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Statement by U.S. Ambassador Peter F. Allgeier on the Trade Policy Review of Zambia

July 27, 2009

Geneva, Switzerland - Thank you, Chair.

The United States is pleased to welcome Minister of Commerce, Trade and Industry Felix Mutati, Ambassador Darlington Mwape, and the rest of the Zambian delegation to the third review of the trade policies and practices of Zambia.    We would like to thank the Government of Zambia and the Secretariat for the excellent and comprehensive reports that they prepared for this review and that were circulated before this meeting.  Finally, we would like to thank Ambassador Jean Feyder, as discussant, for providing a useful context for this review.

I would like to begin by acknowledging Zambia's impressive overall economic performance during most of this review period.  We see the central role that copper plays in Zambia's economy and appreciate how Zambia's dependence on one commodity can have deleterious effects for the nation's well-being.  But we also recognize that substantial debt relief along with the Zambian government's prudent macroeconomic policies and ongoing structural reforms, of which trade liberalization is an integral part, all contributed to Zambia's economic gains through mid-2008.

Unfortunately, as the Secretariat report points out, Zambia's dependence on mining has limited its progress in developing other sectors.  We know that diversifying out of copper has been a longstanding objective of Zambian governments.  Achieving that goal, despite the government's improved macroeconomic management, seems to have eluded Zambia.  The Secretariat report notes slow progress in reducing the domestic cost of doing business and improving productivity (and therefore international competitiveness) in non-mining sectors to achieve diversification.  Like all of you, we look forward to a short-lived global slowdown.  But we agree that economic diversification remains key to Zambia's national growth and development.  The Secretariat advises that, to realize its objectives, Zambia ought to, among other things, continue prudent macroeconomic management and ensure that revenues generated by the copper sector are used to build productive infrastructure as well as support for delivery of social services.  We would consider this to be sound, worthwhile advice.  In addition, we support the Zambian government's efforts to promote the agricultural sector as a critical aspect of its diversification plan and hope Zambia establishes WTO-consistent import and export policies to foster investment in this critical sector.

The United States enjoys a strong bilateral trade relationship with Zambia.  Two-way United States-Zambian goods trade increased ten percent in 2008, totaling $130 million, with trade rising in both directions.  Zambia is eligible for trade preferences under the African Growth and Opportunity Act (AGOA); and, in recent years, substantially all Zambian imports have entered the United States duty-free, either under AGOA, the Generalized System of Preferences (GSP), or zero-duty most-favored-nation provisions.  Nevertheless, U.S imports of products from Zambia under AGOA and GSP have been modest and are comprised mostly of refined copper products.  We want to work with the Zambian government to find ways to increase Zambia's utilization of AGOA and GSP trade preferences and to diversify its trade with the United States.   The USAID-funded Southern Africa Global Competitiveness Hub is already working with the Zambian government and private sector to help maximize trade opportunities under AGOA.

In 2006, Zambia signed a two-year, $22.7 million threshold agreement with the Millennium Challenge Corporation (MCC) which included assistance - described in the Secretariat's report - for reducing barriers to trade and investment, including work to strengthen capacity in such areas as trade facilitation, SPS, and standards and to help meet other technical requirements.  USAID would like to work with Zambia's government to complement the MCC threshold program with further assistance to enable the government to continue and deepen regulatory reforms.

In December 2008, the MCC selected Zambia as eligible for large-scale assistance via an MCC compact.  We urge the Zambian government, as it works with the MCC on a compact proposal, to consider including projects related to trade capacity-building and trade-related infrastructure as elements to help it diversify the economy.

The Secretariat reports that, since the last review in 2002, Zambia's trade policy has remained substantially unchanged.  The Government of Zambia has introduced reforms and regulatory changes in some areas, such as government procurement, standards, and business procedures.  We note, for example, the improvement over the last few years of Zambia's ranking in the World Bank's Doing Business indicators and are pleased to note that U.S. assistance, through the MCC, has assisted the Zambian government's efforts in this area.

The Secretariat has devoted a chapter of its report to the issue of aid for trade and has rightly acknowledged Zambia's active participation in the Task Force on the Integrated Framework.   We read with interest that Zambia continues to benefit from a high level of assistance from its development partners and that Zambia is trying to integrate into its policymaking the findings of the Cabinet-approved 2005 Diagnostic Trade Integration Study.  According to the Secretariat, many of the areas that the DTIS identified in its action matrix are being addressed by Zambia's bilateral and multilateral development partners.   We would be interested in hearing from Zambia about its latest diversification plans.

We are pleased to note the extent to which the private sector has played a greater role in the nation's economy since the early 1990s.  We encourage Zambia to work quickly to allow for improved productivity in the areas of agriculture, energy, and fixed-line telecommunication services so that privatization can be realized.

We urge the Government of Zambia to accelerate the pace of reform in order to reduce any trade restrictions and to increase the competitiveness of Zambian producers.  For example, the Secretariat notes that Zambia's tariff structure includes a large overhang between WTO-bound and applied rates that "creates a degree of unpredictability for traders."  With the launch of the COMESA Customs Union and its multi-tier tariff structure capped at 25%, we see no compelling reason for maintaining bound tariffs at over 100% or for not binding a larger number of tariff lines at the lower COMESA rate.

The United States has submitted a few questions on tariff policies, customs valuation and intellectual property rights.  We look forward to reviewing the Zambian government's responses.

Finally, I would like to commend Zambia's active participation in the Doha Development Agenda negotiations.   Zambia has taken a leadership role among the LDCs in these negotiations.  We look forward to continuing our work with Zambia to achieve a balanced and ambitious result in the Doha negotiations with meaningful new market access for all.  Such a result could further enhance opportunities for Zambia to broaden its export base, its export markets and hence its opportunity to diversify.  The United States looks forward to working with Zambia toward bringing the Doha Round to a conclusion, and we wish you a successful trade policy review.