Archives April 2018

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 1^st 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:-

1. 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;
2. 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;
3. 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
4. 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:-

1. 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.
2. 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
3.  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 7^th 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.

BUSINESS leaders in Bulawayo have pressed the Competition and Tariff Commission (CTC) to decentralise its operations by opening local offices to effectively assist companies.

Contributing during a public workshop organised by the commission yesterday, business representatives in the city said they were facing numerous tariff and competition-related challenges that could be adequately addressed if CTC was accessible at local level.

Since its establishment 21-years ago, as a statutory body to implement and enforce Zimbabwe’s completion policy and law, as well as to execute the country’s trade tariffs policy, the commission only operates from the capital.

Participants said they were not amused by the requirement to travel to Harare to seek essential business administrative services, saying the practise was not only inconvenient but costly.

“Your offices are only in Harare, so how does one access your products? Businesses all over Zimbabwe need your services and being in Harare only doesn’t serve that intended purpose,” said one participant.

An official from a refrigeration air conditioning company weighed in saying it was critical for CTC to urgently open an office in Bulawayo to meaningfully impact on industry transformation.

The official said the closure of industries in the city in recent years was partly a result of unfair business and tariff practices, which CTC should address to foster re-industrialisation.

Others concurred. “It’s not fair for CTC to continue to operate from one corner of the country 38 years after independence. You should have offices in all provinces and support businesses across board.”

Unless the commission spreads its wings and works closely with businesses at local level, it will remain a liability to the economy, said the participants.

The commission is mandated to regulate competition in all sectors of the Zimbabwean economy, and gives advice on trade tariffs matters. Participants also urged the commission to investigate the beef industry where they claimed cartels were manipulating the market.

They further pointed to the need to regulate wholesale and retail competition and cried foul over unfair competition with cheap imports. Some claimed that Harare-based firms were fraudulently getting tenders ahead of local firms.

The CTC senior leadership led by chairman Engineer Anthony Mutemi and director Ms Ellen Ruparanganda, acknowledged the concerns and pledged to act on them.

“We appreciate the frank and brutal feedback, both good and bad. I can give commitment that the board of the commission will look into that,” said Eng Mutemi.

The CTC, however, highlighted that in the past years its operations were crippled by finance constraints, which limited its capacity.

During the engagements businesses were taken through various presentation sessions to appreciate the structure of the commission and the legal framework that informs its operations.

There was lively dialogue on various subject areas covering merger regulations, tariff adjustments, restrictive business practices and trade remedies among others.

SOURCE: HERALD NEWSPAPER 29 JUNE 2018