Thursday, January 21, 2010

Be competitive globally, zimbabwean firms told to cope with EPA agreement

By Golden Sibanda

Firms have been warned to ensure they are globally competitive ahead of the 2013 deadline when 45 percent of goods from the European Union start entering Zimbabwe duty-free.

The call was made by Confederation of Zimbabwe Industries vice president Mr Joseph Kanyekanye at a workshop to discuss export opportunities and benefits that firms could derive under Interim Partnership Agreements with EU and Comesa trade protocols.

His remarks came amid indications industry was not fully conversant with protocols and implications of trade agreements the Government has been negotiating regionally and internationally.

Mr Kanyekanye warned that while Economic Partnership Agreements with the EU presented opportunities to local firms, the trade pacts were a worrisome competition threat.

Local producers, he said, would be greatly disadvantaged by the fact that the economy is taking off from a very low base after difficulties of the last decade, which undermined their efficiency.

He said 2013 looked like a long time to come, but with challenges besetting local firms, they could be caught on the wrong footing.

"Considering challenges that local firms are faced with regarding low capacity utilisation and old equipment, the EPAs are a challenge; in fact, they are a threat.

"If you (local companies) that are not competitive do not take measures to be globally competitive, you will be in trouble," said Mr Kanyekanye.

Unlike local firms, he said, EU producers could obtain low cost funding, more efficient production equipment and technology, thus attaining better economies of scale.

One of the major constraints that local firms faced related to unavailability of affordable long-term financing and antiquated production machinery whose efficiency had hugely deteriorated.

Mr Kanyekanye suggested that the full EPA be renegotiated to include contingent provisions in case local industry is not ready for 45 percent liberalisation of the local market by the 2013 deadline.

Forty-five percent of EU goods will enter the local market duty-free in 2013 while the percentage threshold would rise to 80 percent by 2022.

Currently, local goods enter the EU on a quota free basis, except sugar.

CZI said EU threats presented a challenge for local firms to raise their competitiveness to remain relevant on the global market.

After all, said Mr Kanyekanye, when the economy fully recovers to the levels of 1996, the country would require bigger export markets.

However, it emerged that despite the many meetings to discuss implications, opportunities and benefits local firms could derive from trade agreements being negotiated, there was still confusion among delegates attending the discussions over the trade pacts.

Mrs Angelica Katurusa, a senior official in the Ministry of Regional Integration and International Cooperation, said the problem was that companies were not represented at the highest level at forums that discuss trade agreements being negotiated by Government.

She also lamented the fact that most local companies did not have export managers who should make effective use of information on trade agreements that the Government was negotiating.

"Most representatives sent by companies to discussions such as these ones are too junior and are not the same people sent by companies when similar trade discussions are organised in future," she said.

The workshop also discussed implications and export opportunities under Comesa as Zimbabwe ponders whether to join the Comesa Customs Union or the Sadc Free Trade Area, which shall have different common tariff and trade protocol structures.

The Comesa Customs Union was launched in Zimbabwe last year, but members are yet to realign their tariff systems with the agreed ones and the regional body is still to agree on a common trade policy with the rest of the world.