PRESS/TPRB/38
11September 1996
TRADE POLICY REVIEW BODY
Review ofZambia
TPRB 'sEvaluation
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) conducted itsfirst
review ofZambia 'stradepolicies on9and10September 1996. ThetextoftheChairman 'sconcluding
remarks isattached asasummary ofthesalient points which emerged during thetwo-day discussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeachWTO member country atregular periodic intervals tomonitor significant
trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'stradepolicies, including:
itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother preferential
agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussions andtheChairman 'ssumming-up, together withthese tworeports,
willbepublished induecourse asthecomplete trade policy review ofZambia andwillbeavailable
from theWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211 Geneva 21.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995),
Canada (1990, 1992&1994), theCzech Republic (1996), Chile (1991), Colombia (1990), Costa Rica
(1995), Côted'Ivoire (1995), theDominican Republic (1996), Egypt (1992), theEuropean Communities
(1991, 1993 &1995), Finland (1992), Ghana (1992), Hong Kong (1990 &1994), Hungary (1991),
Iceland (1994), India (1993), Indonesia (1991 and1994), Israel (1994), Japan (1990, 1992 &1995),
Kenya(1993),Korea,Rep.of(1992),Macau(1994),Malaysia(1993),Mauritius(1995),Mexico(1993),
Morocco(1989&1996),NewZealand(1990),Nigeria(1991),Norway(1991&1996),Pakistan(1995),
Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992
&1996), Slovak Republic (1995), South Africa (1993), SriLanka (1995), Sweden (1990 &1994),
Switzerland (1991 &1996), Thailand (1991 &1995), Tunisia (1994), Turkey (1994), theUnited States
(1989,1992&1994),Uganda(1995),Uruguay(1992),Venezuela(1996),Zambia(1996)andZimbabwe
(1994).
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TRADE POLICY REVIEW BODY
Review ofZambia
Concluding Remarks bytheChairperson
TheTrade Policy Review Body hasnowcompleted itsfirstreview ofZambia 'strade
policies andpractices. These remarks, made onmyownresponsibility, summarize themain points
ofthediscussion. They arenotintended tosubstitute forthecollective evaluation andappreciation
ofZambia 'strade policies andpractices. Details ofthediscussion willbereflected intheminutes
ofthemeeting.
Thediscussion developed under three main themes: (i)theexternal andregional setting for
Zambia ’stradepolicies; (ii)Zambia ’seconomic situation; and(iii)specific questions ontrademeasures.
External andregional setting forZambia ’strade policies
Members commended Zambia onitsunilateral liberalization efforts anditsdetermination to
baseitseconomic andtrade policies ontheprinciples ofthemultilateral trading system. Thepoint
wasemphasised thatopenmarkets werenecessary tosupport Zambia 'seconomic restructuring. Within
thiscontext, Members asked about theaccess granted toZambia byitsneighbours inregional trade
agreements, suchasSADC andCOMESA, towhich itisaparty; thatavailable under theLomé
Convention; andtheeffects ofsuchaccess onZambia 'sownliberalization process. Questions were
alsoposed concerning broader regional co-operation, including under theAbuja Treaty. Some members
noted thedesirability ofregional approaches ontourism, withregard toresources shared byZambia
anditsneighbours.ParticipantscommentedthatZambia'sregionalagreementsshouldbefullyconsistent
withtheWTO Agreements.
Therepresentative ofZambia began hisresponse byindicating thathewould provide written
answers tosome ofthequestions uponhisreturn toZambia. Areas heproposed tocover inthisway
included: theimpact ofSADC intheshort- andmedium-term; themacroeconomic environment;
andZambia 'scommitments under theGATS.
Therepresentative ofZambia went ontoemphasise thathiscountry hadembarked onan
unparalled andboldgrowth programme inboththepolitical andeconomic spheres; Zambia was
committedtothisprogrammeandsoughtthesupportoftheinternationalcommunitytoensurethesuccess
oftheprogramme. Heindicated thathiscountry sought toenter intoarange ofbilateral trade
arrangements andwascurrently negotiating agreements withZimbabwe andSACU member States.
Onregional arrangements, itwashisGovernment 'sview thatCOMESA andSADC could co-exist
inaconstructive manner. Henoted thattherewould beajointCOMESA/SADC meeting inNovember
ofthisyearthatwould dealwithanyduplication ofactivities bythetwo. COMESA hadbeennotified
totheWTOinlinewiththeUruguayRoundAgreements,andthatZambiawouldencourageallCOMESA
members toensure thattheregional arrangement complied fullywiththeWTO.
Withrespecttothesuggestionsonregionalapproachestotourism,heindicatedthatjointpackages
hadbeeninitiated withSouth Africa andNamibia andthatconsultations hadbeeninitiated withKenya.
OntheLomé Convention, henoted thatasthepreferences would endbytheyear2000, Zambia had
already begun tosensitize itsbusiness community tothestiffer competition thatwould result.
.
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Zambia ’seconomic situation
Members appreciated Zambia 'ssignificant economic reforms introduced since 1991. They
noted thatresults hadbeenslowincoming, partly because oftherecurrence ofdrought; however,
therehadrecentlybeenanencouragingexpansionofnon-traditionalexports.Bothsavingsandinvestment
levels remained low:Members asked about theeffects ofmeasures taken toincrease savings andattract
foreign direct investment, aftertherecent removal ofspecific incentives. Some participants inquired
about levels ofinterest ratesandtheireffects oncompetitiveness ofZambian goods andservices; the
structure andviability oftheexternal current account; andthevolatility ofinternational reserves.
Acknowledging thateconomic reforms canoften bepolitically sensitive, Members asked questions
regarding theshort-term impact, andlonger-term effects, ofZambia 'sstructural adjustment measures,
including theprivatization programme. Questions wereposed regarding domestic structural constraints
onexport diversification andthefurther development ofnon-traditional products.
Participants sought clarification onlimitations maintained byZambia onforeign investment
inservices. They noted thattheprospects forFDIcould beimproved byZambia 'sparticipation in
future WTO services negotiations andbyincreasing itsGATS commitments.
TherepresentativeofZambiarepliedthatintheshorttermstructuraladjustmenthadhadadverse
effects onthewelfare ofZambia 'speople. Thishadnotbrought anypolitical instability asZambians
strongly believed thattheadjustment programme wastheonlywaytorevitalize theeconomy. Inthis
context,Zambiahadembarkedonacomprehensiveprivatizationprogramme,underwhich138companies
hadalready beensold. Zambia wascommitted toprivatizing ZCCM, theCopper Company, and
ZAMTEL, thetelecommunications company; theformer hadalready beenadvertised forsaleand
thedeadline fortenders wasend-February 1997. Henoted thatanumber ofmeasures hadbeentaken
toattract foreign direct investment, including theremoval ofcustoms dutyonimports ofmachinery
incertain sectors, infrastructural improvements and100percentprofit repatriation byforeign investors.
Henoted thattheInvestment Centre didnothavethecapacity toprocess investment licences inthe
highly complex mining andfinancial services sectors; therefore these were theresponsibility ofthe
respective Ministries. Newlegislation hadalsobeenintroduced forthecreation ofprivate pension
schemes, which might improve savings. Therepresentative emphasised thatthere were, indeed, a
number ofconstraints facing Zambian exports, however, Zambia hadacomparative advantage inareas
suchashorticultural products, precious andsemi-precious stones, agriculture, textiles, engineering,
wood andwood products, leather andtourism.
Specific questions
Expressing fullappreciation fortheconsiderable progress made byZambia inliberalizing its
traderégime, Members sought clarification ontheconsultative process fortradepolicy withtheprivate
sector. While noting thatthetariff structure hadbeensignificantly simplified, participants expressed
concerns bothabout thelowlevelofZambia 'sWTO bindings onnon-agricultural products, andabout
thedisparity between bound andapplied rates. Participants noted theheavy dependence ofZambia 's
governmentrevenueonbordertaxesandaskedifthismightslowitsfurtherpursuitoftariffliberalization.
Specific questions were alsoraised onthecompatibility oftheImport Declaration Feewith
WTO rulesandtimetable foritsabolition; aswellastheincorporation ofWTO disciplines intodomestic
trade legislation including oncustoms valuation, pre-shipment inspection, andanti-dumping and
countervailing measures. Theexistence ofalong-standing anti-dumping measure, applied onanm.f.n.
basis, wasparticularly emphasised bysome members. Members alsoasked about prospects forfurther
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liberalizationofservicessectors,particularlytelecommunications,andtheimplementationofthetrucking
activities licence.
Therepresentative ofZambia responded thatsome 25percentofgovernment revenue came
fromborder duties; thedependence wastherefore lessserious thanhadbeensuggested. Government
officials heldquarterly meetings withtheprivate sector todiscuss anumber ofpolicy issues, including
those relating totrade; theprivate sector wasalsoinvolved intradenegotiations andinthepreparation
forSingapore. Onthedisparity between bound andapplied tariffs, hereassured Members thatZambia
hadnointention ofincreasing tariffs, butrather wascommitted tofuture liberalization. Heindicated
thattheImport Declaration Feewould beeliminated thisyear; anumber ofmeasures, including a
broadening ofthetaxbaseandimproved performance bytheZambia Revenue Authority would fill
thesubsequent financial gap. Zambia wasfullycommitted toimplementing theWTO Agreement on
Customs Valuation, butneeded technical assistance forthispurpose; inter-Ministerial consultations
wereunderway tothiseffect. Henoted thatthecompany making theproduct onwhich there wasa
long-standing anti-dumping dutywasintheprocess ofprivatization andhence thedutycould beexpected
tolapse. Headded thatthere wasnodiscrimination between localandforeign truckers ingranting
thetrucking activities licence, whose issuance wasintended toarrest smuggling.
*****
Insummary,theoverallthrustofthediscussionwasencouragingandsupportiveoftheunderlying
direction ofZambia 'seconomic andtrade policy. Atthesame time, many ofthequestions posed
reflected members 'concern thattheeconomic reform process inZambia should besustained and
deepened, accompanied byfullcompliance withallofZambia 'sWTO obligations.
Members welcomed thesignificant stepstaken bytheZambian authorities towards amoreopen
andderegulated economic andtrade régime; theyalsowelcomed steps being taken byZambia to
overcome infrastructural andother supply constraints. They recognized thedifficulties ofsuchmajor
adaptation,particularlygiventheinevitabletime-lagbeforethestepstakentranslateintopracticalbenefits
fortheZambian economy. Theywereconscious that,ifthepolicies pursued domestically aretoachieve
thedesiredresults,itisimportantthattheyreceivesupportattheregionallevelandwithinthemultilateral
trading system.
END