The Sunday Mail
ZIMBABWE has been on a major drive to deepen relations with all countries in Africa and beyond, and indications are that more nations are increasingly prepared to do business with local enterprises.
Trade Focus
Allan Majuru
President Mnangagwa’s economic diplomacy thrust is premised on unlocking economic benefits from Zimbabwe’s good foreign relations.
For businesses, this is creating opportunities in export markets, as well as attracting investment and tourists.
The best success options for local companies in export markets are countries that Zimbabwe has preferential trade agreements with, particularly those in the region, as they are easily accessible.
In trade, the World Trade Organisation (WTO) insists that countries need to operate on the most-favoured-nation basis, which means a country must extend the same treatment to all WTO member states.
It, however, allows for regional integration through the establishment of regional trade blocs, customs unions and bilateral agreements. But the rules governing these agreements should not undermine fundamental principles of the WTO.
To grow trade among themselves, countries are allowed to establish bilateral or multilateral agreements within blocs such as the Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA) and the African Continental Free Trade Area (AfCFTA).
Preferential trade agreements have become a popular tool for countries seeking to promote economic growth and improve profitability.
Zimbabwe, like many other countries, has signed several bilateral and multilateral trade agreements over the years.
Under preferential bilateral trade agreements, Zimbabwe offers or is offered better trading arrangements with the contracting partner than any other country that does not have such a deal.
ZimTrade, the country’s trade development and promotion body, has already published a “Guide to Trade Agreements”, which local companies can use to explore ways through which they can benefit from the agreements.
Bilateral trade agreements
Currently, Zimbabwe has four operational bilateral trade agreements with Botswana, Malawi, Mozambique and Namibia.
The Zimbabwe-Botswana trade agreement, ratified in 1988, offers reciprocal duty-free trade on all products grown and produced or manufactured wholly or partly from imported inputs, subject to a 25 percent local content requirement.
With Malawi, this is a reciprocal trade agreement that has been in place since 1995, with 25 percent domestic value-added requirements.
In Mozambique, the focus of the agreement that has been in place since 2005 is to eliminate tariff and non-tariff barriers, and to co-operate in customs and trade promotion.
The deal provides for duty-free trade between the two members, with the rules of origin specifying a 25 percent domestic value-added component.
Excluded from the agreement are refined and unrefined sugar; Coca-Cola/Schweppes soft drinks; firearms, ammunition and explosives; motor vehicles; and cigarettes. With regard to Zimbabwe and Namibia, there is a reciprocal agreement that has been in place since 1992, which requires at least 25 percent local content for manufactured products. It also stipulates that the two countries should be the last place of substantial manufacturing for the exported products.
Multilateral trade agreements
Zimbabwe is also signatory to the SADC Trade Protocol, the COMESA Free Trade Area, interim Economic Partnership Agreements (EPAs) and the AfCFTA, as well as the United Kingdom (UK)-Eastern and Southern Africa (ESA) EPA.
Small businesses can further benefit from the COMESA Simplified Trade Regime (STR), which is operational in Malawi, Zambia and Zimbabwe.
The regime was introduced to make it easy for small-scale cross-border traders by simplifying and harmonising customs and border procedures, including improving efficiency of the border-clearance process.
COMESA STR targets small-scale traders importing and/or exporting goods worth US$2 000 or less, which are on the common list of eligible products negotiated and agreed by the participating countries.
On the other hand, the AfCFTA has the potential to create a market of 1,2 billion people, providing local businesses with a much larger access than they presently have. Zimbabwe’s economy is heavily reliant on export of commodities such as tobacco and minerals.
So, the AfCFTA will provide opportunities for local businesses to diversify their exports and tap into new markets.
Further, the UK-ESA EPA seeks to boost bilateral trade between the parties by removing tariffs on a wide range of goods and services. This will allow businesses in both regions to access new markets and increase their competitiveness.
By listing under the Registered Exporter (REX) System, companies benefit from the EPAs, which provide ESA countries with improved access to the UK market — one of the world’s largest economies. They, thus, diversify their exports and reduce reliance on traditional markets.
Zimbabwe is also benefitting from Generalised System of Preferences (GSP), which is offered by a number of developed countries. GSP is a system that provides reduced rates of duty or duty-free access to products from developing countries.
The preferences vary by country and product, and change from year to year.
Developed countries that have extended GSP to Zimbabwe include Australia, Canada, Japan, New Zealand, the United States, Norway, the Russian Federation, Switzerland, Turkey, Belarus and all European Union countries.
Key benefits
Preferential trade agreements are designed to stimulate trade between states or group of countries through preferential treatment in the reduction or elimination of customs duties, as well as removal or relaxation of quantitative restrictions.
For example, duty and import-related taxes could constitute a large percentage of the final price for cross-border transactions.
Thus, a reduction or elimination of the duty can give the exporter a substantial advantage in terms of cost over competitors from countries that do not have similar trade agreements.
Local companies looking to grow their exports should, therefore, take advantage of these agreements.
Steps for registration
To qualify under the bilateral and multilateral trade agreements, it is necessary for the company or exporter to register with the Zimbabwe Revenue Authority (ZIMRA).
Preference is granted to goods that meet the origin conferring criteria or rules of origin that are used to distinguish between goods produced within territories of the states that are members to the agreement in question.
Goods can only meet this criterion if they have been obtained from a member state, or they have been produced in a member country wholly or partially from materials imported from outside the member states by a process of production that effects a substantial transformation of the goods.
To enable ZIMRA officials to verify the eligibility of the products, the company or exporter is required to submit supporting documents such as an application letter, CR14, list of products intended for export, valid tax clearance certificate and a factual cost analysis of the products intended for export.
Certificates of origin must also be completed and submitted to ZIMRA.
Obtaining certificates of origins
For all trade agreements, except the European Union (EU)-ESA EPA, exporters are required to submit the certificate of origin to ZIMRA as part of the documentation and declaration process.
This is documentary proof that goods or products meet the rules of origin requirements, as specified by the trade agreement.
The certificates of origin can be obtained at ZimTrade offices in Harare, Bulawayo and Mutare.
Allan Majuru is ZimTrade’s CEO
