Industry divided over free trade

ZIMBABWE’S hard-pressed industries have warned the country against ratifying the African Continental Trade Area (AfCFTA) agreement before some adjustment on the rules of origin principles are made.
The free trade agreement, signed in March 2018 by 44 African countries, is projected to make Africa the largest free trade zone in the world, with an estimated combined gross domestic product of over US$3,3 trillion.
However, local industries feel that rules of origin — which stipulates that in order for African nations to be able to trade freely at duty free, 35 percent of a product has to be manufactured in the African country intending to export the product within the continent — should be amended to cater for their current needs.
Documents seen by The Financial Gazette show that local cement sector has agreed to adopt the Southern African Development Community (SADC) rule of origin.
“This is because there is enough Limestone to manufacture cement within the region as a major product and the Limestone being one of the major products in Zimbabwe,” read part of the document compiled by the ministry of Industry.
The Fish sector said Zimbabwe’s position was to adopt the Common Market for Eastern and Southern Africa (COMESA) rule since it was considered viable to implement.
The electrical energy sector added that the “SADC rule has made a value of non-original material rule alternative” but the meeting, which was attended by representatives from the economy’s subsectors considered it a complex decision tied to political conditions and geographical location barriers.
Zimbabwe’s other main area of contention of the AfCFTA is to have a tariff liberalisation reduced to around 85 percent from the current 90 percent to allow for the import protection of certain goods in the country.
Negotiations are expected to be completed during the first quarter of the year, before being presented to Parliament for adoption.
The leather sector said Zimbabwe should adopt the SADC rule since the country has the ability to value add albeit wanting to export raw materials for now, as it is recapitalising its industry.
“However the meeting suggested a closer look to the sector’s proposal to adopt a wholly approach within the region since it has been grappling to meet the demands and targets set on several encounters during the relief period,” the document said.
Those that use woven fabrics of carded wool or fine animal hair chose to change the tariff heading in the textile industry to enable the sector to import and convert the raw materials.
This has been considered a viable option since it will not adversely affect anyone.
Those who do knitted and crotched materials preferred a more flexible approach with a double stage since there is the absence of a blanket manufacturing industry in Zimbabwe
The glass industry agreed to adopt the SADC rule since it enables Zimbabwe to import within the region.
The Dairy industry agreed that their raw material be wholly produced since they fluctuates within the region.
However for solid milk it was agreed to adopt a flexible approach of importing from elsewhere in other countries like New Zealand, Australia and Canada.
The motor industry is yet to be consulted whether it has the capacity to generate or not and to consider the degree of protectionism enacted way back.
The Refrigeration and freezers sector adopted the Change of Tariff Heading (CTH) with 55 percent Value of Non Originating Material (VNOM).
A Capri research was proposed to consider the implications of the decisions made.
Household or laundry and washing machine sector adopted a CTH approach with 55 percent threshold and VNOM.
Textiles, glass and motor industries were encouraged to attend such vital meetings since it may affect the performance of their sectors in