Zambia loses K10.6bn in trade pacts
ZAMBIA has in the last four years lost almost US$500 million (equivalent to over K10.6 billion) net revenue arising from free trade agreements which are meant to eliminate certain barriers and restrictive practices that some countries face.
ZAMBIA has in the last four years lost almost US$500 million (equivalent to over K10.6 billion) net revenue arising from free trade agreements which are meant to eliminate certain barriers and restrictive practices that some countries face.
In 2017, 2018, 2019 and 2020, Zambia lost net revenue of K2, 408.4, K2, 895.1, K3,115.1 and K2, 265.3 respectively, amounting to K10.683 billion.
Free trade agreements do not just reduce and eliminate tariffs, they also help address behind-the-border barriers that would otherwise impede the flow of goods and services.
However, the agreements come with revenue consequences as they reduce trade tax revenues.
For Zambia, some of the regional trade agreements signed include the Common Market for Eastern and Southern Africa, and the Southern African Development Community (SADC).
In addition to the regional trade agreements, Zambia has ratified the African Growth and Opportunity Act, Generalised System of Preferences, World Trade Organisation Trade Facilitation Agreement, China Special Preferential Tariff Treatment and India Duty Free Tariff Preference Scheme for Least Developed Countries.
According to the Zambia Revenue Authority (ZRA) Commissioner General, Kingsley Chanda, the total revenue forgone as a result of concessions arising from the trade agreements for the period 2017 to 2020 was K10.683 billion. Mr Chanda told the Parliamentary Budget Committee that: “Zambia forgoes significant levels of revenue through the implementation of the trade agreements.”
He therefore recommended the need for Zambia to consider applying a surcharge on goods that could be injurious to the economy.
“Zambia’s capacity to apply safeguard measures should
be strengthened to mitigate losses that may arise in the process of implementing the agreements through unfair trade practices that other countries may engage in,” he said. In his submission, Mr
Chanda said Zambian exports had faced several non-tariff barriers in export markets such as quotas, market standards and restrictive rules of origin.
“Zambia should strengthen the institutional capacity in the Ministry of Commerce, Trade and Industry to deal with safeguards and trade remedies as provided in the Tripartite Agreement.
“It should take advantage of its central location in the region and improve its transport logistics and become the regional transportation hub. It can turn around the challenges of being a landlocked country to the prospects of being a landlinked country. This can generate revenue for the country,” he said.
Mr Chanda however said the agreements were necessary for the development and growth of Zambia’s industries as the country also accesses other external markets with duty preferences, thereby earning the country.