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Trade agreements Malawi has signed

Trade agreements are contractual arrangements between countries governing their trade relationships. They are either bilateral or multilateral and are important because they eliminate trade barriers (e.g. tariffs, quotas or prohibitive standards). Thus, they lead to creation of new markets.

(I) Bilateral trade agreements

Malawi has five bilateral trade agreements. The key features of these bilateral trade agreements are highlighted below:

(1) Malawi-Zimbabwe Trade Agreement

Goods originated from either country are exported to the other on import duty free status basis. To enjoy the provision of this agreement, Malawian producers are required to apply to the Malawi Revenue Authority (MRA) which verifies the origin of the goods. To qualify the goods should be wholly produced in Malawi. Otherwise their domestic value addition should not be at least 25%. Moreover, the goods should be accompanied by a certificate of origin. The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) issues the certificate of origin.

(2) Malawi-Mozambique Trade Agreement

This agreement grants duty free access to goods originating from the two countries except those on the Exclusion List. Goods on the Exclusion List include sugar, beer, Coca-Cola and other branded soft drinks, manufactured tobacco, refined edible oil, dressed chicken, table eggs, unmanufactured tobacco, stationary, petroleum products, firearms, ammunition, and explosives. Since Mozambique is an important transit route for Malawi’s imports, this agreement also includes provisions for trade facilitation.

(3) Malawi-South Africa Trade Agreement

The Malawi-South Africa bilateral trade agreement was negotiated as part of the support programs by the Government of South Africa to aid the economic development of Malawi. Therefore, the agreement is non-reciprocal or asymmetrical. Malawi exports to South Africa enjoy duty-free treatment while imports from South Africa into Malawi are dutiable at the normal (Most Favoured Nation) rates applied to any other country.

South Africa is the major export market for Malawi in Africa accounting for over 35% of Malawi’s total exports. Major exports include tobacco, farm vegetables, rubber, oil seeds and fruit, clothing and iron. Imports include fertilizers, pharmaceutical products, dairy products, mineral fuels, machinery, glassware, stationery, chemical compounds, motor vehicle and industrial spares.

(4) Malawi-Botswana Trade Agreement 

Malawi and Botswana’s trade relations are regulated by the World Trade Organization (WTO) Agreement, Southern African Development Community (SADC) Trade Protocol and a Customs Agreement of 1956. The latter allows entry of goods grown, produced or manufactured in either country duty-free, except potable spirits and spirituous liquors. Malawi’s major exports to Botswana include tobacco, tea, timber, plywood/block board, textiles and garments and cotton lint. Malawi imports wheat flour, salt, soda ash, plastic products and pharmaceutical products from Botswana.

(5) Malawi-China Trade Agreement 

The Agreement allows duty free entry into China of Malawi's major exports such as tobacco, tea, sugar cane, coffee and legumes. Malawi’s trade volume with China hit US$100 million in 2012, a 400-percent jump from 2010.

(6) Malawi-Tanzania Trade Agreement 

Malawi and Tanzania trade relations are regulated by the World Trade Organization (WTO) Agreement and the Southern Africa Development Community (SADC) Protocol on Trade under the Most Favoured Nation Agreement. There is no Bilateral Trade Agreement between the two countries. However, Malawi and Tanzania established a Joint Permanent Commission of Cooperation (JPCC) in April, 1993 in Lilongwe, Malawi.

(II) Regional trade agreements

(1) Common Market for Eastern and Southern Africa (COMESA)

Malawi is part of the COMESA Free Trade Area (FTA), which was achieved on 31 October 2000. Eleven of COMESA's 21 Member States belong to the FTA. These, according to the COMESA website, include; Burundi, Djibouti, Kenya, Madagascar,  Mauritius, Rwanda, Sudan, Zambia and Zimbabwe. The FTA members eliminated their tariffs on COMESA originating products, in accordance with the tariff reduction schedule adopted in 1992. They are also working on the eventual elimination of quantitative restrictions and other non-tariff barriers.

(2) Southern African Development Community (SADC) Trade Protocol

The Southern African Development Community (SADC) Trade Protocol was signed in 1996 to promote intra-regional trade in goods and services through reduction and eventual removal of tariffs and non-tariff barriers in the region. It was also aimed at enhancing economic development, diversification, and industrialization of the region. SADC Member States are Botswana, Democratic Republic of Congo, Lesotho, Malawi, Namibia, Mauritius, Mozambique, Madagascar, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. A SADC Free Trade Area was established in January 2008. Malawi has not reached the minimum threshold of 85% trade liberalization which was agreed to be the minimum for the Free Trade Area. Meanwhile Malawi has liberalized 70% of her trade with SADC. Malawi is, therefore, part of the SADC FTA and is working on removing tariffs on the remaining products.

(III) Multilateral trade agreements

(1) World Trade Organization (WTO)

Malawi is a member of the World Trade Organization, a legal institution of the multilateral trading system promoting the negotiations for liberalisation of trade in goods and services through removal of barriers to trade. The organisation is also responsible for development of international trade rules and settlement of trade disputes. The WTO came into being on 1st January 1995 (After the General Agreement on Tariff and Trade-GATT 1947).

(2) European Union

Malawi is a party to the African Caribbean and Pacific (ACP) – European Union (EU) Partnership Agreement. Under the Agreement ACP countries enjoy duty-free market access to the European Union. Since its inception in the 1970s, the Agreement has been revised several times. The last revision was done in 2000 and a new agreement (Cotonou Agreement) was signed which introduced a requirement for ACP countries to offer reciprocal duty-free treatment to imports from the EU in line with the World Trade Organisation rules.

Since 2002, ACP countries have been negotiating the new trade arrangements with the EU known as Economic Partnership Agreements. The negotiations are being done in regional configurations. Malawi is negotiating for an EPA under the Eastern and Southern Africa (ESA) configuration which comprises Burundi, Comoros, Seychelles, DR Congo, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Seychelles, Rwanda Sudan, Uganda, Zambia and Zimbabwe. Meanwhile, Malawi is trading with the EU through the Everything But Arms a special arrangement for Least Developed Countries under the EU Generalised System of Preferences.

(3) African Growth and Opportunity Act (AGOA)

The African Growth and Opportunity Act (AGOA) is a United States Trade Act, enacted in May 2000 and renewed to 2025 enhances market access to the USA for qualifying Sub-Saharan African (SSA) countries. Qualification for AGOA preferences is based on a set of conditions contained in the AGOA legislation. To qualify and remain eligible for AGOA, each country must be working to improve its rule of law, human rights, and respect for core labour standards.

Malawi's major exports to the USA under AGOA include agricultural products, followed by textiles and apparel products.

For detailed information on trade agreement Malawi is a party to, visit www.malawitradeportal.gov.mw