Zim's economic health impacts SA - Davies

Pretoria - Zimbabwe is to apply for a derogation from the Council of Ministers of Trade (CMT), following its failure to comply with commitments under the Southern African Development Community (SADC) protocol.

This is according to Minister of Trade and Industry, Rob Davies, who was speaking at a media briefing on Thursday.

Davies shared the outcomes of the meeting with Zimbabwe’s Minister of Industry and Commerce, Mike Bimha. The ministers met to find a resolution for the measures undertaken by the Zimbabwean government regarding exports from South Africa.

“We got a pretty comprehensive briefing on challenges Zimbabwe is facing and there was an agreement on both sides that we must follow the procedures of the SADC protocol,” Davies told Fin24.

The SADC protocol has been enforced since 2008. There is a process under the protocol which allows for the CMT to consider and agree on a derogation on commitments, he explained.

At the last CMT meeting in Botswana, it was agreed that another meeting will be held on August 24, ahead of the SADC Summit in Swaziland.

Trade-restrictive measures

The DTI is concerned about the implementation of trade-restrictive measures by Zimbabwe, explained Xolelwa Mlumbi, deputy director general at the International Trade and Economic Development Division.

This includes surcharges implemented on some of South Africa’s export products, due to the pressure the Zimbabwean economy is facing, explained Davies. “This is not just imports from South Africa, but South Africa is Zimbabwe’s largest trading partner,” he said.

Surcharges on products include agro-processing products and some chemical lines. Zimbabwe has implemented these charges to protect their local industry.

Tariff increases were also applied to 1000 product lines, some of these were of particular export interest to South Africa, explained Davies. The DTI identified 112 lines, that they believe Zimbabwe does not have production capacity for.

No response from Zim

The DTI wants Zimbabwe to review surcharges on those lines. “We were supposed to receive a response on 30 June, and we did not get a response today,” said Davies.

Getting the response is essential for the DTI to support a possible derogation. “They [Zimbabwe] understood that and undertook their best to make sure we get the information on time,” he said.

Another issue is the introduction of Statutory Instrument 64, a regulation on imports. Under this, imports for certain products will not be allowed. If there is a shortage of products, exporters can apply for a trade permit, which is time bound.

“We want a greater understanding of rules, when and where potential suppliers can use the mechanism for permits,” said Davies.

“If the Zimbabwean economy is in trouble, South Africa will feel the effects of that in a number of ways, such as migration and other factors,” he said.

The DTI is aware of the challenges in the Zimbabwean economy, which may affect its capacity to import. This will have “detrimental effects” on productive enterprises, said Davies.

“We need to be convinced there will not be a permanent damage to the SADC trade protocol for us to proceed with regional integration and regional trade agreements.”