In 2010, the SACU secretariat also commissioned a study on a possible trade agreement between SACU and the East African Community (EAC). In 2011, SACU endorsed a number of principles that guide free trade agreements and prioritized the continuation of agreements with Mercosur and India. SACU is increasingly engaged in bilateral free trade agreements with foreign trading partners, not least because it is a unique tariff complement with South Africa as a force economy: as a customs union, members establish a common external tariff with foreign countries and do not impose tariffs on trade between them. The agreement came into force on 1 April 2016 and covers, among others, the textile, manufacturing, machinery, chemical and mineral sectors, which is an important step in South-South relations. The Southern African Customs Union (SACU) consists of South Africa, Botswana, Lesotho, Namibia and Swaziland. It was founded in 1910, making it the oldest customs union in the world. The SACU agreement was revised in 1969 and 2002. In 2003, SACU began talks with the United States for a free trade agreement, but these were grounded in mid-2006 due to Washington`s high demands. In 2008, a trade and investment cooperation agreement in the area of development cooperation was signed as an interim measure for a comprehensive and final free trade agreement. In April 2005, SACU signed a preferential trade agreement with the South American bloc mercosur, the first free trade agreement.
The agreement was revised in April 2008 to include other protocols. In 2006, SACU signed a free trade agreement with the European Free Trade Area (EFTA). Both blocs are trying to consolidate trade through a preferential tariff system. Rates are completely eliminated for almost half of these items (470). The rest is divided as follows: 167 positions receive a 50% preference, 144 positions receive one of 25% and 283 positions receive one out of 10%. As a result of the agreement, the average rate of positions included in SACU`s offer will increase from 9.5% to 7.2%. The two political groups agreed on tasks to publicize the benefits of the agreement and called on the private sector in each country to take advantage of it. It was agreed that the next meeting would take place in 2018. The aim of the meeting was to work on the preferential trade agreement between MERCOSUR and SACU, signed in April 2009 and subsequently ratified by member states.
It is a firm preferential agreement that removes all or part of the tariffs on a number of products. Montevideo, Uruguay. The MERCOSUR and southern African Customs Union (SACU), made up of Botswana, Lesotho, Namibia, South Africa and Swaziland, signed a preferential trade agreement on the ninth meeting of the negotiating committee established by the Framework Agreement for the creation of a merCOSUR-SACU free trade agreement in December 2004.