Zimbabwe in trading dilemma - Zimbabwe Situation

Zimbabwe in trading dilemma

Source: Zimbabwe in trading dilemma | Sunday Mail (Business)

Tawanda Musarurwa
Zimbabwe is one of several African countries that ratified the African Continental Free Trade Area (AfCFTA), but the southern African nation is facing a dilemma in implementing the trade policy.

The free trade area is an ambitious plan that seeks to boost intra-African trade.

It also aims at liberalising services to tackle non-tariff barriers which hamper trade between African countries.

Once ratified by all AU member states, the agreement will make the AfCFTA the largest free trade area created since the formation of the World Trade Organisation.

AfCFTA could create an African market of over 1,2 billion people with a gross domestic product of $2, 5 trillion.

To this extent, it’s a double-edged sword for Zimbabwe as the country’s struggling productive industries have been negatively affected by cheap imports.

Therefore Zimbabwe is currently facing challenges in implementing its obligations under the Sadc Protocol on Trade.

Although some observers say the AfCFTA will broaden the market for local manufacturers, industry has indicated that it needs more time to enhance the competitiveness of its products for them to stand a chance on the continental market.

Investopedia defines free trade as a policy to eliminate discrimination against imports and exports. Buyers and sellers from different economies may voluntarily trade without a government applying tariffs, quotas, subsidies or prohibitions on goods and services.

But Zimbabwe’s current imports management programme is tantamount to trade protectionism or economic isolationism.

Under the import management programme, Government came up with a number of interim statutory measures aimed at restricting imports to enable local industry to recover after performance had been immensely affected by the influx of foreign products.

The most notable intervention was the removal of a number of products from the Open General Import Licence through several Statutory Instruments 64 of 2016 and 20 of 2016, which regulated the importation of selected products. SI 64 was gazetted in June 2016 following a recommendation from the local industry, which was based on an extensive study on local manufacturing capacities as well as consultations with respective players in the sector.

Imports were only allowed in instances where the local producers could not satisfy local demand.

Authorities have since admitted that the programme is not necessarily complaint with trade regional protocols that Zimbabwe is a party to.

“The import management programme is not compliant, but when your house is on fire, sometimes you have to take a bucket of water to douse the flames. So that is what the country decided to do,” said the permanent secretary in the Ministry of Industry, Commerce and Enterprise Development, Ms Abigail Shoniwa earlier this year.

“The import management programme and some of the tariffs that are announced in the budget go against what we committed to in the early 2000s under the Sadc Trade Protocol. But then things were different.

‘‘We went through an experience which we all know about.”

Besides ratifying the AfCFTA, Zimbabwe is a signatory to the Sadc Protocol on Trade, which seeks to promote regional integration through free trade.

As such, Zimbabwe has specific bilateral trade agreements with specific Sadc member States.

Zimbabwe’s trade partners in the region have since registered their consternations over policies such as SI 64.The AfCFTA com mits African countries to removing tariffs on 90 percent of their goods, with 10 percent of “sensitive items” to be phased in later.

The AfCFTA is a flagship project of the AU Agenda 2063, the long-term vision for an integrated, prosperous and peaceful Africa.