SACU: A one way Lotto?

Hilton Zunckel responded to the comments as contained in the following letters which appeared in Business Day: Free to choose (August 31), the letter by Gerhard Erasmus, SACU a vehicle for development (September 5), and Wallie Roux, What Union (13 September).

While SACU is able to boast being the worlds oldest surviving customs union (circa 1910), on a functional level one is often surprised that the member countries are bold enough to refer to the Union’s treaty as a customs union. In practice we find that the vast array of exceptions provided for in the text have long been generously interpreted and questionably applied to the extent that the functional operation on a business level is plagued by an arrangement where the exception has in fact become the rule. This is especially so in the agricultural sector where border closures, permits, duty rebates, market sharing arrangements and local content requirements still abound to bedevil the true spirit of a customs union. In a customs union scenario the member states relinquish their regional trading sovereignty and in effect become like provinces of a single country for trade. In this way a trader in Johannesburg should see no difference between the market in Cape Town or the markets in Maseru, Gaberone, Mbabane or Windhoek. That is what a customs union is supposed to be all about. However, try and move even a basic staple food commodity like bread flour between the national ‘provinces’ of the Union and you will find that only South Africa will accept the trade. The other ‘provinces’ remain strangely loathe to reciprocate and remain closed.

More concerning however is that what SACU essentially entails is not free regional trade, but a sure lotto win of a guaranteed payout transferring funds from the South African tax payer to the treasuries (and then not necessarily citizens) of our neighbours. Fiscal discipline is not governed by SACU and recipient states are in fact sovereign in this sense to blow the lotto winnings at their discretion. Whether this is for rural development or palaces for royal wives is at the sole discretion of the lotto winner.

Erasmus is correct in stating that the institutions are provided for and Roux is correct in pointing out that they are far from functional. Unfortunately this is precisely what business needs from SACU – functioning institutions like a decent tribunal to ensure that those grinning with their winnings are at least expected to buy a ticket.