9 November 2012

Zimbabwe: Trade With SA Declines

MANUFACTURED exports from Zimbabwe to South Africa have declined significantly after the latter suspended some bilateral and regional trade agreements to prevent third party imports from entering the country under the guise of Sadc rules.

As a result, South Africa, whose share of Zimbabwe's exports has declined to 12 percent from 30 percent, now occupies fourth place after Zambia, Malawi and Mozambique, which receive 30, 17 and 13 percent of the country's exports, respectively.

But South Africa remains Zimbabwe's biggest trading partner, with trade between the two standing at R19,2 billion in 2011, compared with R16,5 billion in 2010 and R14,8 billion in 2009.

Industry and Commerce Minister Welshman Ncube said South Africa resorted to the single transformation rule under the Sadc trade protocol and unilaterally suspended a 1964 trade agreement.

Speaking at the launch of the Confederation of Zimbabwe Industries 2012 manufacturing survey report on Wednesday Minister Ncube said South Africa feared Zimbabwe could be used as a conduit for third-party products.

"From our position as a ministry, our trade relationship with South Africa is very critical as a destination of our exports, (but) the figures of our exports to South Africa (are) declining.

"This is due to challenges we have had with South Africa, relating in particular to the implementation of the Sadc trade protocol, for instance, in the clothing sector," said Minister Ncube.

An initial trade agreement between South Africa and Zimbabwe in 1964 provided for preferential rates of duty, rebates and quotas on certain goods traded between the two countries. The single stage transformation rule policy option provides for significant liberalisation of the Sadc rules of origin and entails the application of the relaxed "single transformation" during manufacturing in all regional member countries.

Restrictions by SA come against the backdrop where up to 85 percent of respondents to the CZI's survey said they faced competition from South African products while 66 percent cited China.

Minister Ncube last week met his SA counterpart Rob Davies during the Zimbabwe-South Africa joint commission meeting and later held intensive discussions on sticking points in the bilateral trade relations.

"We have agreed to set up a high-level technical committee to look at this relationship and to look at the issues of concern from both sides," said Minister Ncube.

He indicated Zimbabwe had also expressed concern that Brazilian chickens were finding their way on to the local market, disguised as South African products.

Minister Ncube said Zimbabwe had reintroduced tariffs on certain products originating from South Africa and the two countries would discuss the issue.

According to CZI's manufacturing survey report, local firms have also struggled to export due to the fact that local products cannot compete in outside markets, in terms of both price and quality.

The survey also revealed that industry was suffering from shortage of working capital to meet orders, high cost of production which is rendering locally produced products expensive, and failure to identify potential export markets.

The five most problematic factors when exporting, identified by the CZI survey which different companies, include access to trade finance, identifying potential markets and buyers, access to imported inputs at competitive prices, difficulties in meeting quality and quantity requirements and cost of delays during domestic transportation.

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