The Politics of Trade in the Southern African Customs Union (Sacu)

The Southern African Customs Union (SACU) and China intend to negotiate a free trade agreement to promote trade and investment between their markets. Yet, SACU's colonial legacy continues to debilitate the economies of its weaker member states. Administrative and operational discrepancies threaten the integrity of the customs union, further complicated by third parties.This study assesses the politics of trade in SACU, and the prospect of a FTA with the China. It explores the quantity and quality of trade between the parties, as well as the role of the state in encouraging economic diplomacy. It draws on the experiences of other developing countries that have FTAs with stronger economies, thus providing policy recommendations for sustainable trade relations between SACU and China that are aligned to SACU's development agenda.The study concludes that a SACU-China FTA will stimulate a restructuring of SACU's trade partners, with limited benefit to the region. The cost competitiveness of Chinese imports will cripple SACU industries, cause unemployment and negate prospects of new industrialisation. SACU's strategy for trade liberalisation should be incremental and sector specific.