Beholden to China: A deal that tied Zim in knots

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Umar Johnson

BY TATIRA ZWINOIRA
OUTSPOKEN American psychologist Umar Johnson, in an interview last year, claimed that China wanted to colonise Africa.

In an interview with American media house Acres of Diamonds Media, Johnson gave three main reasons why China wanted to colonise Africa.

He said the Asian giant wanted to reduce its large population of over 1,4 billion people by sending its unwanted excess to Africa.

Secondly, the highly impoverished nature of Africa offered Chinese investors cheap labour as most countries on the continent do not have a minimum wage or basic labour rights.

Lastly, the high number of human rights abuses in Africa had turned away most Western countries which have either reduced or shunned doing business with African nations despite the continent having most of the world’s natural resources.

Thus, most African countries are left in a desperate state, looking for fresh investment, leaving most willing to accept Chinese money without really scrutinising the nature of the investment.

These reasons can be seen in Zimbabwe, where rural communities are increasingly speaking out against Chinese businesses, with workers complaining about poor labour practices.

Unconfirmed data shows that Chinese investments now make up nearly 64,5% of Zimbabwe’s economy.

This figure was revealed by American think-tank, American Enterprise Institute, which said recently that investments and contracts with Zimbabwe reached US$11,64 billion last year, from only a few millions in 2005.

However, this number could be way higher if private deals were added.

The total Chinese investment is against a gross domestic product of US$18,05 billion at the end of 2020, according to the World Bank.

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While this may explain why Chinese firms get away with poor labour practices, one-sided investment deals and exploitation of communities, it raises the question: is there any legal backing to China’s strategy in Zimbabwe?

The answer is yes, in the form of a bilateral agreement between China and Zimbabwe signed on May 21, 1996, that came into force on March 1, 1998.

This article examines the second half of the bilateral treaty between China and Zimbabwe as it will show how Chinese businesses should conduct themselves in the African country.

The trade deal

Under Article 8 of the bilateral treaty, section 1 says any dispute between Zimbabwean and Chinese businesses must be settled diplomatically.

However, diplomatic settlements favour China since it has more global sway on the military, political and economic front compared to Zimbabwe, which has poor relations with the international community.

Zimbabwe-Emmerson-Mnangagwa-China-Xi-Jinping

Also, China holds important seats on international bodies and thus can decide what goes on relating to Zimbabwe, leaving the southern African country in a position of servitude.

Sections 2 and 3 of the article reads: “If a dispute cannot be settled within six months, it shall upon the request of either contracting party, be submitted to an ad hoc arbitral tribunal (hereinafter referred to as the tribunal). Such tribunal shall comprise three arbitrators. Within two months from the date on which either contracting party receives the written notice requesting for arbitration from the other contracting party, each contracting party shall appoint one arbitrator.

“Those two arbitrators shall, within a further two months, together select a third arbitrator who shall be a national of any other State which has diplomatic relations with both contracting parties. The third arbitrator shall be appointed by the two contracting parties as chairman of the arbitral tribunal.”

The treaty goes on to state in section 4: “If the tribunal has not been constituted within four months from the date of receipt of the written notice for arbitration, either contracting party may, in the absence of any other agreement, invite the president of the International Court of Justice to appoint the arbitrator(s) who has or have not yet been appointed.”

The tribunal is also given power to determine its own procedure with decisions reached by majority vote.

Each of the parties of the tribunal must bear the costs associated with the arbitration.

Dispute resolution

Article 9 section 1 states that disputes between Chinese and Zimbabwean parties must be settled amicably through negotiations.

“If a dispute involving the amount of compensation for expropriation cannot be settled within six months after resort to negotiations as provided for in paragraph 1 of this Article, it may be submitted at the request of either party to an ad hoc arbitral tribunal,” reads part of section 3.

It then lays out the way in which the tribunal shall operate in section 4.

“Such an arbitral tribunal shall be constituted for each individual case in the following way: each party to the dispute shall appoint an arbitrator, and these two shall select a national of any other State which has diplomatic relations with the two contracting parties as chairman.

“The first two arbitrators shall be appointed within two months of the written notice for arbitration by either party to the dispute to the other, and the chairman shall be selected within four months. If within the period specified above the tribunal has not been constituted, either party to the dispute may invite the secretary-general of the International Centre for Settlement of Investment Disputes to make the necessary appointments.”

Under this tribunal for compensation, like with disputes, sections 5 and 6 state that it shall determine its own procedures and decisions shall be reached by majority votes.

But, section 7 states that the tribunal shall adjudicate in accordance with the laws of the contracting party (China or Zimbabwe) to the dispute accepting the investment.

Section 8 states that costs to the tribunal shall be handled by both parties in arbitration.

Article 10 states which investments the bilateral treaty applies to: “This agreement shall apply to investments which were made prior to or after its entry into force by investors of either contracting party in accordance with the laws of the other contracting party in the territory of the other contracting party.”

Article 11 states there should be regular meetings between China and Zimbabwe in order to review the implementation of this agreement; exchange legal information and investment opportunities; resolve disputes arising out of investments; and forward proposals on promotion of investment.

Lastly, the regular meetings are to study other issues in connection with investments “where either contracting party requests consultation on any matters provided for in paragraph 1 of this Article, the other contracting party shall give prompt response and that the consultation be held alternately in Beijing and Harare.”

The bilateral treaty between China and Zimbabwe is enforced under Article 12. Under sections 1 and 2, under the article, it states: “This agreement shall enter into force on the first day of the following month after the date on which both contracting parties have notified each other in writing that their respective internal legal procedures have been fulfilled, and shall remain in force for a period of 10 years.

“This agreement shall continue in force if either contracting party fails to give a written notice to the other contracting party to terminate this agreements one year before the expiration provided for in paragraph 1 of this article.”

Difficult to terminate Chinese investments

Section 3 goes on to state that after the expiration of the initial 10-year period; either contracting party may at any time thereafter terminate this agreement by giving at least one year’s written notice to the other contracting party.

“With respect to investments made prior to the date of termination of this agreement, the provisions of Articles 1 to 11 shall continue to be effective for a further period of 10 years from such date of termination,” section 4 under this article reads.

As such, this makes it difficult for Zimbabwe to escape or terminate any investments with China as a lot of hurdles are involved.

As a result, once the government of Zimbabwe or business enters into a deal with China, they are essentially tying themselves to the Asian counterpart for years.

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˜This article first appeared in the Weekly Digest, an AMH digital publication