Zim-EU Agreement to Suffocate Trade

ZimbabweThe Interim Economic Partnership Agreement (IEPA) Zimbabwe signed with the European Union (EU) is set to suffocate the country’s trade and industrial development policies due to the removal of taxes, a regional non-governmental organisation has warned. Zimbabwe alongside Mauritius, Seychelles and Madagascar concluded the IEPA with the EU that would result in the removal of taxes between the African countries and the EU.

But in an analysis of the trade pact, the Southern and Eastern Africa Trade, Information and Negotiations Institute (Seatini) said the elimination of the export taxes is a blow to both the National Trade Policy (NTP) and Industrial Development Policy (IDP) meant to promote the trade and industrial revival respectively.

Last year, the Zimbabwean government launched the Industrial Development Policy 2012-2016 that advocates value-addition or beneficiation and the NTP to guide the country’s trade with the rest of the world.

“There is no doubt that for Zimbabwe to successfully implement the NTP and IDP it will need to use tools such as export taxes. However, Article 15 of the interim EPA agreement that Zimbabwe signed and ratified provides for elimination of export taxes, thereby suffocating the policy space Zimbabwe is referring to in its National Trade policy on the need for value-adding natural resources,” Seatini said in a discussion paper, Zimbabwe’s control over its natural resources in the WTO context.

Article 15 of the IEPA provides that for the duration of the agreement, the parties shall not institute any new duties or taxes on, or in connection with, the exportation of goods to any other party in excess of those imposed on products destined for sale. The organisation recommended that Zimbabwe “must exercise its right to develop its economy and protect the environment through the use of export taxes, until such a time when the economy can competitively trade with the rest of the world enabling it to then gradually eliminate the taxes on a product by-product basis”.

It also recommended that government should consult widely all relevant ministries and the private sector on its existing and proposed laws relating to any prohibitions and restrictions on the export of natural resources especially metals and minerals. Seatini warned that the use of export restrictions would be in violation of World Trade Organisation (WTO) rules.

Article XI:2(a) of the General Agreement on Tariffs and Trade does not allow WTO members to impose prohibitions and restrictions on the importation of any product, unless they (restrictions and prohibitions) are temporary, addresses critical shortages, relates to foodstuffs or other products and are essential to the exporting WTO member. It said it would be difficult for Zimbabwe to prove the critical shortage requirement. Source: The Standard – Zimbabwe

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World Trade Report 2012

This year’s World Trade Report ventures beyond tariffs to examine other policy measures that can affect trade. As tariffs have fallen in the years since the birth of the General Agreement on Tariffs and Trade (GATT) in 1948, attention has progressively shifted towards non-tariff measures (NTMs). The range of NTMs is vast, complex, driven by multiple policy motives, and ever-changing. Public policy objectives underlying NTMs have evolved. The drivers of change are many, including greater inter-dependency in a globalizing world, increased social awareness, and growing concerns regarding health, safety, and environmental quality. Many of these factors call for a deepening of integration, wresting attention away from more traditional and shallower forms of cooperation. Trade in services is a part of this development and has come under greater scrutiny, along with the policies that influence services trade.

So what does the report contain? Click here to download the report!

  • Section A of the Report presents an overview of the history of non-tariff measures in the GATT/WTO. This overview discusses how motivations for using NTMs have evolved, complicating this area of trade policy but not changing the core challenge of managing the relationship between public policy and trading opportunities.
  • Section B examines the reasons why governments use NTMs and services measures and the extent to which public policy interventions may also distort international trade. The phenomenon of off-shoring and the cross-effects of services measures on goods trade are also considered. The section analyses choices among alternative policy instruments from a theoretical and empirical perspective. Finally, case studies are presented on the use of NTMs in particular contexts.These include the recent financial crisis, climate change policy and food safety concerns. The case studies consider how far measures adopted may pose a challenge for international trade.
  • Section C of the Report surveys available sources of information on NTMs and services measures and evaluates their relative strengths and weaknesses. It uses this information to establish a number of “stylized facts”, first about NTMs (TBT/SPS measures in particular) and then about services measures.
  • Section D discusses the magnitude and the trade effects of NTMs and services measures in general, before focusing on TBT/SPS measures and domestic regulation in services. It also examines how regulatory harmonization and/or mutual recognition of standards help to reduce the trade-hindering effects of the diversity of TBT and SPS measures and domestic regulation in services.
  • Section E looks at international cooperation on NTMs and services measures. The first part reviews the economic rationale for such cooperation and discusses the efficient design of rules on NTMs in a trade agreement. The second part looks at how cooperation has occurred on TBT/SPS measures and services regulation in the multilateral trading system, and within other international forums and institutions. The third part of the section deals with the legal analysis of the treatment of NTMs in the GATT/WTO dispute system and interpretations of the rules that have emerged in recent international trade disputes. The section concludes with a discussion of outstanding challenges and key policy implications of the Report. Source: World Trade Organisation.
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