WORLD TRADE WT/TPR/M/17
30October 1996
ORGANIZATION(96-4569)
Trade Policy Review Body
9-10September 1996
TRADE POLICY REVIEW
ZAMBIA
MINUTES OFMEETING
Chairperson: H.E. Ms.Anne Anderson (Ireland)
Page
I. INTRODUCTORY REMARKS BYTHE CHAIRPERSON 2
II. OPENING STATEMENT BYTHE REPRESENTATIVE OFZAMBIA 3
III. STATEMENT BYTHE FIRST DISCUSSANT 5
IV. STATEMENT BYTHE SECOND DISCUSSANT 6
V. STATEMENTS BYMEMBERS 7
VI. REPLIES BYTHE REPRESENTATIVE OFZAMBIA AND ADDITIONAL
COMMENTS 9
VII. CONCLUDING REMARKS BYTHE CHAIRPERSON 11WT/TPR/M/17
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I. INTRODUCTORY REMARKS BYTHE CHAIRPERSON
1. TheTrade Policy Review ofZambia washeldon9and10September 1996. TheChairperson
welcomed thedelegation ofZambia, headed bytheMinister ofCommerce, Trade andIndustry, His
Excellency Dr.Syamukayumbu Syamujaye, andthediscussants, Mr.Peter Jenkins (United Kingdom)
andMr.Calson Mbegabolawe (Zimbabwe).
2. TheChairperson recalled thepurpose oftheTrade Policy Reviews andthemain elements of
theprocedures forthemeeting. Thereport bytheGovernment ofZambia wascontained indocument
WT/TPR/G/17andthatoftheWTOSecretariatindocumentWT/TPR/S/17.Copiesofwrittenquestions
submitted byAustralia andCanada hadbeentransmitted tothedelegation ofZambia; theUnited States
ofAmerica, Japan, Egypt, Kenya, theEuropean Union andIndia alsosubmitted written points shortly
before themeeting. Iffullreplies could notbeprovided during themeeting, supplementary written
replies should beprovided later.
3. Recalling thatintergovernmental organizations would attend meetings oftheGeneral Council
through decisions taken onthebasis oftheadhocarrangements, theChairperson proposed thatthe
Trade Policy Review Body invite theFAO, EFTA, IMF, OECD, UNCTAD andtheWorld Bank,
which hadrequested observer status, toitsnextmeeting.WT/TPR/M/17
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II. OPENING STATEMENT BYTHE REPRESENTATIVE OFZAMBIA
4. Onbehalf ofhisdelegation, therepresentative ofZambia welcomed theholding ofhiscountry 's
firstTrade Policy Review. Recalling theimportance ofsuchreviews, therepresentative stressed
Zambia 'scommitment totheTrade Policy Review Mechanism (TPRM) andZambians 'confidence
inthefactthatsuchacollective evaluation oftheireconomy would facilitate itsintegration intothe
world economy. Hereaffirmed Zambia 'scommitment tothemultilateral trading system, noting also
thattheUruguayRoundhadimprovedtransparencyandpredictabilitythroughasubstantialstrengthening
ofrulesandregulations. Zambia hadliberalized itseconomy significantly andfeltthattheliberalization
oftheworld economy under theWTO rules, particularly economies ofcountries initssub-region,
would enable itsecure market access.
5. TheZambian economy hadalways beendominated bythecopper mining industry, which had
been used bytheprevious Government topromote industrialization through import substitution.
Combined withrising oilprices inthemid1970s, thedecline ofcopper production from700,000 tonnes
in1977to307,181 tonnes in1995hadadverse effects ontheZambian economy. Overvalued exchange
ratesandarestrictive trade régime characterized byimport andexport prohibitions, price controls
andconsumer subsidies haddistorted domestic production andmade Zambian exports uncompetitive
ontheworld market. Because ofinconsistencies, structural adjustment programmes implemented by
theprevious Government intheearly 1980s, hadfailed toaccomplish theirobjectives andhadbeen
abandoned in1987.
6. TheGovernment, which hadtaken power in1991, hadimplemented reform measures, such
astheremoval ofprice andforeign exchange controls, theintroduction offullretention offoreign
exchange earnings onnon-traditional exports, thedismantling ofrestrictions totrade, theliberalization
ofinterest ratesandtheprivatization ofStatecompanies. Public sector reform hadbeenimplemented
withaview tocreating aconducive atmosphere forprivate sector development. Theaimofthese
measures wastoimprove theZambian economy byaccelerating thedevelopment ofthemanufacturing
andagricultural sectors, improving andexpanding theeconomic infrastructure forlocalandforeign
direct investment, promoting anddiversifying trade through exports ofnon-traditional goods, and
ameliorating andexpanding thesocial infrastructure forimproving living standards. Zambia 'seconomy
hadbecome market driven; macro-economic stability hadbeenachieved inspiteofserious drought
conditions.
7. TheGovernmenthadestablishedinstitutions,suchastheZambiaRevenueAuthority,theZambia
PrivatizationAgency,theExportBoardofZambia,theInvestmentCentreandtheLusakaStockExchange
inorder toconsolidate Zambia 'seconomic transformation. Taxadministration andcompliance had
improved substantially and138Statecompanies hadbeenprivatized. Even strategic companies, such
astheZambia Consolidated Copper Mines (ZCCM) were dueforsale.
8. Therepresentative ofZambia stressed thathiscountry 'strade policy focused oncreating a
conducive environment forregional andinternational economic integration andrecalled multilateral
andregional agreements towhich Zambia wasasignatory. Zambia granted tariffpreferences toother
member States oftheCommon Market forEastern andSouthern Africa (COMESA) andtocountries
withwhich ithadbilateral trade arrangements. Ithaddifficulties withmarket access totheSouthern
African Customs Union (SACU) countries -especially South Africa, which wasthemajor supplier
ofimports toZambia -because ofthehighprotection leveltheymaintained bymeans oftariffs and
non-tariff measures; negotiations were under waytocorrect trade imbalances withtheUnion.
9. Economic reforms hadyettoshow theirfullbenefits because of,interalia,fluctuations of
copperprices,weatherconditions,andhighinterestratesandfreightcosts.TherepresentativeofZambia
stated thatZambians believed thatonlytheideals oftheWTO, towhich theywerecommitted, wouldWT/TPR/M/17
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overcome theireconomic difficulties. Hestressed hisGovernment 'scommitment todemocracy and
asked theWTO touseitsgood offices toensure thatother member States, particularly those inthe
Southern African sub-region, would open theirmarkets andprovide anevenplaying fieldforfair
competition forgoods andservices originating inZambia.WT/TPR/M/17
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III. STATEMENT BYTHE FIRST DISCUSSANT
10. Thefirstdiscussant, Mr.Peter Jenkins, congratulated Zambia forhaving taken adecisive turn
away from import substitution since 1991. Quantitative restrictions, including import controls, had
beenremoved from allbutafewproducts, thetariff structure simplified, andapplied ratesreduced
although bound ratestended tobeveryhigh, including those at125percent.
11. Given thatZambia 'sdependence onborder duties forGovernment revenue washigh, the
discussant sought clarification onsteps tobetaken toincrease revenue from non-trade sources, and
onproblems thathadtobesurmounted inthisregard. Confirmation wasrequested astothe
Government 'sintention toeliminate, byDecember 1996, theImport Declaration Fee,whose conformity
withWTO ruleswasquestionable; information wassought onthewayresulting shortfalls inrevenue
would bemade good.
12. Thediscussant recalled theimportance ofinvestment toeconomic growth andremarked on
itslowlevelinZambia, which heascribed tolowlevels offoreign direct investment andgross domestic
savings. Herequested comments ontheeffectiveness ofmeasures already taken andthose tobe
implemented toenhance boththeattractiveness ofZambia toforeign investors andtoencourage higher
domestic savings. Heinquired about therealratesofreturn oninterest-bearing saving instruments.
Healsoasked about therepatriation ofcapital flight, ifany.
13. Thediscussant noted thedetermination oftheauthorities toreduce thedependence ofZambia
onmineral exports, particularly byboosting exports ofnon-traditional products, andpointed toinstances
inwhich exports hadleddeveloping countries ontothepathofsustained andlow-inflationary growth.
Hesought information onexport diversification possibilities andconstraints, including non-traditional
products inwhich Zambia hadacomparative advantage. Comments wererequested fromthedelegation
ofZambia about thelevelofmarket access forZambian products, including possible newprotective
barriers tonon-traditional exports from Zambia.
14. Hecontinued bynoting thatZambia 'sexternal current account deficits hadbeenrelatively high
inthepasttwoyears andsuggested ariskthatZambia 'scommitment tomarket-opening could come
under pressure asaresult ofbalance-of-payments difficulties. Information wassought onwhathad
beentermed a"huge outflow ontheservices account" intheGovernment report, andinparticular,
therecent andprojected costofpayments onforeign debt. Healsoasked about thecapital inflows
which were financing these deficits. Herequested abreakdown ofsuchinflows byorigin andtype,
enabling onetoassess theirvolatility, andinformation ontheconnection between Zambia 'scommitment
tomarket reforms andontheavailability ofthecapital needed tofinance thecurrent account deficits.
15. Noting thatZambia stillmaintained limitations onforeign investments intheservices sector,
thediscussant sought clarification onthese limitations andonplans torescind themandtoparticipate
infuture WTO negotiations ontelecommunications andfinancial services.WT/TPR/M/17
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IV. STATEMENT BYTHE SECOND DISCUSSANT
16. Thesecond discussant, Mr.Calson Mbegabolawe, acknowledged Zambia 'sadjustment efforts,
encouraged ittocontinue withitsreforms andcalled ontheinternational community toprovide
appropriate support. Heasked questions about therelationship between theregional arrangements
towhich Zambia issignatory, andabout theconsistency andcomplementarity ofregional initiatives
withthemultilateral trading system.
17. Henoted thatZambia hadautonomously liberalized itseconomy, butthatthelevelofitsWTO
commitments waslow. Thisdidnotensure theirreversibility ofreform. Questions wereasked about
thewayZambia intended toincrease itsWTO commitments. InviewoftheGovernment 'scomplaints
about unfair trading practices within thesub-region, comments were requested from thedelegation
ofZambia onthetime-frame fortheincorporation ofWTO disciplines (particularly onanti-dumping
andcountervailing measures) intodomestic trade legislation, onproducts thatmight beaffected, on
thebasisonwhich theexisting provision fortheimposition ofselective countervailing measures would
beimplemented, andonthelong-standing anti-dumping measures thatZambia applied onanm.f.n.
basis. Thecompatibility oftheImport Declaration FeewithWTO ruleswasputintoquestion, given
thatZambia didnotlistany"other duties andcharges" initsUruguay Round Schedule. Clarification
wassought onthecriteria forselecting products tobeinspected under theselective pre-shipment
inspection system whose introduction Zambia wasconsidering.
18. Commending Zambia onitsambitious privatization programme, thediscussant requested
comments onmeasures todealwithnegative developments, including social difficulties, thatmight
result fromthereforms. Healsoasked about efforts bytheGovernment torevitalize thecopper industry,
which wasthebackbone ofZambian economy. Information wassought ontheGovernment 'sprogress
inexploiting thehugepotential thatexisted foragriculture andonsolutions todifficulties, including
financial problems, experienced bysmall-scale farmers. Aquestion wasasked about regional initiatives
ontourism, especially withregard toresources shared byZambia anditsneighbours.WT/TPR/M/17
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V. STATEMENT BYMEMBERS OFTHE TRADE POLICY REVIEW BODY
19. Therepresentative ofAustralia acknowledged theimpressive programme ofeconomic reforms
undertaken byZambia since 1991 andencouraged ittotaketheforeshadowed measures tocomplete
itsprivatization andliberalization programme. Heinquired about thereasons forwhich theone-stop
Investment Centre wasnotusedtoprocess investment applications inthemining andfinancial services
sectors. Herequested further details ontheprivatization ofZambia Consolidated Copper Mines
(ZCCM); onincentives tobothZambians andforeigners investing inZambia through theprivatization
programme; andoncontrols orrestrictions, including theimport permit, applying toimports and
exports. Heraised questions ontheImport Declaration Fee(IDF). Herequested comments fromthe
delegation ofZambia ontaxandtariff concessions; onthewaytheAgricultural Sector Investment
Programme operated; andontheleveloflivestock importation intoZambia, particularly inthecontext
ofthedrought related lossoflivestock andtariffs thatranged to25percent.
20. Therepresentative ofCanada congratulated Zambia foritsprogress inimplementing economic
reforms. Heexpressed concern about thedisparity between bound andapplied tariff ratesandasked
foranassessment oftheimpact oftheregional tariff liberalization ontheGovernment revenues and
possible consequences forachieving further multilateral liberalization. Heraised questions ontheway
thereduction ofincome taxunder theInvestment Actoperated, ontheIDF, andonpre-shipment
inspection ofproducts subject topreferential tariff treatment. Hesought information oncriteria used
bybankstoacceptorrefuseexportpermits,onthetimescalefortheimplementationoftheWTOCustoms
Valuation Agreement byZambia, andfurther details ontheAgricultural Sector Investment Programme.
21. Therepresentative oftheUnited States commended Zambia onitsimpressive record oftrade
liberalization. Heexpressed concern about: thelong-standing GATT- andWTO-inconsistent anti-
dumping action; restrictions onforeign investment inZambia; thelimited number oftariff linesthat
werebound; andthedisparity between bound andapplied rates. Hesought clarification on:customs
valuation;monopoliesandrightsheldbyState-ownedcompanies,suchasZambiaNationalOilCompany,
Zambia Consolidated Copper Mines andZambia Electricity Supply Corporation; administration of
export prohibitions, given thatnoexport licences wererequired; andthetime-frames forimplementing
thecomputerization programme ofcustoms procedures andbringing Zambia 'scustom 'slegislation
intoconformity withWTO disciplines inthearea. Herequested justification forthebanonthe
importation ofleft-hand drive vehicles, further information onprocedures fordetermining whether
aparticular alcoholic spirit was"noxious" or"injurious"; andasked about thepublication ofrules
oforigin regulation andprocedures forappealing origin determinations made byZambian customs.
22. PointingoutthathiscountrywasthesinglelargestmarketforZambianexports,therepresentative
ofJapan congratulated Zambia onitsreforms. Herequested comments fromthedelegation ofZambia
on:theimpact ofregistration procedures forforeign companies andtheelimination ofthismeasure;
andabout anypossible discrimination against foreigners asregards theperiod ofvalidity oftrucking
activities licences. Healsoasked about thecompatibility oftheIDFwithGATT Agreements andabout
theabolition ofthisfee.
23. Therepresentative ofEgypt commended Zambia onitsadjustment measures andencouraged
ittocontinue thereform programme. Heinquired about Zambia 'scooperation withAfrican countries
onthebasis oftheAbuja Treaty, andabout thedevelopment ofitstrade relations withother African
countries withwhich Zambia hadnotconcluded regional orbilateral trade agreements.
24. Noting thatbothpolitical andeconomic reforms canbedifficult, therepresentative ofKenya
congratulated Zambia forthesuccess ithadachieved andencouraged ittocontinue itseconomic
liberalization.ReferringtoduplicationofactivitiesofboththeCommonMarketforEasternandSouthern
Africa (COMESA) andtheSouthern African Development Community (SADC), towhich ZambiaWT/TPR/M/17
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wasamember, sheasked forinformation ontheposition oftheGovernment ofZambia asregards
apossible merger ofthetworegional economic groupings.
25. After congratulating Zambia foritsprogress withtrade liberalization, therepresentative of
theEuropean Union inquired about themainfactors thatwerelimiting positive gains forZambia from
thereforms andonthewayitcould exploit thebenefits oftrade liberalization, particularly fornon-
traditional exports. Heasked questions regarding recent developments offoreign direct investment,
theprivatization ofZCCM, andfurther liberalization oftrade anditspossible impact. Herequested
comments from thedelegation ofZambia ontheexpected impact oftherecent trade protocol forthe
SADC region andsuggested thattheWTO andother international organizations lookattheregional
perspective intradematters. Hesought clarification on:thewaytheGovernment ofZambia intended
toanswer donors 'concerns onitsability toensure stability; theincorporation oftheprovisions of
theWTO Agreements intodomestic trade legislation; andZambia 'sspecific expectations from the
Singapore Ministerial meeting, particularly asregards thereview ofagriculture commitments and
initiatives benefiting leastdeveloped countries.
26. Recalling thatreform measures hadbeenunilaterally initiated byZambia, andinspiteofinternal
andexternal factors thathadnegatively affected itseconomy, therepresentative ofIndia called onthe
international community toprovide aconducive environment forthegrowth ofZambia 'snon-traditional
exports. Heencouraged Zambia toimprove productivity incopper production, toresolve theissues
associated withmanagement andskilled labour, andtogivemore emphasis tonon-traditional exports.
27. Therepresentative ofHungary welcomed thefundamental policy changes initiated byZambia
since 1991. Herecalled thepositive results thathadbeenaccomplished inspite ofunfavourable
exogenous factors. Heobserved thatZambia 'sbilateral tradewithHungary wasinsignificant, although
Hungary hadprovided duty-free treatment foritsimports from Zambia. Heinquired about future
reductions byZambia ofitsbound tariff rates.
28. TherepresentativeofTunisiacongratulatedZambiaonitsreforms,andencouragedittocontinue
withitsprogramme. Hesought information onZambia 'sparticipation intheGlobal System ofTrade
Preferences andintheAfrican Economic Market, asinitiated bytheUnited Nations Economic
Commission forAfrica.
29. Acknowledgingthateconomicreformscanbepoliticallysensitive,therepresentativeofTanzania
considered thatefforts made byZambia deserved international support. Heencouraged Zambia to
increase itsregional trade withcountries suchasTanzania.
30. After noting thathiscountry wasalsoamember ofCOMESA, therepresentative ofMadagascar
encouraged Zambia onitspathofeconomic liberalization.WT/TPR/M/17
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VI. REPLIES BYTHEREPRESENTATIVE OFZAMBIA AND ADDITIONAL COMMENTS
31. Intheintroduction tohisreplies, therepresentative ofZambia indicated thathewould provide
written answers tosome ofthequestions upon hisreturn toZambia. These written answers would
cover: theimpact ofSADC intheshortandmedium term; themacro-economic environment, including
issues relating tointerest rates, thebalance ofpayments, thestructure andviability oftheexternal
current account, andthevolatility ofinternational reserves; andZambia 'scommitments totheGeneral
Agreement onTrade inServices.
(1) External andregional setting forZambia 'strade policies
32. Therepresentative ofZambia reiterated thecommitment ofhisGovernment tothestepsithad
taken andassured other participants thatthere wasnowayback. Heindicated thatZambia was
committed toentering intobilateral andregional trade arrangements andwasnegotiating bilateral
agreements withZimbabwe andSACU member States. ItwashisGovernment viewthatCOMESA
andSADC could co-exist inaconstructive manner; ajointCOMESA/SADC meeting inNovember
1996woulddealwithanyduplicationofactivitiesbythetwo.RecallingthatCOMESAhadbeennotified
totheWTO inlinewiththeUruguay Round Agreements, henoted thatZambia would encourage all
COMESA members toensure thattheregional arrangement complied fully withtheWTO. He
emphasized thathisGovernment wassensitizing Zambia 'sbusiness community toprepare forstiffer
competition, given thatpreferences provided under theLomé Convention would come toanendby
theyear2000.
33. TheseconddiscussantencouragedZambiatodiversifyitsexportmarkets,particularlytodampen
theeffects thatmight result from theabolition oftheLomé Convention. Recalling thatZambia and
Zimbabwe hadacommon geographical, historical andcultural background, therepresentative of
Zimbabwe listed sectors, including tourism, power andtransport, inwhich cooperation between the
twocountries waspromoted. Hereaffirmed thecommitment ofZimbabwe totheviewthatregional
cooperation should beabuilding block towards integration intothemultilateral trading system and
intotheworld economy. Heexpressed thefullsupport ofhiscountry toZambia 'sdetermination to
succeed initsreform effort, notwithstanding adverse exogenous factors, suchasdroughts.
34. Therepresentative oftheEuropean Union observed thatthemarket access problem thatZambia
wasfacing inSouthern Africa arose from thefactthatsome countries were members ofSADC but
notofCOMESA. After having noted thatanumber ofhisquestions fellintoareas tobecovered in
written answers, thefirstdiscussant requested information onthelong-term intention oftheGovernment
ofZambia toreduce theshare ofborder charges intotalpublic revenue. Hecommended Zambia on
itsliberalization efforts, andcommented onZambia 'sexternal accounts andpossible ways toimprove
itsdomestic savings.
(2) Zambia 'seconomic situation
35. Therepresentative ofZambia acknowledged thattheIDFwasinconsistent withtheWTO
Agreement andstressed thatitwould bedropped attheendof1996. Alternative revenue measures,
suchasbroadeningthetaxbaseandimprovingtheperformanceoftheZambiaRevenueAuthority(ZRA),
were under study tofillthefinancial gapthatwould becreated bytheelimination oftheIDF.
36. Hementioned thatstructural adjustment programmes hadnotbrought anypolitical instability
toZambia, largely because thepopulation hadstrongly accepted them astheonlywaytorevitalize
theeconomy. Freeandfairelections would beheldintwo-months time. Onprivatization, henoted
that138State companies hadbeensoldandothers were dueforsale. ZCCM hadbeenadvertisedWT/TPR/M/17
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forsaleasfromSeptember 1996; thedeadline forreceiving tenders was28thFebruary 1997. Studies
wereunder wayforthesalesoftheZambia Telecommunication Company andtheZambia Electricity
Supply Corporation.
37. Measures taken byZambia toattract foreign direct investment included: theremoval ofcustoms
dutyonproductive machinery inagriculture, mining andtourism; theharmonization oftheZambia
Revenue Authority andInvestment Actsinorder toimprove incentives offered toforeign investors;
thecommitment tomacro-economic andpolitical stability through, interalia,fiscal andmonetary
discipline toensure lowinterest ratesandinflation; theimprovement ofinfrastructure, suchasroads;
access toproductive inputs, suchasland; creation ofarural electrification fund; fullrepatriation
ofprofits byforeign investors; theintroduction ofanewlegislation toprovide forthecreation of
aprivate pension scheme; andimprovements introduced inpromotional activities realized bythe
Investment Centre.
38. TheInvestment Centre didnotprocess investment licences inthemining andfinancial services
sectors because ofthecomplexity ofthesesectors andthelimited capacity oftheCentre tohandle them.
Asregards areas inwhich Zambia hadcomparative advantages, therepresentative listed horticultural
products,preciousandsemi-preciousstones,agriculture,textiles,engineering,woodandwoodproducts,
leather, andtourism.
39. ThefirstdiscussantcongratulatedtherepresentativeofZambiaonZambia'sintentiontoeliminate
theIDF. Thesecond discussant observed thatbilateral andregional groupings, aswellastheWTO,
were forathatZambia could usetoincrease itsmarket access. Structural rigidities were alsotobe
given dueconsideration.
40. Therepresentative ofZambia added thatconsultations were under waywithneighbouring
countries. Among themajor problems Zambia wasfacing weresubsidized exports fromabroad and
obsolete equipment. There waslesscapital outflow from Zambia thanbefore. Financial assistance
wasnegotiated withinstitutions, suchastheWorld Bank.
(3) Specific questions
41. Therepresentative ofZambia confirmed thathisGovernment hadaconsultative process for
tradepolicy withtheprivate sector. Hereassured participants thatZambia hadnointention toincrease
tariffs butitwasrather committed tofuture tariff liberalization. Hementioned Zambia 'sneed of
technical assistance toimplement theWTO Agreement oncustoms valuation, butheadded thatinter-
ministerial consultations wereunder wayforthispurpose. Onthelong-standing anti-dumping duty
onsteeldoors andwindow frames, hepointed outthattheparastatal, which wasprotected bythis
measure, wasunder privatization andconsequently thedutywould automatically cease tobeineffect.
42. HementionedthatZambiadidnotpracticeanydiscriminationbetweenlocalandforeigntruckers.
Measures onforeign trucking weretostoprampant smuggling, which hademanated from extensive
trade liberalization. Hestated thatZambia didnotrelyoncommercial farmers. Zambia supported
andencouraged aregional approach tothepromotion oftourism andhadinitiated jointpackages with
South Africa andNamibia; consultations wereunder waywithKenya. Heassured therepresentative
ofHungary thateverything would bedonetoensure thatZambia exported toHungary.
43. Hestressed thecommitment ofZambia tosucceeding inbothpolitical andeconomic reforms
andcalled forunwavering support oftheinternational community forthispurpose.WT/TPR/M/17
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VII. CONCLUDING REMARKS BYTHE CHAIRPERSON
44. Overthepasttwodays,theTradePolicyReviewBodyhasconductedthefirstreviewofZambia's
trade policies andpractices. These remarks, intended tosummarize thesalient points, aremade on
myownresponsibility anddonotsubstitute fortheBody'scollective evaluation andappreciation.
Details ofthediscussion willbereflected intheminutes ofthemeeting.
45. Thediscussion developed under three main themes: (i)theexternal andregional setting for
Zambia'stradepolicies;(ii)Zambia'seconomicsituation;and(iii)specificquestionsontrademeasures.
(i) External andregional setting forZambia 'strade policies
46. 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.
47. 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.
48. Therepresentative ofZambia went ontoemphasise thathiscountry hadembarked onan
unparalleled 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 'sviewthatCOMESA 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.
49. 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.
(ii) Zambia 'seconomic situation
50. 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; theWT/TPR/M/17
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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.
51. Participants sought clarification onlimitations maintained byZambia onforeign investment
inservices. They noted thattheprospects forFDIcould beimproved byZambia 'sparticipation in
future WTO services negotiations andbyincreasing itsGATS commitments.
52. 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 weretheresponsibility 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.
(iii) Specific questions
53. 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 werealsoraised onthecompatibility oftheImport Declaration FeewithWTO rules
andtimetable foritsabolition; aswellastheincorporation ofWTO disciplines intodomestic trade
legislationincludingoncustomsvaluation,pre-shipmentinspection,andanti-dumpingandcountervailing
measures. Theexistence ofalong-standing anti-dumping measure, applied onanm.f.n. basis, was
particularlyemphasisedbysomemembers.Membersalsoaskedaboutprospectsforfurtherliberalization
ofservices sectors, particularly telecommunications, andtheimplementation ofthetrucking activities
licence.
54. 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 onWT/TPR/M/17
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Customs Valuation, butneeded technical assistance forthispurpose; inter-Ministerial consultations
were under waytothiseffect. Henoted thatthecompany making theproduct onwhich there was
along-standing anti-dumping dutywasintheprocess ofprivatization andhence thedutycould be
expected tolapse. Headded thatthere wasnodiscrimination between localandforeign truckers in
granting thetrucking activities licence, whose issuance wasintended toarrest smuggling.
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55. Insummary,Ishouldsaythattheoverallthrustofthediscussionwasencouragingandsupportive
oftheunderlying direction ofZambia 'seconomic andtrade policy. Atthesame time, many ofthe
questions posed reflected members 'concern thattheeconomic reform process inZambia should be
sustained anddeepened, accompanied byfullcompliance withallofZambia 'sWTO obligations.
56. Members welcomed thesignificant stepstaken bytheZambian authorities towards amore open
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.