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Free trade zones in Nigeria

New security outfit will increase investments in free zones – NEPZA

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The Nigeria Export Processing Zones Authority (NEPZA) says the newly inaugurated Special Economic Zone Security (SEZSEC) outfit will cause an upsurge of investments in the zones.

The Managing Director of NEPZA, Prof. Adesoji Adesugba, said this at the passing-out ceremony of 40 officers of the SEZSEC, on Saturday in Lagos.

The one-month training, was carried out in collaboration with the Department of State Services (DSS).

According to Adesugba, the outfit is borne out of the need to further strengthen the existing security architecture and provide adequate security to lives and properties in the free zones.

Adesugba, who was represented by Dr Oyesola Oyekunle, Director Finance and Accounts, said the authority suffered its share of the poor security situation when hoodlums invaded the Tinapa Free Zone in Calabar and a lot of investments were lost.

He said the outfit would create a safe and secure environment for the zones’ employees, facilities, contracted service providers, members of the public, the special economic zones and NEPZA resources.

“It is no gainsaying that this singular action will cause an upsurge of investment into the zones as investors look to invest in places where their investment will be secured,” he said.

Adesugba, however, said the outfit was not created to dislodge the existing zones’ security structure rather, it was established to reinforce the collaborative force of sister security services.

Mr Niyi Adebayo, Minister of Industry, Trade and Investment, lauded the creation of the SEZSEC unit, adding that the decision was apt to secure and keep the special economic zone (SEZ) safe and give confidence to investors.

Adebayo, represented by Babagana Alkali, Director Policy Planning, Research and Statistics, tasked NEPZA to make the zones more attractive to investors, provide high quality infrastructure and be a one-stop shop that would positively impact the economy.

He said the Federal Government offered a number of economic incentives that would attract foreign companies to operate in the SEZs.

These incentives included full tax holidays for three consecutive years; duty free importation; 100 per cent repatriation of capital, profits and dividends; exemption from all import and export licences; land is rent free for the first six months for any construction project undertaken in the zone.

Mr Salami Ajege, Commandant, States Services Academy (SSA), said the security outfit was expected to gather intelligence that would help combat economic sabotage, boost trade and other related activities wherever they were deployed.

Ajege said to achieve the mandate, the unit would need to ensure professionalism in the discharge of the duties and responsibilities.

He urged them to be smart, diligent, determined to succeed, discreet with information and be ever ready to confront challenges they will be faced with in discharging their duties.

“For no reason whatsoever should you become vulnerable to be used against national interest or national security,” he said.

Also, the Comptroller-General of Nigeria Customs Service, retired Col. Hameed Ali, urged the team to learn the rules that guided other government organisations they would work with to avoid stepping on each others toes.

Ali, who was represented by Kathleen Ekekezie, Deputy Comptroller-General in-charge of Excise, Free Trade Zones and Industrial Incentives Department, cautioned the personnel against going on a “one-man patrol” to avoid running into trouble.

The awards were given to the graduates for outstanding performance in Academics, Parade and Unarmed Combat.

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ASK THE EXPERT – 2: What is Private zones

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ASK THE EXPERT – 2: What is Private zones
By
Chris Ndibe
MD/CEO Carlcon Group & Free Zone Expert
Last week, Sept. 8, 2021, we took on the explanation and the esprit of public Zone in the ownership structure of Free Zones. This time, I am taking up the explanation of private zones.
PRIVATE ZONES
A zone is Private when it is owned by a private company, obtaining an operational license from government to operate in a place of choice. All terms and conditions will be adhered to.
Those espousing for the private zones advance the following reasons and conviction for the Private Free Zones development.
In today’s world, we are heading towards a global economy where one must be competitive and efficient in order to survive. The Private sector which is profit oriented strive for competitiveness and efficiency in their business endeavor.
Therefore, Private Free Zone budgets and expenses are strictly monitored and controlled due to the competitive and the profit oriented nature of their structure.
Private Zones are developed according to long term plans. There is no need to worry about change in administration, or the political party in power in host country. They are innovative and flexible because of pressure exerted by the owner to obtain maximum benefit from the available resources. For instance, loans from banks must be repaid, therefore the best administrator is sort for.
In case of a dispute, a multinational company established in a Private Zone has a better chance to come up with a fair settlement because there’s a final arbiter (government), instead of having to sue the government of host country. We were all privy to Samsung vs. LADOL saga, where government became the final arbiter.
 A client company does not have to deal with any corruption or bureaucracy. There is no political conflict of interest while negotiating with any labour union.
 There is no conflict of interest with a Private Free Zone if the government wishes to negotiate Free Trade Agreement with other countries.
 There is no government direct competition with the Private sector. On the contrary, there will be collaborations with government and private sectors. The privatization of existing Public Free Zones around the world would generate extra income for the government. The income could be invested in public infrastructure and social development without losing jobs or foreign exchange income.
BUTTRESSING EFFECTIVENESS AND EFFICIENCY
Private Free Zones operators only accept business risk when government does its part. They need to acquire multi-disciplinary skills, combining real estate know-how, industrial estate management, marketing, market research, personnel and training. These will make for good management of a zone. To ensure a profitable Private Free Zone operation, the charges made to investors to cover factory rent and services rendered, have to be low enough to be acceptable cost input to the export price calculations to enable their product penetrate external market.
All over the world, main source of loans capital are inclining towards favouring the private development of Free Zones and the conversion of some existing Public Free Zones to private management. Four main factors operating here are:
i. Government no longer have to find and finance high caliber staff to manage Free Zones, as well as the expenses of repairs, maintenance and funding promotional campaigns as is being experienced with Kano, Calabar Free Trade and Tinapa.
ii. Free Zones are now perceived to be sound investments where the return on capital invested is reasonable, and backed by government incentives.
iii. The onus on government to raise and repay loans for Free Zones development is reduced or not at all.
iv. Any criticism of a Free Zones operations are reflected on to the private sector, who are the main recipients of benefits from the provision of infrastructure from the tax-payers’ money.
The Private sectors are taking the lead in developing and managing successful Free Zones in the world and in Nigeria. The key factor behind the rise of Private Zones in Nigeria and many countries in the world is the perception that Private Zones are more successful than most Public Zones. This is attributed to general lack of funding for the government zones and apparent bureaucracy that creeps in. Banks now feel that private development and management of Free Zones is to be encouraged on the basis that development costs are fully recoverable. This is not fully assured in the case of public zones.
Governments on their part have to find and attract Free Zones operators or developers, provide incentives and in some cases, arrange for guarantees. Government investment in infrastructure serves multiple purposes in development of trade, industry, tourism and wellbeing of the average citizen, which in the end benefits the operations of Free Zones.
What is often overlooked however is that before the private sector can be attracted to enter the Free Zone business as an operator or developer, the government has to have established confidence in the international business community. The trend now is using the private sector resources, expertise, management and risk taking for development and growth of Free Zone. This was the idea behind NSEZCO but failed because of it’s design and lack of sincerity on the part of the line ministry.
The optimum roles of the public and private sector in creating and operating successful Free Zones involve a balancing between public services infrastructure incentives and flexibility and marketing efficiency.
Both public and private sector interests will continue to be important in the development of Free Trade Zones. How much of the task should be public or private depends on the country’s culture, objectives, situation on ground and market prospects.

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NEPZA on new template for registration of free zones

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By Chris Ndibe

The Nigeria Export Processing Zones (NEPZA) would with effect from January 1, 2021, commence operation on a new template for Free Zone registration in line with Nigeria’s focus on ease of doing business.

According to the Prof. Adesoji Adesugba, the Managing Director of NEPZA,

the new registration process will make the process of registering a Free Zone company more efficient and attractive for potential investors without compromising the integrity of the system.

“There are two plans outlined, one is to be adopted immediately and the other to be implemented in the next 6-12 months,’’ Mr Martins Odeh,  

Head, Corporate Communications, NEPZA, quoted Adesugba as saying.

The steps leading to successful registration listed include NEPZA allowing the official submission of registration documents by clear scanned signed copied to emails of the Zone Administrators.

This email should then be forwarded to the team at NEPZA HQ instantaneously for processing and the documents should be processed, and a virtual screening meeting scheduled within 24hours.

“ Once the application is approved, Certified True Copies (CTC) of the scanned signed documents and the NEPZA registration certificate should be sent to the Zone Administrator on behalf of the newly registered Enterprise.

“The Zone Manager will then submit the original documents to the Zone Administrator and collect the CTC documents and NEPZA Registration certificate on behalf of the new Enterprise.’’

Adesugba said that the Authority would in long term have a system driven process and explained that a company registration portal where all Free Zones could download the NEPZA forms (with serial numbers) and submit documents for company registration.

According to him, the portal will allow uploads of proof of registration fee payments made by remittal to the Treasury Single Account (TSA) and scheduling of virtual screening meetings.

“It is imperative that we continue to make timely process improvements such as this, in order to generate goodwill for the Authority and position our Free Zones as an attractive investment location to a wide range of investors,’’Adesugba said.

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AfDB praises self at Meeting of the Africa Economic Zones Organization

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By Tanko Mohammed

The African Development Bank (AfDB) has been very responsive in supporting countries to address the pandemic in Africa, the President, Dr Akinwunmi Adesina said at te 5th annual meeting of Africa Economic Zones Organisations.

He said: “I wish to thank the Africa Economic Zones Organization for inviting me to speak to you at your fifth Annual Meeting.

You are meeting at a time of great challenges with the COVID-19 pandemic. The pandemic has claimed too many lives and slowed down global growth, trade and investments.

The African Development Bank  has been very responsive in supporting countries to address the pandemic in Africa. The Bank launched a $10 billion crisis response facility to support countries’ immediate needs for liquidity.

The Bank also launched a $3 billion fight COVID-19 social bond on the global capital markets, the largest US Dollar denominated social bond ever in world history.

This is all part of our mission to ensure that Africa develops faster and improves the quality of life of its people.

Africa has had impressive economic growth over the past one decade, including 6 of the ten fastest growing economies in the world. While the pandemic has set us back now, with a decade of growth lost, I am confident that Africa will bounce back.

The same fundamentals that drove growth are still there. At the core of this must be the growth of the private sector, and the deployment of supportive environments for their operations.

Globally, Special Economic Zones have powered the economic growth of several countries. Their numbers have exploded from less than 200 in the 1980s to 5,000 today.

Collectively, they have contributed exports worth $3.5 trillion, roughly 20% of global trade in goods.

In Africa, special economic zones are operating in 38 countries, accounting for annual trade turnover of $680 million.

The Special Economic Zones have not been as successful in Africa compared to Asia and other parts of the world, for several reasons.

First, is the more limited infrastructure, with Africa’s infrastructure financing gap estimated to be $64-108 billion annually.

Second, is the weaker institutional environment and coordination challenges.

Third, is the limited access to financing to develop well-integrated value chains.

Fourth, the primary focus of the Special Economic Zones on exports alone has weakened the linkages with the wider local economy, with very limited transfer of skills, technology and market access. Essentially, they often create islands of wealth in the midst of wider poverty.

The African Development Bank is investing heavily in closing the infrastructure gap. This includes energy, roads, ports, ICT and transport corridors.

The Bank is also supporting the Africa Exchange Linkage project, to integrate stock exchanges across Africa. This will create an integrated capital market with capitalization in excess of $1 trillion, representing 90% of Africa’s total equity market. This will increase liquidity and enable seamless trading platforms across the continent.

The goal of our efforts is to support the integration of Africa’s markets.

The African Continental Free Trade Area, which will become operational in January 2021, now provides a market with 1.3 billion people and a combined GDP of $3.4 trillion. It will be the largest free trade zone in the world.

So, the times have changed, and opportunities have changed for the private sector and for the Africa Economic Zones Organization.

While Special Economic Zones have been primarily focused on exports, they now need to sharply focus on the regional markets in Africa.

Special Economic Zones should allow Africa to now develop its manufacturing capacity, competitive regional value chains, for exports into the African Continental Free Trade Area, and to expand their integration into global value chains.

Today, let me highlight one important opportunity: agriculture.

Agriculture, food and agribusiness is the sector with the largest potential wealth impact for Africa.

The size of the food and agriculture market is estimated to rise to over a trillion dollars by 2030.

Tapping into this massive market requires a structural approach to develop better integrated food and agriculture value chains.

That’s why the African Development Bank is supporting the development of Special Agro-industrial Processing Zones (SAPZs).

These zones will focus on agro-industrialization, by investing massively in integrated infrastructure, in areas of high potential agricultural value chains; including processing, marketing and logistics.

The SAPZs will help to unlock vast economic and trade opportunities from value- added agriculture in Africa.

Five SAPZs are already in implementation, including Ethiopia’s integrated agro-industrial parks, Togo’s Agro-food processing zones, and in Senegal and Guinea.

Several more are planned.

Regional SAPZs will also consolidate integrated infrastructure and agricultural processing and food manufacturing companies around regional transport corridors.

This will allow for economies of scale by taking advantage of regional infrastructure, transport and logistics, for lowering costs and enhancing competitiveness.

The African Development Bank will continue to help accelerate private sector investments into Africa.

The Bank-supported Africa Investment Forum has helped to attract $78.1 billion of investment interests into Africa, in just two years.

One of these investments is the $26 billion Mozambique Liquefied Natural Gas project, which will make Mozambique the world’s third largest exporter of liquefied natural gas.

Our financing for the Boke Mine, Rail and Port in Guinea, will improve Guinea’s position in global markets and move it towards processing bauxites into aluminum.

Our $600 million co-financing for Ghana’s Cocoa Board will allow it to add greater value to its cocoa and attract better prices for its farmers, globally.

That’s the Africa we need and the Africa we want: one that is beaming with investments.

One that is processing and adding value to all of what it produces. One that has competitive industrial manufacturing capacities, able to create wealth, prosperity and quality jobs for its people.

As you meet today, think Africa, think a new Africa!

You all as members of the Africa Economic Zones Organization will play a very important role in making the new Africa happen.

The African Development Bank commits to specifically work with you to expand your investments, and specially to help develop the Special Agro-industrial Processing Zones (SAPZs) across Africa.

Working together we will help Africa to grow back, better, bolder and with greater prosperity.

I wish you all a very successful Forum!

Thank you all.

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Minister defies odds to crunch talks on transfer of Oil and Gas Free Trade Zones

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By Yunusa Sariki

In spite of opposition, the Minister of  Industry, Trade and Investment, Mr Niyi Adebayo, has fixed July 15, 2020, to commence talks and modalities for the handover of the five `Oil and Gas’ Free Trade Zones under the control of the Nigeria Export Processing Zones (NEPZA).

Adebayo is kick starting the process in spite of a pending suit in the Federal High Court, Lagos; National Assembly’s resolution; and stakeholders’ caution against transfer.

Some ‘Oil and Gas’ Free Zones seeking judicial intervention in the alleged attempt by Oil and Gas Export Free Zone Authority, OGEFZA, to regulate the ‘oil and gas’ free zones operations had described the plan as “contemptuous’’ having dragged OGEFZA, the ministry and the Attorney-General of the Federation (AGF) to court in respect of the planned deal.

The plaintiffs are seeking to know whether by the clear provisions of the Nigeria Export Processing Zone Act, Cap No. 107, Laws of the Federation of Nigeria 2004, should be regulated by the Nigeria Export Processing Zones Authority (NEPZA) being the Authority vested with the administration of the Authority and management of all the Export Processing Zones.

The contention is also that the zone purported revised law by the National Assembly was false as it was not passed by the 8th assembly before their tenure came to a close and has remained so.

  The ministry in a letter dated July 7 and signed by Mr S.A Audu, Director Commodities and Export Department, on behalf of the minister, had directed the five ‘oil and gas’ free zones to unfailingly appear at the ministry on July 15 to commence discussion on the lingering misunderstanding concerning the regulation of the free zone areas.

The letter had identified the interpretation of the provisions of the Nigeria Export Processing Zones Authority Act Cap 107, LFN 2010 and the Oil/Gas Export Free Zone Act Cap 5, LFN as the contentious issue to be re-opened.

This development has been criticized by a cross section of stakeholders who spoke on the condition of anonymity on July 10, 2020 in Abuja.

The stakeholders described the continuous disregard of the rule of law by the minister as a setback for President Muhammadu Buhari’s government that is passionate on repositioning the country’s justice system.

They also said Adebayo was not fair to Prof. Adesoji Adesugba, the new Managing Director of NEPZA, who assumed office on July 1 after his appointment was approved on June 26.

“The question is why now, when the new Managing Director of NEPZA is yet to settle down and properly get briefed on the challenges and prospects of the agency.

“The ministry should see this as a total distraction on someone who is just taking an important government agency in the ministry. This act of the ministry to the Prof. Adesugba amounts to attempting to service a plane 15 mins after it take off.”

Furthermore, it is an attempt to ambush the new MD into signing and transferring the 5 targeted ‘Oil & Gas’ Free Zones after failing to intimidate and railroad the immediate past Acting MD of the Authority, Mr. Bitrus Dawuk to do their biddings.

“Meanwhile, the Senate had earlier kicked against the acclaimed interpretation to Onne Oil/Gas Free Zone Authority Act 1996 that gave impetus to the agency current contemplation to take over some free zones approved and managed by NEPZA.

“The Senate Committee on Industry, Trade and Investment had described the purported interpretation given to the OGEFZA Act by two former Attorney General of the Federation as “unjustifiable’’ and not in line with actual intention of the law. The stakeholders said.

The senate committee pointed out that nothing meaningful could be achieved in this direction if the OGEFZA’s Act was not amended, adding that the minister’s effort was in futility.

“The reawakening of this issue now is of serious concern to stakeholders. The ministry should be more concerned with the template of the new MD of NEPZA on ways of growing the free zone scheme. Prof. Adesugba should remain circumspect and remain resolute by not allowing himself to be used to achieve this inordinate pursuit,’’ they also said.

The stakeholders are of the view that the ministry should rather be interested in redefining the nation’s free zone scheme bedevilled with lots of challenges instead of fanning the ember of hate and confusion between two sister agencies.

“The renewal of the saga of transferring the five Oil and Gas zones to OGEFZA by the minister is totally against the growth of the scheme and the attention of President Muhammadu Buhari must be quickly brought to this,’’ a stakeholder said.

 “The stakeholders are wondering if there is something the ministry is seeing in this transfer of zones which operators of the affected zones that have consistently refused the planned action are not seeing.

“There must be more than meets the eye on this matter. But it beholds on the ministry to come out straight to explain to Nigerians why the hastiness of interpretation of 2008 & 2014, when the Federal Government had given directive for the two agencies to be merged.

“As a matter of fact, the agenda of the proposed meeting is before several Federal High Courts in Lagos and we are waiting to see if the President Buhari would continue to wait and allow his lieutenants to desecrate the justice system freely,’’ another stakeholder said.

Further questions asked by stakeholders include,  if the legal opinion from the Attorney General office can be referred to as the Law.

Can the opinion of the Attorney General and Minister of Justice supersede the decision of the Federal Executive Council EC(2002)/173 issued in the year 2002 and reiterated in 2006?

Furthermore, has the Federal Executive Council at any time reversed its earlier resolution of 2002? Does the Executive arm of Government possess the power to unilaterally alter the law to change the name of an agency created by an Act of the National Assembly without going back to the National Assembly to effect this?

The free zones the agency is fighting to assume control of are Ladol Free Trade Zone Lagos, Dangote Free Trade Zone Lagos, Olokola Free Trade Zone Ogun, and Tomaro Free Trade Zone, Lagos.

Sen. Ade Francis Fadahunsi, Acting Chairman of the Senate Committee, on Trade and Investment had led Sen. Nakudu Sabo Mohammed and Sen. Yusuf. A. Yusuf, to conduct hearing session with top management of OGEFZA led by its Managing Director, Umana Umana on June 18.

During the session, Fadahunsi, while giving the committee’s resolutions, said nothing meaningful could be achieved from OGEFZA’s struggle to take over free zones being regulated and managed by NEPZA if the OGEFZA’s Act of 1996 was not amended.

“The legal interpretations given by the Office of the Attorney General to Sections 5 (2) and 25 of the OGEFZA Act 8 of 1996 which necessitates this long struggle for a take-over of some free zones are not explicit.

The agency can only genuinely move to claim those zones if their Act and that of NEPZA, Act 63 of 1992 were both amended.

“We are, however, here to make peace and to ensure that both Authorities are well positioned to perform their duties for the benefit of the country.

“So, you must ensure to expedite your action in bringing an Executive Bill so that we can commence the process of amending the Act,’’ Fadahunsi said.

He further explained that it was incumbent on the Ministry of Industry, Trade and Investment to step up initiative to bring an Executive Bill for the amendment of the Act if it felt strongly about the need to expand OGEFZA’s mandate.

Earlier, Umana had tried without result to convince the panel to be assuaged by his argument, as according to him, the OGEFZA Act had placed limitation on NEPZA’s function to only non-oil sector.

Umana also explained that: “I will however, be fair to admit that both OGEFZA and NEPZA Acts are obsolete and required speedy amendments. I agree that the current OGEFZA Act is not explicit.’’

In that meeting, Fadahunsi said the committee was intervening to end decades of the needless squabble between the two agencies.

Fadahunsi also said: “We will apply justice and objectivity in our decision to end the controversy which has not served the overall interest of our national economy’’.

The above position was recently re-echoed by Chief Denise Aghanya, Executive Secretary of Anti-Corruption Data Research Initiative, ARDI, who insisted that the ministry must allow President Muhammadu Buhari’s directive on the implementation of the Steve Oransanye’s Report to be effected rather than trying to bend the goal post.

Aghanya’s position was contained in a letter to the National Assembly dated June 27 which was also copied the ministry, NEPZA and OGEFZA respectively.

For U.S. to Stay in WTO, China May Have to Leave

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Instead of unilateral tariffs, the U.S. and its allies could use the World Trade Organization to force China to alter its trade-distorting behavior—or leave

President Trump and Chinese President Xi Jinping shake hands in Beijing in November 2017. The U.S. and China are in an intensifying trade fight.
Add captionPresident Trump and Chinese President Xi Jinping shake hands in Beijing in November 2017. The U.S. and China are in an intensifying trade fight. Photo: Qilai Shen

The intensifying trade fight
between the U.S. and China didn’t come out of the blue. American
frustration has long been building over China’s failure to live up to
its commitments when it joined the World Trade Organization in 2001.
But President Trump’s unilateral tariffs
risk a Pyrrhic victory that damages global trading rules that have
broadly served U.S. interests. There may be a more effective solution:
threaten China with expulsion from the WTO.
Calling this the nuclear option doesn’t really do it justice
since the nuclear weapons don’t even exist. The WTO lacks a formal
mechanism to throw out a member. But its founding charter, the General
Agreement on Tariffs and Trade, includes a section, Article XXIII, that
can achieve the same thing. It allows a case to be brought against a
member for behavior that doesn’t specifically violate the treaty but
“nullifies or impairs” the benefits every other country expects to
derive from the WTO.
“China’s economy is structured differently from any other major
economy…in ways that were not anticipated by WTO negotiators,” Jennifer
Hillman, a Georgetown University law professor told Congress’s U.S.-China Economic and Security Review Commission in June.
WTO rules don’t deal well with the extensive overlap between
China’s government, ruling Communist party and companies. Article XXIII,
she said, was designed “exactly for this type of situation.”
China is more open and market oriented today than before it joined the WTO. It has generally adhered to the letter of WTO decisions, including when it loses cases there. And it argues much criticism aimed at it is unfounded. For example, no formal laws force foreign companies to transfer technology to Chinese firms, it says.
But as Ms. Hillman, a former member of the WTO’s top
dispute-settlement panel, shows, that misses the many ways China
violates the commitments it undertook when it joined the WTO. In the
1994 Marrakesh declaration, which led to the WTO’s creation, members
agreed to a trading system based on “open, market-oriented policies.”
Yet market forces in China are retreating as the state expands.
Foreign companies report they are routinely compelled to
transfer technology to Chinese companies to do business there, in
violation of Beijing’s commitments. Ms. Hillman notes that even
unwritten measures can be challenged at the WTO.
China’s discriminatory licensing treatment and its failure to
better police the theft of foreign intellectual property both violate
its obligations under the WTO’s side agreement on intellectual property.
China, like all WTO members, is supposed to publish all of its
subsidies so that others can respond to them. It doesn’t, because many
take the form of low-cost loans, raw materials or other inputs to or
from state-owned enterprises.
China isn’t sued more often for such transgressions, Ms.
Hillman says, because such cases can be hard to win. Foreign companies
are reluctant to provide evidence because they see foreign competitors
as intertwined with the Chinese government, which can retaliate, for
example by blocking their expansion. Many countries won’t bring cases
against China on their own for the same reason, says Chad Bown, of the
Peterson Institute for International Economics. No such fear exists
about suing the U.S.
Ms. Hillman says this is why other countries should bring a
“big, bold” case based under Article XXIII; by addressing China’s
systemic violations, such a case would depend less on proving smaller,
specific violations.
If the U.S., European Union, Japan, Canada, Australia, Mexico
and South Korea brought the case jointly and won, China would either
have to change its policies, or face WTO-sanctioned penalties on almost
all of its exports. Ms. Hillman goes further: The findings could be used
to amend the WTO charter to explicitly prohibit the offending policies.
If China couldn’t abide by amendments, it would effectively withdraw
from the WTO.
Ordinarily the WTO acts by consensus, so China could just veto
the amendments. But Ms. Hillman notes that if consensus can’t be
reached, the WTO allows amendments with a supermajority of members.
All of this is risky and unprecedented; only a handful of WTO
cases have been brought under Article XXIII. (Ms. Hillman says they were
much narrower and not relevant to the China situation.) No country has
left the WTO, much less been expelled.
Putting together a case would take a long time and require the
U.S. to work with allies it has alienated with tariffs. The Trump
administration has little love for the WTO and has reportedly weighed
withdrawal, while blocking appointments to its dispute settlement body.
Yet some administration officials are willing to entertain
this strategy. Does China “want to be a part of the WTO and just behave
like everybody else, or don’t they?” Kevin Hassett, chairman of the
White House Council of Economic Advisers, said on Fox Business Network
last week. “And if they don’t, then we, the community of nations, are we
going to let them stay in the WTO?” Before he became Mr. Trump’s trade
ambassador, Robert Lighthizer proposed bringing a case against China
under Article XXIII.
Japanese and EU trade officials are meeting with their
American counterparts in Washington Friday to discuss China. They
already have their own reasons for wanting China to change, but now they
have another: forcing China to act like it belongs in the WTO may be
necessary to keep the U.S. from leaving.


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Zimbabwe: Government Grants Special Economic Zone Status to Manicaland

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Mutare —
President Emmerson Mnangagwa said government will soon grant Manicaland a
Special Economic Zone (SEZ) status.
Addressing
a rally at Sakubva stadium in the eastern border city on Saturday, Mnangagwa
said Manicaland will fall under SEZs for the purposes of exportation of goods
to Beira from Mutare.
Manicaland
province is rich in natural resources such as gold, diamonds and timber and has
got a good climate for horticulture.
“In
our economic plans, Manicaland will be granted a status of Special Economic
Zone for the purpose of exportation of our commodities from this area to port
of Beira,” he said.
He said
the status will give the province employment opportunities, technology and
skills importation.
“We
have seen it fit to grant you that status as it will create employment
opportunities and skills and technology importation for the region,” said
Mnangagwa.
The
special economic zones idea was promulgated into law in October 2016, largely
to attract foreign direct investment (FDI), generate employment and create
employment.
The main
motivation for designing SEZ is to attract greater FDI inflows, create jobs and
increase exports from the host country.
According
to economists, SEZs are more successful in national economies with adequate
infrastructure, in particular, transport and energy infrastructure.
The SEZ
are also being created to restore the economy’s capacity to produce goods and
services competitively.
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EXPOUNDING THE DEFINITION OF FREE TRADE ZONE.

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Calabar Free Zone in Calabar, Nigeria

Before we start delving into other areas of
important facts on Free Trade Zone, like linking the Free Trade Zones/ Special
Economic Zones to local industries, and critical analysis of the ecosystem of
the scheme, Let us further expound the definition of Free Zone for the benefit
of other significant publics that may not be well knowledgeable about the
scheme but have part to play in the development and growth of the scheme in
Africa.

FREE ZONES have existed for several centuries. They
were established to encourage centre pot trade, mostly in the form of city wide
zones located on international trade routes. Examples cited by experts include:
Gibraltar (1704), Singapore (1819), Hong Kong (1848), Hamburg (1888), and
Copenhagen (1891).

The World Bank publication on Special Economic Zones
(2008) stated that the modern Free Zones are variants of these traditional,
commercial zones. The principles underlying the basic concept of a Free Zone
include:

·        
Geographically delimited area, usually
physically secured

·        
Single management/administration

·        
Eligibility for benefits based upon
physical location within the Zone

·        
Separate customs area (duty-free
benefits) and streamlined procedures.

The fundamental concept of a Zone is that it is an
alternative policy framework, developed by government, to promote policy
objectives of government. Sometimes this involves a specific geographical
region, often involves specific industry such as banking or insurance, or
companies with some common behavior such as export orientated, high technology
content.

Free Trade Zones are generally established within a
country, although there are few examples of cross border zones, where free
trade areas are established between countries.

The Free Zones of today are quite different from the
Free Zones of the past. Although they serve a largely similar purpose, they
have grown increasingly complex and are thus involved with an increasing volume
and variety of economic transactions. Contrary to the view of the Trade Bureaucrats
and Liberal Trade economists, the liberalization of trade has not eliminated
the need for Free Zones, but rather expanded their roles. As globalization
takes place the formation of Free Zones continues at an increasing rate (Robert
Haywood, 2000). It encourages export manufacturing.

As was stated in our first post and for matter of
emphasis, Free Zones are defined as “outside the customs territory” for the
purposes of the assessment of import duties and taxes. Free Zones typically
allow for duty-and tax-free imports of raw and intermediate materials and, in
many cases capital equipment. This is to lower the cost of production so as to
enable the product compete favourably at the international market.