Johannesburg — THE Southern African Customs Union (Sacu) is facing one of its biggest tests, as the world's oldest common market celebrates its centenary this week.

The five-nation Sacu, formed during the era of British colonialism, is regarded as a necessary instrument to facilitate trade, regional economic integration and social cohesion within the region.

It has been especially beneficial to vulnerable economies such as those of Lesotho and Swaziland through the union's generous revenue-sharing mechanism.

This is after Botswana, Lesotho and Swaziland last year breached the protocol of the customs union by signing an interim trade agreement with the European Union (EU).

This decision contravened the rules of origin of the union, effectively giving the middle finger to the region's most powerful economy, SA.

These countries went ahead against the protests of both SA and Namibia by signing a separate free trade deal with the EU earlier this month.

A standoff has since ensued.

Even last year, SA threatened to tighten its border controls to monitor cheap EU imports arriving through Botswana, Lesotho and Swaziland. It is, however, not clear at this stage if SA has indeed tightened its borders as an act of retaliation against these countries.

SA feels undermined and betrayed by the action of Botswana, Lesotho and Swaziland, as it heavily subsidises the national budgets of the other four members by virtue of being the wealthiest economy in the region. There are also thousands of workers from these countries working in SA's mines.

In fact, research by the South African Institute of International Affairs (SAIIA) shows that SA is responsible for 90% of the southern African region's gross domestic product.

SA's tax collection infrastructure, through the South African Revenue Service, is hailed as one of the most efficient in Africa, hence the country's ability to render this service to other members on goods and services entering the union.

SA is aware that any perception that it wants to adopt a carrot-and-stick approach towards its neighbours will be interpreted as another attempt to be the bully in the classroom. Since the end of apartheid in 1994, SA's foreign policy towards the region has been informed by a sense of paying back the debt that these countries paid in assisting with the liberation struggle.

Francis Ikome, an expert on Africa's political economy at the Institute for Global Dialogue, says that Africa takes centre stage in SA's foreign policy.

Therefore, "it may not be too appropriate to perceive SA 's economic and other forms of assistance to countries on the continent as a waste of state resources or as amounting to misplaced priorities", he says.

SA's foreign policy statements have struggled to juggle with this indebtedness and the country's right to assert its sovereignty when its interests are at stake.

The recent Sacu stalemate is a point in case.

Last week, Trade and Industry Minister Rob Davies said it was important for members of the customs union to speak with one voice on trade policy. Mr Davies said SA's reservations about the EU deal stemmed from a number of issues, including matters such as the most-favoured-nation clause, intellectual property rights, and the liberalisation of the services industry in Sacu member states. This includes concessions that would have to be made by Sacu members affecting 50 tariff lines on certain goods and services, according to the SAIIA.

Next month, a meeting of Sacu heads of state is to take place in Pretoria, in part to resolve this impasse. The agenda will include expanding the union by admitting other countries in the region.

SA will have to respond to the challenge of how to assert its authority and protect its interests in this association.