Zim, EU in trade pact

via Zim, EU in trade pact November 8, 2013 Zimbabwe Independent by Owen Gagare

TRADE between Zimbabwe and the European Union (EU) doubled in the first four years of the transition to multi-currencies in 2009, reaching a total of US$800 million as at end of 2012, with the terms of trade being US$200 million in Zimbabwe’s favour, information from the 28-nation bloc shows.

Signs are that there will be a marked improvement going forward, despite the perception that Zimbabwe is isolated by Western nations through sanctions, as is often cited by Zanu PF when explaining the country’s enduring economic morass. The Zimbabwe Independent has established that much work has been taking place behind the scenes to improve trade relations between the two traditional trading partners, resulting in greater and better trade.

Harare ratified the interim Economic Partnership Agreement between the EU and Eastern and Southern African states, giving the country unlimited opportunities to export its products to countries in the bloc duty free and quota free, meaning the country can export as much as it can, provided it meets the EU quality standards.

Although the trade agreement, which President Robert Mugabe signed on March 13 2012, also gives the EU access to the Zimbabwean market, it excludes the bloc from bringing in products which threaten the viability of local industries and the livelihoods of the majority.

In addition, the agreement has safeguard clauses which provide additional safety nets for Zimbabwe by allowing the country to protect infant industries, ensure food security and rural development or any other production in the event of market disturbances by imports.

“The EU is fully committed to support efforts of Zimbabwe to better integrate and compete in the regional and global economy. Zimbabwe ratified last year the interim Economic Partnership Agreement between the EU and Eastern and Southern Africa group …,” said Dell’Ariccia.

“The provisional application of the agreement has very positive implications for the private sector and industry in Zimbabwe in general and in particular, it provides wide range of opportunities for accessing new markets in the 28 member states of the EU thanks to the duty- free quota free access of all goods to the European Union.”

He said Zimbabwe was mainly exporting horticulture products, tobacco and minerals — among them tin and diamonds. He said the EU was however not buying Chiadzwa diamonds last year because of trade restrictions on Zimbabwe Mining Development Corporation and its subsidiaries, but that was set to change following the lifting of the restrictions.

The EU in turn exported products not manufactured in Zimbabwe among them chemicals and machinery.

The trade is despite the restrictive measures, which Zanu PF calls “illegal economic sanctions”, by the EU, which comprise of travel restrictions on Mugabe and his inner circle as well as an arms embargo imposed on the country since 2002.The measures, the bloc said, were in response to violations of human rights, democratic principles and the rule of law by government.

The United States also took measures on the country under the Zimbabwe Democracy and Economic Recovery Act which stopped the country from receiving bilateral or multilateral debt relief or financial assistance from the US as well as financial organisations to which the US is a member.

Mugabe and Zanu PF have been alleging sanctions are responsible for the country’s economic meltdown and giving the impression that relations between Harare and the EU are very thorny with very little co-operationNevertheless, the Zimbabwe government could also benefit from direct aid from EU under the 11th European Development Fund, which supports development programmes in African, Caribbean and Pacific countries. The EDF will run from 2014 to 2020.

The country has not had access to the funds since 2002, when the bloc suspended direct aid to Zimbabwe, under Article 96 of the Cotonou Agreement, although humanitarian aid has continued through civil society.

Dell’Ariccia said the EU had, in July last year, suspended the application of the agreement and was working at a technical level to see how the two parties could start co-operation in future. He said the article had however not been lifted, despite the suspension.

Dell’Ariccia also revealed European investors were keen to invest in the country although they were still waiting to see the course being taken by the government. He said future signs were encouraging.

“The only thing that has prevented them from coming with enthusiasm was certain policies that were not clear enough to create a climate of trust and confidence, particularly on indigenisation. They are not against indigenisation. The point is that the rules of the game must be clear, transparent and the same for everyone,” he said.

“The new minister (of Indigenisation, Francis Nhema) has been very positive. This has already produced a positive effect on investors.”

Dell’Ariccia said European investors were interested in many areas among them energy production, manufacturing, mining and services.

The engagement between the government and the Antwerp World Diamond Council (AWDC) is also likely to benefit the country, as this would result in value addition of Zimbabwe’s diamonds through polishing and cutting, as well as exposure to a larger market.

AWDC has about 2 000 traders of the gems.

Dell’Ariccia also said the EU was supporting efforts to revive Zimbabwe’s clothing industry, which has been identified in the Zimbabwe Industrial Development Policy as a priority sector to rebuild the economy. The block is also supporting the protection and registration of geographical indications to market origin-based agricultural products and anti-bribery and corruption campaigns among other initiatives.