24 August 2014

Zimbabwe: 'Zimbabwe Lacks Trade Strategy'

Trade experts have said Zimbabwe's membership in multiple regional trade blocs is reflective of a lack of trade strategy and is not benefitting local businesses.

Overlapping memberships has been cited as a major factor fuelling trade disputes, tariff confusion, creation of non-tariff barriers, market fragmentation and escalating costs of doing business as each country seeks to advance its own economic interests.

Customs, tax and international trade consultant Elisha Tshuma said the repercussions of continued membership in more than one bloc were far-reaching as government had to meet and comply with its obligations in each of the regional blocs.

Tshuma said overlapping membership is expensive to both the government and traders. Zimbabwe is a member of the Common Market for East and Southern Africa (Comesa) and Southern African Development Community (Sadc.)

"The private sector will be required to acquit themselves with the provisions of both regional economic communities and choose one that suits them better whenever they want to either import or export," he said.

Tshuma said the two regional economic communities have different rules of origin and traders need to appreciate them and make informed decisions.

"Zimbabwe should make a decision either to be in Sadc or in Comesa like what South Africa and Kenya did. South Africa is in Sadc and not Comesa. Likewise, Kenya is in Comesa and not Sadc. Zimbabwe needs to identify a trade bloc that gives it more benefit," he said.

Regional engagements already exist on the African continent, namely Comesa , Sadc, Southern African Customs Union (Sacu), and the East Africa Community (EAC), and most countries are members of more than one such grouping.

In a 2013 research paper for the Trade Law Centre (Tralac) by Gerhard Erasmus, it is observed that a Sadc audit notes that the key problem with implementing Sadc's deep integration agenda within the context of overlapping membership is simply that countries cannot implement two sets of rules.

The same consideration applies to the EAC and Comesa.

Economist Takunda Mugaga said overlapping membership could lead to strained trade relations due to policy disregard. He said that one regional bloc may have certain trade policies in place favourable for particular products while another has a different set of policies, detrimental to the same.

"Continued membership in more than one trade bloc may also be indicative of a deficiency in decision making by policymakers.

"Most countries in this scenario usually join more than one trade body for political benefits rather than economic considerations, which only serves to deter investment inflows," said Mugaga.

Trade experts contend that from a legal point of view, a country cannot apply two different common external tariffs and should not seek individual exemptions, but cooperate in efforts to negotiate new arrangements between concerned regional economic communities.

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