Why Zimbabwe was not eligible for AGOA

Zimbabwe was not eligible under the African Growth and Opportunity Act which offered preferential trade to African exports to the United States because of its interventionism and lack of fundamental freedoms.

United States ambassador to Zimbabwe Christopher Dell listed some of the reasons why Zimbabwe had to remain ineligible in a cable dispatched on 24 February 2005.

Full cable:

Viewing cable 05HARARE312, ZIMBABWE STILL AGOA INELIGIBLE

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This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 HARARE 000312

SIPDIS

STATE FOR AF/S

USDOC FOR ROBERT TELCHIN

TREASURY FOR OREN WYCHE-SHAW

PASS USTR FLORIZELLE LISER

DEPT PLEASE PASS TO ALL AFRICAN DIPLOMATIC POSTS COLLECTIVE

ALSO PASS TO USAID FOR MARJORIE COPSON

E.O. 12958: N/A

TAGS: EFIN ETRD PGOV ECON EINV ZI

SUBJECT: ZIMBABWE STILL AGOA INELIGIBLE

REF: STATE 24616

¶1. Zimbabwe remains ineligible for African Growth and

Opportunity Act (AGOA) benefits. We submit the following

input for the President,s Section 106 report to Congress.

¶2. Market Economy/Economic Reform/Elimination of Barriers to

U.S. Trade: Since the late-1990s, the government has

approached the economy through broad interventionism, with

parastatals serving as monopolistic middlemen for products

such as gold, tobacco and grain. In 2004, the government

suggested that it also would create parastatals to supervise

the production and export of platinum and cut flowers,

although it has not yet taken action. The government,s

disastrous fast track land reform program has undercut

productivity while failing to address the social justice

concerns it was alleged to address. Much of the

redistributed land went to government insiders rather than

small landholders or agricultural workers, and the latter

were given virtually no assistance in making the farms

productive.

¶3. Market Economy/Economic Reform/Elimination of Barriers to

U.S. Trade (continued): The Reserve Bank of Zimbabwe (RBZ)

continues to maintain an artificially strong currency through

enforcement of an official exchange rate including highly

restrictive foreign currency laws. This has had distorting

effects on the economy, proving a disincentive for exporters

while providing the government with a means to favor some

importers over others. It has also furthered corruption

through rent-seeking activities on the part of insiders with

access to hard currency. It has also led to a vibrant

parallel currency market. There are many barriers to trade,

including high duties for importers and exchange requirements

for exporters. The government is paying only a small portion

of its international arrears, which now exceed $2 billion.

Due to exchange rate management, annual inflation dropped

from 623 to 133 percent, but indications in early 2005 are

that inflation is increasing again. The government made no

progress privatizing inefficient parastatals in 2003. Growth

remains negative and an estimated two-thirds of the

working-age population is unemployed.

¶3. Rule of Law/Political Pluralism/Anti-Corruption: The

ruling ZANU-PF party maintains its grip on power through

fraud and repression, including violence. The 2000

parliamentary elections and 2002 presidential elections were

neither free nor fair. Freedom of association continues to

be routinely abused. Parliamentary elections are scheduled

for March 31, 2005 and the government has crafted a legal

framework for the elections which gives it unfair influence

over the process. The government has also used the court

system to intimidate opponents, for instance unsuccessfully

trying the opposition,s leader on treason charges for

opposing the Mugabe regime. Over the past year, the

government has also removed Harare,s elected opposition

party mayor and several opposition council members and

appointed a commission to run the city. Freedom of speech

and press is also routinely abused. In 2004, the government

passed the Access to Information and Protection of Privacy

Act (AIPPA), which tightly restricts the activities of the

independent media. Police continue to harass journalists,

and the only non-government daily newspaper remains closed.

The opposition is normally denied access to state-media.

During the country,s high-profile land redistribution

program, the government ignored rule-of- law and due process.

Continued harassment has also made it increasingly difficult

for civil society groups to function and parliament recently

passed a law that, if signed by President Mugabe, could

deregister many non-governmental groups while making it

illegal for NGOs to accept foreign donations.

¶4. Poverty Reduction: The government maintains several

programs that provide food or basic services to the poor.

However, these have had minimal effect compared to the

general thrust of the government,s economic policy, which

has caused most Zimbabweans to grow progressively poorer over

the past six years. Though half the population faces serious

food insecurity, the government has used its monopoly on

grain importation to manipulate food availability for

political ends. Many Zimbabweans take home but a fraction of

their 1997 real wages. Income taxes kick in at a monthly

salary of $20. Electricity and fuel are heavily subsidized

but often difficult to come by. Controls have failed to keep

prices in check.

¶5. Labor/Child Labor/Human Rights: Despite official

recognition of worker rights, the government continues to

exert heavy pressure on labor unions, limiting their freedom

of association and right to organize. Unions have been

denied routine meetings and necessary consultations with

constituents under the Public Order and Security Act (POSA) .

Senior members of the Zimbabwe Congress of Trade Unions

(ZCTU) have been arrested on spurious charges, some of them

later reporting physical abuse while in police custody. The

government,s human rights record remained poor, and it

continued to commit serious abuses.   Security forces

committed at least one extrajudicial killing. Arbitrary

arrest and detention and lengthy pre-trial detention remained

problems. As detailed above, the government frequently

restricts fundamental freedoms.

DELL

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