JB Cronjé, tralac Researcher, comments on the latest trade restrictive measures implemented by Zimbabwe and the South African Government’s response

According to a press statement released by the South African Department of Trade and Industry, the South African and Zimbabwean Ministers of Trade will meet on 4 August 2016 to find “an amicable resolution to the measures implemented by Zimbabwe on products of export interest to South Africa. It will also seek to ensure compliance with Zimbabwe's commitments under the World Trade Organisation and the Southern African Development Community Trade Protocol. The ministers will in their discussions take into account Zimbabwe’s industrial development and balance of payments challenges.” The South African Minister also said recently that the “issue was raised at SADC and its committee of trade ministers said that we (SA and Zimbabwe) should meet. We are prepared to be flexible”. It is not clear what the Minister meant but the scope for so-called ‘flexibility’ in terms of the application of legally binding trade agreements such as the SADC Protocol on Trade requires consideration.

This bilateral discussion comes after the Zimbabwean government recently adopted a regulation requiring import licenses on certain products such as coffee creamers, body creams, cereals, bottled water, jams, dairy products, fertilizers and building material (See Statutory Instrument 64 of 2016 here).

The purpose of the regulation is, according to a press statement issued by the Zimbabwean Minister of Trade, “not to BAN the importation of those listed products but to REGULATE them”. It states further that the Ministry will “allow importation of goods which can be produced locally, when local production cannot meet the national demand; in an endeavour to avoid shortages on the local market”. Furthermore, that this ‘support is not open ended but time bound and sector specific. During this period, industries are expected to re-tool and bring in new technology and address production inefficiencies”. 

The import licence regulations of concern do not provide any detail regarding their implementation such as application requirements and procedures. Media reports suggest that the licenses are issued at a cost of US$ 30 for each consignment of a listed product regardless of quantity or value, after justifying the import to the Ministry (Read previous Discussion Note here). The regulation does not specify what considerations will be taken into account for the evaluation of a licence application and whether a decision will be based on objectively determinable facts. What makes the system even more peculiar is that individuals, doing their shopping across border in South Africa, have been partially exempted from the licencing requirements. This partial exemption comes after demonstrations against the introduction of the licencing system erupted at the Beit Bridge border post between South Africa and Zimbabwe. The large numbers of informal cross border traders and shoppers that pass through the border post will from now on be granted a monthly allowance on each listed product to “a maximum of 1kg coffee creamers (Cremora), cereals (2kg), hair products (6 packets of a weight not exceeding 1,5kg), washing powder (4kg), mayonnaise or salad creams (not exceeding 2 litres) and bar soap (box of 24)”. Other products individuals are allowed to import without a licence include “potato crisps (one pack of 12 of 125g each), peanut butter (2kg), jams (2kg), canned fruits and vegetables (2kg), yoghurt (1kg), cheese (1kg), juice blend (4 litres), camphor creams, white petroleum jellies (180ml) as well as shoe polish (one pack of 12 of 50ml or 40g each)”. It is unclear how the Zimbabwean border authorities will monitor the cross border movement of individuals and their groceries. Nonetheless, the partial exemption is good news for South African retail businesses located close to the Zimbabwean border. However, the licencing system negatively affects especially South African commercial exporters. About a third of Zimbabwe’s imports come from South Africa. This represents about 2.5 percent of South Africa’s total exports. The lack of transparency in the evaluation and issuing of import licences makes it impossible to determine whether all applicants are treated equally.   

The time period for the application of this import licensing regime is not specified in the communication issued by the Zimbabwean authorities. It is also not clear whether there are in fact domestic industries that produce the products on the published list. In any case, non-automatic import licences are quantitative restrictions that limit the quantity of products that may be imported into a country. As a result, all WTO Members, including Zimbabwe, must adhere to the rules on the application and administration of import licences as stipulated in the WTO’s Import Licensing Agreement. This Agreement also requires Zimbabwe to notify the WTO of any quantitative restriction it maintains. This has not yet happened.

Equally, article 7 of the SADC Protocol on Trade prohibits the adoption of quantitative restrictions unless otherwise provided for in the Protocol. In particular, Article 9 of the Protocol provides “nothing in Article 7 and 8 of this Protocol shall be construed as to prevent the adoption or enforcement of any measures by a Member State” necessary to protect certain societal values and interests. The adoption of quantitative measures to protect local producers is not included in the list of exceptions in Article 9. However, Members may apply a “quota system provided that the tariff rate under such a quota system is more favourable than the rate applied under this Protocol”. In other words, Zimbabwe may only continue to apply import licences if they are used to administer the implementation of a tariff quota that is in line with the provisions of the SADC Protocol on Trade and the WTO Import Licensing Agreement. If not, legal consequences should follow. There is no room for ‘flexibility’.

Tell us what you think.

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Sources:

DTI, 2016, Media Statement: Minister Davies to Meet His Zimbabwean Counterpart to Discuss Trade Restrictions Available [Online] at http://www.thedti.gov.za/editmedia.jsp?id=3815

Tshuma, E., 2016. Traders demonstrate against new Zimbabwe import regulations Available [Online] at http://www.tralac.org/discussions/article/9940-traders-demonstrate-against-new-zimbabwe-import-regulations.html

Mtomba, V., and Mandizha, T., 2016. Import Bans: Govt puts waivers in NewsDay, 8 July 2016 Available [Online] at https://www.newsday.co.zw/2016/07/08/imports-ban-govt-puts-waivers/