HomeBusinessZim to sign Epas only after tax resolution

Zim to sign Epas only after tax resolution

Taurai Mangudhla

INDUSTRY and Commerce minister Welshman Ncube says Zimbabwe will only sign the full Economic Partnership Agreements (Epas) between the European Union (EU) and regional bodies in African, Caribbean and Pacific countries (ACPs) after contentious issues relating to taxation are solved.

Zimbabwe, which is currently negotiating Epas under the Eastern and Southern African (Esa) grouping, feels that controversial issues such as taxation had major consequences in development of ACPs.

“There are about seven contentious issues…We will not sign the full Epa without negotiating to the end,” said Ncube. “We (Zimbabwe) will not sign unless we have clauses that are consistent with national interest. We have to come up with a solution on clauses that are negative to us.”

Epas are a scheme to create a free trade area  between the European Commission of the European Union and the African, Caribbean and Pacific Group of States (ACP) countries.

They are a response to continuing criticism that the non-reciprocal and discriminating preferential trade agreements offered by the EU are incompatible with WTO rules.

Epas, being negotiated with African, Caribbean and Pacific (ACP) regions engaged in a regional economic integration process, aims to promote trade between the two groupings through trade development, sustainable growth and poverty reduction.

This will assist ACP countries integrate into the world economy to share opportunities offered by globalisation.
“It is our preferred position that all issues be negotiated to the end,” Ncube said.

“We want ACPs to be taxed for exporting raw material to encourage processing our own produce…the EU insists on a stand still clause on the tariffs, but we need to be flexible on the tariffs,” he said.

The stand-still clause stipulates that Epas come into force, the parties may not introduce new tariffs, raise existing tariffs and once eliminated, tariffs may not be re-imposed.

ACPs are pushing for the removal of this clause citing impingement on policy space.

While the EU’s mantains export taxes restrict supply of raw materials to its industries, ACP maintains that export taxes are development tools used for value addition and revenue collection and will not be eliminated.

Ncube, however, emphasised the country’s need to commit to a comprehensive Epa.

“If we politic and walk way from Epas, we will have to pay full duty for exports to Europe and the consequences will be severe. Zimbabwe is not regarded to be amongst the Least Developed Countries  that are exempted from paying duty,” Ncube said.

“Imagine competing against Swaziland to sell sugar in Europe. if we pay heavy trade tariffs, no one will buy it (the sugar) because it will be expensive” he added.

Ncube dismissed possible threats to the Zimbabwean economy should Sadc sign a comprehensive Epa by mid 2011 as scheduled.

He said Sadc configuration was essentially about the member states accessing European goods and not about local trade.

Confederation of Zimbabwe Industries  economist, Dephine Mazambani, commended Epas as not only lucrative for competition but likely to provide consumers with quality products.  She also encouraged government to delay ratification of Epas to protect local industries.

“It (delaying ratification of Epas) can be a measure to protect the country but what you have to ask is what products we import from EU and export to EU. Mainly we import capital goods and we export horticultural products, sugar and a bit of processed food items,” she said.

“Do we have the capacity to produce capital goods at the moment. The answer is no and what is happening to our exports to the EU? They are becoming expensive due to the duties that prevail for the different commodities” she said.

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