Friday, January 17, 2014

Zimbabwe Cautious on WTO Pact

Zim cautious on WTO pact

January 17, 2014
Business Reporters
Zimbabwe Herald

Zimbabwe is wary of the potential negative impact of the World Trade Organisation’s proposed trade facilitation agreement and is taking a calculated approach to implementation of its provisions to be adopted in July.

This follows the WTO ministerial conference in Bali, Indonesia last month which adopted three proposals namely agriculture-food security and tariff rate quota, trade facilitation development issues on special and differential treatment monitoring mechanism and the Cancan 28 proposals.

It is estimated that benefits to the world economy would be between US$400 billion and US$1 trillion through reduction of costs of trade by 10 percent to 15 percent, increasing trade flows and revenue collection, creating stable business environment and attracting foreign investment.

“Although the trade facilitation agreement will bring benefits outlined above, Zimbabwe will not benefit much because the country is a net importer.

“This implies that there will be facilitation of more imports relative to exports and has the effect of negatively affecting our trade balance and balance of payment position,” Industry and Commerce Minister Mike Bimha said. Minister Bimha attended the meeting held from 3 to 7 December 2013.

The agreement is fashioned in a manner to provide a permanent solution for the developed world to gain market access to developing economies and Zimbabwe feels this will cause greater difficulties for its economy.

Zimbabwe contends that in light of its economic challenges the agreement will result in balance of payment problems and increased external competition.

The pact will also put the country under pressure as members are subject to dispute settlement process when they breach obligations or commitments while provisions demand amendments to domestic legislation. It will also require large investment in infrastructure and capacity building.

It is against this background that Zimbabwe, together with other developing countries lobbied and managed to retain some safeguards in implementing the cumbersome and mandatory provisions of the trade agreement.

The safeguards include self designation or categorisation of binding provisions according to short or long term implementation periods, technical assistance needs and determination of implementation periods.

The safeguards also include self assessment of required capacity after provision of technical assistance, reference of the ministers’ mandate in the Hong Kong Ministerial Conference, which specifies that a country will not be required to implement if it has not yet acquired capacity.

The issues adopted in Bali are not final, but substance of the agreement will not change although it will be corrected to ensure language is legally correct ahead of adoption at the general council in July.

Objectives on trade facilitation included speeding up customs procedures, making trade easier, faster and cheaper, providing clarity, efficiency and transparency and reducing corruption, bureaucracy and adopting technology.

They also involve assistance to developing countries and least developed countries to upgrade their infrastructure, train customs officials and helping the countries with other costs of implementing the agreement.

On public stock-holding for food security the proposed solution will be interim, but discussion centred on what will happen at the end of the interim period.

The agreement was to use an interim solution until a permanent one is found. Members agreed on a combination of consultation and providing information when quotas are under filled, but one remaining issue was on countries reserve the right not to apply the system after six years, agreeing on Barbados, Dominican Republic, El Salvador, Guatemala and US.

There was agreement to ensure improved access for cotton products from least developed countries and assistance for production in those countries.

A position was also agreed for duty free, quota free access for least developed countries to export to richer nations and the countries that have not done so for at least 97 percent of products to improve the volumes.

Members also agreed on simplified rules of origin for least developed countries, making it easier for the countries to identify products as they own goods in order to qualify for preferential treatment in importing countries.

Agreement was also reached for services waiver, allowing for least developed countries preferential access to richer services markets and a monitoring mechanism consisting of meetings and other methods for monitoring provisions on special treatment given to developing countries.

Outstanding legally binding issues include work on elimination of export subsidies, least developed countries issues, review of interim solution, a permanent solution on food security and other issues left out of the Bali conference will resume in the relevant negotiating committees.

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