Lesotho caught up in trade row

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MASERU — Lesotho has been caught up in a trade row that threatens to tear up the Southern African Customs Union (SACU), the country’s major source of revenue.

This comes after Lesotho, Namibia and Swaziland signed a trade deal with the European Union (EU) — the SADC Economic Partnership Agreement (EPA) — without the approval of the other two SACU members, South Africa and Botswana.

The two countries refused to sign the Southern African Development Community deal which they say is flawed and favours the EU.

However, Lesotho’s Finance Minister Timothy Thahane, who is the current chairman of SACU, told the Lesotho Times all the member states of the customs union had agreed prior to the signing of the EPA pact.

 “The process leading to the signing of the EPA had been agreed by all SACU members,” Thahane said this week.

“I have to find out what really happened between the EU and South Africa.”

Thahane said he could only comment further on the issue once SACU member states have met.

He said a meeting to establish how the fallout arose and to iron out differences had failed to materialise last week because South Africa’s representatives were not available.

The meeting was moved to today but had to be postponed again because                  Botswana had not confirmed its attendance.

“As far as I am concerned it has mostly been speculation and newspapers have talked about the South Africa-EU row but we should not get into it,” Thahane said.

“As chairman of SACU, I’m in the process of organising that we meet to look into the issue.

“We were due to meet as SACU on the 9th or 10th (July) but South Africa was not available.

“We then moved the meeting to the 16th but Botswana did not confirm this time round.”

Analysts see the EPA deal as a threat to South Africa’s economic dominance in the SACU countries and the entire SADC region.

Goods and services are traded in the SACU countries without tariffs.

South Africa and Namibia are worried the EPA deal would bring EU goods into SACU countries through the back door.

But if South Africa were to pull out of SACU, Lesotho and Swaziland will be left facing economic collapse, analysts warn.

Lesotho and Swaziland rely on SACU remittances for up to as much as 70 percent of their revenues, while Botswana is largely dependent on its beef and diamond exports.

The SACU revenues are distributed disproportionately in favour of Lesotho and Swaziland.

SACU, established in 1910, is the world’s oldest customs union.

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