Zimbabwe’s latest trade policy pronouncements: Government suspends import duties and removes import licenses on basic commodities
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On the 17th of May 2022, the Zimbabwean government, through the Minister of Finance and Economic Development, introduced Statutory Instrument 98 of 2022 which immediately and wholly suspended Customs duties on importation of basic commodities. The principal regulations being amended by SI 98 of 2022 is the Customs and Excise (Suspension) Regulations, 2003 published in Statutory Instrument 257 of 2003.
As a Customs & Excise suspension and amendment regulation, SI 98 of 2022 will be effective for the next six months – from 17 May 2022 to 16 November 2022. Its effect on cross-border trade is to totally or wholly suspend payment of duty on cooking oil, margarine, rice, flour, salt, bath soap, laundry soap, washing powder, toothpaste and petroleum jelly during the said period, regardless of their country of origin (CoO) and quantities (bulk and small).
By wholly suspending Customs duties on the above listed basic commodities, it means that anyone can now import these products into Zimbabwe duty free as from the 17th of May 2022 to the 16th of November 2022. The basic commodities affected are those goods or products which people use in their day-to-day lives. For the avoidance of doubt, the amendment defines the basic commodities being affected by providing the specific tariff codes (HS2017).
To complement efforts to avert serious shortages of basic commodities in the economy, government through the Ministry of Industry and Commerce gazetted Statutory Instrument 103 of 2022 on Friday the 20th of May 2022 (3 days later). This instrument removed the mandatory production of import licenses on the same seven categories of the basic commodities covered by SI 98 of 2022. This implies that sugar, milk powder, infants milk formula, petroleum jelly, bath soap, laundry bar and washing powder can now be imported by anyone without the need to produce import permits or licenses. SI 98 and SI 103 all of 2022 complement each other towards the faster and easier importation of these basic commodities. The former addresses issues of tariff barriers to trade, while the later addresses issues of licenses or permits as non-tariff barriers to trade in the basic commodities in question.
Despite considerable progress towards implementation of HS2022 which became effective on the 1st of January 2022, Zimbabwe is still administering HS2017 version. A cursory look of the HS2017, that is, Statutory Instrument 53 of 2017 (Customs & Excise (Tariff) Notice, 2017 shows that these basic commodities were generally attracting either 10% or 15% in Customs tariffs prior to the recent policy pronouncements. By definition, a Customs or import tariff is a tax imposed by the government of a given country or a supranational union on imports or exports of goods and/or services. It is a visible and strategic instrument often used by governments to design their cross-border trade policies with the rest of their international trading partners.
This is not the first time that Zimbabwe has responded with similar policy approaches under more or less similar deteriorating economic circumstances. At the peak of hyperinflation in May 2008, the government suspended Customs duties on generally more or less – the same list of commodities for an unbroken period of four years.
The current policy developments affect different sectors of the local economy differently – for good and for worse. Despite enjoying government protection for years as well as having priority to easy access to foreign currency through the Reserve Bank of Zimbabwe’s Auction System, local manufacturers continued to hike prices on locally manufactured goods beyond landed prices of similarly imported goods from neighbouring countries. The vulnerable groups, particularly women in informal cross-border trade who trade for their basic survival and livelihoods will see the current policy developments as considerable reprieve and opportunity to rise again following the perverse effects COVID-19 had had on their means of livelihoods. This is also happening at a time when mandatory high-cost PCR Tests valid for 48 hours were removed, while all land borders are open to individuals once again.
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