No Tariffs on capital goods (COMESA)

The Chronicle paper revealed that countries in the COMESA Customs Union will not charge tariffs on capital goods and raw materials imported from outside the bloc. This will create a strong business rapport among the African states in trading their products. Zimbabwe will benefit immensely in this move and the current challenges faced by many local industries will bear a light burden to import their products which will boost the business.

Semi-processed goods and finished products will attract duty of 10 and 25 percent to create a level playing field for manufacturers and producers in the region. This is reasonable in enabling the business to flow and generate profits that will improve the financial statuses of local industries.

COMESA has defined capital goods as those used to produce other goods while a raw material applies to products that have not undergone any form of processing. An intermediate product is one requiring further processing before it can be used while a finished product does not need any further processing. As we know that most of the African state is much into the extraction than in processing.

According to a COMESA document, member countries had adopted a Common External Tariff for goods imported from outside the 19-member trade bloc. Trade on goods produced in member countries is duty-free under the Free Trade Area set up in 2000.

The newsletter said the FTA, while beneficial to members, did not provide a level playing field in agricultural and manufacturing sectors.
"It is not possible to foster and promote regional production of goods in sectors where producers outside the region are more competitive for a variety of reasons. Nearly all economies in COMESA are small with nascent and fairly fragile industries that require nurturing."

The newsletter said the customs union would protect upcoming companies from competition from bigger and older industries. This will improve the indigenisation philosophy and empower the local business people. Local business suffers from the giant business who most of the times would have gained the regional and world markets.

It said the union would also facilitate increased regional cross-border trade in goods and services. General in Zimbabwe, cross boarder trade which is engineered by women has paid dividends. People from Zimbabwe import goods from neighboring countries such as South Africa, Botswana, Namibia and so forth will benefit from the deal sealed by COMESA

COMESA believes that the Customs Union will also go some way in reducing poverty in member countries as enhanced production to meet market demand will create wealth directly and indirectly. Trade between COMESA member countries has risen from US$3 billion in 2000 before the FTA was formed to more than US$15 billion last year. The trading bloc has a population of 400 million, creating an enormous opportunities for businesses in the member countries.
Most Western countries, especially those from the North benefited from similar trade in Europe which made it possible for companies to extend their tentacles. The COMESA stance will go a long way to improve the African states business status.