HomeBusinessZimbabwe struggles to comply with Comesa deals

Zimbabwe struggles to comply with Comesa deals

Priscilla Misihairabwi-Mushonga, the Regional Integration and International Co-operation minister told Standardbusiness last week that the country stood to benefit from trade liberalisation in the region despite the costs that will come with the reduction of tariffs.

 

“Investors coming to Southern Africa would be interested in dealing with a unanimous tariff regime, which makes business easier across borders,” Mushonga said.

“Most of our trade tariffs are up to 15% on average and we have to reduce them to zero in line with Comesa requirements.

“Although this may mean a loss in revenue for government, it is important to note that such changes on a broader perspective will encourage more investment for the country.”

Zimbabwe is among the leading countries within Comesa in terms of implementing the regional grouping’s program- mes.

Keith Rockwell, the WTO’s director of information and external relations said the talks would make it easier for Zimbabwe to open up for international trade.

“Special rules have already been negotiated for Zimbabwe in the Doha round that will provide the government with a great deal of flexibility in the way it opens trade,” Rockwell said.

“Zimbabwe is among roughly 12 countries which have not filed legal tariff ceilings with the WTO on the majority of imported products.”

He said governments have already agreed that those countries which have bound less than 35% of their tariff lines in the WTO or have established legal ceilings on less than half of their imports, will be able to use a broad average to lower tariffs in some areas while maintaining import protection in sensitive areas.

“Such countries will have to reduce their tariffs to an average of 30%.

“Currently, the average tariff applied by Zimbabwe on manufactured goods is 25,6% and 25,3% on agricultural imports.

“This means that the government will have considerable flexibility in its tariff cutting resulting from the Doha round,” he said.

Rockwell also pointed out that there were other regional or bilateral trading arrangements for many countries, including Zimbabwe, which may require tariffs to be lower than the WTO averages. But such tariffs would not be legally binding in the multilateral body.

“In the case of Africa, I think it is widely acknowledged that stronger trading relations between African neighbours can facilitate greater trade, raise income levels and reduce poverty,” Rockwell said.

“This is very good for a global trading system,” said Rockwell, adding that the multilateral trading front was preferable as it covered a wider range of trade related issues.

The WTO official conceded that it was highly unlikely that developed nations will scrap agricultural subsidies unless they get something in return.

 

What comesa wants to see happening

Comesa envisages the establishment of a common market by 2015, particularly in the areas of liberalising services, agriculture, the elimination of non-tariff barriers, trade facilitation and market information among others.

Mushonga’s statements follow a recent report by the World Bank reflecting increased investor interest in Southern African countries spurred by the region’s large untapped and rapidly growing markets.

According to the World Bank, regional Gross Domestic Product (GDP) is projected to grow by more than 5% annually between 2010 and 2012.
Last year, Zimbabwe’s GDP surpassed that of most Sadc states as a result of the economic stability brought by the formation of the inclusive government in 2009.

However, the country recorded a US$1 billion trade deficit last year, which Finance minister Tendai Biti blamed on low domestic industrial production and a liberal import regime.

An influx of South African imports has adversely affected local manufacturers who are battling with power outages and low capacity utilisation.
On the multilateral front, members of the World Trade Organisation (WTO) are expected to conclude the long running Doha round of negotiations this year.

At the General Council and Trade Negotiations committee meetings in December last year, the membership agreed that they will work to advance the negotiations by Easter through the production of new negotiating texts in agriculture and industrial goods trade.

 

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