Harare – Zimbabwe is on course to fulfil trade liberalisation obligations with the European Union (EU) in line with the Interim Economic Partnership Agreement (IEPA), which aims for progressive removal of tariffs and other trade restrictions between the eu and Eastern and Southern African states.
Experts say meeting the terms of the agreement has the potential to increase Zimbabwe’s productivity and contribute to Gross Domestic Product (GDP) growth, by allowing local companies access to cheaper inputs, newer and modern technologies, and fostering competition and innovation.
In the latest update on the implementation of the trade pact, the Competition and Tariff Commission (CTC), a statutory body mandated to give technical advice to government on tariff and trade negotiations, said significant progress is being made to ensure Zimbabwe meets her bargain in terms of global trade.
“In terms of implementing its IEPA tariff commitments, Zimbabwe was supposed to have commenced its first tranche of liberalisation in January 2013 for raw materials and capital goods, most of which were already at zero percent.
“Zimbabwe did not immediately begin the process of gradual liberalisation of the tariff applicable to EU goods entering Zimbabwe due to macro-economic challenges and low capacity utilisation facing local industry.”
Despite having signed in 2009 and ratifying the IEPA in 2012, CTC said, it was not until 7 October 2016 that Zimbabwe gazetted the first EPA tariff schedule through Statutory Instrument (S.I.) 117 of 2016, Customs and Excise (European Community and Eastern and Southern Africa (ESA) States Economic Partnership Agreements, Suspension and Market Access Offer, Regulations.
“This was done after the EU and the Government of Zimbabwe agreed on a revised tariff scheme, allowing for catching up scenario with the initial schedule so that 80 percent liberalisation would be achieved by 2022,” said CTC.
The IEPA contains provisions concerning trade regime for goods, rules of origin, development cooperation, fisheries, trade defence instruments and dispute settlement.
It also has a clause providing for continued negotiations on trade in services, investment, agriculture, sanitary and phytosanitary provisions and technical barriers to trade, customs and trade facilitation and trade related rules, all of which are subject to further discussion in the full EPA.
Zimbabwe signed the IEPA together with Mauritius, Madagascar and Seychelles under the Eastern and Southern Africa (ESA) regional configuration in 2009. Zimbabwe ratified the agreement in March 2012. Under the IEPA, commencing 1 January 2008, EU offers duty free, quota free market access to all exports from ESA states.
However, ESA states were not in a position to table a common regional market access offer and each country presented an individual offer based on its specialities. The tariff offer for ESA states involved gradual opening up of their markets for EU exports over a 15-year period, with some exceptions for products that ESA countries consider sensitive.
In this regard Madagascar undertook to liberalise 81 percent, Seychelles 98 percent and Zimbabwe 80 percent. According to CTC Zimbabwe decided to exclude 20 percent of tradable products, which includes those of animal origin, cereals, beverages, paper, plastics, rubber, textiles and clothing, footwear, glass, ceramics, consumer electronics and vehicles.
It is hoped that implementation of the IEPA would yield benefits such as increased competition resulting in lower prices. CTC, however, warns this could create a paradox in which local industry could be forced out of markets as they will not be efficient and competitive enough compared to European products.
Experts also say the IEPA would result in implementation of an effective, predictable and transparent regional regulatory framework for trade and economic cooperation, which also promotes regional integration, economic cooperation and good economic governance.
Zimbabwe is also signatory to the African Caribbean Pacific (ACP) and European Union Cotonou Agreement signed in 2000 and will expire in 2020. The framework agreement governs trade, economic and development relations between the two regions.