The protection of infant industries in SACU : the Namibian poultry industries case

Abstract

The Southern Africa Customs Union was first established in 1889 between the Cape of Good Hope and the Orange Free State. It has since undergone extensive change resulting in the current 2002 Agreement which includes an institutional framework. SACU’s member states comprise of Botswana, Lesotho, Namibia, South Africa and Swaziland. The Agreement thrives on the principle of free trade within the customs union and common external tariffs on goods entering the customs area. However, as an exception to free trade, article 25(1) of the 2002 Agreement recognises the right of a member state to prohibit the importation or exportation of any goods from its area. This may be done for economic, social, cultural or other reasons as may be agreed upon by the Council. However, article 25(3) prohibits the use of article 25(1) as a means to protect infant industries. As a further exception to free trade, article 26 of the 2002 Agreement recognises the right of all other member states, except South Africa, to protect their infant industries. The protection offered in this article is limited, because the definition of infant industry is not clear as to when the inception of such an industry must be. This causes problems with the application of article 26, especially where an industry was established, but only became operational after the expiry of eight years, or has been established for over eight years on a small scale and needs protection in order to enlarge and intensify its operations. Due to this shortfall, Namibia used its Import and Export Control Act 30 of 1994 to protect a key industry in Namibia, the poultry industry. However, according to article 25(3), this may be considered a violation, because Namibia has used its national legislation to protect an infant industry. The key finding of this study is that the protection of infant industries in SACU is not sufficient to cater for the economic needs of the member states. To this end, SACU must consider allowing national legislation to supplement and monitor infant industry protection in the member states’ areas. In addition, SACUs institutional framework, which is not fully operational at present, must be established to function fully, as this may help address some of the issues in SACU.