1. What do the COMESA Customs Union and COMESA-EAC-SADC Tripartite Free Trade Area mean for Zambia’s import trade and trade tax revenue?
- Author:
- Caesar Cheelo, Njeleka Malata, and Joseph Tembo
- Publication Date:
- 02-2012
- Content Type:
- Working Paper
- Institution:
- Zambia Institute for Policy Analysis and Research (ZIPAR)
- Abstract:
- Zambia has participated actively in the Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community (SADC) regional integration programmes. Within SADC it is now reportedly a full participant in the SADC Free Trade Area (FTA), granting duty-free and quota-free access to goods originating from the SADC region. It is also a founding participant in the COMESA FTA and is now looking ahead to participate in the establishment of the COMESA Customs Union. The country is also committed to participate in the recently announced Tripartite FTA, which will establish a free trade area and then eventually a customs union, consolidating the regional economic communities of COMESA, SADC, and the East African Community (EAC). Quite often the actual or potential short-term or transitional impacts of the tariff reforms associated with regional integration are not well known. This is the case with respect to Zambia’s commitments to further integration under the forthcoming COMESA Customs Union and Tripartite FTA. ZIPAR therefore undertook a study to assess the potential effects for Zambia of the forthcoming trade reforms implied in both the COMESA Customs Union and the Tripartite FTA. The study made two starting-point observations: on the one hand, the Tripartite FTA is expected to consolidate the internal markets of the three regional economic communities and facilitate duty- and quota-free trade within the common market, subject to rules of origin. This means the Tripartite FTA will define Zambia’s internal trade policy position with other member states. On the other hand, the COMESA Customs Union, with its Common Tariff Nomenclature, Common External Tariff structure and common Customs Management Regulations, will define Zambia and other COMESA Member States’ common external trade policy position. Given Zambia’s ratification of these trade arrangements, it is important for policy-makers to understand the significance of the trade policy reforms implied in both the COMESA Customs Union and the Tripartite FTA. This paper therefore seeks to determine the implications for Zambia of the trade reforms that the country will undertake. It applies the following methods of ex-ante analysis: (1) Import trade and tariff profiling using simple descriptive statistical analysis of trade for the period 2000-2010 and of tariff structures in 2010; (2) Analysis of required trade policy reforms; and (3) Analysis of revenue implications and economic effects using the World Bank’s Tariff Reform Impact Simulation Tool (TRIST). Trade and customs data as well as other data were obtained from authentic national and international sources including the Zambia Revenue Authority, COMESA Secretariat, Central Statistical Office, Ministry of Finance, World Trade Organisation and World Bank, among others. The paper’s reference period is 2010.
- Topic:
- Regional Cooperation, Economy, Tax Systems, Free Trade, and Imports
- Political Geography:
- Africa and Zambia