The Competition and Tariff Commission is a statutory body that operates under the guidance of the Competition Act (Chapter 14:28). One of the functions of the Commission is to undertake investigations and make reports to the Minister of Industry, Commerce and Enterprise Development relating to tariff charges, unfair trade practices and the provision of assistance or protection to local industry. The Commission also gives technical adviceto the Ministry on tariffs in trade negotiations.
Zimbabwe is signatory to the African Caribbean Pacific (ACP) and European Union (EU) Cotonou Agreement signed in 2000 and will expire in 2020. This framework agreement governs trade, economic and development relations between the two regions. In terms of trade, these agreements were characterized by non-reciprocal preferential market access for ACP products into the EU market. However, these non-reciprocal trade preferences under this Agreement were set to expire in 2007 and the ACP and EU launched EPA negotiations in 2002. EPAs are designed as reciprocal trade arrangements leading to establishment of a free trade area between the ACP countries and EU.
By December 2007, the Eastern and Southern Africa (ESA) States had not concluded a comprehensive agreement and therefore embracing the interim Economic Partnership Agreements (iEPA,) was meant to prevent trade disruption; pending the entry into force of the full EPAs. In December 2007, a Market Access Regulation (MAR 1528/2007) was adopted by the EU to provisionally apply EPA preferences as from 1st January 2008. This was from the EU to countries that concluded such a deal, but are yet to sign, ratify and implement their agreements. In May 2013, the EU amended the MAR to exclude countries that have not taken the necessary steps to ratify the EPA.
Zimbabwe signed the iEPA together with Mauritius, Madagascar and Seychelles under the ESA regional configuration in 2009. Zimbabwe ratified the Agreement in March 2012. The iEPA aims for a progressive removal of tariffs and other trade restrictions between the EU and the ESA countries. Under the iEPA, commencing 1 January 2008, EU now offers duty-free, quota-free market access to all exports from the four ESA States. However, ESA countries were not in a position to table a common regional market access offer and each country presented an individual offer based on its specificities. The tariff offer for ESA countries involved gradually opening up of their markets to EU exports over a 15 year period, with some exceptions for products that ESA countries consider sensitive. In this respect Madagascar liberalized 81%, Seychelles 98% Mauritius 96% and Zimbabwe 80%. Zimbabwe decided to exclude 20% of tradable products which includes products of animal origin, cereals, beverages, paper, plastics and rubber, textiles and clothing, footwear, glass and ceramics, consumer electronic and vehicles. The country will gradually liberalize her imports from the EU within 15 years (ending in 2022).
The iEPA contains provisions concerning trade regime for goods, rules of origin, development cooperation, fisheries, trade defense instruments and dispute settlement. The iEPA contains a rendez-vous clause providing for continued negotiations on trade in services, investment, agriculture, rules of origin, sanitary and phytosanitary provisions and technical barriers to trade, customs and trade facilitation and trade-related rules. All these issues are subject to further discussions in the full EPA.
Of major interest are the objectives of cooperation in the area of trade which are:-
- the provision of full duty and quota free market access conditions for goods originating in the ESA States into the market EC Party market on a secure, long term and predictable basis;
- the promotion of trade between the Parties and the acceleration of export led growth to enable the integration of ESA countries into the global economy;
- the progressive and gradual liberalisation of the goods market in ESA States in accordance with the modalities established in this Agreement (80% liberalization and 20% sensitive goods); and
- the preservation and improvement of market access conditions to ensure that all ESA States are better and not worse off.
The major benefits that can be derived from the iEPA include:-
- Its potential to increase Zimbabwe’s productivity and contribute to GDP growth, by allowing local companies access to cheaper inputs, newer and modern technologies, and fostering competition and innovation.
- 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; and
- Increased competition resulting in lower prices; however this might result in a paradox whereby the local industry will be forced out of the market as they will not be efficient and competitive with European products. The ultimate benefit will be the emergence of efficient and competitive domestic industries able to compete globally.
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. It was to commence tariff phase down for intermediate and final products by 2014, till 80% liberalization is reached by 2022.
Zimbabwe did not immediately begin the process of gradual liberalization of the tariff applicable to EU goods entering Zimbabwe due to macro-economic challenges and low capacity utilization facing local industry. Despite having signed in 2009 and ratifying the iEPA in 2012, it was not until the 7th of October 2016 that Zimbabwe gazetted the first EPA tariff schedule for 2016 through Statutory Instrument (SI) 117 of 2016, Customs and Excise (European Community (EC) and Eastern and Southern Africa States (ESA) Economic Partnership Agreements) (Suspension) (Market Access Offer) Regulations, 2016. 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% liberalization would be achieved by 2022.