THE Interim Economic Partnership Agreement (IEPA) Zimbabwe signed with the European Union (EU) is set to suffocate the country’s trade and industrial development policies due to the removal of taxes, a regional non-governmental organisation has warned.
Report by Ndamu Sandu
Zimbabwe alongside Mauritius, Seychelles and Madagascar concluded the IEPA with the EU that would result in the removal of taxes between the African countries and the EU.
But in an analysis of the trade pact, the Southern and Eastern Africa Trade, Information and Negotiations Institute (Seatini) said the elimination of the export taxes is a blow to both the National Trade Policy (NTP) and Industrial Development Policy (IDP) meant to promote the trade and industrial revival respectively.
Last year, government launched the Industrial Development Policy 2012-2016 that advocates value-addition or beneficiation and the NTP to guide the country’s trade with the rest of the world.
“There is no doubt that for Zimbabwe to successfully implement the NTP and IDP it will need to use tools such as export taxes. However, Article 15 of the interim EPA agreement that Zimbabwe signed and ratified provides for elimination of export taxes, thereby suffocating the policy space Zimbabwe is referring to in its National Trade policy on the need for value-adding natural resources,” Seatini said in a discussion paper, Zimbabwe’s control over its natural resources in the WTO context.
Article 15 of the IEPA provides that for the duration of the agreement, the parties shall not institute any new duties or taxes on, or in connection with, the exportation of goods to any other party in excess of those imposed on products destined for sale.
The organisation recommended that Zimbabwe “must exercise its right to develop its economy and protect the environment through the use of export taxes, until such a time when the economy can competitively trade with the rest of the world enabling it to then gradually eliminate the taxes on a product by product basis”.
It also recommended that government should consult widely all relevant ministries and the private sector on its existing and proposed laws relating to any prohibitions and restrictions on the export of natural resources especially metals and minerals.
Seatini warned that the use of export restrictions would be in violation of World Trade Organisation (WTO) rules.
Article XI:2(a) of the General Agreement on Tariffs and Trade does not allow WTO members to impose prohibitions and restrictions on the importation of any product, unless they (restrictions and prohibitions) are temporary, addresses critical shortages, relates to foodstuffs or other products and are essential to the exporting WTO member.
It said it would be difficult for Zimbabwe to prove the critical shortage requirement.