MERCOSUR and Southern African Customs Union Strengthen Relations
The two blocs are seeking to consolidate trade through a preferential tariff system
The Administrative Committee for the Agreement between the Southern Common Market (MERCOSUR) (link in Spanish) and the Southern African Customs Union (SACU), which is made up of South Africa, Namibia, Lesotho, Swaziland, and Botswana, held its first meeting (link in Spanish), signaling new rapprochement between the two blocs.
The aim of the meeting was to work on the Preferential Trade Agreement between the MERCOSUR and SACU, which was signed in April 2009 and subsequently ratified by the member countries. This is a fixed preference agreement in which the tariffs on a certain number of products are totally or partially eliminated.
Specifically, the SACU grants the MERCOSUR preference on 1064 tariff positions (from the 2007 Harmonized System), which represent approximately 10% of the tariff universe. Tariffs will be entirely eliminated on nearly half of these positions (470). The rest will be distributed as follows: 167 positions will receive a 50% preference, 144 positions will receive one of 25%, and 283 positions will receive one of 10%. As a consequence of the agreement, the average tariff for the positions included in SACU’s offer will go from 9.5% to 7.2%.
The agreement entered into force on April 1, 2016, and covers (link in Spanish) the textile, manufacturing, machinery, chemical, and mineral sectors, among others, and thus marks a milestone in South-South relations.
The SACU working group was chaired by the Department of Trade and Industry of South Africa, and the MERCOSUR delegation was led by Argentina, which holds the pro-tempore presidency of the bloc.
The two groups agreed on tasks to publicize the benefits of this agreement and urged the private sector in each country to take advantage of it. It was agreed that the next meeting would take place in 2018.