Lately, we have been covering some topics regarding Zimbabwean trade issues. I have already covered how to import products into Zimbabwe as a company. I also covered how to export products from Zimbabwe as a company. The other article I wrote was on how to conduct export market research. Today I am shifting your attention to how to utilize Zimbabwe Trade Agreements. There are Trade Agreements that Zimbabwe has with other countries or groups of countries.
An Overview Of What A Trade Agreement Is
A trade agreement is a contractual working arrangement that stipulates how two or more countries conduct mutually beneficial trade. Preferential and or free trade are the most common types of trade agreements. The thrust is usually 3-tier namely, to limit or minimize tariffs, quotas, and trade restrictions on selected products. Thus trade agreements are meant to stimulate and streamline trade between countries.
A trade agreement can either be bilateral (signed between two countries) or multilateral (signed by more than two countries). Some of the Trade Agreements that Zimbabwe is a party to are the Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), and Interim Economic Partnership Agreement (iPEA) (with the European Union).
Why do Trade Agreements Matter To Exporters Or Importers?
Exporters get to enjoy advantages that make them more competitive. For example, elimination or reduction of duty significantly reduces the exporter’s costs. This can enable them to flexibly price their products and make them more alluring to importers. Whether you are exporting or importing you must be privy to the existence of any trade agreements. They have a huge bearing on your determination of export pricing and terms of payment.
Eligibility For Preferential Treatment
You must understand what are called rules of origin (RoO). These are the rules that govern a given trade agreement. These are the set criteria used to determine whether or not a product qualifies. The core basis of these rules is that the products must have specific local content input from the exporting country. Let us suppose Zimbabwe and Botswana have a bilateral agreement or are part of a multilateral agreement. Botswana would give preferential treatment to goods originating from Zimbabwe provided:
- They are wholly grown or produced in Zimbabwe. (Minerals and agricultural produce are examples here).
- The product has undergone an acceptable amount of processing and wields a specified percentage of Zimbabwean content in cases where the input materials are sourced from another country. (Electronics assembled in Zimbabwe could be an example here).
Local content requirements vary from trade agreement to trade agreement. That is why it is important to closely check what is entailed in a respective trade agreement. The country where the last substantial economically justified working or the processing is conducted will be considered as the origin when the products are manufactured in at least two countries. A company in Zimbabwe can apply to ZIMRA for eligibility. The prerequisite of course is that they should be able to prove their local content. ZIMRA will scrutinize the application to see if the products qualify.
Application For Eligibility Under A Trade Agreement
It does not matter if you registering for a bilateral trade agreement or a multilateral one, the process is the same. There is a list of documentation you will need to submit to ZIMRA. If you are a manufacturer, you must submit formal application letter (on company letterhead/logo); valid tax clearance certificate; copy of Certificate of Incorporation; list of contact persons together with their cell numbers and physical addresses; list of products intended for export (tariff headings optional); step-by-step description of the manufacturing process for each product; CR14 form; sketch of factory, showing machinery layout; and factual cost analysis of the products intended for export (the cost of production must be based on the actual production cost for not less than 3 months).
In support of the cost analysis, the following are needed: invoice of each type of raw material used and where they are sourced from (tariff headings optional). For imported raw material, supporting import documents should be submitted; a list of employees in the factory and their wages including supervisory and management staff (this should be accompanied by wage sheets); job description of each category of employee; proof of factory overheads i.e. rent, electricity, water and so on; and value of building or lease.
For commodity brokers, merchants, and distributors they must submit formal application letter to be registered under the agreement, a certified copy of the certificate of incorporation, valid tax clearance certificate, a list of contact persons, list of products intended for export, and letter from the manufacturer of products they intend to export authorizing the distributor/merchant/broker to export their products, and manufacturer’s registration letter to export the particular products for which they (i.e. commodity brokers, merchants and distributors) are seeking registration.
Trade Agreements For Zimbabwe Exporters To Utilize
The list of bilateral and multilateral trade agreements is as follows:
- Zimbabwe and Botswana
- Zimbabwe and Malawi
- Zimbabwe and Mozambique
- Zimbabwe and Namibia
- Zimbabwe and South Africa
- SADC Trade Protocol
- COMESA Free Trade Area
- Interim Economic Partnership Agreement (iEPA)
Generalized System of Preferences (some industrial and agricultural products originating from developing countries are allowed preferential passage (i.e. zero duty) into developed countries such as Australia, Belarus, Canada, Iceland, Japan, New Zealand, Norway, Russia, Switzerland (including Liechtenstein), Turkey, and United States of America)
Certificate Of Origin (CoO)
This will be proof that your products meet the RoO requirements of the applicable trade agreement. As an exporter every time you have a consignment to export you apply to ZIMRA for a CoO.
CoO forms for SADC, COMESA, Zimbabwe-Mozambique, iEPA and GSP are available at ZimTrade. You can also find them at:
- Confederation of Zimbabwe Industries (CZI)
- Zimbabwe National Chamber of Commerce (ZNCC)
CoO forms for Zimbabwe-Malawi, Zimbabwe-Botswana, and Zimbabwe-Namibia) are distributed by:
Knowing and utilizing them is essential to any trade activities, import or export. That is why we explored how to become eligible, the benefits, and other related aspects.