17 December 2011
ZIMBABWE is set to benefit highly by signing a trade agreement with the European Union, according to a new report by a Geneva-based organisation, South Centre. The EU and African Caribbean and Pacific Countries (ACP) are negotiating for reciprocal trade agreements, Economic Partnership Agreements (EPAs) in line with the rules of the world’s body governing trade.
ACP countries used to enjoy unilateral trade preferences under the Lome Convention. These preferences are in violation of the World Trade Organisation rules which advocates reciprocal trade agreements.
In its latest report, South Centre said that Zimbabwe would lose US$15,4 million in tariff revenue but gains US$39,2 million in duties under the EU General Systems and Preferences (GSPs).
Under GSP, exporters from developing countries pay lower duties on some or all of what they sell to the EU.
This gives them vital access to EU markets contributing to the growth of their economies.
According to the South Centre, only six countries — Zimbabwe, Botswana, Mauritius, Namibia, Seychelles and Swaziland — are the only non-Least Developed Countries that would benefit from signing EPAs.
According to statistics, the share of trade in Sub-Saharan Africa’s Gross Domestic Product (GDP) is 34,5% as compared to only 13,5 % for the US and Japan and 14,3 % for Europe.
According to the African Union Commission and regional economic communities position paper on EPAs, despite the continent’s integration into the global economy, this has not been accompanied by any significant inflow of investments into manufacturing to enhance competitiveness and allow the continent to move up the value chain.
“The challenge of sustainable economic growth and development in Africa requires the diversification and fundamental restructuring of the economy,” the paper said.
The paper said that the lessons to be learnt from the global financial and economic crisis highlight the need for increased regulation of the market, rather than policy reforms that put more emphasis on the removal of regulation.
“Africa needs policy space to diversify its economy, achieve competitiveness and attain sustainable economic growth and development,” said the paper.
South Centre said the benefit of signing EPAs is additional market access compared with the trading arrangement that could be applied in the absence of EPAs.
Over the past two to three decades, African countries have undertaken far-reaching autonomous economic trade, financial and investment liberalisation programmes within both the multilateral and regional context.
This has led to the continent becoming more dependent on the global economy than the developed countries.
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Zimbabwe: Govt Set to Benefit From EU Trade Agreement – Report