Ambassador Punke: WTO Trade Policy Review of Zimbabwe

Statement delivered by Ambassador Michael Punke
Deputy U.S. Trade Representative and U.S. Permanent Representative to the World Trade Organization
Geneva,
October 19, 2011
As Delivered

Thank you, Mr. Chairman.  Let me start by saying that we appreciate the efforts that all participants have undertaken to make this TPR a productive one.

Zimbabwe’s political and economic story, unfortunately, seems to be one filled with tribulation.  Although Zimbabwe inherited one of the strongest and most complete industrial infrastructures in sub-Saharan Africa, in addition to being endowed with abundant natural resources, an educated workforce, considerable energy alternatives, international tourist attractions, extensive wildlife, and a strong agricultural base, the country today is beset with problems.  Rapidly deteriorating infrastructure, with electricity and water cuts now commonplace, political turmoil, and poor management of the economy, have all led to considerable economic hardships. Investor confidence remains low due to insecurity of land tenure and indigenization laws that require, in theory if not always in practice, that 51 percent of investments be owned by Zimbabwean citizens.  While agriculture still contributes modestly to GDP, it is no longer the backbone of the Zimbabwean economy.  Nonetheless, according to the Secretariat’s Report, agriculture remains Zimbabwe’s principal source of employment and continues to have a multiplier effect on the economy.  Large-scale commercial farming has nearly collapsed over the course of the last 9 years under the government’s controversial land reforms.

With regard to global comparisons of economic competitiveness, Zimbabwe generally ranks poorly.  For example, in the World Bank’s “Doing Business” rankings for 2011, Zimbabwe stands at number 157 out of 183 economies. With a relatively diversified economy, and a highly educated and skilled labor force, Zimbabwe is potentially a major investment destination.  However, the Secretariat points out that inflows of foreign direct investment (FDI) into Zimbabwe decreased considerably in 2005-10 mainly due to the socio-political crisis, insecurity of land tenure, as well as enforcement of indigenization and empowerment regulations aimed at securing 51 percent ownership of businesses worth over US$500,000 to indigenous Zimbabweans.

We recognize that Zimbabwe is an original WTO Member, having been a GATT contracting party, and that it has been an active participant in the Doha Round negotiations. In its Report, the government says it is developing a National Trade Policy, which will “leverage” its Industrial Development Policy.  In the absence of a comprehensive trade policy in recent years, Zimbabwe has from time to time imposed tariffs and import bans on some commodities with the explicit goal of protecting domestic producers.  This suggests that the National Trade Policy may likewise restrict trade for the purpose of import substitution at the cost of efficiency and broad-based growth.  We have asked Zimbabwe to spell out more clearly the goals it will aim for in its National Trade Policy, the efforts it will undertake to ensure its consistency with the WTO, and the role of public consultation in the development and implementation of this Policy.  We look forward to hearing more about Zimbabwe’s plans in this regard.

Furthermore, while Zimbabwe has tried to provide updated WTO notifications, a number of them remain outstanding.  In the spirit of transparency, we are interested to know when Zimbabwe will notify each of the outstanding practices identified in the Secretariat’s Report for this TPR, including those required by the TBT, SPS and TRIPS agreements, and how Zimbabwe will ensure the timely notification of future regulations.

With regard to TRIPS, the Secretariat advises that the TRIPS Council reviewed Zimbabwe’s intellectual property legislation at a time when some key amendments were not yet put into operation and that no notifications have been submitted to the WTO since then.  We are keen to know when Zimbabwe will bring its notifications up-to-date and look forward to an update on what, if any, other amendments Zimbabwe has made to its intellectual property laws since 2004. Adequate and effective protection of intellectual property, in our view, is a critical factor in the pursuit of fostering investment and enhancing innovation and creativity.  We hope that Zimbabwe will keep this element in mind as it seeks to improve its capacity to attract trade and investment.

The Secretariat points out that Zimbwabe has lowered its applied MFN tariff rates unilaterally, with a view to reducing production costs.  But, at 15.4 percent, Zimbabwe’s simple average applied MFN tariff, the Secretariat tells us, “is among the highest in the region”. Furthermore, Zimbabwe’s MFN tariff rates on 61 lines exceed the corresponding bound levels in some cases by as much as 60 percentage points, although its tariff bindings cover only 22.4 percent of all lines.  Furthermore, 64 lines carry non-ad valorem rates that could potentially exceed their ad valorem bindings.  We hope to hear Zimbabwe’s plans for addressing this problematic circumstance during the course of this TPR.

Zimbabwe notes in its Report that the government maintains rules requiring licenses for the export of some commodities.  The secretariat’s report shows that these restrictions apply to a broad range of products, including some of Zimbabwe’s chief exports.  These restrictions disrupt links between domestic and external markets, promote rent-seeking, and lower the incomes of producers.  The 2007 ban on groundnut exports, which was recently eased somewhat, and this year’s ban on raw chrome exports illustrate these effects.  We will be interested to know Zimbabwe’s plans to review its policies requiring export licenses.

The Secretariat remarks that Zimbabwe is among the region’s leaders in deploying and upgrading computerized customs clearance systems.  We would encourage Zimbabwe to continue its efforts in this regard.  We have a number of questions regarding Zimbabwe’s customs procedures and valuation practices as well as its prohibitions, quantitative restrictions, controls and licensing procedures which we submitted for written responses.  We hope that Zimbabwe has shed some light on the issues we raised and we look forward to examining Zimbabwe’s answers carefully so that we can better understand how business is conducted.

In closing Mr. Chairman, today the United States has identified many of the questions that we submitted for Zimbabwe’s written responses. We will, of course, review the government’s responses with great interest.  We look forward to working with Zimbabwe and with other Members as together we take steps to strengthen the rules-based multilateral trading system.  Finally, we offer Zimbabwe our best wishes for a successful TPR.

Thank you.