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EPAs: Digging our own Grave

Zimbabwe Standard, Harare

EPAs: Digging our own Grave

5 September 2009

It is saddening that Zimbabwe is going ahead in signing the interim and full Economic Partnership Agreements (EPAs) with the European Union (EU) at the expense of its citizens, small-scale farmers and industries.
The Minister of Industry and Commerce, Professor Welshman Ncube stated that cabinet had agreed to sign the interim EPAs that will run until December 2010 adding that full EPAs would be signed by end of December 2010.

EPA negotiations will result in total trade liberalisation or opening up of trade between Zimbabwe, other African Caribbean (ACP) countries and the EU. Trade liberalisation would be in tranches and the first tranche is expected to be liberalized in 2013 while the other two tranches will come in 2015.

It is critical to analyse the current content and context in which EPAs were and have been negotiated between Zimbabwe, the EU and other ACP countries. Although EPAs are seen as, “developmental, strengthen regional integration among developing countries, vehicle for reducing poverty”, and ensure full legality of EU-ACP trade relations vis-à-vis multilateral trade of the World Trade Organisation (WTO) rules, they also guarantee a continuation of trade flows from the ACP to the EU, avoiding disruptions and ensuring a continuation of the EU-ACP conditions of trade.

That is a continuation of the market access conditions established by the Lome conventions. However, in the final analysis, the negative effects far outweigh the benefits since EPAs were tailor-made to benefit the EU and not developing countries.

The fact that the EPA negotiations were concluded by individual countries has resulted in divisions among ACP regions to the extent of jeopardising regional economic integration of developing countries. Sadc and Comesa have been divided since some countries in the Sadc region such as Zimbabwe and Malawi negotiated the EPAs under the East and Southern Africa (ESA) bloc. The negotiations were shrouded in secrecy excluding other relevant stakeholders and beneficiaries.

Civil society, business, small-scale farmers, miners and informal traders as well as the ordinary citizenry were not involved in the negotiations and governments only consulted these groups for rubber-stamping purposes only.

Further, the negotiations were hurriedly concluded in 2007 without covering the contentious issues that are still to be agreed. These contentious issues include sensitive goods, rates and the time to be taken by countries in reducing tariffs, Singapore issues especially on competition in government procurement, investments and trade in services.

For Zimbabwe to maintain only 20% on goods it considers sensitive products and protecting infant industries is a tall order. Serious lack of technical and negotiating capacity which had characterised ACP participation in the EPAs persisted until the conclusion of the negotiations.

The government is currently engaging the international community begging for international aid to resuscitate the decade-long dilapidated agricultural and manufacturing industry. How can anyone expect Zimbabwe’s small-scale farmers and industries to compete with highly subsidized and technologically advanced EU’s industries? The EU supports its farmers with up to 6 billion euros a year and this is almost the same amount Zimbabwe requires to resuscitate her economy. In this regard it is disappointing for Zimbabwe to sign EPAs as this is not going to benefit anyone in Zimbabwe.

We have all witnessed what happened to the cross-border traders especially in the clothing industry and footwear when the Chinese entered Zimbabwe. Most of the companies went out of business and even small-scale traders closed their shops leading to massive unemployment. There is an urgent need for the government to institute safe-guarding measures to protect our local industries as we also expect the same dumping of cheap products into Zimbabwe from the EU.

There is poor infrastructure in Zimbabwe, insufficient and often poorly maintained transport, information, electricity and communication infrastructure (roads, ports, railways, telecommunication etc) are a major problem.

Poor infrastructure results in high costs of doing business for traders and this reduces productivity resulting in local industries not being able to produce in time to compete with the EU. There is an urgent need for Zimbabwe to prioritize the development of infrastructure while existing infrastructure must be properly maintained, not left to decay as is the case with Zimbabwe at present.

The dependence on trade taxes constitutes a major threat for Zimbabwe because if they are removed in the course of implementing the EPA agreement, the country will lose revenue. In all of the developing countries, trade taxes account for over 10% of total fiscal revenue.

Trade liberalization is likely to create a significant fiscal gap through the lowering of import duties in some countries. Alternative sources of fiscal revenue are going to be difficult, considering that Zimbabwe has a weak industrial base as well as high unemployment levels that result in less income to offset the tax gap. In this regard by signing full EPAs, Zimbabwe is digging its own grave.

Richard Mambeva
Programme Officer
Zimbabwe Coalition on Debt and Development (ZIMCODD).