INDUSTRY and Commerce minister Mike Bimha said there was nothing to gain from the Trade Facilitation Agreement agreed to by the World Trade Organisation last year since Zimbabwe was a net importer of products.
The TFA is a multilateral deal which is meant to simplify customs procedures by reducing costs and improving their speed and efficiency. It was agreed to at the 9th World Trade Organization (WTO) in December last year.
Zimbabwe’s trade deficit widened to US$3,6 billion in October 2013, from US$3,02 billion in August and US$2,37 billion at half year, according to figures released by the Zimbabwe National Statistics Agency (Zimstats).
The deficit has already surpassed the US$3 billion mark forecast by economists at the beginning of last year, in a trend that continues to hold back gross domestic product growth.
According to import and export data from ZimStat, exports for the 10 months amounted to US$2,78 billion and imports totalled US$6,55 billion.
The huge deficit is creating a situation where money which is supposed to circulate internally thereby creating liquidity is in fact being kept outside the country by financing imports.
The gap is expected to widen further as the local industry continues to struggle to meet consumer demand.
“Although the trade facilitation agreement will bring the benefits outlined, Zimbabwe will not gain much because the country is a net importer,” Bimha said.
Bimha said the agreement implies that there will be facilitation of more imports relative to exports and has the effect of negatively affecting the trade balance and balance of payment position.
He added that FTA agreement was designed to provide a permanent solution to the developed world’s need to gain easy market access in developing countries.
“This will cause greater economic difficulties for a country such as Zimbabwe as this will result in external competition.”
He however said Zimbabwe is currently implementing trade facilitation programmes based on its own customs regulations.
“This is not binding and implementation is at our convenient pace and without fear of breach of international provisions and application of dispute settlement mechanism,” Bimha said.
On the other hand however, developing countries were set to benefit from the technical assistance to update infrastructure and train customs officials or for any other costs associated with implementing the agreement. Advertisement
Benefits to the world economy associated with implementing the FTA are estimated at between US$400 billion and US$1 trillion, through reducing costs of trade between 10 percent and 15 percent, increasing trade flows and revenue collection, as well creating a stable business environment and attract foreign investment.
Government has however come up with measures to address the flooding of cheap imports after expressing concern that Zimbabwe had become a warehouse for goods produced in other economies.
In the 10 month period to October 2013, South Africa remained the largest trading partner accounting for US$3,17 billion of the imports and US$2,04 billion of exports.
The United Kingdom also emerged as a strong import partner accounting for US$1,15 billion; there were no recorded exports to the UK.
The liquidity crisis, since dollarisation has been worsened by an imbalance between imports and exports which has resulted in money flowing out of the country.
The Confederation of Zimbabwe Industries says in its latest Manufacturing sector survey that local companies were not exporting because their products had become uncompetitive on the export markets.
The companies also said the shortage of working capital had resulted in most firms focusing on meeting local demand while the high cost of production had rendered their products expensive.