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About the Zimbabwe National Chamber of Commerce

Zimbabwe National Chamber of Commerce is a non-profit making membership-based organization that provides services designed to support its members in business development.

As an independent organisation, the ZNCC has represented the interests of its members for over 100 years especially through advocacy and provides a focus on business empowerment as the engine for economic growth. ZNCC also aims to be a leader in business development in the national economy and a channel of communication between business and the various authorities in Zimbabwe.

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Preamble

The Zimbabwe National Chamber of Commerce (ZNCC) in partnership with the United Nations Development Programme (UNDP) Zimbabwe held Workshops on the African Continental Free Trade Area (AfCFTA) in Bulawayo (17 & 18) and Gweru (19 & 20) from 17 to 20 October 2023. This followed a similar Workshop which was held from 4 to 5 September 2023 in Mutare. The Workshop was targeting export-ready businesses to capacitate them and enhance their participation in the African Continental Free Trade Area.

Objectives of the Workshop

Given the identified knowledge gap on the AfCFTA within Zimbabwe’s private sector, ZNCC continues to take, it upon itself and developmental partners such as UNDP Zimbabwe, to champion the promotion of knowledge on the continental initiative. The specific objectives are to:

  • Promote a better understanding of the provisions, opportunities, and challenges of the AfCFTA in the Zimbabwean context;
  • Enhance information dissemination on the progress made in the operationalization and implementation of the AfCFTA in Zimbabwe and the continent at large;
  • Educate the business community on the benefits that accrue from actively participating in the AfCFTA; and
  • Get feedback from the business community on the issues and challenges they face from participating in the continental free trade area.

Official Opening Session

Welcome Remarks

Bulawayo – Mr MacKenzie Dongo, ZNCC Matabeleland Region Vice President

Gweru – Mr Layton Reid, ZNCC Gweru Branch Chairperson

Delegates were welcomed to the Workshop and the participants were introduced to the ZNCC Training School which was established in 2020 to enhance business development through industry-specific training and capacity-building initiatives. It was submitted that Zimbabwe is currently working towards the launch of the National AfCFTA Implementation Strategy and emphasis was placed on the need for local industry to be able to take full advantage of the trade pact through continuously building adequate capacity across all value chains. During the ZNCC 2023 Pre-National Budget Consultations, there was a realization that the Rules of Origin are still a challenge for most exporters and importers to understand and adhere to. The majority of businesspeople are unaware of the AfCFTA and how they can benefit from the opportunities presented within the free trade area. ZNCC has identified a knowledge gap among Zimbabwean businesses regarding the implications of the AfCFTA to their operations which has necessitated the need for such a Workshop.

Official Opening Remarks

Mr. Shingirai Own Mareya, Ministry of Foreign Affairs and International Trade

While giving the remarks on behalf of the Permanent Secretary in the Ministry of Foreign Affairs and International Trade (Ambassador James Manzou), Mr Shingirai O. Mareya highlighted that the AfCFTA is part of Zimbabwe’s agenda for economic development and it is instrumental in the achievement of Vision 2030. Over the years, Zimbabwe has taken a shift toward economic diplomacy, and the Government’s thrust is placed on implementing the National Development Strategy I (NDS1) which is focused on high, accelerated, and inclusive development. The NDS1, thus recognizes the private sector as the engine for a sustained recovery and growth for the Zimbabwean economy. In this regard, Mr. Mareya advised that the Government continues to play its role in creating an enabling environment for the private sector to flourish. For the AfCFTA to be implemented successfully, the participation of the private sector, which is the key implementor, need not be emphasized.

Attendance

The two groups of participants were well diverse and included players from agriculture, manufacturing, mining, tourism, textile and clothing, and education sectors, among other sectors. The participants also included the Government Ministries, Departments, and Agencies that work with these sectors such as the Ministry of Industry and Commerce, the Ministry of Foreign Affairs and International Trade, the Ministry of Women's Affairs, SMEs and Community Development, the Zimbabwe Revenue Authority (ZIMRA), and the Competition and Tariff Commission (CTC). The total number of participants for Bulawayo was 45 and for Gweru was 36 including Speakers (6) and ZNCC Secretariat (Bulawayo (4) and Gweru (3)).

Tracking Progress under the African Continental Free Trade Area

Presentation by Mr Shingirai O. Mareya – Ministry of Foreign Affairs and International Trade

The African Continental Free Trade Area is part of the African Union (AU) agenda 2063 towards creating “The Africa We Want”. The AfCFTA will be harnessed by enhanced trading in value-added products among 54 participating countries. All of the 55 African countries have signed the agreement except Eritrea. The African Continental Free Trade Area portends unique growth and market opportunities for various businesses including SMEs. The AfCFTA is the world’s largest free trade area bringing together the 55 countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs). Quite significant work is being done towards the realization of the objectives of the AfCFTA though there are some outstanding issues under negotiations. Figure 1 provides an update on the Agreement establishing the AfCFTA.

Phase I

Phase II

Phase III

Protocol Trade in Goods

Protocol Trade in Services

Settlement of disputes

Protocol on Competition

Policy

Protocol on investment

Protocol on IP Rights

Annexes

•       Customs Cooperation

•       Trade Facilitation

•       Transit Trade and Transit Facilitation

•       Technical barriers to Trade

•       Sanitary and Phytosanitary

•       Non-Tariff Barriers

•       Trade Remedies

Annexes

•       MFN Exemptions

•       Air Transport

•       Schedule of Specific Commitments in Services 

•       Buss, Tourism, Fin, Transport,

•       Schedules of Tariff Concessions

•       Rules of Origin  

•       Unlocks the dynamic benefits of the AfCFTA;

•       Rationalizes the investment landscape;

•       Businesses and companies compete fairly with each other;

•       Protect Intellectual Property

Legend

Negotiations Completed

Adopted by AU Summit

Substantial work done

Negotiations on-going

Protocol on Digital Trade

Protocol on Women and Youth in Trade

•       Growing importance of e-commerce

•       Inclusive growth taking on board women and youth  

Figure 1: Agreement Establishing the AfCFTA

Source: AfCFTA Secretariat (2023)

Key AfCFTA Milestones

·         As of April 2023, AfCFTA Agreement was ratified by 47 AU Member States, representing 85% of the AU Member States;

·         Trade in Goods – 46 schedules of tariff concessions received, representing 85% of the AU Membership;

·         Rules of Origin negotiated at 88.3% convergence (pending issues – automotive, textile/clothing);

·         Trade in services – Provisional Schedules of Tariff Concession (PSTC). 46 provisional schedules have been received including 4 from Customs Unions (East African Community (EAC), Economic Community of West African States (ECOWAS), South African Customs Union (SACU), and Economic and Monetary Union of Central African States (CEMAC). 36 of these offers have been technically verified. Nine (9) State Parties and non-State Parties are yet to submit their PSTC;

·         The AfCFTA Phase II negotiations covering protocols on Investment, Competition Policy, and Intellectual Property Rights (IPRs) completed;

·         The AfCFTA Appellate Body was also established and the Dispute Settlement Body (DSB) recently agreed on the modalities for the selection of members of the Appellate Body. A first meeting was held in Accra in the second week of July 2023;

·         National Implementation of the AfCFTA has begun with 25 State Parties and 1 Regional Economic Community (REC) validating their strategies of which 9 are under implementation. In addition to these, 12 countries and three RECs are drafting their strategies;

·         Guided Trade Initiative matchmaking businesses and products for export and import between interested State Parties in coordination with their national AfCFTA Implementation Committees;

·         Africa currently trades with 42 currencies. The continent’s transactions on Swift amounted to US$ 19.5 billion in 2019. The African Union, in partnership with the Afreximbank has established the Pan-African Payments and Settlement System (PAPSS) to enable Africans to trade in their local currencies and eliminate the use of third currencies while boosting intra-African trade.

Source: AfCFTA Secretariat (2023)

In the meantime, Zimbabwe is in the process of identifying products with the highest potential to be pushed into the continent and in this regard, Zimbabwe is set to join the Second Phase of the Guided Trade Initiative. According to Mr. Mareya, the Regional Economic Communities to which Zimbabwe is affiliated such as the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA) are building blocs not stumbling blocs for the country’s effective participation in the AfCFTA.

Key Concepts on Trade – Harmonized System (HS) Nomenclature

Bulawayo – Mrs. Makhosazana Kuture, Zimbabwe Revenue Authority (ZIMRA)

Gweru – Mr Tomeyi Sona, Zimbabwe Revenue Authority

The presenters highlighted that the HS Code system comprises about 5609 commodity groups, and each of the groups is identified by a six-digit code, arranged in a logical structure to achieve uniform classification. Accordingly, Zimbabwe is a contracting party of the World Customs Organization (WCO) and is obliged to incorporate the HS amended version which is produced every 5 years. The HS was defined as a universal way for the classification of goods and a numeric language to code goods.

The HS is used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics. It is revised or updated every 5 years e.g. HS 2002, HS 2007, HS 2012 HS 2017, and HS 2022 to take into account developments, for example, new products being introduced in international trade. The last edition was HS 2017 and the current edition is HS 2022. The year in the name refers to when it is required to be implemented – not when it is finalized.

Over 200 countries use the HS as a basis for their customs tariffs. Currently, over 98% of the merchandise in international trade is classified under the HS code. The good news is that Customs Officials have expertise in the interpretation and implementation of HS. Through the WCO and other international Customs agencies, Customs Administrations regularly receive training on the use of the HS.

Uses of the HS

  • Identification of goods through standard codes;
  • Harmonised way of describing goods used in trade;
  • An instrument that Facilitates international trade;
  • Facilitates the collection, comparison, and analysis of statistics
  • Enables uniform and consistent identification of traded goods;
  • Allocation of rates of customs duty
  • Simplified implementation of international treaties;
  • Rules of origin – change in tariff heading; and
  • Analysis of global trade for economic, policy and business planning, and international trade negotiations

Key Concepts on Trade – Tariffs, the Meaning of Tariff Offers, and their Implications

Mr Tawanda Katsande – Competition and Tariff Commission

While giving a background of the AfCFTA, Mr. T. Katsande indicated that the overarching objective of the AfCFTA is to create a single continental market for goods and services, with a population of about 1.3 billion people and a combined Gross Domestic Product (GDP) of approximately US$3.4 trillion. The AfCFTA also seeks to eliminate trade barriers and boost intra-Africa trade progressively.

Agreed Tariff Offer Modalities under AfCFTA

 

Non-LDCs

LDCs

Timeframe: Non-LDCs

Timeframe: LDCs (SDT)

Level of Ambition

90 percent

90 percent

5 years

10 years

Sensitive Products

ü  7 percent

ü  Subject to Notification and Negotiation

ü  Method of Negotiation: Request & Offer

ü  7 percent

ü  Subject to Negotiations

ü  Method of Negotiation: Request & Offer

10 years

13 years

Exclusion List

ü  3 percent

ü  Review after 5 years

ü  Subject to negotiation

ü  Subject to Anti-Concentration Clause

ü  3 percent

ü  Review after 5 years

ü  Subject to negotiation

ü  Subject to Anti-Concentration Clause

 

 

Transition Period

Tariff phase-down shall be in equal installments i.e. Linear Approach

Supplementary Modality

Member States may compliment the Linear Approach with request and offer approach

Variable Geometry

Member States who may wish to make deeper cuts within a shorter time period may do so, on the basis of reciprocity

Eight countries including Kenya, Egypt, Ghana, Rwanda, Tanzania, Cameroon, Tunisia, and Mauritius have commenced on ninety-six products under the AfCFTA Guided Trade Initiative. Zimbabwe has since submitted its offer for technical verification and has received comments from the Secretariat. The implications of the Tariff Offers to the private sector were reported as follows:

  • Market Access (Two Way);
  • Increased Competition;
  • World-class product standard (Quality);
  • Productivity (priority); and
  • Efficient production processes (priority)

Key Concepts on Trade – Rules of Origin

Bulawayo - Mrs. Makhosazana Kuture, Zimbabwe Revenue Authority (ZIMRA)

Gweru – Mr William Gadzikwa, Zimbabwe Revenue Authority

Goods shall be eligible for preference under the AfCFTA protocol if they originate in any of the State Parties in accordance with the criteria and conditions set out in Annex 2 on Rules of Origin. The reasons for determining the origins of goods include: conditions that a product needs to fulfill as originating; application of certain customs/trade measures may depend on the origin of goods; because the origin may not be evident; production of goods may take place in more than one country; rates of duty may be affected; to effect controls; and for statistical purposes.

At the ports of entry, the port officials utilize the following to determine the origin of goods: certificate of origin, physical examination, use of general knowledge, acceptance as declared where no preference is being claimed, and apply preference where claimed and certificate of origin supplied. A country of origin is a country where the goods are grown, produced, or subjected to their last economically justifiable process of manufacture. The country of supply is a country in which goods are placed on board the means of transport for direct export to a State Party.

The Rules of Origin can be obtained at the World Trade Organization (WTO) Rules of Origin, Revised Kyoto Convention (RKC) (Specific Annex K), domestic legislation, and Free Trade Agreements (e.g. AfCFTA). The conditions to attain the Rules of Origin include Wholly obtained (Goods that occur naturally in the free trade area), and Substantial Transformation/Sufficiently worked/Processed (Change in Tariff Classification, Specific processing, Value Added, and Value of Non-originating content). The unacceptable processes of manufacture include: diluting; sorting & cleaning; bottling; drying; heating; repair; mere subdivisions; re-treading of tyres; and mere assembly.

Understanding Trade in Services and Policies Around it

Mr Shingirai Owen Mareya – Ministry of Foreign Affairs and International Trade

A service is an economic activity that is intangible and invisible its production and consumption occur simultaneously. Statistics are poor because services are difficult to trace. However, services are the most important activity in many countries of the world: over 50% of the GDP in developing countries, and over 70% of GDP for developed countries.

General Agreement on Trade in Services

The GATS is the first multilateral Trade Agreement to cover Trade in Services. It entered into force in January 1995 as a result of the Uruguay Round negotiations. GATS provides for progressive liberalization through successful rounds of negotiations to improve market access and extend national treatment to foreign services and services suppliers. 

Classification of Services

African Continental Free Trade Area Guide Trade Initiative

The Guide Trade Initiative (GTI) was developed to kickstart commercially meaningful trade under the AfCFTA between and among State Parties. This will support the implementation of the so-far adopted Schedules of Specific Commitments/offers. The countries with adopted Schedules of Specific Commitments are Cameroon, Central African Republic, Chad, Congo, Djibouti, DRC, Gabon, Egypt, Equatorial Guinea, Lesotho, Malawi, Kenya, Tanzania, Rwanda, Burundi, Eswatini, Namibia, Mauritius, Seychelles, Uganda, Zambia, and Zimbabwe. The initiative entails the Secretariat to hand-hold State Parties as they navigate the different regulatory landscapes within the State Parties in order to trade services and identify market opportunities in the State Parties.

Introduction to the International Trade Centre Market Analysis Tools

Mr Jephias Makiwa – Zimbabwe National Chamber of Commerce

Whether one is a company, institution, or a policymaker, reliable information to make better informed trade-related decisions is greatly needed. The information helps businesses understand that staying on top of competitive conditions, anticipating demands, pinpointing growth potential, and scanning for opportunities for new markets is indeed critical. ITC’s innovative market analysis and resource solutions help businesses review crucial trade-related information in over 200 countries and territories, and provide them with the means to better understand supply and demand trends for internationally traded products. Updated evidence-based information is critical to decision-making in rapidly shifting global trade conditions. ITC’s market analyses provide real-time data on trade dynamics, market access conditions, growth potential and policy choices, possible business partners, and business operations. In an environment where the sources, availability, and value of data have increased exponentially, we help stakeholders translate information into actionable intelligence.

The participants were introduced to tools such as the Trade Map, the Export Potential Map, and the Market Price Information. For most of the participants, this was their first time to hear about such tools. The participants were also informed about other tools which are specific to the AfCFTA such as the African Trade Observatory (ATO).

Consignment-Based Conformity Assessment

Bulawayo - Mr Tafadzwa Mugomo, Cotecna

An exporter pays the following fees for certification on the consignment-based conformity assessment (CBCA). The fees, which are net of any taxes, cover the documentary verification and the physical inspections of the goods but do not include: Testing: to be quoted on a case-by-case basis; Registration fees; Manufacturing Licensing; Re-inspection due to vain inspection; Sampling of bulk shipments; Cost incurred by the Seller in presenting the goods for inspection and/or testing; and Other fees not mentioned above.

Fees Structure for an Exporter (General Goods) per Consignment

Routes

Ad Valorem Fee as a % of the FOB Value of the Consignment

Minimum Fee in USD

Maximum Fee in USD

A

0.50

240

2,675

B

0.45

240

2,675

C

0.25

240

2,675

Source: Cotecna (2023)

Below are the goods subjected to the CBCA Programme in Zimbabwe.

Food and Agriculture (including Fertilizers, Confectionery, Biscuits, Beverages, Snacks)

Building Products (including Cement, Portland cement, Pipes, Plumbing accessories, Door Frames, Sanitary ware, Ceramic tiles, Steel bars for reinforcement of concrete)

Petroleum and fuel (including Paraffin stoves and Heaters, Gas containers, Candles, Lubricants)

Petroleum Gases and other Gaseous Hydrocarbons

Insecticides, rodenticides, fungicides, herbicides, and similar

Other ARTICLES OF PLASTICS AND ARTICLES OF OTHER MATERIALS (mittens, office and school supplies, Petri dishes, fitting for furniture, ear plugs and others)

Paper products (including Handkerchiefs, cleansing or facial tissues and towels, Tablecloths and serviettes, and others)

Optical products (including sunglasses, refractive lenses, and others)

Packaging material (including Packaging for contact with food)

Electrical/electronic products (including Electrical and electronic appliances, Fluorescent lamps, Starters, Ballasts, Energy saving lamps, Solar panels, Photovoltaic products, Diodes, transistors, and other devices)

Body care and health products (including Cosmetics, Sanitary pads, Baby diapers, and Detergents)

Automotive and Transportation (including New Tyres, New Brake pads, New Other vehicle parts, New Motor vehicles, New Chassis, New trailers, and New semi-trailers)

Clothing and textiles (including Blankets, Clothing and textile products, Shoes, Cotton cords, and Yarns)

Toys (including all kinds of toys)

Subjected Goods under the CBCA Programme

Source: Cotecna (2023)

Trade Remedies

Mr Tarcicious Mufundisi – Competition and Tariff Commission

WTO trade liberalization under the GATT 1947 lowered and in other cases removed tariffs and other customs impediments to trade. The GATT 1947, has as its fundamental principles, reciprocity and non-discrimination. However, trade liberalization and its ensuing gains brought exposure to unfair trade practices such as dumping and subsidization that can cause harm to emerging and established domestic industries alike. In as much as tariffs are lowered or eliminated, it becomes important for countries to counteract such practices that harm domestic industries.

The trade remedies system allowed Member States to use anti-dumping, countervailing, and safeguard measures in a bid to counteract these unfair trade practices. These measures are exceptions to the WTO fundamental principles aimed at counteracting injury or threat to injury on the domestic industry as a result of dumped, subsidized imports or a surge in imports. These measures go beyond the protection granted by the tariff schedules negotiated as part of the GATT 1947. Therefore, trade remedies are becoming increasingly vital for the survival of the domestic producers who remain the main provider of jobs and significant contributor to GDP in many countries.

Legal Provisions in Zimbabwe

  • GATT Article VI – Agreement to implementation of Article VI;
  • XIX GATT 1994: Emergency Action on Imports of Particular Products;
  • Competition Act (Chapter 14:28), Section 34C;
  • SI 266 of 2002 known as Competition Anti-Dumping and Countervailing Duty Investigation Regulations of 2002;
  • SI 217 of 2006 known as Competition Safeguards Investigation Regulations of 2006; and
  • Customs and Excise Act (23:02), Section 90-94.

Trade Remedies under the AfCFTA

The AfCFTA makes provision for trade remedies in response to injury, serious injury, or threat thereof emanating from trade. The principal objective of the Protocol on Trade in Goods is to create a liberalized market for trade in goods [Article 2(1)] through the progressive elimination of tariffs and non-tariff barriers among other means. The backbone of this objective is the General Agreement on Tariffs and Trade (GATT) of the World Trade Organization. In relation to trade remedies, the AfCFTA reaffirms the rights of state parties under the relevant WTO Agreements and provides for how trade remedies will be pursued under the AfCFTA. The agreement not only provides for trade remedies but also their application which is to be undertaken in accordance with the provisions of the Protocol and Annex 9. The Protocol on Trade in Goods as read together with Annex 9 and accompanying guidelines, essentially provides for the approach to be followed in investigating cases of dumping, subsidies, and surge in imports with an effect on the domestic industry of a State Party.

Background Paper on AfCFTA – Impediments to Zimbabwe’s Private Sector’s Effective Participation in AfCFTA

Mr Jephias Makiwa – Zimbabwe National Chamber of Commerce

Despite concrete and deliberate efforts to increase trade among African countries, intra-African trade remains relatively low compared to other regions like the European Union and Asia. In the year 2021, 1 out of 10 products exported by Africa entered the African market, while the remainder was destined for overseas markets compared to 6 out of 10 exported for the EU market by EU countries and 5 out of 10 for the Asian market by Asian countries. Other continents continue to experience significant volumes of interregional trade compared to Africa. Interregional trade is currently affected by various factors including non-alignment in regulations, tariffs as well as other infrastructure and logistical challenges. Strategic initiatives such as the African Continental Free Trade Area (AfCFTA) will play a key role in addressing some of the challenges affecting interregional trade.

For Zimbabwe’s private sector to succeed in intra-continental trade, factors such as market access, border administration, business environment, trade finance, and transport and communications infrastructure are critical. Deliberate efforts to improve on each of the necessary conditions for success in international trade are crucial for Zimbabwe’s private sector. There are quite a number of strengths that would need to be harnessed, and a number of constraints, some being under scrutiny in this paper, that would need to be addressed. The AfCFTA is expected to play a critical role in the attainment of the country’s vision of becoming an upper-middle-income society by 2030 and this potential rests on the policy choices of today and how we make it work for Zimbabwe.

The challenges facing local businesses, at the firm level, impeding them from participating in international trade, are not unique to AfCFTA only, but the overall participation in international trade in general. There is a need for policy reform to encourage formalization and capacity-building initiatives on standardization, as well as equipping businesses with knowledge and critical skills for effective participation in international trade. Some of the recommendations drawn from the background paper are as follows: promoting the AfCFTA implementation strategy and raising awareness on the strategies in place; operationalizing the AfCFTA Implementation Committee; moving with speed in the transformation of the Beitbridge Border Post into a one-stop border post; providing adequate budget support for the effective and timeous implementation of the AfCFTA; promoting the expansion of the productive capacity of the existing manufacturing centers; capacitating the Standards Association of Zimbabwe (technical and institutional capacity) to certify new products on the market; promoting the clustering and integration of SMEs into the existing production value chains; promoting digital payment systems and organizing with participating countries on modalities to fully adopt the Pan-African Payments and Settlement System (PAPSS); and aligning trade laws and policies to the AfCFTA Agreement. Trade associations are urged to enhance AfCFTA awareness by incorporating the informal sector and capacitating their members with market intelligence whilst the organization itself is recommended to invest in skills for trade.

The Workshops lasted for two days and the content covered was packaged in such a way that key information would be delivered within the given timeframe.

Closing Remarks

Bulawayo – Mr Beki Moyo, ZNCC Bulawayo Branch Chairperson

Gweru – Mr Nyasha Gonese, ZNCC Gweru Branch Executive Committee Member

In closing, it was reported that the content was insightful and informative. The Branch Chairpersons were confident that the participating export-ready businesses indeed benefited from the Workshop. They expressed appreciation to the Speakers and Presenters who spoke on various topics that were discussed during the two days. Words of appreciation were forwarded to ZNCC and UNDP Zimbabwe for organizing the fruitful Workshop as were as the organizations that deployed the personnel to facilitate the Workshop such as the Ministry of Foreign Affairs and International Trade, the Competition and Tariff Commission, and the Zimbabwe Revenue Authority.


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