HomeBusiness DigestEPAs poses threat to Zim's sick economy

EPAs poses threat to Zim’s sick economy

Kuda Chikwanda

GOVERNMENT’S plans to sign Economic Partnership Agreements (EPAs) next month, along with other African, Caribbean and Pacific (ACP) countries, poses

a huge threat to Zimbabwe’s already battered economy.

EPAs are a collective scheme to create free trade areas between the European Union (EU) and ACP member states. Once signed, they will be operational on January 1 2008. The agreement entails that member countries abolish tariffs to ensure free trade among members.

Analysts however say Zimbabwe will not be able to benefit from the agreement because of the current economic problems. Zimbabwean companies are already reeling from foreign currency shortages, an unviable exchange rates and lack of raw materials. Price controls, inflation and hostile operating environment have also affected local companies. These problems, analysts say, make it impossible for local companies to compete on the EPA markets.

Under threat are Zimbabwe’s agricultural and manufacturing sectors that will be forced to compete with an influx of cheaply manufactured European goods. This will harm local farmers, local manufacturers and exporters.

The parliamentary portfolio committee on Foreign Affairs, Industry and International Trade heard this week that EPAs, once signed, would result in loss of guaranteed markets. The committee was also told that the EPAs will lead to more unemployment, and diminished income. .

The committee also heard that EPAs had strict conditions attached which Zimbabwean companies might not be able to meet.

The EU has also been demanding “zero-for-zero” concessions, especially on tariffs levied on imports and exports.

These concessions include that developing countries scrap duty of imports from developed nations, which would also reciprocate with a similar move.

“We can’t compete on an equal footing with the EU as we have a smaller economy,” said Andrew Mushita, director of Community Technology Development Trust (CTDT), a non-governmental organisation which deals with trade and technology issues.

“If we cannot meet the conditions imposed by EPAs, then it means we cannot export,” said Mushita.

Mushita also told the parliamentary committee that Zimbabwe would have to contend with dumping of cheap commodities by European producers who are beneficiaries of subsidies from their governments and who also use advanced technology with better economies of scale.

He told the committee that unless the conditionalities suited Zimbabwe’s productive environment, the country would not reap any benefits from being a signatory to the EPAs.

CTDT legal officer Angeline Munzara-Chawira said development had to take the centre stage in dealing with EPAs.

“Trade should not come first before development but development must always come first,” she said.

Zanu PF MP for Buhera North, William Mutomba, raised concern over the predicament the country faced regarding EPAs. He asked Mushita if it was possible for government to refuse to sign the EPAs next month.

“It seems the disadvantages are outweighing the advantages. We seem to have shortages of everything,” Mutomba said. “What is it we want to export? We seem to be making negotiations for the sake of negotiations. Do we have any direct benefit?”

Negotiations for EPAs started in 2002 after stinging World Trade Organisation criticism of the EU’s non-reciprocal and discriminating trade agreements with developing countries.

Zimbabwe entered into the talks under the Eastern and Southern Africa Negotiating Forum — umbrella body of the Common Market for Eastern and Southern Africa (Comesa).

However this move is likely to also create problems for Zimbabwe, which is an active member of the Southern African Development Community (Sadc), according Masiiwa Rusare of the Trade Centre. Sadc has its own tariff agreements which may not be compatible with those of the EPA.

“There will be a tendency for competing programmes in one country. It is difficult to implement if a country is a member of two groupings. If Comesa says the common external tariff is 20% and Sadc says it is 15% it becomes difficult to implement,” Rusare said.

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