Entry into force of the Preferential Trade Agreement (PTA) between the Common Market of the South (MERCOSUR) and the Southern African Customs Union (SACU)

South Africa has completed all the administrative processes to facilitate the implementation of the SACU (Botswana, Lesotho, Namibia, South Africa, and Swaziland) and the MERCOSUR (Argentina, Brazil, Paraguay, and Uruguay) Preferential Trade Agreement as from 21 October 2016. In accordance with Article 36, the SACU - MERCUSOR PTA entered into force on 01 April 2016, thirty (30) days following SACU's acknowledgement of the notification from MERCOSUR that it had concluded the necessary legal requirements and South Africa will implement the Agreement retrospectively from the date of entry into force of the Agreement, 1 April 2016.

The SACU - MERCUSOR PTA was signed in the City of Salvador, Federative Republic of Brazil, on 15 December 2008 on the side of MERCOSUR, and in the City of Maseru, Lesotho, on 3 April 2009 on the side of SACU. MERCOSUR was the last party to notify completion of its internal processes on 19 December 2015.

The Agreement contains the main text, and seven annexes. The main text sets out the principles, legal provisions and procedures for the relations under the Agreement. It also establishes the Joint Administration Committee, to manage the administration of this Agreement. Annex 1 and 2 set out MERCOSUR and SACU respective tariff concessions. Annexes 3, 4, 5, 6, and 7 cover general rules of origin, trade remedies, dispute settlement, Sanitary and Phytosanitary Measures, and cooperation on Customs Administration.

SACU offered concessions on 1 062 tariff lines and MERCOSUR offered concessions on 1 052 tariff lines. In either case, the preference margins range between 100 - 10%. SACU offered a Tariff Rate Quota for four agricultural products, which will be accessible on a first come first serve principle with no permit requirements. The tariffs will be reduced immediately on entry into force of the Agreement.

The PTA is the first trade agreement concluded by SACU as a single entity, following the SACU Agreement of 2002. This agreement is also the first with another developing region, giving meaning to the objectives of South - South cooperation. Thus, the PTA creates a basis for further integration and cooperation including possible further exchanges of tariff preferences, and cooperation on any other area.

The Agreement is being administered by SARS following the approval of the legislation and its publication in the Government Gazette.

Source: The Department of Trade and Industry, South Africa.

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