The ratification by Zimbabwe of the economic partnership agreement (EPA) with the United Kingdom (UK), allowing the African country’s exporters to continue enjoying tariff and quota free access to the UK’s market, will boost trade and investment between the countries.
British Ambassador to Zimbabwe Melanie Robinson, revealed the development this week, adding Europe’s second largest economy fully supported efforts by Harare for job creation and economic development.
“Glad, Zimbabwe has ratified the Economic Partnership Agreement with the UK. This ensures (Zimbabwean exporters) tariff and quota free access to the EU market,” said Robinson posting on her twitter account.
Foreign Affairs and International Trade Minister Sibusiso Moyo confirmed the development as well, also adding that it represented a major milestone towards boosting trade and investment for Zimbabwe.
“This is a huge step for Zimbabwe’s re-engagement efforts. The signing of this partnership will undoubtedly bring increased trade and investment to Zimbabwe,” Moyo said.
The International Monetary Fund says enhanced market access for the poorest developing countries would provide them with the means to harness trade for economic development and poverty reduction.
Estimates of the gains from eliminating all barriers to merchandise trade, through improved access to industrialised markets, range from US$250 billion to US$680 billion per year, according to the IMF.
Further, it says about two-thirds of these gains would accrue to industrial countries, but the amount accruing to developing countries would still be far more than twice the level of aid they currently receive.
The latest trade arrangement comes as the UK is in the transitional period of leaving the European Union, also known as Brexit, a large economic block with a set of similar customs rules and protocols, which will no longer bind it as a non-member.
The UK had committed to continue its previous trade arrangements with the Eastern and Southern Africa (ESA) States if it exited the European Union (EU) without a deal in March last year, or at the end of an implementation period.
The UK and EU are now in the transition period until 31 December 2020. During this transition period the status quo prevails while the terms of the future EU-UK relationship are negotiated.
The ESA-UK-EPA provides immediate duty-free and quota-free access to goods from ESA States, including Zimbabwe, into the UK in exchange for more gradual tariff liberalisation from the ESA States. The EPA ensures minimal disruption to trade and benefits that existed before Britain voted on the decision to leave the EU as a trade block.
In order to transition the trade agreements that the EU concluded with third countries, the UK agreed with many third countries that the most appropriate and proportionate form of legal instrument to ensure continuity, as it prepared to leave EU, was a short form agreement.
The UK’s trading arrangements with Zimbabwe and other ESA States namely Madagascar, Mauritius, and Seychelles were, until now, governed by an Interim Agreement establishing a framework for an Economic Partnership Agreement between itself and ESA countries.
The interim EPA provided for provisional application, and was being provisionally applied by the UK. Given that the UK sought to maintain effects of the previous agreement with Madagascar, Mauritius, Seychelles and Zimbabwe as it leaves the EU, it has retained the provisions in the new ESA EPA.
ZimTrade, a State trade promotion body, chief executive Allan Majuru, last year said when Britain exits the EU; it will need much more in terms of the diversity of its imports, which it used to obtain from the European continental trade block.
A bilateral trade agreement with Britain that will not be part of the EU, relates more to exports that received preferential treatment under EU trade agreements that covered the entire block.
Total trade in goods and services between the UK and Madagascar, Mauritius, Seychelles and Zimbabwe (‘the region’) was £1,5 billion in 2017, around 0.1 percent of the UK’s total trade.
Madagascar, then, was the UK’s 143rd largest trading partner, Mauritius was 79th largest trading partner,
Seychelles 146th largest trading partner, and Zimbabwe 100th largest trading partner. Zimbabwe’s exports to the UK increased by 276 percent to US$112 million in 2018 from US$30 million in 2012, according to ZimTrade. The composition of Zimbabwe’s exports to the UK was dominated by diamonds, mange tout peas, black fermented tea, oranges, unmanufactured tobacco, fresh avocados, sculptures, fresh peaches, fresh nectarines, fresh raspberries, passion fruit and jewellery, among others.
Major imports from the European nations were motor vehicles, tractors, telephone sets, spare parts, live animals, medicaments and laboratory reagents, among others.
The UK joined in 1973 (when it was known as the European Economic Community). When the UK finally leaves as planned by December 2020, it would be the first member state to withdraw from the EU.
The UK has a total population of 67 million with a Gross Domestic Product (GDP) of US$2,6 trillion, a gross domestic product (GDP) per capita of US$39 526,2 and is ranked 9th biggest among 190 economies in the ease of doing business on the World Bank’s annual ratings.