HomeBusiness DigestMerger of Competition, Tariff Commissions finally paying off

Merger of Competition, Tariff Commissions finally paying off

Ngoni Chanakira

AS the haggling between the former Competition and Tariff Commissions subsides, their merger is now expected to improve Zimbabwe’s trade policies with resultant economic benefits, says their

director Alexander Kububa.

The two commissions joined hands on June 1 2002.

Unlike in the case of the Departments of Customs and Excise and that of Taxes, the merger did not result in any redundancies since all employees of the former Tariff Commission were absorbed into the merged entity without creating an over-employment situation.

Before the merger, both commissions were still recruiting their core staff and had, therefore, not reached their respective optimum employment levels.

A year before the merger, the two commissions operated under one roof.

Kububa says this greatly helped identify possible problem areas associated with the pending organisational change.

In an interview with businessdigest – a year after merging – Kububa said the coordination of competition and tariffs functions under one authority was expected to better prepare Zimbabwe to take full advantage of the benefits of trade liberalisation under the Common Market for Eastern and Southern Africa (Comesa) and the Southern African Development Community (Sadc) at regional level and under the World Trade Organisation (WTO) at multilateral level.

“The success of the merger of the Competition Commission and Tariff Commission was largely attributed to the depth of preparations undertaken and open discussions held between the two commissions and their parent Ministry of Industry and International Trade,” Kububa said.

The Competition Amendment Act, 2001 (Number 29 of 2001) that was gazetted on May 31 2002 formalised the merger of the Competition and Tariff Commission.

The Amendment Act repealed the Tariff Commission Act (Chapter 14:29), and therefore dissolved the Tariff Commission. It merged the functions of the commission with those of the Competition Commission to establish the Competition and Tariff Commission.

Kububa said the complementarities between the functions and operations of the two commissions became manifest soon after they came into operation in 1998.

“The two commissions had the common aim of contributing towards the economic development of the country, particularly in the essential fields of trade and industry,” Kububa said. “The commissions also shared the same concerns over the disruptive effects of unfair trade practices to trade and industrial development. However, while the Tariff Commission focussed on protection of individual companies and industries against unfair trade practices of foreign companies or government policies, the Competition Commission’s focus was on promoting and protecting the competition process on the domestic market, not necessarily individual companies in a competitive environment.”

He said since the two commissions had somewhat different focuses in their dealing with unfair trade practices, there was a real danger that their respective determinations on specific cases might produce contradictory outcomes or even nullify the other organisation’s decisions if such determinations were not coordinated under one authority”.

“For example, while protection from imports is one aspect of tariff protection of local industry, import competition is an important component of competition,” Kububa said. “There is, therefore, need to ensure that the granting of tariff protection does not materially restrict competition on the local market. There is also a growing realisation worldwide that there is an important and unavoidable interface between competition policy and trade policy, under which tariffs policy falls. That realisation resulted in the WTO to form a working group on the interaction between trade and competition policy to establish a framework for the interface between the two developmental policies.”

Kububa said even though the two commissions operated in two distinct disciplinary fields their functions were complementary in certain critical areas.

He said the Competition Commission was involved in competition law and policy based on the economics of industrial organisation, while the Tariff Commission was involved in trade policy in the specific area of tariffs.

“While the Competition Commission was primarily concerned with the conduct and behaviour of competing firms on the domestic market and the Tariff Commission was concerned with the competitiveness of firms in international trade, both commissions aimed at preventing unfair trade practices, and collusive behaviour cartels in global trade, with the primary objective of economic development associated with consumer welfare and protection,” Kububa said.

He said unfair trade practices included predatory behaviour on domestic markets or dumping activities in international trade.

The director said the granting of tariff protection to the local industry was now being done without unnecessarily distorting competition on the domestic market and tariffs were being used to ease entry barriers into concentrated markets.

“Competition policy can also now better be used for trade and industrial development,” Kububa said. “Financially, the merger resulted in considerable reduction in operating costs through the amalgamation of the former commissions’ administrative and financial support services.”

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