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Sacu-Mercosur Pta Gets Cautionary Thumbs-Up

Namibian, Namibia

Sacu-Mercosur Pta Gets Cautionary Thumbs-Up

By Catherine Sasman

1 November 2011

The Deputy Minister of Trade and Industry, Tjekero Tweya, tabled a motion in Parliament on Thursday for the ratification of a preferential trade agreement (PTA) between the Southern African Customs Union (Sacu) and South America’s trade bloc, called the Common Market of the South (Mercosur).

Mercosur consists of Argentina, Brazil, Paraguay, Uruguay and Venezuela.

"I would be happy to have an open market, but will there be a balance of trade?" questioned Prime Minister Nahas Angula.

The Deputy Minister of Youth, National Service, Sport and Culture, Pohamba Shifeta, welcomed the proposed PTA as a means of diversifying Sacu’s market access, but emphasised the need to protect local industries while attracting foreign investment to the region.

RDP MP Steve Bezuidenhoudt underscored the need not to move forward recklessly, also supporting the notion of protection of certain local industries.

Tweya said the current impasse in World Trade Organisation (WTO) trade negotiations, and the recent announcement by the European Union (EU) that it will close its markets for Namibian products if Namibia and other African Caribbean and Pacific (ACP) countries have not signed the Economic Partnership Agreement (EPA) by the end of 2013, have placed Sacu, and Namibia in particular, in a "delicate" position in terms of market access for their products.

He said the implementation of the Sacu-Mercosur PTA would provide Namibia with an alternative market and broaden its market base.

Tweja said Sacu’s relationship with Mercosur is strategic, promoting South-South cooperation that generates cohesiveness among countries of the South.

The PTA agreement between Sacu and Mercosur was signed by all Mercosur parties in December 2008, and in April 2009 by Sacu members.

The Sacu Council of Ministers in May and June this year agreed to proceed to ratify the PTA.

The implementation of the agreement is expected to start upon ratification. So far, Botswana and South Africa have ratified the PTA.

The PTA aims to increase trade through the mutual granting of tariff preferences, to establish fixed preference margins as a first step towards the creation of a free trade area between Sacu and Mercosur, to implement the granting of preferences and to establish trade disciplines between parties.

It further takes into account the principle of special and differential treatment for smaller and less developed economies in Sacu and Mercosur.

Moreover, it is to ensure regional integration between South-South trade compatible with multilateral trading systems. It covers trade in goods - both industrial and agricultural - based on agreed tariff preferences and other conditions such as the rules of origin agreed by both parties for the importation of negotiated products.

It also provides for the application of tariff preferences to customs duties in each territory at the time of importation.