According to a report by the Forum on China-Africa Cooperation, four agreements were signed in December 2012 between the Zambian and Chinese governments, including a trade accord that will provide duty-free access for 95% of Zambia’s exports to China, up from the present level of 60%. This brings the potential number of products benefiting from duty-free access to the Chinese market to around 8,000.
Yusuf Dodia, Chairperson of the Private Sector Development Association (PSDA), a Zambian private sector lobby group, has welcomed the agreement as providing an ‘alternate market’, given the economic problems in many European economies to which Zambia has traditionally exported its products. However, he expressed caution over the possible continued effect of non-tariff barriers on actual levels of Zambian exports to China, most notably in terms of demanding SPS requirements.
Mr Dodia also highlighted the need for assistance in proactively developing trade with China. In this context, the news that the Doha Round of WTO negotiations has made good progress on trade facilitation may be encouraging. A review of progress during 2012 by WTO negotiating group chairs, reported by ICTSD, indicated that while virtually no advance had been made in some areas, there had been significant gains in the areas of agriculture, trade facilitation, special and differential treatment, least developed countries and dispute settlement. It was claimed that there are real prospects for a deal by the end of 2013 on trade facilitation, which covers ‘easing of customs procedures and other border restrictions’.
China has been progressively expanding duty-free access for African exports since 2010, in line with commitments made by in the WTO and in successive Sino–Africa summits. However, figures on the share of trade that is duty-free provide an inadequate guide to the ease of trade, and may be misleading. If one partner’s tariffs are so high on some goods that little is imported, it may then appear that trade is more liberal than is actually the case, because the non-free items account for such a small share of the total. The problem is particularly marked where a country’s sales are mainly of primary products that the importing country needs and does not wish to restrict, which is the case for many African exports to China. Figures on the share of trade that is duty-free say little about the regime for other goods exported on a smaller scale or not at all.
Moreover, duties are only one potential obstacle to effectively accessing the Chinese market. The Chinese market is not an easy ‘alternate market’ to the EU for food and agricultural products. The structure of demand is often different to that in Europe, with widely differing prices being offered for the same product on these different markets (see Agritrade article ‘ Prospects for Namibian beef exports to China’, 4 January 2013). This commonly requires specific initiatives to identify particular market components, linked to strong branding and marketing strategy. Even when a clear brand identity exists, problems in ensuring respect for quality labels can arise (see Agritrade article ‘ Jamaica seeking new partners for coffee marketing in China’, 2 February 2013).
In addition, dedicated agricultural export protocols covering SPS requirements and other administrative arrangements will be required before food and agricultural product exports can freely take place. The negotiation of such agricultural export protocols with China will require close collaboration between the private sector and the Zambian government, if opportunities opened up under increased duty-free market access coverage are to be exploited.
Since the challenges faced in exploiting the enormous potential implicit in the rapidly evolving Chinese market are common to many African and other ACP countries (see Agritrade article ‘ Market opportunities identified but action required’, 3 September 2012), there would appear to be considerable scope for sharing knowledge among ACP countries. This potentially constitutes an area for a pan-ACP trade development initiative.