By Retlaw Matatu Matorwa
Zimbabwe launched a five-year Trade Facilitation Roadmap initiative, a move that seeks to complement ongoing efforts towards the ratification of the World Trade Organisation-Trade Facilitation Agreements (FTA). The agreement, which sailed through Parliament and now awaits Presidential assent, is set to enhance economic growth through provision of expeditious movement, release and clearance of goods, including goods in transit.
Should Zimbabwe fully ratify FTAs it would assist the country in reducing the cost of trading, bureaucracy and corruption through use of technological advances. According to the World Trade Organisation, the trade facilitation agreement has potential to generate US$1 trillion to the world’s income and create 18 million jobs in developing countries.
In 2013, Zimbabwe was part to the Bali ministerial conference on the landmark Trade Facilitation Agreement (TFA). The TFA entered into force on February 22 2017, following ratification by two thirds of the WTO membership. FTA strives to simplify, modernise and harmonise export and import processes and has therefore emerged as an important issue for the world trading system.
Apart from provision of expeditious movement of goods, FTAs provide for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provision for technical assistance and capacity building on this area.
The Minister of Industry, Commerce and Enterprise Development, Dr Mike Bimha, expressed concern that Zimbabwe may not benefit much from the TFA given that the country is a net importer, as there will be facilitation of more imports than exports, which may harm the country’s trade balance and balance of payment position (The Sunday Mail, March 12, 2017). It has become evident that the ratification of TFA by Zimbabwe will place it on a positive economic trajectory particularly in its drive to lure foreign direct investment (FDI).
Proponents of TFA acknowledge with concern that small- and medium-sized enterprises — which, as a whole, account in many economies for up to 60 percent of GDP creation — are not active players in international trade due to red tape rather than tariff barriers. The administrative barriers for enterprises that do not regularly ship large quantities are often simply too high to make foreign markets appear attractive.
For developing-country economies, inefficiencies in areas such as customs and transport can be roadblocks to their integration into the global economy and may severely impair export competitiveness or inflow of foreign direct investment. This is one of the reasons why developing-country exporters are increasingly interested in removing administrative barriers, particularly in other developing countries, which today account for 40 percent of their trade in manufactured goods. In the circumstance, the Trade Facilitation Agreement comes in as a strategic intervention to ease doing business in Zimbabwe.
Long before the TFA was concluded, African ministers had already recognised the potential benefits it could bring to Africa. In October 2013, they reaffirmed “the importance of trade facilitation where our priorities include enhancing infrastructure and boosting productive and trade capacities, in addition to reducing transaction costs, barriers, incentivising the undertaking of reforms and improvements to the customs regulatory systems as well as boosting intra-African trade”.
According to WTO computable general equilibrium simulations presented in the World Trade Report 2015, export gains from the TFA would be between US$750 billion and over US$1 trillion per annum. The gravity model estimations show even higher figures, ranging from US$1,1 trillion to US$3,6 trillion. According to the same source, developing countries and Least Developed Countries (LDCs) would be the main beneficiaries of the “full” implementation of the agreement.
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