundUnboundDescription
(per cent)
All products 7,817 20.9 597.0 96.1 0.1 3.9
HS 01-24 913 46.8 597.0 82.4 0.0 17.6
HS 25-97 6,904 18.1 185.0 97.9 0.1 2.0
WTO agriculture b846 43.5 597.0 99.5 0.0 0.5
 - Animals and products thereof 96 44.8 160.0 100.0 0.0 0.0
 - Dairy products 20 93.7 96.0 100.0 0.0 0.0
 - Coffee and tea, cocoa, sugar etc. 178 54.0 597.0 99.4 0.0 0.6
 - Cut flowers, Plants 44 10.6 60.0 100.0 0.0 0.0
 - Fruit and vegetables 182 30.7 99.0 100.0 0.0 0.0
 - Grains 16 30.8 72.0 100.0 0.0 0.0
 - Oil seeds, fats and oils and their Products 75 49.0 81.0 100.0 0.0 0.0
 - Beverages and spirits 49 145.2 597.0 100.0 0.0 0.0
 - Tobacco 13 51.7 54.0 100.0 0.0 0.0
 - Other agricultural products n.e.s. 173 16.9 72.0 98.3 0.0 1.7
WTO Non-agriculture c6,948 18.1 185.0 96.0 0.1 3.9
 - Wood, pulp, paper and furniture 273 11.4 30.0 100.0 0.0 0.0
 - Transport equipment 202 25.2 50.0 100.0 0.0 0.0
 - Non-electric machinery 638 10.8 30.0 100.0 0.0 0.0
 -  M e t a l s 7 6 01 3 . 93 0 . 09 9 . 7 0 . 1 0 . 3
 - Electric machinery 374 18.1 30.0 99.5 0.0 0.5
 - Chemicals and photographic supplies 1,290 13.3 185.0 99.5 0.0 0.5
 - Textile and clothing 2,162 26.8 45.0 99.4 0.0 0.6
 - Non-agriculture articles n.e.s. 463 13.0 30.0 94.4 0.2 5.4
 - Leather, rubber, footwear and travel goods 213 21.0 30.0 93.4 1.4 5.2
 - Mineral products, precious stones and precious metals 406 10.3 30.0 86.2 0.2 13.5
 - Fish and fishery products 167 21.1 37.0 4.2 0.0 95.8
Petroleum 23 - - 0.0 0.0 100.0
a The table covers all SACU members excluding Lesotho, which bound duties on all agriculture products at a ceiling rate of 200%
and on non-agricultural products at a ceiling rate of 60%.
b Botswana's concessions on agriculture products are the same except on dairy products (HS 04),  wheat, maize and rice (HS 1001,
1005 and 1006), groundnuts and sunflowers oil-seed (HS 1202 and 1206) and raw cotton (HS 5201), on which tariff rates arebound at 20%.
c Botswana's concessions on non-agricultural products are the same except on soda ash (ex HS 28) and small  tractors (ex HS
9701), on which tariff rates are bound at 20%.
Source : WTO Secretariat, based on South Africa's Uruguay Round Schedule XVII.
22. The simple average of the final bound rate for Namibia, South Africa, and Swaziland is
20.9%, with a maximum rate of 597% on products such as alcoholic beverages, and spirits
(HS Chapters 21, and 22).  More than three-fourths of the tariff is bound at 25% or lower, and 9.9% isbound at zero (Chart III.3). Unbound tariff lines cover mo stly: fish and fish products (HS Chapters 03,
15, and 16); mineral fuels, oils and products of their distillation, bituminous substances and mineral
waxes (HS Chapter 27); and arms and ammunition (HS Chapter 93). Tariffs on agricultural productsWT/TPR/S/114 Trade Policy Review
Page 28
(WTO definition) are bound at ceiling rates averaging 43.5%, while tariffs on non-agricultural
products are bound at ceiling rates averaging 18.1%. These leave margins for discretionary increases
in applied rates.
23. For Botswana, tariff bindings on WTO agricultural products are identical to those of Namibia,
South Africa, and Swaziland, with the exception of  dairy products (HS Chapter 04); wheat, maize,
and rice (HS headings 1001, 1005 and 1006); groundnuts and sunflower seeds (HS headings 1202 and
1206); and raw cotton (HS heading 5201), on which tariffs are bound at 20%. Tariff bindings on non-agricultural products are the same as those of South Africa, except for soda ash (HS Chapter 28ex),
and small tractors (HS heading 8701ex), on which tariffs are bound at 20%.
24. Lesotho's bindings differ from those of Na mibia, South Africa, and Swaziland in that
agricultural products are bound at a ceiling ra te of 200%, and non-agricultural products at 60%.
(iv) Tariff preferences
25. Under the SACU Agreement, goods  originating in a member country are traded free of duties
within the customs union (Chapter II(2)(i)). Unde r the SADC Trade Protocol, all SACU countries also
grant duty-free access, on a reciprocal basis, to imports of Category A products from SADC members
(Chapter II(4)). SACU countries also grant tariff preferences on a reciprocal basis under trade
agreements in which they participate individually. Consequently, tariff preferences may differ from
one SACU country to another.0.010.020.030.040.050.060.070.080.090.0100.0Chart III.3
Cumulative distribution of post-Uruguay Round bound tariffs
Per cent
Note:
Source:The cumulative percentage does not add up to 100% due to unbound duty items.
WTO Secretariat calculations, based on South-African Uruguay Round Schedule XVII.SACU WT/TPR/S/114
Page 29
(v) Other duties and charges
26. In addition to customs tariffs, certain products are also subject to excise duties, levies, and
VAT or sales tax.  Table III.5 shows SACU memb ers' binding commitments on other duties and
charges.
Table III.5
Binding of other duties and charges (ODCs) by SACU membersa, January 2003
HS code suffix Description Bound ODCs
07134000 Lentils 9.60R/T (Normal levy)+2.40R/T(Special levy)
07135000 Broad beans (Vicia faba var.
major) and horse beans
(Vicia faba var. equina, Vicia
faba var. minor)9.60R/T (Normal levy)+2.40R/T(Special levy)
07139010 Whole 9.60R/T (Normal levy)+2.40R/T(Special levy)
07139020 Skinned or split manioc,
arrowroot, salep, jerusalem
artichokes, sweet potatoesand similar roots and tubers
with high starch or inulin
content, fresh, chilled, frozenor dried, whether or not
sliced or in the form of
pellets; sago pith9.60R/T (Normal levy)+2.40R/T(Special levy)
10019000 Other 585c/T (Normal levy)
10030000 01  - Barley: purchased for feed
purposes657c/t (Normal levy)+3353c/T(Special levy)
10030000 02  - Other 657c/T (Normal levy)+7202c/T(Special levy)
10040000 Oats 586c/T (Normal levy)+3330c/T(Special levy)
10051000 Seed 3.93R/T (Normal levy)+70.06R-141.80R/T(Special levy)
10059000 Other 3.93R/T (Normal levy)+70.06R-141.80R/T(Special levy)
10070000 Grain sorghum 5R/T (Normal levy)+19.95R/T(Special levy)
11071020 Of barley 821c/T (Normal levy)+450c/T(Special levy)
11072020 Of barley 821c/T (Normal levy)+450c/T(Special levy)
12010000 Soya beans, whether or not
broken3.90R/T (Normal levy)
12021000 In shell 11.35R/T (Normal levy)+10.00R/T(Special levy)
12022000 Shelled, whether or not
broken8.23R/T (Normal levy)+7.25R/T(Special levy)
12060000 Sunflower seeds, whether or
not broken4.40R/T (Normal levy)
12092100 Lucerne (alfalfa) seed 18.48R/70kg. (Normal levy)
12129910 Chicory roots 89.10R/T (Normal levy)+44R/T(Special levy)
24011000 00 Tobacco, not
stemmed/stripped
24011000 01  - Flue-cured tobacco 3.3c/kg. (Normal levy)+75.9c/kg.(Special levy)
24011000 02  - Burley tobacco 3.3c/kg. (Normal levy)+42.9c/kg.(Special levy)
24011000 03  - Air-cured tobacco 3.3c/kg. (Normal levy)+16.5c/kg.(Special levy)
24011000 04  - Oriental tobacco 3.3c/kg. (Normal levy)+16.5c/kg.(Special levy)
24012000 00 Tobacco, partly or wholly
stemmed/stripped
24012000 01  - Flue-cured tobacco 3.3c/kg. (Normal levy)+75.9c/kg.(Special levy)
24012000 02  - Burley tobacco 3.3c/kg. (Normal levy)+42.9c/kg.(Special levy)
24012000 03  - Air-cured tobacco 3.3c/kg. (Normal levy)+16.5c/kg.(Special levy)
Table III.5 (cont'd)WT/TPR/S/114 Trade Policy Review
Page 30
HS code suffix Description Bound ODCs
24012000 04  - Oriental tobacco 3.3c/kg. (Normal levy)+16.5c/kg.(Special levy)
24013000 00 Tobacco refuse
24013000 01  - Flue-cured tobacco 3.3c/kg. (Normal levy)+75.9c/kg.(Special levy)
24013000 02  - Burley tobacco 3.3c/kg. (Normal levy)+42.9c/kg.(Special levy)
24013000 03  - Air-cured tobacco 3.3c/kg. (Normal levy)+16.5c/kg.(Special levy)
24013000 04  - Oriental tobacco 3.3c/kg. (Normal levy)+16.5c/kg.(Special levy)
51011100 Shorn wool 7.5% of gross selling price (Normal levy)+5.0% of gross selling price(Special
levy)
51011900 Other 7.5% of gross selling price (Normal levy)+5.0% of gross selling price(Special
levy)
51012100 Shorn wool 7.5% of gross selling price (Normal levy)+5.0% of gross selling price(Special
levy)
51012900 Other 7.5% of gross selling price (Normal levy)+5.0% of gross selling price(Special
levy)
51013010  Not bleached, dyed or
otherwise processed7.5% of gross selling price (Normal levy)+5.0% of gross selling price(Special
levy)
51013020 Bleached, dyed or otherwise
processed7.5% of gross selling price (Normal levy)+5.0% of gross selling price(Special
levy)
51021110 Not further processed than
bleached or dyed11.5c/kg. (Normal levy)+10.5c/kg. +(5*Ac)/100 where A=average gross
yield/kg. mohair sold through the Mohair Board(Special levy)
51021190 Other 11.5c/kg. (Normal levy)+10.5c/kg. +(5*Ac)/100 where A=average gross
yield/kg. mohair sold through the Mohair Board(Special levy)
51021910 Not further processed than
bleached or dyed11.5c/kg. (Normal levy)+10.5c/kg. +(5*Ac)/100 where A=average gross
yield/kg. mohair sold through the Mohair Board(Special levy)
51021990 Other 11.5c/kg. (Normal levy)+10.5c/kg. +(5*Ac)/100 where A=average gross
yield/kg. mohair sold through the Mohair Board(Special levy)
51022010 Not further processed than
bleached11.5c/kg. (Normal levy)+10.5c/kg. +(5*Ac)/100 where A=average gross
yield/kg. mohair sold through the Mohair Board(Special levy)
51022090 Other 11.5c/kg. (Normal levy)+10.5c/kg. +(5*Ac)/100 where A=average gross
yield/kg. mohair sold through the Mohair Board(Special levy)
52010010 Not ginned 4.4c/kg. cotton fibre (Normal levy)+3.3c/kg. cotton fibre(Special levy)
52010020 Ginned but not further
processed4.4c/kg. cotton fibre (Normal levy)+3.3c/kg. cotton fibre(Special levy)
52010090 Other 4.4c/kg. cotton fibre (Normal levy)+3.3c/kg. cotton fibre(Special levy)
a The table is for Botswana, Namibia, South Africa, and Swaziland. With the exception of the products contained in the table,
these countries have bound ODCs on all the other goods covered by their tariff binding at zero. Lesotho has bound ODCs on all 
products at zero.
Source : CTS file.  WTO Consolidated Tariff Schedules database (CTS).
(a) Excise duties
27. SACU countries levy specific, ad valorem  or formula excise duties on certain products; the
duties are generally the same on goods of the same class or kind, whether domestically produced orimported. However, specific excise duties on certain imported beverages such as mineral water,
lemonade, and flavoured mineral water, are higher than those collected on similar locally produced
goods (R 0.136 per litre on locally produced non-alcoholic beverages, against R 0.1466 per litre on
imports). Specific excise duties are also levied on prepared foodstuffs; beverages and spirits; tobacco;
mineral products; and products of the chemical or allied industries.
28. Ad valorem  excise duties are levied on certain manufactured products. The value for
ad valorem  excise duty purposes of imports includes an uplift of 15% of the transaction value and any
non-rebated customs duties.  The value for locally-manufactured products is the full and final price
(before deductions of any discount other than cash discounts) at which the goods are offered for saleSACU WT/TPR/S/114
Page 31
or consumption in the local market.  The modal (i.e. the most frequent) rate of ad valorem  excise
duties has decreased from 15% to 7% since the last Review; the minimum rate is 5%  (Table III.6).
The excise duty on certain categories of tractors, motor vehicles, and chassis, are calculated on the
basis of a formula, with a maximum rate of 20%.
Table III.6
Products subject to ad valorem  excise duties
Product description Rate(%)
Essential oils (terpeneless or not) 7
Perfumes and toilet waters 7
Beauty and make-up preparations for the care of skin (other than medicaments) 5
Preparations for use on the hair 5
Shaving preparations, personal deodorants, bath preparations, depilatories and other perfumery, cosmetic or toilet
preparations, not elsewhere specified or included5
Prepared room deodorisers whether or not perfumed or having disinfectant properties 5
Articles of apparel, clothing accessories and other articles of furskin 7
Artificial fur and articles thereof 7
Single loudspeakers, mounted in enclosures, other loudspeakers, audio-frequency electric amplifiers and electric sound
amplifier sets7
Turntables (record-desks), record-players, cassette-players and other sound reproducing apparatus, not incorporating a
sound recording device7
Magnetic tape recorders and other sound recording apparatus whether or not incorporating a sound reproducing device 7
Video recording or reproducing apparatus whether or not incorporating a video tuner 7
Prepared unrecorded media for sound or similar recording of other phenomena, other than photographic or
cinematographic goods7
Records, tapes and other recorded media for sound or other similarly recorded phenomena, excluding photographic or
cinematographic goods7
Reception apparatus for radio-telephony, radio-telegraphy or radio-broadcasting, whether or not combined in the same
housing, with sound recording or reproducing apparatus or a clock;  lenses, prisms, mirrors and other optical elements,
of any material, mounted, being parts of, or fittings for, instruments or apparatus, other than such elements of glass notoptically worked7
Sunglasses 7
Refracting telescopes, binocular or monocular, prismatic or not (excluding astronomical instruments) 7
Photographic (excluding cinematographic) cameras, photographic flashlight apparatus and flashbulbs (excluding
certain discharge lamps)7
Cinematographic cameras and projectors, whether or not incorporating sound recording or reproducing apparatus 7
Slide projectors and other image projectors (excluding cinematographic projectors and overhead projectors) 7
Photographic plates and film of any material, excluding paper, paperboard or textile 7
Side-cars, motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars, and
with a cylinder capacity exceeding 800cm37
Wrist-watches, pocket-watches and other watches, and clocks, excluding braille watches, tower, astronomical and
observatory clocks, instrument panel clocks, and clocks of similar types for vehicles aircrafts and vessels7
Revolvers and pistols (excluding target shooting pistols of 5.6 mm calibre), muzzle-loading firearms, other sporting,
hunting or target-shooting shotguns or rifles, and spring, air or gas guns and pistols, excluding those designed toproject missile suitable for the injection of animals.7
Certain categories of motorcycles, cycles and side-cars, with cylinder capacity exceeding 200 cm3 but not exceeding
800 cm35
Automatic goods-vending machines, television receivers, video games of a kind used with a television receiver, games
of skill or chance and related machines and parts thereof, excluding bowling alley equipment7
Printing machines, automatic typewriters and work-processing machines, calculating machines, automatic data
processing machines, facsimile transmission apparatus, certain external modems and parts thereof, and certain photo-
copying apparatus5
Under Schedule 1(2)(B), certain categories of tractors (HS8701.20), and motor vehicles, and chassis  (HS 8702.00;
8703.00;  8704.00;  and 8706.00)C, with a
maximum of
20%a
a C is the rate of excise duty  (in percentage) calculated on the basis of the following formula:  C = 35B.10-4 - 50, where B is the 
value for the ad valorem  excise duty purposes.
Source: WTO Secretariat, based on information provided by South Africa.WT/TPR/S/114 Trade Policy Review
Page 32
(b) VAT or sales tax
29. Each SACU country sets its own value-added tax (VAT) or sales tax. Botswana, Namibia,
and South Africa levy VAT at different rates (Annexes 1, 3, and 4); Lesotho and Swaziland still
impose sales taxes, also at different rates (Annexes  2 and 5). Differences in internal taxation between
SACU members increase transaction costs for tr aders, encourage smuggling and tax evasion, and
distort trade flows. In practice, when goods are exported from one SACU country to another, the
shipper applies for VAT/sales tax refunds from the exporting country, and then pays the relevant tax
to the importing country. Filing paperwork with two different countries unnecessarily increases the
costs of conducting international trade.49 In the absence of harmonization, border controls have to be
maintained within the SACU area. Harmonizing th e taxation system would be more trade-friendly,
and would foster economic integration within the region, and between the SACU area and the rest of
the world.
(vi) Duty and tax concessions
30. The 2002 SACU Agreement provides that members apply identical rebates, refunds or
drawbacks of customs duties on imported goods (C hapter II(2)(ii)). Throughout the SACU, products
exempt from normal customs formalities, such as diplomatic imports, are also exempt from paymentof both customs and excise duties. Rebates of customs and excise duties and temporary rebates of
customs duties on various categories of products are also available (Table III.7).
Table III.7
Products eligible for rebates of customs and excise duties
Products Schedule
Building material worked monumental building stone and articles thereof, tools and stores, for use by the War
Graves Commission and similar international organizations4, Part 1
Goods for cultural, educational, charitable, welfare or youth organizations or purposes 4, Part 1
Goods for heads of State, diplomatic and other foreign representatives, provided that the government of the
mission or the person who is claiming the rebate facility accords reciprocal treatment to South Africans in
similar positions4, Part 1
Goods imported by immigrants, tourists, returning residents and other passengers, for their personal use and
under specified conditions4, Part 1
Cups, medals and other trophies, awarded abroad to any person, and such articles for presentation;  goods
formerly exported (re-imported goods), provided that specified conditions are met (for instance, a permit for
re-importation issued by the Director-General of Agricultural Economics and Marketing is required for the
admission under rebates of re-imported butter, cheese, maize and maize products, sugar, wine, brandy and
spirituous beverages)4, Part 1
Goods, such as wooden cases, empty containers, master models and base oils for lubricating oil, for industrial
or commercial purposes4, Part 1
Goods (excluding corn or grain seed), for purposes of experimenting therewith as the department controlling or
supervising such experimenting may allow by specific permits, food containing soya-bean concentrates,
specially prepared for infants4, Part 1
Goods imported for the relief of distress of persons in cases of famine or other national disaster, under
technical assistance or multilateral international agreements to which South Africa is a party4, Part 1
Printed matters imported by airlines for their own use 4, Part 1
Parts and materials of plastics of a kind used for the manufacture of design engineering models of factories,
installations and the like4, Part 1
Table III.7 (cont'd)
                                                     
49 For example, the difference between South Africa's 14% VAT and Lesotho's 10% sales tax creates
an economic border of its own. When goods exit South Africa and enter Lesotho, the shipper applies for a VATrefund from South African authorities, and then pays a sales tax to Lesotho.SACU WT/TPR/S/114
Page 33
Products Schedule
Textiles fabrics woven from six different fibres, for testing dyestuff fastness 4, Part 1
Office furniture and equipment (excluding motor vehicles) for the official use by an organization (excluding a
business enterprise) approved by the Commissioner for Customs and Excise, transferring its administrative
operations to South Africa.4, Part 1
Potatoes, dried leguminous vegetables and fruit, cereals and oil seeds (solely for planting or sowing), rape
seed, sunflower seed, meat, fish, dairy products, plastics, rubber and rubber products, paper, not carded or
combed cotton, worn clothing and other worn items and chemical products.4, Part 2a
Under specified circumstances, lost, destroyed or damaged goods, in respect of which the fuel levy, together
with the customs duty, amounts not less than R 25004, Part 4b
Petrol and distillate fuels for use by the State President, diplomatic and other foreign representatives 6, Part 3c
Distillate fuels used for road and rail transport in agriculture or forestry, for the production of agricultural
goods, or used in forestry, whalers, trawlers and other ocean-going fishing or non-South African vessels.6, Part 1c
a Temporary rebates of customs duties.
b Rebates of the fuel levy.
c Refunds of fuel levy.
Source: Information provided by South Africa.
(4) C ONTINGENCY TRADE REMEDIES
31. Because of their membership of SACU, BLNS countries apply anti-dumping, countervailing,
and safeguard measures imposed by South Africa. These measures are mainly relevant to items
produced in South Africa, since the domestic industries of BLNS countries do not produce most of the
items concerned. Therefore, BLNS countries could be penalized by the imposition of these measures.
There has been no major change to the legislation on contingency trade remedies since the last TPR ofSACU. Chapter 6 of the 1964 Customs and Excise Ac t, and Section 4 of the Board on Tariffs and
Trade (BTT) Act, 1986, as amended in 1995 and 1997
50, provide the legal basis for anti-dumping,
countervailing, and safeguard measures in South Africa, and by extension in the SACU. The 2002
SACU Agreement recognizes the need to develop such legislation (as a priority) at the regional level,
with a view to consolidating the increasing liberalization of their markets.
32. Anti-dumping, countervailing, or safeguard actions are initiated by the BTT at the request of a
domestic (i.e. SACU) industry. After investigation, the BTT makes recommendations to the SouthAfrican Minister of Trade and Industry (MTI). The Minister of Finance may, by notice in the official
Gazette and in accordance with a request of th e MTI, impose, withdraw, or reduce anti-dumping,
countervailing, or safeguard duties, with or without retrospective effect. However, anti-dumping,
countervailing, and safeguard duties may only be imposed retroactively to the date of the imposition
of a provisional payment.
33. In April 1996, South Africa undertook, in the WTO Committees on Anti-Dumping Practices
and on Subsidies and Countervailing Measures, to amend its  legislation (by extension also SACU's)
on these matters with a view to ensuring its compliance with the requirements of the WTO
Agreements. At the request of the South African Ministry of Trade and Industry, the BTT investigated
the restructuring of the anti-dumping and countervailing system. The recommendations of the BTTwill be published in the second half of 2003, together with the proposed regulations.
(i) Anti-dumping and countervailing measures
34. Under the 1986 BTT Act, as amended, dumping occurs when the price of a good exported to
South Africa or the SACU area (the export price) is lower than the "normal value", defined as the
                                                     
50 Board on Tariffs and Trade Amendment Act, No. 39 of 1995, and Board on Tariffs and Trade
Amendment Act, No. 16 of 1997.WT/TPR/S/114 Trade Policy Review
Page 34
comparable price actually paid or payable in the ordinary course of trade for like goods intended for
consumption in the exporting country or countries of origin.51 In the absence of the price as defined,
the normal value will be the highest comparable price at which similar goods are actually exported to
any third country in the ordinary course of trade, or the constructed cost of production of goods in the
country of origin plus a "reasonable" addition for selling costs and profit.52
35. An export or a proposed export of goods to South Africa or the SACU area is deemed to be
subsidized if the authority of the exporting country or any other country provides any form of
financial aid or other assistance in respect of those goods, including assistance in respect of
production, manufacture, transport, or export.53 Procedures for anti-dumping and countervailing
actions are essentially the same as at the time of the previous TPR of SACU.54
36. South Africa reported initiating 157 anti-dumping investigations and applying 106 anti-
dumping measures during the period 1 January 1995 through 30 June 2002, making it the fifth largest
user of anti-dumping actions (after the Un ited States, the EU, India, and Argentina).55 As at
30 June 2002, South Africa had 98 definitive anti-dumping duties in force (Chart III.4), compared
with 35 at the end of 1996. In terms of anti-dumping initiations by country of origin during
1995-June 2002, 30.8% were against members of the EU, 9.6% each against China and India, and8.3% against the Republic of Korea. The South African anti-dumping measures have mostly affected
chemical and products thereof, basic metal products, glass and glassware products, and textiles and
clothing (Chart III.4).
37. Between August 1998 and 30 June 2002, South Africa initiated ten countervailing
investigations. In one case no subsidization was found, while in three others, definitive duties were
imposed; one was still reported as at 30 June 2002 regarding welded galvanized steel pipe
(Table III.8).
                                                     
51 The export price is defined as the price actually paid or payable for goods sold for export net of all
taxes, discounts, and rebates actually granted and directly related to the sale under consideration. In the absence
of an export price or where it is unreliable, the export price is constructed by the BTT.
52 Allowance is made for differences in conditions, terms of sales and taxation, and for other
differences affecting price comparability.
53 Board on Tariffs and Trade Act (as amended).
54 For a complete description abou t the procedures for anti-dumping and countervailing actions, see
WTO (1998).
55 WTO (2002).SACU WT/TPR/S/114
Page 35
020406080100120
1995 1996 1997 1998 1999 2000 2001 June 2002
Source :  Notifications to the WTO;  and information provided by South Africa.Indonesia 3.3United States 4.5
Malaysia 3.2EU
30.8
Base metals
 & products 
thereof
16.3
Korea, 
Rep. of
8.3Chinese Taipei 2.6Australia 2.6Chemicals & products 
thereof
37.9
Pulp of wood,
paper or 
paperboard
4.8Machinery, 
mech. appliances 
& electrical equip.
     9.0(b) Initiations by product
Per cent(c) Initiations by origin 
Per centChart III.4
Anti-dumping measures, January 1995 to June 2002
(a) Number of cases initiated and measures in force
Cases initiated 
Plastics & 
rubber, products 
thereof
4.0Textiles & 
articles thereof
10.6Other
5.8
India
9.6Hong Kong, China
4.5
China, 
P.R. of
9.6Measures in forcea
a    Anti-dumping measures in force on 31 December, except for 2002 which refer to 30 June.
Other
9.1
Other 
Europe
4.9
Glass and 
glassware
11.6Brazil 2.6Africa
4.4WT/TPR/S/114 Trade Policy Review
Page 36
Table III.8
Countervailing measures, 1 July 1998 to 30 June 2002
Country/
ProductInitiation Provisional
measure/de-
terminationFinal measure No final measure
Definitive
dutyPrice
undertakingNo
subsidizationOther
India
Footwear 15.09.99 06.07.01 ../n.a. ../n.a. ../n.a. ../n.a.
Wire ropes 22.09.00 17%
08.02.02../n.a. ../n.a. ../n.a. ../n.a.
Welded
galvanized
steel pipes16.03.01 7.3%
08.02.027.3%
14.06.02../n.a. ../n.a. ../n.a.
Suspension
PVC24.03.00 15.12.00 21.77%
15.06.01../n.a. ../n.a. ../n.a.
PVC rolled
goods25.08.00 No duty
09.11.01../n.a. ../n.a. ../n.a. 28.06.02
Acetamino-
phenol02.02.99 ../n.a. 24.11.00 ../n.a. ../n.a. 29.06.01
Overhead
aluminium
steelreinforced
conductor
cable30.04.99 No duty
20.04.00../n.a. ../n.a. 25.05.01 ../n.a.
Paper
insulated
coveredelectric cable21.08.98 No duty
07.05.99../n.a. ../n.a. ../n.a. 05.11.99
Korea, Rep. of
Wire ropes 22.09.00 ../n.a. ../n.a. ../n.a. ../n.a. ../n.a.
Pakistan
Bed linen 24.03.00 30.07.01 ../n.a. ../n.a. ../n.a. ../n.a.
../n.a. Not available or not applicable.
Source: WTO documents G/SCM/N/47/ZAF, 16 April 1999; G/SCM/N/52/ZAF, 14 October 1999; G/SCM/N/56/ZAF, 
5 April 2000; G/SCM/N/62/ZAF, 25 September 2000; G/SCM/N/68/ZAF, 9 March 2001; G/SCM/N/75/ZAF, 2 August 2001; G/SCM/N/81/ZAF, 18 March 2002; and G/ SCM/N/87/ZAF, 26 September 2002;  and information 
from the authorities of South Africa.
(ii) Safeguard measures
38. In South Africa, and by extension in SACU, safeguard actions are taken in the case of
"disruptive competition". Under the BTT Act, as amended in 1997, disruptive competition is "the
export of goods to South Africa or the common customs area of the SACU in such increased
quantities, absolute or relative to domestic production in South Africa or the common customs area of
the SACU which produces like or directly competitive products".56  The 1997 amendments to the
BTT Act were to bring the definition of disrup tive competition fully into line with the WTO
                                                     
56 Board on Tariffs and Trade Act (as amended).SACU WT/TPR/S/114
Page 37
Agreement on Safeguards. The 1997 amendments to the Customs and Excise Act provide a legal
mechanism for the institution of provisional safeguard measures.57
39. During the period under review, South Africa, and by extension SACU, has not introduced
any new safeguard measure. However, some items under HS Chapter 27 (mineral fuels, mineral oils,
and products of their distillation), and new tyres (40.11), were notified by South Africa under
Article 11.1 of the WTO Agreement on Safeguards.58  In accordance with the phasing-out/removal
timetable provided by South Africa in this regard, import control on Chapter 27 products were to be
phased out or brought into conformity with the WTO by the end of 1998, and import control on new
tyres would have been removed since 1996.  However, import controls still apply to these products,
for strategic reasons in the case of mineral fuels/oils, or for monitoring quality specifications purposes
with respect to new tyres (Annex 4, Table III.1).
40. South Africa, and by extension SACU, retained  the right to use the transitional safeguard
mechanism of Article 6 of the WTO Agreement on Te xtiles and Clothing, but has not made use of it.
As reported in the previous Review, South Africa notified on time the list of textile and clothing
products integrated into GATT 1994 during Phases I and II.59  However, South Africa has yet to
notify its schedule for Phase III.
41. As at the end of October 2002, South Africa, and by extension SACU, had not invoked the
special safeguard right it retained under Article 5 of the WTO Agreement on Agriculture.  There is no
provision for special safeguards in the SACU Agreement.
42. SACU members have taken no trade measures  for balance-of-payment purposes since 1998.
(5) S TANDARDS AND TECHNICAL REGULATIONS
43. SACU countries do not have a common policy on standards and technical regulations.
South African standards, however, are generally used in Lesotho and Namibia, whereas Botswana
established its own Bureau of Standards in 1995, and Swaziland enacted its Standards and Quality Act
in 2001 (Annexes).  Article 28 of the 2002 SACU Ag reement provides that members shall harmonize
product standards and technical regulations within the common customs area, and apply product
standards and technical regulations in accordance with the WTO Agreement on Technical Barriers to
Trade.
44. Article 30 of the 2002 SACU Agreement indicates  that members reserve the right to apply
sanitary and phytosanitary (SPS) measures in accordance with their national SPS laws and
international standards.  Subject to the provisions of Article 18 of the Agreement, SACU countries
recognize the importance of measures prescribing zoo-sanitary and phytosanitary requirements aimed
at preventing the spread of animal and plant diseases, parasites and insects, and agree to consult fromtime to time to achieve such an aim in the comm on customs area, with due regard to the need to
facilitate the flow of trade in products affected by such measures.
                                                     
57 The amendments also provide for the application of provisional measures in respect of safeguard
duties in a similar manner as is currently provided for in respect of anti-dumping and countervailing duties.
58 WTO document G/SG/N/5/ZAF, 18 June 1995.
59 WTO documents G/TMB/N/114, 10 August 1995, and G/TMB/N/197/Rev.1, 26 November 1996 for
Phase I products, and WTO document G/TMB/N/307, 24 November 1997, for Phase II.SACU WT/TPR/S/114
Page 39
REFERENCES
Coughlin, P. and S. Undenge (2001), Study of the Textile and Garment Industries:  Malawi , paper
commissioned by SADC, April, Gaborone.
DTI (2001), "Working Paper Concerning the Establis hment of the CITA", draft, November, Pretoria.
Imani Development (Malawi) Ltd. (2001a), "Draftin g Briefing Paper on Regional Trade Agreements",
September, Lilongwe.
Imani Development (Malawi) Ltd. (2001b), "Overview of Malawi's Trade Relations Both Regionally
and Internationally", paper prepared for the Royal Norwegian Embassy, January, Lilongwe.
WTO (1998), Trade Policy Review – Southern African Customs Union , Geneva.
WTO (2002), Annual Report , Geneva.
UNAIDS (2002), Joint United Nations Programme on HIV/AIDS , Geneva.APPENDIX TABLESSACU WT/TPR/S/114
Page 43
Table AIII.1
Tariff quotas on agricultural products, 15 April 1994a
HS code Description of products Initial quota Final quota
Quantity
(tonnes)Quantity
(tonnes)
0201 & 0202 Meat of bovine animals 26,254 26,254
0203 Meat of swine 2,814 4,691
0204 Meat of sheep 3,601 6,002
0206 Edible offal 2,544 2,544
0207 Meat and edible offal of poultry 17,420 29,033
0401 Milk and cream, fresh 32,194 53,657
0402 Milk powder 4,470 4,470
0403 Buttermilk and yoghurt 213 213
0404 Whey 2,786 2,786
0405 Butter 1,167 1,167
0406 Cheese 1,557 1,989
0407 & 0408 Eggs 5,400 9,000
0701 Potatoes 28,897 48,161
0705.20 Chicory, fresh 4 4
0708 Peas and beans, fresh 263 263
0710 Vegetables frozen 583 583
0712 Dried vegetables 860 860
0713.20 & 0713.90 Dried peas 5,184 5,184
0713.30 Dried beans 11,063 11,063
0713.40 Lentils 1,601 1,601
0806.20 Grapes, dried 238 397
0813 Dried fruit 259 349
0901 Coffee 15,746 15,746
0902 Tea 11,375 11,375
1001 & 1100 Ex Wheat or wheat equivalent 97,333 108,279
1002 Rye 50 83
1003 Barley 14,552 14,552
1004 & 1100 Ex Oats or oats equivalent 7,333 7,333
1005 & 1100 Ex Maize or maize equivalent 161,400 269,000
1007 Grain Sorghum 12,670 21,116
1008 Other cereals 145 145
1100 Ex Barley equivalent 96,248 96,248
1201 Soya beans 1,030 1,717
1202 Groundnuts 7,908 7,908
1204 Linseed 202 202
1205 Rapeseed 871 871
1206 Sunflowerseed 8,709 14,514
1209.21 Lucerne seed 576 576
1507, 1508, 1510,
1511, 1512, 1513,
1514, 1515.Vegetable oils 61,083 61,083
1701 Sugar 46,667 62,037
1702 Other sugars 6,391 6,391
1703 Molasses 20,720 34,533
Table AIII.1 (cont'd)WT/TPR/S/114 Trade Policy Review
Page 44
HS code Description of products Initial quota Final quota
Quantity
(tonnes)Quantity
(tonnes)
1901 Malt extracts 6,119 6,119
1902 Pasta 1,749 1,749
1903 Tapioca 5,448 5,448
2008 Ex Preserved fruit and nuts 1,636 1,636
2106 Food  preparations 3,109 3,109
2204, 2205, 2206,
2207, 2208Wine and spirits (litres) 9,572,405 9,572,405
2209 Vinegar (litres) 15,000 15,000
2303 Corn gluten feed 3,960 3960
2304, 2305, 2306 Oilcake 120,667 120,667
2306
2401 Tobacco 16,773 16,773
5201 Cotton 17,101 17,101
a In the Uruguay Round, South Africa on behalf of SACU countries, committed itself to apply quotas to a range of 
agricultural products, under the minimum market-access commitments, at maximum tariffs of 20% of bound rates.
Source: Schedule XVIII – South Africa.SACU WT/TPR/S/114
Page 45
Table AIII.2
SACU's tariff by HS chapter, 2002
HS
codeNumber
of linesDescription Simple average Range Standard
deviation
7,909 Total 11.4 0 - 60 12.6
948 HS 01-24 11.5 0-55 12.3
6,961 HS 25-97 11.4 0-60 12.6
876 WTO agriculture 9.6 0-55 11.8
7,033 WTO industry (including petroleum) 11.6 0-60 12.6
01 23 Live animals 0.0 0 0.0
02 65 Meat and edible meat offal 20.2 0 - 40 18.4
03 122 Fish and crustaceans, molluscs and other aquatic invertebrates 20.8 0 - 30 9.5
04 28 Dairy produce; birds' eggs; natural honey; edible products of animal
origin, not elsewhere specified or included8.2 0 - 22 10.1
05 24 Products of animal origin, not elsewhere specified or included 0.0 0 0.0
06 12 Live trees and other plants; bulbs, roots and the like; cut flowers and
ornamental foliage8.3 0 - 20 10.3
07 71 Edible vegetables and certain roots and tubers 11.0 0 – 39 10.0
08 61 Edible fruit and nuts; peel of citrus fruit or melons 7.6 0 – 35 8.2
09 39 Coffee, tea, maté and spices 2.4 0 – 25 6.7
10 16 Cereals 2.5 0 – 25 6.9
11 50 Products of the milling industry; malt; starches; inulin; wheat gluten 8.3 0 – 20 8.8
12 51 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit;
industrial or medicinal plants; straw and fodder6.7 0 – 20 7.5
13 16 Lac; gums, resins and other vegetable saps and extracts 5.6 0 – 25 8.1
14 10 Vegetable plaiting materials; vegetable products not elsewhere
specified or included1.5 0 – 15 4.7
15 54 Animal or vegetable fats and oils and their cleavage products; prepared
edible fats; animal or vegetable waxes7.4 0 – 10 4.4
16 65 Preparations of meat, of fish or of crustaceans, molluscs or other
aquatic invertebrates19.5 0 – 50 15.4
17 16 Sugars and sugar confectionery 4.2 0 – 25 9.7
18 12 Cocoa and cocoa preparations 9.3 0 – 21 9.8
19 28 Preparations of cereals, flour, starch or milk; pastrycooks' products 21.2 0 – 30 7.1
20 68 Preparations of vegetables, fruit, nuts or other parts of plants 18.0 0 – 55 11.0
21 31 Miscellaneous edible preparations 14.1 0 – 30 9.5
22 38 Beverages, spirits and vinegar 21.3 0 – 25 8.8
23 35 Residues and waste from the food industries; prepared animal fodder 4.1 0 – 20 5.9
24 13 Tobacco and manufactured t obacco substitutes 31.8 0 – 45 16.9
25 72 Salt; sulphur; earths and stone; plastering materials, lime and cement 1.0 0 – 10 2.7
26 37 Ores, slag and ash 0.0 0 0.0
27 79 Mineral fuels, mineral oils and products of their distillation; bituminous
substances; mineral waxes4.4 0 – 20 6.8
28 194 Inorganic chemicals; organic or inorganic compounds of precious
metals, of rare-earth metals, of radioactive elements or of isotopes0.9 0 – 20 3.2
29 450 Organic chemicals 1.5 0 – 22 4.1
30 34 Pharmaceutical products 0.6 0 – 20 3.4
31 26 Fertilizers 0.0 0 0.0
32 54 Tanning or dyeing extracts; tannins and their derivatives; dyes,
pigments and other colouring matter; paints and varnishes; putty andother mastics; inks2.8 0 – 10 4.5
Table AIII.2 (cont'd)WT/TPR/S/114 Trade Policy Review
Page 46
HS
codeNumber
of linesDescription Simple average Range Standard
deviation
33 46 Essential oils and resinoids; perfumery, cosmetic or toilet preparations
soap, organic surface-active agents, washing preparations, lubricatingpreparations, artificial waxes, prepared waxes, polishing or scouringpreparations, candles and similar articl9.8 0 – 20 9.1
34 27 Soap, organic surface-active agents, washing preparations, lubricating
preparations, artificial waxes, prepared waxes, polishing or scouringpreparations, candles and similar articles, modelling pastes, 'dentalwaxes and dental preparations with a basis13.5 0 – 20 7.8
35 20 Albuminoidal substances; modified starches; glues; enzymes 2.8 0 – 20 5.9
36 8 Explosives; pyrotechnic products; matches; pyrophoric alloys; certain
combustible preparations3.1 0 – 15 5.9
37 50 Photographic or cinematographic goods 5.4 0 – 15 6.8
38 107 Miscellaneous chemical products 2.9 0 – 10 4.6
39 301 Plastics and articles thereof 8.2 0 – 20 7.3
40 133 Rubber and articles thereof 9.4 0 – 43 9.6
41 46 Raw hides and skins (other than furskins) and leather 3.9 0 – 10 4.9
42 22 Articles of leather; saddlery and harness; travel goods, handbags and
similar containers; articles of animal gut (other than silk-worm gut)25.2 0 – 30 8.7
43 14 Furskins and artificial fur; manufactures thereof 10.7 0 – 30 12.4
44 80 Wood and articles of wood; wood charcoal 8.0 0 – 30 8.4
45 7 Cork and articles of cork 0.0 0 0.0
46 6 Manufactures of straw, of esparto or of other plaiting materials;
basketware and wickerwork16.7 0 – 20 8.2
47 20 Pulp of wood or of other fibrous cellulosic material; recovered (waste
and scrap) paper and paperboard0.0 0 0.0
48 122 Paper and paperboard; articles of paper pulp, of paper or of paperboard 7.1 0 – 20 6.1
49 27 Printed books, newspapers, pictures and other products of the printing
industry; manuscripts, typescripts and plans4.3 0 – 15 6.6
50 10 Silk 0.0 0 0.0
51 53 Wool, fine or coarse animal hair; horsehair yarn and woven fabric 9.4 0 – 24 10.5
52 446 Cotton 22.7 0 – 24 3.5
53 29 Other vegetable textile fibres; paper yarn and woven fabrics of paper
yarn2.8 0 – 20 7.0
54 346 Man-made filaments 22.3 0 – 24 5.2
55 598 Man-made staple fibres 23.0 0 – 24 4.1
56 42 Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and
cables and articles thereof14.6 0 – 20 5.0
57 23 Carpets and other textile floor coverings 30.0 30 0.0
58 52 Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings;
embroidery18.6 0 – 25 8.9
59 65 Impregnated, coated, covered or laminated textile fabrics; textile
articles of a kind suitable for industrial use12.7 0 – 27 9.6
60 181 Knitted or crocheted fabrics 21.9 5 – 24 5.3
61 148 Articles of apparel and clothing accessories, knitted or crocheted 43.7 0 – 47 10.5
62 148 Articles of apparel and clothing accessories, not knitted or crocheted 42.4 0 – 47 11.2
63 82 Other made up textile articles; sets; worn clothing and worn textile
articles; rags27.8 0 – 60 9.8
64 56 Footwear, gaiters and the like; parts of such articles 22.6 0 – 30 11.4
65 13 Headgear and parts thereof 20.0 0 – 30 10.8
66 7 Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-
crops and parts thereof25.0 20 – 30 5.0
Table AIII.2 (cont'd)SACU WT/TPR/S/114
Page 47
HS
codeNumber
of linesDescription Simple average Range Standard
deviation
67 8 Prepared feathers and down and articles made of feathers or of down;
artificial flowers; articles of human hair17.5 0 – 20 7.1
68 56 Articles of stone, plaster, cement, asbestos, mica or similar materials 5.6 0 – 15 7.3
69 29 Ceramic products 8.6 0 – 30 11.6
70 102 Glass and glassware 7.7 0 – 20 6.0
71 58 Natural or cultured pearls, precious or semi-precious stones, precious
metals, metals clad with precious metal, and articles thereof; imitation
jewellery; coin4.4 0 – 20 8.3
72 175 Iron and steel 3.1 0 – 5 2.4
73 183 Articles of iron or steel 6.7 0 – 30 6.4
74 69 Copper and articles thereof 5.1 0 – 20 6.1
75 17 Nickel and articles thereof 0.0 0 0.0
76 68 Aluminium and articles thereof 6.0 0 – 30 6.7
78 10 Lead and articles thereof 0.0 0 0.0
79 10 Zinc and articles thereof 0.0 0 0.0
80 8 Tin and articles thereof 0.0 0 0.0
81 51 Other base metals; cermets; articles thereof 0.0 0 0.0
82 117 Tools, implements, cutlery, spoons and forks, of base metal; parts
thereof of base metal10.0 0 – 30 10.1
83 47 Miscellaneous articles of base metal 12.1 0 – 20 8.4
84 629 Nuclear reactors, boilers, machinery and mechanical appliances; parts
thereof2.7 0 – 30 6.1
85 403 Electrical machinery and equipment and parts thereof; sound recorders
and reproducers, television image and sound recorders and reproducers,
and parts and accessories of such articles6.1 0 – 25 7.7
86 25 Railway or tramway locomotives, rolling-stock and parts thereof;
railway or tramway track fixtures and fittings and parts thereof;mechanical (including electro-mechanical) traffic signalling equipment
of all kinds0.4 0 – 10 2.0
87 156 Vehicles other than railway or tramway rolling-stock,and parts and
accessories thereof12.5 0 – 35 12.0
88 17 Aircraft, spacecraft, and parts thereof 0.0 0 0.0
89 18 Ships, boats and floating structures 2.2 0 – 10 4.3
90 167 Optical, photographic, cinematographic, measuring, checking,
precision, medical or surgical instruments and apparatus; parts and
accessories thereof0.4 0 – 20 2.5
91 53 Clocks and watches and parts thereof 0.0 0 0.0
92 23 Musical instruments; parts and accessories of such articles 0.0 0 0.0
93 28 Arms and ammunition; parts and accessories thereof 11.8 0 – 15 6.3
94 46 Furniture; bedding, mattresses, mattress supports, cushions and similar
stuffed furnishings; lamps and lighting fittings, not elsewhere specifiedor included; illuminated signs, illuminated name-plates and the like;
prefabricated buildings13.9 0 – 20 9.3
95 44 Toys, games and sports requisites; parts and accessories thereof 2.3 0 – 30 7.4
96 56 Miscellaneous manufactured articles 9.4 0 - 20 8.7
97 7 Works of art, collectors' pieces and antiques 0.0 0 0.0
Source : WTO Secretariat calculations, based on data provided by South Africa.