The Sadc Council of Ministers of Trade has given Zimbabwe the greenlight to seek a special dispensation for derogation on outstanding tariff commitments in line with the regional trade protocol.
Zimbabwe is a signatory to the SADC Protocol on Trade whose objective is to liberalise intra-regional trade in goods and services on the basis of fair, mutually equitable and beneficial trade arrangements.
The protocol also seeks to support and ensure efficient production within the regional bloc, reflecting the dynamic comparative and competitive advantages of member states.
According to the Competition and Tariff Commission (CTC), a statutory body mandated with the implementation of Zimbabwe’s competition policy and execution of the trade tariffs, the country has not been successful in implementing the phasing down of the tariffs, as stipulated in the protocol due to several economic constraints.
“The country was supposed to have completed the tariff phase down for Category C products by December 2014, but is yet to fully comply. This is largely due to the fact that Zimbabwe is still tackling its economic challenges, hence the need for the extension of the derogation,” said CTC.
“A proposal was tabled by Zimbabwe to the Council of Ministers of Trade for it to apply for a special dispensation for derogation, outside the set criteria so that it could regularise its commitments under the SADC Protocol on Trade.
“The Council of Ministers of Trade has given the country the greenlight to submit an application for a special dispensation for derogation on the outstanding tariff commitments. If granted, this will allow Zimbabwe time and policy space for local industry to retool and build production capacities to enhance competitiveness.”
The SADC Protocol on Trade includes, among other provisions, specific undertakings towards the elimination of trade tariff barriers in the form of tariff phase down commitments for each member state. The implementation of individual member state tariff phase-downs commenced in 2001 and was to have been completed by 2012.
Under this pact, member states agreed to phase down tariffs for goods in three main categories, depending on the degree of sensitivity of the goods in trade. The fourth category is for goods that are excluded from the phase down process. The criteria for sensitivity included factors such as; revenue generation, employment creation and strategic importance, among others. Category A focused on immediate liberalisation of tariff lines with low duties to zero percent as from date of implementation. Category B sought gradual tariff phase down on goods to zero percent from 2000 to 2008. Category C looks at sensitive goods or products to industrial or agricultural activities that were to be phased down between 2009 and 2012. These include meat, fruits, dairy produce, vegetables, beverages, footwear, tobacco, cereals, ceramic products, paper and paper products, soap, wood and its articles, sugar and a range of mineral products. Meanwhile, Category E looks at excluded product list covering goods such as firearms and ammunition.
While Zimbabwe managed to reduce or eliminate duties or tariffs under Categories A and B, constituting 87 percent of the tariff lines under its tariff phase down commitments, the CTC said the country could not fully implement the phase down under Category C (sensitive products).
As such, it said the country applied for derogation from implementing the phase down pursuant to Article 3.1 (C) of the SADC Trade Protocol, which states that: “Member States that have been adversely affected by the removal of tariffs…may be granted a grace period to afford them additional time for the elimination of tariffs and NTBs (non-tariff barriers)”.
The derogation entailed that Zimbabwe would suspend phasing down its tariffs for Category C products until 2012, after which yearly reductions should resume and be completed by 2014.
The country applied for derogation in 2011 and was granted a two-year grace period ending in 2012 with the hope of completing the phase down in 2014.
To deter member states from abusing the derogation provision, the SADC Council of Ministers of Trade, have set a stringent criteria for applying for the window under Article 3.1 (C) of the Protocol on Trade. This includes limitation on the number of products that could be granted derogation.