Mozambique and SADC Trade Performance
In June 2010, INE data for 2009 became available, permitting analysis of Mozambique’s performance in SADC and world markets. While SACU had completed tariff elimination for SADC partners in 2004, Mozambique’s other SADC partners were committed to begin reductions on sensitive products, mostly agricultural, in 2007 or 2008 and to complete implementation in 2012. Therefore Mozambique began to enjoy a margin of preference (MOP), the difference between the most-favored-nation (MFN) tariff and SADC tariff rates, on all products during 3 years of the 5-period of this analysis, 2005 to 2009. In 2008 SADC partners were committed to eliminating duties on all other nonsensitive products. Mozambique was committed to reduce tariffs applying to South Africa on nonsensitive products from 20 to 10 percent in 2007 and completing the reduction to free in 2008. On sensitive products, Mozambique’s first reduction from 20 percent to 15 percent was scheduled in 2009. In 2012 a reduction to 10 percent is scheduled, and duties will be eliminated in 2015. Completion of the Trade Protocol was believed to afford opportunities for new exports by SADC partners to each other. A 2008 review of SADC implementation found that Malawi, Zimbabwe, and Zambia had not had fully implemented offers. Malawi, in fact, had stopped implementing reductions in 2004 for revenue reasons. Zimbabwe is believed to be current in its implementation and Zambia has taken steps to catch up. Angola and DRC have not made tariff offers or reductions to SADC partners.
After four years of duty-free trade under the Protocol in the SACU market new Mozambican exporters should have emerged because of the significant margins of preference afforded qualified SADC suppliers. Implementation of the TDCA between the European Union and South Africa has resulted in reduced margins of preference. For example, SACU tariffs on clothing products to the EU in 2009, are 20 percent, cutting in half the once 40-point margin of preference between MFN and SADC rates that prevailed in 2004. During 2010 SADC countries under the EPA agreement between Southern African and the EU, including Mozambique, will begin reducing rates applying to EU suppliers, including immediate elimination of duties on many products reducing margins of preference between them vis a vis European suppliers.
In this paper we assess the performance of Mozambique’s exports to SADC countries, comparing it to the performance of exports to the rest of the world (ROW). Analysis is presented at a summary level (total exports, agricultural, energy, and industrial products) and identifies specific key commodities. Import performance is presented in the same manner. The effect of staged reductions by Mozambique and its SADC partners on exports to each other is discussed when relevant. The appearance of new export products and the disappearance of traditional products is also noted.
Mozambique’s trade with SADC partners is dominated by South Africa, which received more than 75 percent of exports to SADC and 92 percent of imports in 2009. With Malawi and Zimbabwe, the three SADC partners account for 97 percent of exports and 95 percent of imports from SADC.
The data used in this analysis is from INE. It is supplemented by UN COMTRADE data available on the International Trade Center’s Trade Map web site. COMTRADE data for many SADC partners is not available for 2009. Direct COMTRADE data from the ITC Trade Data Site is synonymous with INE data. Gaps in INE data (merchandise or destinations that are not identified) can be informed by COMTRADE partner data (Mirror). For example, INE does not include data on sugar and cotton exports, key commodities, for 2008, but data are available from partners. In other cases there is a big discrepancy between reported Mozambique exports and import data from destinations. For example, South Africa reports $118 million in natural gas imports from Mozambique in 2008 while Mozambique reports exports of $4 million to South Africa. If mirror data are used for these three products in 2008 unidentified products totaling nearly $200 million in the INE data are fully explained.
Another data caution must be mentioned. There is significant transit trade from third countries to neighboring SADC countries through Mozambican corridors, and vice versa. This trade does not represent exports from Mozambique, but re-exports. For example, reported wheat flour exports to Zimbabwe in 2009 are $17 million, $15 million higher than exports in any previous year, and are likely re-exports of food assistance to Zimbabwe from donor countries. Such data anomalies are raised throughout the paper. Finally INE does not report individual country destinations for all products, in some cases the destination or origination is simply reported as “other countries.” Therefore there will be slight differences between the summary tables and the totals based on analysis of trade between Mozambique, SADC, and the rest of the world (ROW). In agriculture, for example, trade with SADC and the ROW total $528 million in agricultural trade compared to the $531 million reported in the Table 2-2 summary of exports by type of product. Such differences are not material to the analysis.