Our trade ratio has been on the increase since we adopted the multiple currency system, showing the importance of trade for Zimbabwe. The trade ratio was about 120 percent in 2012.
This ratio measures the degree of dependence of domestic producers on foreign markets and the reliance degree of dependence of domestic demand on foreign supply of goods and services. We should make sure that we are producing an excess for the foreign market and that we have easy foreign market access for our goods to be sold competitively.
Foreign market access is a major challenge for Zimbabwean exporters today.
In the old days, many countries took a mercantilist approach, where they would impose high tariffs on manufactured goods. This protective stance was a system of political economy that sought to enrich a country by restraining imports and encouraging exports.
However, regionalism has now become a key feature of world trade. Import tariffs have declined worldwide, as a result of multilateral and regional trade liberalisation. However, as tariffs went down, non-tariff measures rose.
According to a study conducted by International Trade Centre in 2008, non-tariff barriers are the second biggest market access challenge for developing countries.
Non-tariff measures are a major obstacle to trade today. They refer to restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products difficult or costly.
Non-tariff barriers also include unjustified or improper application of non-tariff measures such as sanitary measures and other technical barriers to trade. Import bans, quotas, a “buy national” policy, the complex regulatory environment, complex rules of origin and export subsidies are examples of non-tariff barriers.
Tariff measures are no longer a major challenge because regional and bilateral trade agreements have proliferated although the complexity of these agreements and multilateral negotiations have also increased substantially.
The number of Free Trade Agreements notified to the World Trade Organisation increased substantially over the last two decades, from 20 in 1990 to about 200 in 2010. This shows how market access issues are changing.
The average tariffs faced by developing countries in developed economies are falling significantly. Non-tariff barriers are now a major concern for developing countries because they face difficulties in trying to comply with them. Developing countries face challenges in accessing relevant information or legislation due to information asymmetries.
The lack of adequate local infrastructure to meet requirements is also a cause of concern for them. They also face prohibitive costs in complying with regulations or proving compliance.
There is a serious need for Zimbabwean exporters to report non-tariff barriers they face, in order to lower their cost of doing business and become competitive.
What exporters might see as a legitimate action in trade might actually be a non-tariff barrier which could be removed.
COMESA, EAC and SADC are implementing a non-tariff barrier elimination mechanism. The online mechanism is available on the website: www.tradebarriers.org.
The web-based mechanism will enhance transparency and easy follow-up of reported and identified non-trade barriers. The mechanism enables stakeholders to report and monitor the resolution of barriers encountered as they conduct their business in the COMESA, EAC and SADC regions.
So far 441 complaints have been registered, with 327 of them having been resolved.
Zimbabwean exporters should understand the reporting process just as much as they should understand what non-tariff barriers are. In Zimbabwe, non-tariff barriers can be reported to the Ministry of Industry and Commerce and to the Confederation of Zimbabwe Industries.
Post published in: Business