72801 v1 World Trade Indicators 2009/10 Zambia Trade Brief Trade Policy import tariffs on various fuels, including diesel, petrol, and kerosene, in June 2008. However, the government Zambia undertook a trade reform program in the recently increased its import duty on fuel from 5 1990s, reducing import duties, eliminating import and percent to 25 percent to prevent two domestic oil export license requirements, abolishing export bans, firms from collapsing.3 and introducing export incentives. According to its MFN Tariff Trade Restrictive Index (TTRI)1 of 8.9 percent, Zambia is more open to trade than an average External Environment Sub-Saharan Africa (SSA) country (11.3 percent) or low-income country (11.6 percent). Based on the Zambia’s exports face a favorable trading TTRI, it ranks of 88th out of 125 countries (where 1st is environment, especially when compared to the average least restrictive). The agricultural sector is given a SSA or low-income country. Zambia’s Market Access higher level of tariff protection (15.9 percent) TTRI4 (including preferences) is 1.4 percent, below compared to the non-agricultural sector (8.6 percent). the SSA country group average of 3.9 percent and the Zambia’s ad valorem tariffs comprise three non-zero low-income country group average of 5.6 percent. The bands (5, 15, and 25 percent) with the fishing industry weighted average rest of the world tariff (including and light manufacturing industries such as wood preferences) faced by Zambia’s exports is 3.3 percent, products, manufactured foods, beverages, tobacco, with the rates for agricultural goods and non- textiles, and leather facing the highest tariff rates. agricultural goods at 10.9 percent and 2.2 percent, Zambia’s average MFN applied tariff has been mostly respectively. Over the course of 2008, the real steady over the past decade and was 13.8 percent in effective exchange rate of the Zambian kwacha 2008. The maximum MFN applied tariff has increased depreciated by 5.4 percent, making exports more in recent years to 72.8 percent. The trade policy space, competitive. as measured by the wedge between bound and applied As negotiations between the Eastern and Southern tariffs (the overhang), is 90.6 percent. Regarding its Africa (ESA) group and the EU towards a commitment to liberalizing services trade, Zambia comprehensive Economic Partnership Agreement ranks 82nd (out of 148) on the GATS Commitments (EPA) could not be completed prior to the December Index. 2007 deadline, Zambia, with five other members of Faced with rising food prices, Zambia banned maize the ESA group, initialed an “interim� agreement (but exports in an attempt to ensure domestic food safety. with individual market access schedules) with the EU The 2008 budget introduced export taxes of 15 in December 2007 to retain its preferences to the EU percent on copper concentrates and cotton seed to market under the Cotonou Agreement. Its market promote value addition of these products.2 Moreover, access offer was concluded on September 20, 2008. in an effort to relieve its copper mining industry in a Zambia postponed signing the interim EPA, which time of high oil prices, the government decreased was signed by ESA members Mauritius, the Seychelles, Zimbabwe, and Madagascar in August 2009. The country continues to negotiate a comprehensive EPA with the EU as part of the ESA group. Zambia is also Unless otherwise indicated, all data are as of August 2009 a member of the 15-country Southern African and are drawn from the World Trade Indicators 2009/10 Development Community (SADC), whose Trade Database. The database, Country Trade Briefs and Protocol, which was signed in 1996 and came into Trade-at-a-Glance Tables, are available at force in 2000, culminated in the launch of a free trade http://www.worldbank.org/wti. area in August 2008. The country also belongs to the Common Market for Eastern and Southern Africa If using information from this brief, please provide the (COMESA) which established a customs union in following source citation: World Bank. 2010. “Zambia June 2009 and plans to fully implement it by 2012. Trade Brief.� World Trade Indicators 2009/10: Country Trade Briefs. Washington, DC: World Bank. Available at http://www.worldbank.org/wti. World Trade Indicators 2009/10 Zambia Trade Brief Behind the Border Constraints Notes Zambia ranked 90th in the Ease of Doing Business 1. TTRI calculates the equivalent uniform tariff that index in 2009, which compares the business would keep domestic welfare constant. It is weighted by environment of 183 countries. The Logistics import shares and import demand elasticity. Performance Index (LPI), a measure of the extent of 2. WTO, 2009 trade facilitation, rates Zambia at 2.37 on a scale of 1 3. Global Trade Alert, 2009. to 5, compared to 2.35 for the SSA region and 2.29 for 4. MA-TTRI calculates the equivalent uniform tariff of countries in the low-income group. It ranks 100th (out trading partners that would keep their level of imports of 150) in the world and 15th (out of 39) in the SSA constant. It is weighted by import values and import region (with South Africa leading the regional group). demand elasticities of trading partners. Among the LPI subcategories, its best performance is 5. IMF, 2009, p. 4. in lowering domestic logistics costs while its weakest 6. Central Statistical Office—Zambia 2009, p. 6; Central performance is in the quality of transport and IT Statistical Office—Zambia 2008, p. 6. infrastructure for logistics. References Trade Outcomes African Economic Outlook. 2009. “Zambia.� African Real trade growth (in constant 2000 U.S. dollars) was Economic Outlook. July 8, 2009. . further to 3.1 percent in 2009. Import growth was 15.3 Central Statistical Office—Zambia. 2009. The Monthly. percent in 2008 compared to 16.2 percent in 2007, and Central Statistical Office—Zambia. June 2009. was outpaced by export growth of 20.7 percent which . 2007. ———. 2008. The Monthly. Central Statistical Office— Zambia. December 2008. . percent in 2007, driven mainly by estimated import COMESA. 2009. “COMESA Launches its Customs growth of 38.5 percent, compared to 40.4 percent in Union.� COMESA. July 24, 2009. . commodity prices, as the bulk of its export revenue is European Commission. 2009. “Fact Sheet on the Interim generated through copper exports. Thus, while the Economic Partnership Agreement.� European country benefited from high mineral prices in the first Commission. January 2009. . second half as prices of copper fell by about two- Food and Agriculture Organization of the United thirds.5 Goods exports ended up registering an Nations (FAO). 2008. “Policy Measures Taken by estimated growth rate of 10.4 percent, lower than the Governments to Reduce the Impact of Soaring growth rate of 16.9 percent in 2007. Provisional data Prices—Africa—Zambia.� FAO. December 15, 2008. from national statistics6 show that goods exports had . already fallen by 44 percent in nominal U.S. dollar Global Trade Alert. 2009. “Zambia: Increase in Fuel terms in the first half of 2009 compared to the same Import Duty to 25% from 5%.� Global Trade Alert. period in 2008. However, recovering copper prices May 28, 2009. . Services exports grew by 5.5 percent in 2008, International Monetary Fund (IMF). 2009. IMF Country compared to 22.1 percent in 2007, and growth is Report No. 09/188. IMF. June 2009. expected to continue to slow in 2009. Foreign direct . Zambia Trade Brief World Trade Indicators 2009/10 SADC Today. 2009. “Implementation of SADC Trade Protocol on Track.� . Southern African Development Community (SADC). 2008. “Final Communiqué of the 28th Summit of SADC Heads of State and Government.� SADC. August 2008. . The Zambian Chronicle. 2008. “Zambia Cuts Fuel Import Tax to Cushion Users.� The Zambian Chronicle. June 26, 2008. < http://zambianchronicle.com/?p=787>. World Trade Organization (WTO). 2009. Trade Policy Review—Zambia. WTO. June 23, 2009. .