The SACU Council Of Ministers meeting held on June 27 in South Africa has approved the SACU-MERCOSUR Preferential Trade Agreement (PTA) negotiations concluded in April, a statement said last week.

The SACU-MERCOSUR PTA Agreement is aimed at promoting trade between the two sides on a selected number of products. It contains 1 000 tariff lines on both sides for which preferences will be granted.

"The PTA is significant in that it is the first trade agreement concluded by SACU as a single entity," said the SACU secretariat.

"This agreement is also important in that it is with another developing region, giving meaning to the objectives of South-South cooperation and integration," it added.

The statement said as the two parties explore possibilities for further trade liberalisation, they will take into due account the importance of improving market access for the smaller economies in MERCOSUR and SACU.

MERCOSUR encompasses four Latin American countries, namely, Argentina, Brazil, Paraguay and Uruguay while SACU - the oldest Customs Union in the world - comprises South Africa, Botswana, Lesotho, Namibia and Swaziland.

The statement noted that the PTA Agreement contains a main text and five annexes. The main text sets out the principles, legal provisions and procedures for the arrangement. It also establishes an institutional arrangement to manage the new trade arrangement.

Meanwhile, Annexes 1 and 2 set out MERCOSUR's and SACU's respective tariff concessions covering 1 000 products either way.

Annexes 3, 4 and 5 cover general rules of origin, safeguards, and dispute settlement.

The final round on negotiations between SACU and MERCOSUR were held on the 17 and 18 April 2008 in Buenos Aires, Argentina where all outstanding technical issues were resolved.

The agreement concluded on the 17 and 18 April 2008 will replace the agreement signed in December 2004 in Belo Horizonte, Brazil as substantial changes were made to the earlier agreement.

The initial 2004 agreement included an in-built agenda to continue negotiations on a number of issues, including rules of origin, sanitary and phyto-sanitary (SPS) measures, and requests for additional trade preferences for specific products on both sides.

The PTA creates a basis for further integration and co-operation, including possible further exchanges of tariff preferences and cooperation in any other area. It establishes a legal framework to govern SACU and MERCOSUR trade relations.