ZAMBIA Revenue Authority (ZRA) Commissioner General Kingsley Chanda says the Free Trade Area is not working as it ought to because member countries are still imposing barriers on this country’s exports.
Speaking when he appeared before the parliamentary budget committee in Lusaka, Monday, Chanda revealed that foreign countries were still insistent on protecting their local industries.
“Our Free Trade Area is not working as it should because member countries are waking up and imposing all sorts of barriers, both tax barriers as well as non-tariff barriers. So, I don’t think it would even be an ideal time to start advocating for a customs union when even our Free Trade Area is not working as it should. Countries are still protecting their local industries. I do not think the region is ready yet for a customs union when in fact the Free Trade Area is not working,” Chanda said.
“In terms of challenges that Zambia faces, Zambia is generally a high cost production country, and as a result, you find that most of our products are uncompetitive, we can barely trade with South Africa. But of course, we have taken advantage of markets like Malawi and the Congo. The high cost of transport due to the geographical location of the country also poses a challenge. We also have the volatility of the exchange rate, that is another challenge because an unstable exchange rate makes international trade difficult because you can’t easily project your costs. Of course, we also have challenges in terms of the quality of our products, some of our products are not of good quality. We also face challenges of non-tariff barriers, we have had some countries that impose non-tariff barriers on our exports and you can see this with the Congo. Sometimes they just wake up and decide to impose certain restrictions, and even Malawi, we have had some surcharge that has been imposed on Zambian products. And of course, the lack of modern technology in our production also makes it difficult to take advantage of these trade agreements.”
He said Zambia was lucky that South Africa had not imposed surtax on the country’s exports as it would cause problems for manufacturers.
“These are bad practices in a Free Trade Area, they must be discouraged. The problem with surtax is that other trading partners also have a right to reciprocate so you find that even the few exports that you are sending, if South Africa took these very seriously, only that it’s a stronger economy, they would also impose surtax on Zambia’s exports into their country and that could cause a lot of problems for our manufacturers, so yes, it is helping to protect our manufacturers, but it’s a bad practice. And we are lucky that none of our trading partners has actually reciprocated,” Chanda said.
He, however, noted that despite the challenges, trade agreements were good for the country.
“The position of the Zambia Revenue Authority is that trade agreements are good for Zambia and trade agreements potentially can increase the market for the members and that is the rationale behind trade agreements. The idea is to look at the region, to look at Africa as your market and these agreements are provided for in the laws of Zambia and the Constitution of Zambia,” he said.
And in response to a question by committee chairperson, Mwalimu Sinfukwe, on what goods Zambia could do away with importing, Chanda said that the country had the capacity to produce its own food and bemoaned mineral water imports.
“Yes, chair, there are a lot of goods that Zambia produces, and I think one of them, a very obvious one is food. Zambia produces a lot of food, we can actually be self-sufficient in food and literally there may not be need to import food. We can do our own beef; we can do our own poultry; we can do our own eggs; we can do our own maize; the land we have, very good land; very good water bodies and even rains. They are generally good compared to other countries in the region like Botswana, Namibia and so on, which are largely desert countries. But chair, the solution, unfortunately, under the agreements we have signed, is not to ban the importation of those products because in the agreements that we have signed, we have agreed to give equal access to every member of those, every signatory to those agreements. So, the way trade agreements work is you just make sure you are competitive in terms of your production costs…,” he replied.
“For example, why have we continued to import food? We import a lot of eggs from South Africa, we still import beef from Brazil, we import soaps…Chair we have been importing mineral water, that water that we produce in Zambia, there have been imports of mineral water! So, there are a lot of goods that we can produce.”
Meanwhile, Chanda observed that there was need to strengthen institutional capacity at the Ministry of Commerce to increase the country’s trading capabilities.
“I think there are issues of modern technology, having adequate staff numbers to support the trade, support the industries. I think those are things that the Ministry has been struggling with…They need even equipment to test certain things. I believe Zambia Bureau of Standards (ZABS) is under the Ministry of Commerce Trade and Industry and need to invest more in their capacity to identify substandard goods so that the Ministry can quickly take action against those goods. But in terms of the details, the PS can probably make a submission on things that the need to support trade and industry,” said Chanda.
“There is need to strengthen the institutional capacity in the Ministry of Commerce Trade and Industry to deal with safeguards and trade remedies as provided for in the agreements. Zambia should take advantage of the central location in the region and improve its transport and become the regional transportation hub. Again, this is something that we can take advantage of even though our geographical location is a disadvantage when it comes to logistics and access to sea ports. But it can also be an advantage in the sense that we can be a transportation hub.”