Free trade area will not hurt Zambia – studyPosted on Tuesday, July 31st, 2012 by Mwape, Nancy (Zambia Daily Mail) in News
The Zambia Institute for Policy Analysis and Research (ZIPAR) says Zambia will not suffer huge revenue losses from participating in the COMESA customs union and the tripartite Free Trade Area as major tariff reforms have already been undertaken by Government.
Zambia is a member of the Common Market for Eastern and Southern Africa (COMESA) Free Trade Area (FTA), Southern African Development Community FTA and is seeking to join the tripartite COMESA, SADC and Eastern Africa Community free trade area arrangement.
ZIPAR consultant Caesar Cheelo said this during a public discussion forum in Lusaka when he presented a study on “Regional Integration under COMESA and SADC: Implications for Zambia’s Import Trade and Trade Tax Revenue.”
Mr Cheelo has since urged Government to proceed with its commitment to fully participate in the COMESA Customs Union and the tripartite FTA.
“The business of trade is worth fighting for. It is probably the biggest business in the world; but this is a big picture that is sometimes challenging for stakeholders in least developing countries’ context to see,” he said.
The purpose of the study by ZIPAR was to determine the potential effects of the regional integration trade reforms under COMESA and SADC on imports, revenues, competitiveness and tariff protection.
He said Zambia should continue on its path of tariff reform and regional integration, towards deeper regional cooperation.
He said the country should move ahead with its commitment to fully participate in the COMESA Customs Union and the TFTA, adding that adjustment costs are likely to be lower than the costs associated with other tariff positions and reforms already undertaken.
Mr Cheelo said further work should be undertaken to quantify the costs of non tariff barriers (NTBs) for Zambia as a trade facilitator, to eliminate or at least minimise the barriers.
He said discriminatory, often ineffective, policies and strategies regarding NTBs are likely to limit the regional integration benefits of tariff reform.
He said revenue losses under the COMESA Customs Union are a fair trade-off as lower tariffs are likely to improve domestic competitiveness through reduced prices mainly on industrial inputs for the importing industry.
“Zambia’s trade interests in the regional communities require more debate, public information sharing and elaboration. Revenue losses from (importer-based) exemptions are about twice as large as those related to [forthcoming] tariff reforms under COMESA Customs Union and the tripartite FTA,” he said.
Mr Cheelo said under the SADC FTA, the country is already incurring the potential losses under tripartite FTA through trade with South Africa which is its major trading partner under SADC.