International Economics Consulting Ltd (IEC), through its CEO, drafted two country-specific analysis of trade-related impact of LDC graduation for Zambia. The overall objective is to understand and assess the impact on market access, impact with regards to the compliance with WTO Agreements, including IP legislation, the Trade-Related Aspects of Intellectual Property Rights Agreement, Trade-Related Investment Measures, Agriculture, etc., and Impact on Development Cooperation.
Zambia is a mineral, resource-rich, Land-locked Least Developed Country (LLDC) located at the centre of Southern Africa. Zambia’s gross domestic product (GDP) has experienced a remarkable growth since the 2000s, moving from USD 3.6 trillion in 2000 to USD 19.3 trillion in 2020, equivalent to an average growth rate of 8.8 percent. This success was driven by an overall improvement in the macro-economic framework, debt relief, heavy investment in the social sectors, and a large increase in mining and agricultural production since 2004. Following 15 years of socio-economic development, Zambia was classified by the World Bank as a lower-middle-income country in 2011. The country met the LDC graduation criteria in 2021, and it will be considered for graduation at the next triennial review in 2024, provided that it continues to meet the criteria. Specifically, the country recorded an average Gross National Income (GNI) Per Capita of USD 1,411 (the minimum for graduation is USD 1,222) and Human Assets Index score of 67.1 (whilst the minimum for graduation is 66). The country remains economically vulnerable, with an index of 41.7, whilst the maximum for graduation is 32.
For Zambia, graduation will intrinsically represent losing access to preferences through LDC-specific schemes. Specifically, Zambia currently trades with some of its biggest trading partners through LDC-specific vehicles. In the case of Switzerland, Zambia’s biggest trading partner, the country is currently benefiting from duty-free market access. In the case of its exports to the EU, and in the event that Zambia does not sign the EU-ESA EPA, Zambia’s exports will lose duty free quota free treatment provided through the Everything-But-Arms initiative. Without an FTA with the EU, the country might be able to benefit from the EU’s GSP Plus scheme, provided that it fulfils a few conditions. Zambia will remain eligible for preferences under the US African Growth Opportunity Act (AGOA) as access is not dependent on LDC status. Additionally, Zambia is also eligible for preferential market access under the US’ GSP scheme, although its duty-free coverage is much lower than that of AGOA.
Whilst LDCs enjoy an expanded special and differential treatment (SDT) in comparison to other developing countries, LDC graduation is expected to have a limited impact on Zambia. Overall, upon graduation, Zambia will continue to enjoy the flexibilities it received during the establishment of its bound duties. As an LDC, Zambia was only expected to comply with the non-discriminatory principles contained in the TRIPS Agreement and benefit from a drugs patent waiver. Upon graduation, the aforementioned transitional arrangements will no longer be available to Zambia.
Zambia’s Ministry of National Development Planning is the focal institution for LDC graduation and is responsible for overseeing Zambia’s graduation process. Socio-economic transformation and national development constraints have been highlighted in the national planning documents, including Vision 2030 and 7NDP, underpinning the need to act in preparation for graduation. Zambia’s Trade policy post-graduation will need to prioritise the main sectors as defined in various plans and strategies.