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COTTON – A SPECIAL CASE After
Trade policy highly distorts cotton trade and the Second World War,
production. The United States is the major
provider of subsidies to the cotton industry. Brazil and following the success
took the USA to court in 2003 and obtained of the Bretton Woods
a ruling against the USA in 2004. Instead of
limiting subsidies to cotton producers, the USA Conference on international
bought itself out of the problem by paying Brazil. financial arrangements,
Four African countries, Benin, Burkina Faso,
Chad, and Mali, known as the Cotton 4 or C4, countries started to discuss
complained in 2003 about the impact of support the formalisation of
to cotton producers in developed countries. This
resulted in the WTO treating cotton as a special international trade
case with biannual discussions on cotton. policy.”
Developed countries agreed to allow duty-
free market access to cotton imports from least-
developed countries. The 2015 Ministerial
Decision on Cotton contains provisions for In 2002, a new agreement established a joint
improving market access for least-developed decision-making process, and a new revenue-
countries, reforming domestic support and sharing formula.
eliminating export subsidies. Theoretically, all trade between customs
In spite of these high-level decisions, cotton union member states should be free from
remains a highly subsidised product in some tariffs. In practice, South Africa’s customs union
countries. In 2017/18, subsidising countries partners use provisions for the protection of
paid an estimated US$5,9 billion to the cotton infant industries and for the national interest in
sector, 33% more than in the previous year. the SACU agreement to limit imports from South
Africa. Examples are Namibia closing their
REGIONAL TRADE AGREEMENTS borders to maize imports as long as they still
While the multilateral negotiations under the have local stocks available and Lesotho blocking
auspices of the WTO continue from year to year the importation of fresh vegetables for specific
with little real progress, various countries or periods. They also succeeded in negotiating
groups of countries entered into trade agreements quotas for the tariff-free import of goods into their
with one another with the goal of promoting trade countries.
among themselves.
THE SOUTHERN AFRICAN
THE SOUTH AFRICAN CUSTOMS DEVELOPMENT COMMUNITY
UNION (SACU) (SADC)
The Southern African Customs Union is the oldest SADC originated as the South African
customs union in the world. The Cape Colony and Development Co-ordination Conference, an
the independent Orange Free State established initiative of the so-called “frontline states”, with
it in 1889. After unification in 1910, a new the main purpose of reducing their dependence
agreement included the Union of South Africa on apartheid South Africa. In 1992 this was
and the British High Commission territories, changed into SADC. SADC member states are:
Bechuanaland (Botswana), Basutoland (Lesotho), - Angola - Botswana
and Swaziland (ESwatini). South West Africa - Lesotho - Madagascar
(Namibia) was included as it was administered - Malawi - Mauritius
by South Africa. The 1919 SACU agreement - Mozambique - Namibia
created a common external tariff on all imported - Seychelles - South Africa
goods, a common tariff pool, free movement - Swaziland - Tanzania
of goods between the member states and a - Zambia - Zimbabwe
revenue-sharing formula for sharing tariff income. - Democratic Republic of the Congo

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