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    ? The potential

    impact of US-SACU FTA

    negotiations on public health in

    southern Africa


    Tenu Avafia *

    tralac Working Paper

    No 6/2004

    November 2004

    * Researcher, Tralac. I am grateful to Mareike Meyn of the Institute for World Economics and

     International Management for her constructive comments on an earlier draft. The writer is responsible for

    . any errors


    This paper examines the impact and potential consequences of the current negotiations between the Southern African Customs Union (SACU) and the United States (US) aimed at establishing a Free Trade Area (FTA). Given the lull in TRIPs Council negotiations at the WTO following the collapse of the Cancún Ministerial, there has been a marked escalation of bilateral activity, with the US displaying its intention to negotiate and sign FTAs on issues that may continue to remain outside the realm of the WTO for an indeterminable period of time (primarily relating to the Singapore issues). It is highly likely that the FTA negotiations will address a number of trade issues which may have a negative impact on the prospects of increasing access to essential medicines for southern Africans in need of such medicines. Bearing in mind the WTO’s General Council

    Decision of 30 August 2003 as well as the ambitious timetable and deadline set for the US-SACU negotiations (originally set for conclusion by December 2004), this paper examines what the potential impacts of these negotiations may be on public health in southern Africa, more particularly, in the SACU region.

    The views presented in this paper are those of the author alone and do

    not necessarily reflect those of tralac (Trade Law Centre for Southern Africa). Any errors are the author‘s own.

    tralac (Trade Law Centre for Southern Africa) 224, stellenbosch, 7599 south Africa c.l.marais building, crozier street, stellenbosch (t) +27 21 883-2208 (f) +27 21 883-8292 (e)

    ? Copyright Trade Law Centre for Southern Africa 2004


     Table of Contents

I List of abbreviations ________________________________________________ 1

    1 Introduction ______________________________________________________ 3

    1.1 The Southern African Customs Union (SACU) ______________________ 4

    2 The HIV/AIDS situation and access to essential medication in

    The SACU countries________________________________________________ 6

    2.1 The HIV/AIDS prevalence rates of sub-Saharan countries with

    Particular reference to SACU countries _________________________________ 6

    2.2 Existing and future plans for anti-retroviral treatment in SACU

    countries____________________________________________________ 9

    2.2.1 Botswana‘s ARV programme______________________________ 13

    2.2.2 Namibia‘s ARV programme_______________________________ 14

    2.2.3 South African‘s ARV programme___________________________ 14

    2.2.4 Lesotho‘s ARV programme________________________________15

    2.2.5 Swaziland‘s ARV programme______________________________16

3 The impact of intellectual property provisions in the US-SACU

    FTA on public health in SACU________________________________________ 17

    3.1 An Introduction to the US-SACU FTA_____________________________ 18

    3.2 Status of negotiations and area of divergence______________________ 19

    3.3 How intellectual property provisions could impact on public

    health in SACU______________________________________________ 19

4 Other provisions in the US-SACU FTA which may impact on public

    health in the SACU region__________________________________________ 24

    4.1 Provisions on trade in services _________________________________ 24

    4.2 investment provisions________________________________________ 25

    4.3 Government procurement provisions_____________________________26

5. Conclusion______________________________________________________ 26

II Bibliography_____________________________________________________ 30

tralac Working Paper no 6/2004

     List of Abbreviations

AB Appellate Body

    ACP Africa, Caribbean and Pacific AIDS Acquired Immunity Deficiency Syndrome ART Anti-retroviral Therapy

    ARV Anti-retroviral

    BLNS Botswana, Lesotho, Namibia, Swaziland CAFTA Central American Free Trade Area CET Common External Tariff

    COMESA Common Market of Eastern and Southern Africa DSB Dispute Settlement Body

    DSP Dispute Settlement Panel

    DSU Dispute Settlement Understanding EBA Everything But Arms

    EEC European Economic Community

    EIB European Investment Bank

    EPA Economic Partnership Agreement EU European Union

    FDI Foreign Direct Investment

    FTA Free Trade Agreement

    FTAA Free Trade Area of the Americas GATT General Agreement on Tariffs and Trade GATS General Agreement on Trade in Services GDP Gross Domestic Product

    HAART Highly Active Antiretroviral Therapy HIV Human Immune-Deficiency Virus LDC Least Developed Country

    OVC Orphans and Vulnerable Children PLWHA People Living With HIV/AIDS

    RTA Regional trading Agreements

    SACU Southern African Customs Union

    tralac Working Paper no 6/2004 SADC Southern African Development Community

    SADCC The Southern African Development Co-ordination

    Conference SPS Sanitary and Phyto-Sanitary

    SSA Sub-Saharan Africa

    TBT Technical Barriers to Trade

    TDCA Trade, Development and Co-operation Agreement

    TRIPs The Agreement on Trade Related Aspects of Intellectual

    Property Rights WHO World Health Organisation

    WTO World Trade Organization


tralac Working Paper no 6/2004

    1 Introduction

The regional configuration of trading bodies in southern Africa is among the most

    complex on the globe. Southern African countries have a choice of at least three well

    established and functioning regional trading bodies to belong to. These are the

    1Southern African Development Community (SADC), the Southern African Customs

    2Union (SACU) and the Common Market for Eastern and Southern Africa (COMESA).

    Most countries in the region belong to at least two of these trading bodies with the

    exception of Swaziland which belongs to all three.

     1 These being the Southern African Development Community (SADC) whose membership comprises of Angola,

    Botswana, Democratic Republic of Congo (DRC), Lesotho, Malawi, Mauritius, Moçambique, Namibia, South

    Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe.

    2 Currently COMESA has 20 member states. These are Angola, Burundi, Comoros, Djibouti, Democratic Republic

    of Congo (DRC), Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles,

    Swaziland, Sudan, Uganda, Zambia and Zimbabwe


tralac Working Paper no 6/2004

    1.1 The Southern African Customs Union (SACU)

    3As the oldest customs union in the world SACU‘s membership comprises of Botswana, Lesotho, Namibia, South Africa and Swaziland. Its aim is to maintain the free

    interchange of goods between member countries. It provides for a common external

    tariff and common excise and sales duties, common rebates and refunds against third

    countries. All duties collected in the common customs area are paid to the Common

    Revenue Pool that is still dominated by South Africa, which also sets the CET

    unilaterally. The revenue is shared among members according to a revenue-sharing

    4formula as described in the Agreement. South Africa is the custodian of this pool. The

    1910 Agreement establishing the union was updated by the Agreement of 1969 and

    more recently by the Agreement of 2002 which is generally credited with having a more

    5equitable formula. There is also a Council of Ministers which comprises of one minister

    from each SACU member and which meets at least on a yearly basis to discuss matters

    related to the Agreement. There are also technical liaison committees, namely the

    Customs Technical Liaison Committee, the Trade and Industry Liaison committee and

    the Ad hoc Sub-Committee on Agriculture, which are scheduled to meet three times a

    year. With the ratification of the SACU agreement by South Africa, the 2002 Agreement

    came into effect on 15 July 2004 and a secretariat based in Windhoek, Namibia, has

    been established.

In view of the FTA negotiations taking place between SACU and the US, it is necessary

    to delve a little deeper into the history and operation of SACU. The 1969 SACU

    Agreement was one that would always have had to be changed. At the time, South

    Africa was an undemocratic country with its entrenched system of apartheid and also in

    6illegal control of Namibia. Furthermore, the newly independent countries of Botswana,

     3 The predecessor of the SACU was established in 1889 by the Cape of Good Hope and Orange Free State. In

    1910, SACU was formally established with the passing of the South Africa Constitution of 1910. A 1969

    Agreement was recently replaced by a 2002 SACU Agreement which was signed on 21 October 2002 and came

    into effect on 15 July 2004 with the accession of all the member countries.

    4 Refer to 5 According to the new SACU Agreement, all revenue accrued by individual SACU states is to be divided into three

    categories namely, a customs pool, an excise pool and a development component. The customs component will

    be divided according to each country‘s share of total intra-SACU trade; the excise component will be divided on

    the basis of Gross Domestic Product (GDP) and the development component will be fixed at 15% of the total

    excise pool and distributed amongst all SACU members according to the inverse of each country‘s GDP.

    6 Refer to the celebrated International Court of Justice (ICJ) advisory opinion of 21 June 1971 on the legality of

    South Africa‘s continued presence in Namibia (then still South West Africa) online:


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