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Take advantage of trade agreements, firms urged

The Zimbabwe Revenue Authority (Zimra) has advised businesses to take advantage of products’ sources and trade agreements in order to enjoy tax benefits, and promote industrial growth.

Zimra representative Makhosazana Kuture made these remarks during the National Trade Traffic conference at the Zimbabwe International Trade Fair grounds in Bulawayo on Tuesday.

The conference was held under the theme Unpacking Zimbabwe’s Trade Agreements and benefits that can accrue to local industry.

Kuture said product rules of origin were legal provisions used to determine the nationality of a product in the context of international trade and within a preferential trade area such as the Southern African Development Community, Common Market for Eastern and Southern Africa and African Continental Free Trade Area.

The rules of origin specify the conditions under which a product traded between parties to an agreement can claim local “economic” origin status and benefit from the preferences offered by the trade agreement.

Products that are not compliant with rules of origin must be traded on most favoured nation terms, which, in most cases, means much higher tariffs.

“Rules of origin advantages are that they help to come up with marketing strategies exploring new markets, new products, product costing, customs duties, industry-growth, market creation, counter foreign competition, national level employment creation, economic growth, foreign policy, social amenities improvement,’’ Kuture said.

The application of rules of origin is done by dictating sufficient level of processing that must take place in a given country in order for the product to be considered as having its origin in that country.

“The rules of origin in Free Trade Agreements (FTA) define the conditions under which a product is deemed as originating and, therefore, suitable for preferential treatment. Prevent trade deflection and transhipment in an effort to (falsely) obtain origin and preferential treatment. Reasons for determining origin of goods is that rates of duty may be affected such as statistical purposes, sourcing decisions, marketing decisions,’’ Kuture said.

Rules of origin are divided into two categories, namely non-preferential and preferential. The non-preferential rules of origin are used for determining the economic nationality of products subject to commercial policy measures, anti-dumping decisions and tariff quotas.

Non-preferential rules of origin are used for statistical purposes, government procurement, origin markings “Made in” labelling. Preferential rules of origin determine the nationality of a product subject to preferential tariff rates within an FTA/PTA.

“Except as otherwise provided for in this agreement, each party shall eliminate customs duties on originating goods of the other party” Each FTA/PTA has its own set of rules of origin. Criteria for determining origin are wholly obtained goods, live animals born and raised in the party-livestock, animals obtained by hunting, trapping, fishing, gathering or capturing in the party. Goods obtained from live animals in the party (milk, egg, etc) plants and plant products harvested, picked or gathered in the party (cut flowers), minerals and other naturally occurring substances,’’ she said.

Substantial transformation rules apply to goods produced using non-originating materials that have to undergo substantial transformation in a State party for the goods to qualify as originating.

Kuture said goods were considered as originating when they satisfy the requirements set out in the product-specific rules.

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