Common Market for Eastern and Southern Africa (COMESA) Simplified Trade Regime (STR) is a trade arrangement which allows cross border traders in the COMESA region to enjoy duty free status when they import goods originating from member states.
Through COMESA STR, the COMESA regional bloc encourages “free trade” by extending the benefits of a free trade area between countries by abolishing duty on all goods produced locally and sold in members of these regional groupings.
STR overcomes problems in proving goods originate in a member country and therefore are not subject to duty. However, taxes become payable if the goods attract Excise Duty and Value Added Tax (VAT). STR is designed for small consignments that have a value of $1,000 or less.
Malawi launched COMESA STR with Zambia in May 2010 and with Zimbabwe in August 2012. Currently, the borders that are involved in STR transactions are Nyamapanda-Mwanza for Malawi – Zimbabwe and Mwami – Mchinji for Malawi and Zambia.
There are Common Lists of Products that are agreed between COMESA member states to be traded under the STR arrangement. In essence, there are agreed lists of products between Malawi and Zambia, Malawi and Zimbabwe and Zambia and Zimbabwe.
The list of eligible products includes some agricultural products, live animals, food products, furniture, stationery and other assorted items. Therefore traders enjoy duty free status on such goods originating from any of the three member states.
The proof of origin required at the border under COMESA STR is the agreed common list of products. This is unlike a normal commercial transaction, where the law requires that an exporter should obtain a certificate of origin to accompany his consignment in order to be exempted from the normal customs duties that might apply to the goods.
Some goods such as agriculture products obviously originate in one country. Other items, especially manufactured goods, may be made up of parts from other countries outside COMESA. There are special rules that determine whether a good can be considered to be of “local origin”, depending on what proportion of the material is imported or what percentage of the value added is local.
Malawian traders should ensure that goods under STR are worth $1000 or less and should be sold in either Zambia or Zimbabwe. They should also ensure that the goods appear on the STR List of Products for Zambia and Zimbabwe. If the goods do not appear on the list but are subject to duty free treatment under the Free Trade Agreement, traders should obtain a Certificate of Origin.
For agricultural produce, it is usually a requirement to obtain a sanitary and phyto-sanitary certificate from the offices of the Ministry of Agriculture, Ministry of Health or Malawi Bureau of Standards (MBS).