Open trade policy remains substantially unchanged

July 28, 2009 - Zambia

From 2003 to mid 2008, Zambia’s economy moved from stagnation towards steady growth, greater prosperity and better access to foreign investment. Real GDP grew at an annual average rate of 5-6% led by the mining, construction and services sectors, according to a WTO Secretariat report on the trade policies and practices of Zambia.

The report notes the problem of the Zambian economy’s increasing dependence on mining —copper now accounts for over 75% of total exports, up from 65% in 2002— and stresses the need for progress on structural reforms to diversify the economy and reduce dependence on natural resources.

Zambia’s relatively open trade policy has remained substantially unchanged during the review period, although the continuing large gap between the average applied MFN tariff rate (13%) and the bound rate (105%), and the absence of bindings for over 83% of tariff lines, tend to create a degree of unpredictability for traders, according to the report.

The report, along with a policy statement by the Government of Zambia, will be the basis for the third Trade Policy Review (TPR) of Zambia by the Trade Policy Review Body of the WTO on 27 and 29 of July 2009.

Agriculture:
There are a small number of large commercial farms which account for about 45% of the country’s agricultural output, and a large number (around one million) smallholder farmers who grow various crops including cotton and other crops. The small size of most farms means there is a lack of mechanization and economies of scale, leading to low labour productivity and low incomes, and hence poverty.

Textile and Clothing:
Manufacturing’s share of GDP has changed little during the period under review, contributing between 10% and 11% of GDP. Growth in the sector averaged around 5% in the first half of the review period, primarily owing to the Government’s decision to reduce the import duty on imported raw materials. Textile and clothing manufacture has declined due to competition from lower-cost Asian manufacturers after the expiry of the Agreement on Textiles and Clothing in 2005. The regional FTAs have created new export markets for Zambian manufacturers, but their main market remains domestic, where demand and purchasing power are weak.

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