Open for business, yet closed for international trade

I borrow this title from the feisty Zimbabwean author & lawyer Petinah Gappah. A thousand apologies Ms Gappah. Open for Business, closed to International Trade. I could not help thinking about Tanzania when I read what Ms Gappah wrote-about Zimbabwe, not Tanzania. Read On. “My unhappiness and dismay with the government’s heavy-handedness in using non-tariff barriers to evade tariff limits, particularly in preferential agreements.

Back when I lived in Geneva, and Mugabe was President, I advised the Zim embassy against these policies and told them they were in conflict not only with WTO law, but also Sadc rules. Put simply, tariffs and other customs duties for goods are at a historic low across the world, especially in regional and other preferential trade agreements.

Many countries however choose to evade their international obligations by using a raft of what are called non-tariff barriers. These NTBs include import licensing, restrictive rules of origin, quantitative restrictions and quotas, technical standards etc.

When it comes to these NTBs, Zimbabwe is the most complained about country in Sadc. (Phew so Tanzania passes).

Next week, I (Ms Gappah) will be delivering a paper on the use of NTBs, particularly the infamous SI 122 which replaced SI 64. It tells you something that these statutory instruments implement the CONTROL OF GOODS ACT, a 1974 statute from a Rhodesia that was geared towards import substitution.

SI 122 uses excessive import licensing to prohibit imports. This passes the cost on to the consumer, resulting in price rises. So you pay more because importers have to pay truly ridiculous fees that apply to each product to be imported, and they also go through administrative steps that are costly and time consuming.

The policy justification is the protection of local industry, a policy basis that falls away once you realise that SI 122 applies even to products in short supply and that are not made here.

The real reason has nothing to do with what in the WTO is called the “infant industry” exception. It is actually revenue collection. For each product to be imported, an importer pays a $70 license fee.

As I continued to drink from Ms Gappah’s wealth of experience as a lawyer and negotiator in World Trade Organisation, and as a much travelled writer, Hon. Peter Serukamba, a CCM member of Parliament was poking holes into Minister Philip Mpango’s 2018-2019 Budget speech, in much similar veins.

It seems that the Tanzanian economy is geared and bench marking, heck even taking pride in its ability to collect revenue from every nook and cranny.

Revenue collection is the life blood of any government. But surely as Hon Serukamba was saying we have to make a choice whether we want to develop the country or become tax collectors. The argument has been made as to whether we are a free market economy in our actions or we are a wolf-in sheepskin Ujamaaists pretending to free market economists. “We say we are for PPP but this budget has nothing about PPP to write home about,” said Hon Serukamba.

As we continue to grapple with saying one thing and doing another, Zimbabwe, only recently the laughing stock of its neighbours for its gazillion Zimbabwean dollars that cannot buy much in a supermarket are taking full advantage of the change in leadership to milk as much as they can from the international market.

And they are using their expertise in the diaspora and returnees as well as those at home who may know a thing or two about international trade, trade negotiations and how to ensure the country does not cut deals which in Tanzania’s case has made the country lose billions if not trillions in wealth.

As Ms Gappah opines, “We cannot be open for business but closed to international trade. Particularly not when it is our closest African partners who are punished.”

Kasera Nick Oyoo is a research and communications consultant with Midas Touché East Africa