Market Access for Zambia’s export products has been defined by her engagement on the multilateral, regional and bilateral front. Zambia continues to pursue a liberal trade policy at both regional and international levels. Zambia is a member of the World Trade Organisation (WTO) and is engaged on the regional front in the Southern Africa Development Community (SADC); Common Market for East and Southern Africa (COMESA), and; in the Economic Partnership Agreement with the EU within the East and Southern Africa (ESA) configuration. She is also privy to a number of preferential market access schemes in developed and developing country markets.
The Hong Kong Ministerial Declaration provides a commitment on developed countries and developing countries in a position to do so to grant Least Developed Countries (LDCs) duty free and quota free (DFQF) market access for products originating from all LDCs. Based on this, a number of developing countries announced preferential market access treatment for products originating from LDCs. These include India, Brazil, South and China. Developed countries offering DFQF include Canada, Australia and Japan. The United States has crafted the African Growth Opportunities Act for select African countries and the EU crafted the Everything But Arms Initiative, (EBA).
The Southern African Development Community (SADC) was originally formed in 1980, as an alliance of nine majority-ruled States in Southern Africa known called the Southern African Development Coordination Conference (SADCC). The aim of its formation was that of coordinating development in order to ensure economic sustainable and equitable economic growth and diversification. Currently SADC has 15 member states; Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe.
The SADC Free Trade Area was launched on 17th August 2008, in Sandton, South Africa with a total membership of eleven (11) countries. Three member states, Seychelles, Angola and DR Congo are not currently implementing the SADC Trade Protocol. Member states have attained 85% liberalisation of tariff lines in 2008 whilst maximum tariff liberalisation was only attained by January 2012, when the tariff phase down process for sensitive products was completed.
Zambia’s Trade in SADC
Zambia currently exports the following products into the SADC region: copper cathodes and sections of cathodes unwrought, raw cane sugar, tobacco, cobalt, copper ores, portland cement, wheat, electrical energy and maize. Products imported from the region include copper ores and concentrates, cobalt ores, cobalt oxides and hydroxides; commercial cobalt oxides, dump trucks designed for off- highway use, light petroleum distillates, parts of cranes, work-trucks, shovels and construction machinery.
Zambian Products with Export Potential in SADC
Zambian products with highest potential in the SADC region include fish, fresh and dried fruit and nuts, sugar, fresh, chilled and frozen vegetables iron and steel products wood and paper products, beans, groundnuts, maize, portland cement and wheat, sweets, cathodes and sections of cathodes of refined copper, semi-manufactured gold (incl. gold plated platinum), wire of refined copper, cotton, not corded or combed, sulphuric acid, other oils and their fractions and other palm oil & its fractions.
SADC Rules of Origin The SADC rules of origin state that a product can be deemed to be of SADC origin if it meets the one of three criteria: If it is wholly obtained/ produced in a SADC Member state; If it has been produced in a Member State using non-originating materials, provided that such material have undergone sufficient working or process in one or more Member States; or There has been a change in the tariff heading of a product arising from processing carried out on the non- origination materials (Annex I). Annex I rule 2 of the SADC Protocol on Trade as regards to the Rules of Origin Regulations sets out the origin criteria on which goods are deemed to be of SADC origin. Goods which meet the criteria under Appendix I of Annex I of the SADC Protocol on Trade shall be accorded preferential SADC market access. Such products shall be considered as originating in a member State if it has either been wholly produced or has been sufficiently worked or processed in that Member State. As such the rules are used to distinguish between goods that are produced within the SADC Member states and are entitled to preferential treatment and those that are considered to have been produced outside the SADC region that attract full import duties when traded.
The Common Market for Eastern and Southern Africa (COMESA) is a regional economic grouping made up of 19 Member States, with an estimated population of over 400 million and a combined GDP of over USD 345 billion. COMESA was established in 1994 to succeed the Preferential Trade Area (PTA) for Eastern and Southern Africa that had been in existence since 1981.
In October 2000, COMESA member states launched the Free Trade Area (FTA) in Lusaka, Zambia, making it the only FTA in Africa. COMESA has 19 member states, of which 13 are implementing the COMESA Free Trade Area (FTA). Countries in the COMESA FTA include Zambia, Mauritius, Egypt, Malawi, Zimbabwe, Djibouti, Sudan, Kenya, Libya, Madagascar, Rwanda, Seychelles, and Comoros.
COMESA Customs Union
The COMESA Customs Union was launched in June 2009. The Common External Tariff comprises 0% for both capital goods and raw materials, 10% for intermediate goods, and 25% for final goods). Member states apply this Tariff in trade relations with third countries although member states have not yet started implementing the common external tariff.
COMESA Simplified Trade Regime
The COMESA Simplified Trade Regime (STR) has been put in place to ensure that small traders, particularly Cross Boarder Traders are able to take full advantage of the benefits of integration within the COMESA region. Its aim is to formalise informal cross –border trade by putting in place instruments and mechanisms tailored to the trading requirements of small-scale traders that are decentralised to border areas where informal trade is prominent with the view to facilitate ease of market access by small traders. Zambia is implementing the STR with both Zimbabwe and Malawi. Furthermore, the traders stand to claim back the import VAT from customs should they get registered. The STR Trade regime is applicable when:
Zambia’s Trade in COMESA
Zambia currently exports the following products into the COMESA region: tobacco, unstemmed/unstrapped, raw cane sugar, portland cement, plates, sheets and strip of refined copper, wheat or meslin flour, sulphuric acid, wire of refined copper, maize seed and non-seed maize. Key imports include Copper Ores and concentrates, Cobalt Ores and concentrates, Copper refined in form of cathodes and section of cathodes and Cobalt oxides and hydroxides; commercial cobalt oxides and Coke and semi coke of coal, of lignite or of peat, whether or not agglomerated; retort carbon.
Zambian Products with Export Potential in COMESA
Zambian products with highest potential in the COMESA Region include raw sugar, cane, Tobacco, unmanufactured, not stemmed or stripped palm oil, wheat, maize (corn) and cobalt oxides and hydroxides. Others include fish, fresh and dried fruit and nuts, sugar, fresh, chilled and frozen vegetables iron and steel products, wood and paper.
COMESA Rules of Origin
COMESA rules of origin have five independent principles under which goods can be accepted in the importing country as having been produced /manufactured in another COMESA country. These principles are:
1. Those goods should be produced totally in the exporting member state such that there are no foreign materials added to the manufacturing process. Such goods are live animals, agricultural produce e.g. maize, cotton, etc, this is called, wholly produced rule.
2. Those goods when they are being made and there are some foreign materials added to the manufacturing process, those foreign materials should not be over 60% of the C.I.F (Cost Insurance and Freight) value; this is called Material content rule.
3. Those goods when they are being made and the raw materials are foreign, then, in the course of the manufacturing process, there should at least be 35% value addition; this is called Value addition rule.
4. Those goods when the companies make them and the raw material are foreign, during the manufacturing process, the Tariff heading of the final product should be different from the tariff heading of the foreign raw materials; this is called Change in Tariff Heading rule (CTH)
5. Those goods are in the list that was approved by the Ministers in charge of Trade in COMESA Member states (also called the Council of Ministers) and are regarded as very important in the economic development of either the exporting member or the region and that, in the process of manufacturing, there should be at least 25% value addition; goods such as mini buses that are assembled in some member states fall into this category. This rule is called ‘Goods of particular economic importance’ rule.
The Africa Growth and Opportunity Act (AGOA), is a unilateral initiative of the United States Government to grant Sub-Saharan African countries duty-free and quota-free market access on select products. The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets. In total, 37 African countries from Nigeria to Lesotho have access to the US market under the AGOA, Zambia being one such beneficiary.
AGOA Eligible Products
Virtually all products (over 6,500) are eligible to enter the USA market under AGOA. Africa’s exports under AGOA have mainly been textiles and garments, agricultural products, automobiles, oil and handicrafts. Zambia’s export figures to the USA under AGOA including the General System of Preferences (GSP) provisions of the AGOA Act have continued to rise for the past six years. Zambia’s competitive advantage to trade under the AGOA initiative lies in the export of floricultural and horticultural products such as cut flowers and high value vegetables like mange tout, baby corn, asparagus, carrots, Zambia has, apart from cut flowers, five vegetables that are eligible to be exported to the USA under AGOA. These are snow peas, fine beans, courgettes, baby carrots and baby corn.
Zambian Products with Export Potential under AGOA
Key products and sectors which have exhibited export success and still have high potential for successful export under AGOA include the mining and gemstones sector, textiles and garments, processed foods (mushrooms, forest fruits, honey), wood and wood products (furniture, parquets, door frames); primary agriculture (essential oils, floriculture, horticulture, coffee, tea, rice, cash nuts, groundnuts, oil seeds, spices and herbs, beans), leather and leather products. 6
AGOA Rules of Origin
In order to qualify for duty-free access to the US under AGOA, the Rules of Origin underlying this trade Act require that a product be the "growth, product or manufacture" of an AGOA-beneficiary Sub-Saharan African (SSA) country. The salient features of AGOA's general (i.e. non-textiles and apparel) Rules of Origin are as follows:
1. The product must be imported directly from the AGOA-beneficiary country into the United States;
2. Items must be "growth, product or manufacture" of one or more AGOA- beneficiary countries;
3. Products may incorporate materials sourced from outside countries (i.e. non AGOA-beneficiaries) provided that the sum of the direct cost or value (i.e. the transaction value) of the materials produced in the AGOA-beneficiary countries(s), plus the "direct costs of processing" undertaken in the AGOA- beneficiary countries, equal at least 35% of the product's appraised value at the U.S. port of entry (See Note below *)
4. In addition, up to a total of 15% of the 35% value (as appraised at the U.S. port of entry) may consist of U.S. parts and materials.
Note: The U.S. Customs will generally appraise the merchandise at the full value of the transaction, which includes the following:
Everything but Arms (EBA) initiative is a preferential market access arrangement offered to LDCs by the EU. The initiative provides for duty and quota free market entry for essentially all products exported to the European market from Least Developed Countries with the exception of Arms and Ammunition. The EBA is part of the EU GSP Scheme, specifically for LDCs.
In order for Zambian exporters to qualify for the EU GSP the following conditions need to be met.
1. Goods must originate in Zambia that is they must be wholly obtained or sufficiently worked or processed in Zambia. Wholly obtained refers to goods made entirely from naturally occurring raw materials such as plants and vegetables and their products, minerals and mineral products and animals and animal products . While goods are considered sufficiently worked or processed if they meet the following criteria;
2. Preferential origin shall be proved based on statements of origin made out by exporters registered in the REX system (or non-REX registered exporters for consignments with a value below 6000 Euros).
3. The goods must be under customs control while retaining the originating status of a product, provided that the product is not altered (non-alteration rule).