Malawi, other SADC Sugar Exporters reach amicable position with Tanzania

Malawi together with other major sugar exporters in the SADC region got a good deal for their industries with Tanzania committing to allow sugar imports from the region at preferential tariff rates.

Additionally, it was agreed that sugar imports from countries outside the region, like Brazil and Europe, which is heavily subsidized will be imported into Tanzania at 100 percent duty which is the Common External Tariff on the product for the East African Community (EAC) Group.

This follows Tanzania’s application for derogation to impose 100 percent duty on sugar outside SADC and 25 percent for sugar originating in the region.

Tanzania has an estimated annual sugar deficit of 100,000 metric tonnes for its local market that it fills with imports from the SADC region and beyond.

Malawi, South Africa, Zambia, Mauritius and Swaziland are the major sugar producers and exporters in the SADC region.

A Special Meeting of the SADC Committee of Ministers of Trade (CMT) met last week Thursday in Swaziland as part of the SADC Summit to consider and resolve outstanding issues as regards Tanzania’s application for derogation to impose 25% and 10% duty on raw and refined sugar respectively originating from the region and 100% duty on sugar from third party countries.

Tanzania had indicated that this was to enable its domestic industry adjust as it is undergoing restructuring. Ordinarily Tanzania was expected to commit itself to zero duty on sugar originating from SADC under the SADC Sugar Cooperation Agreement (Annex VII to SADC Trade Protocol).

The CMT agreed that Tanzania be given a dispensation of 12 months to adjust while allowing SADC surplus producers, including Malawi, to export to Tanzania at 10 percent duty for refined sugar and 25 percent for raw sugar. The CMT urged Tanzania to adjust the duty of 10 % upwards for refined sugar originating from third parties.

During the meeting, Tanzania also acknowledged the inconsistent tariff rate of 50 percent that Malawi was, in the past, subjected to. And it was reported that Zambia was subjected to an even higher import tariff rate of 100 percent for sugar exports into Tanzania.

Minister of Foreign Affairs and International Cooperation, Francis Kasaila, who represented his Trade, Industry and Tourism counterpart, Joseph Mwanamveka, at the meeting said as a country Malawi was satisfied with the outcome of the meeting as the local sugar industry will now be able to export to Tanzania at preferential rates.

“As Malawi, we are happy with the outcome of the discussions and am sure our sugar industry will be happy too with this opportunity to export at preferential rates to a readily available market," said Kasaila.

Kasaila disclosed that the Malawi delegation’s negotiating position had been discussed in advance between government and the sugar industry players as close partners adding that the outcome of the meeting was therefore a win-win solution that was generally expected.

He expressed the hope that the local sugar industry would try to exploit the opportunities arising from the deal to increase its exports saying efforts to create market opportunities and to increase the country’s exports are in line with the vision of the government of President Prof. Arthur Peter Mutharika of turning Malawi from a net importer to a predominantly exporting country.

On the inconsistencies of overcharging Malawi and Zambia with 50 percent and 100 percent respectively on imports, Tanzania requested evidence relating to the overcharging. The Malawi delegation produced and submitted the necessary customs notes as evidence and it is now expected that Tanzania will either refund the money that was paid in excess of the preferential duty or will provide credits on future exports from Malawi and Zambia.

Tanzania had submitted applications in 2011 and 2015 for consideration by the SADC CMT for derogation or waiver from its trade liberalization commitment for sugar in terms of the provisions of the SADC Trade Protocol in view of the problems its industry is facing. In 2016, at this Special Meeting of the CMT, Tanzania presented an application to extend the timeframe for the derogation for 3 years. However, the Committee approved the extension for only one year and on condition that preferences be given to SADC supplies and that world supplies be subjected to 100 percent as normally expected.

Ideally, Malawi and other major exporters in the region, especially Zambia and Swaziland, would have preferred a Tariff Rate Quota (TRQ) arrangement for access into Tanzania market. The TRQ arrangement was thought to be the best way, on one hand, to effectively manage the imports into Tanzania and therefore to help that country’s domestic industry and, on the other, to promote intra-SADC trade.

Kasaila, who was delegated by President Prof. Arthur Peter Mutharika to represent him at the Summit, was joined in the CMT negotiations by Malawi’s envoy to Mozambique Frank Viyazhi and his counterpart Annie Kumwenda who oversees respectively SADC and Botswana as well as technical officers Mufwa Munthali and Silas Sindi from the Ministry of Trade, Industry and Tourism.