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Free Trade between SACU and EFTA

The European Free Trade Association (EFTA), comprising of Iceland, Liechtenstein, Norway and Switzerland signed an agreement to form a Free Trade Area with the Southern African Customs Union (SACU). Whilst this agreement was already signed on 26 June 2006, it only came into effect on 1 May 2008.

This FTA is the first such agreement entered into by the EFTA with another regional trading block, although it has numerous bilateral arrangements in place.

The delay in bringing the FTA into operation stems from difficulties experienced with ratification procedures in the SACU States. Initially delays were experienced in the domestic ratification procedures in country. These were however performed with some lapse of time, and by the end of 2007 all the SACU States had deposited their instruments of ratification with the government of Norway, which is acting as the repository for these instruments. It later transpired that there were some defects in the instruments submitted by SACU, leading to the position where the FTA could not be implemented from the start of 2008 as envisioned and previously notified by SARS. The glitches seem to have been remedied and SARS gazetted the elusive implementation of the FTA on 9 May 2008. While the implementation must be welcomed it is notable that there is definitely money that has been ?left on the table' due to the fact that preferential market access on some products could have already been banked but is now lost as the implementation of benefits is not retroactive.

The FTA means that the EFTA will grant SACU goods free entry into its markets, thus duty free access as from 1 May 2008 whilst SACU will only progressively liberalise their tariff barriers. SACU will have nine years from 1 May 2008 to progressively liberalise tariff barriers on all goods imported into its markets. Different rates of reduction and time frames apply to different goods as detailed in the annexes to the FTA. Although the FTA currently only deals with trade in goods, it also lays the foundation for further negotiations on trade in services, intellectual property rights, investment, competition, public procurement and cooperation and assistance.

For further information on any implications of the SACU EFTA Free Trade Agreement on your business, you are welcome to contact Hilton Zunckel or Rian Geldenhuys.

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