World Trade Organization |
RESTRICTED |
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WT/TPR/S/183 7 May 2007 | |
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(07-1822) |
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Trade Policy Review Body |
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TRADE POLICY REVIEW Report by the Secretariat CENTRAL AFRICAN REPUBLIC |
This report, prepared for the first Trade Policy Review of Central African Republic, has been drawn up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from Central African Republic on its trade policies and practices. Any technical questions arising from this report may be addressed to Mr Jacques Degbelo (022 739 55 83). Document WT/TPR/G/183 contains the policy statement submitted by Central African Republic. |
Note: This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on the Central African Republic.
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SUMMARY OBSERVATIONS vii
(1) Economic Environment vii
(2) Trade and Investment Regimes viii
(3) Trade Policy Instruments viii
(4) Sectoral Policies ix
(5) Trade Policy and Trading Partners xi
(1) Main Features of the Economy 1
(3) Trade and Investment Performance 6
II. TRADE AND INVESTMENT REGIMES 10
(1) Overview 10
(2) Policy Objectives 12
(3) Trade Agreements and Arrangements 13
(i) The WTO 13
(ii) Regional agreements 14
(4) Investment 20
ANNEX II.1: TRADE-RELATED TECHNICAL ASSISTANCE 23
(1) Implementation of Agreements and Policy Formulation 23
(2) Supply-Side Constraints 24
(3) Integration of Trade in Development Strategies 25
III. trade policies and practices by measure 26
(2) Measures Directly Affecting Imports 26
(v) Prohibitions, quantitative restrictions and licensing 35
(vi) Standardization, accreditation and certification 36
(vii) Sanitary and phytosanitary (SPS) measures 36
(viii) Rules on packaging, marking and labelling 37
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(3) MEASURES DIRECTLY AFFECTING EXPORTS 37
(ii) Export duties and taxes 38
(iii) Prohibitions, quantitative restrictions, export controls and licences 39
(iv) Export subsidies, promotion and assistance 39
(4) Measures Affecting Production And Trade 39
(i) Protection of intellectual property rights 39
(iv) State trading, State-owned enterprises and privatization 44
IV. trade policy and practice by sector 47
(2) Agriculture and Related Activities 47
(i) Overview 47
(iv) Fishing and aquaculture 55
(v) Forestry 55
(3) Mining, Energy and Water 57
(ii) Petroleum products and natural gas 58
(iv) Water 60
(5) Services 62
(ii) Tourism 64
(iii) Telecommunications and postal services 65
REFERENCES 69
APPENDIX TABLES 73
GRAPHS
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I. ECONOMIC ENVIRONMENT
I.1 Structure of merchandise trade, 1995-2005 3
I.2 Direction of merchandise trade, 1995-2005 8
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Breakdown of MFN duties applied, 2006 31
III.2 Escalation of MFN duties applied, 2006 33
IV. TRADE POLICY AND PRACTICE BY SECTOR
IV.1 River traffic, 1980-2006 63
TABLES
I. ECONOMIC ENVIRONMENT
I.1 The
I.2 Main economic indicators, 1998-2006 4
I.3 Balance of payments, 1997-2006 7
II. TRADE AND INVESTMENT REGIMES
II.1 Principal trade-related laws and regulations, March 2007 11
II.2 Investment Charter: Benefits available for newly created manufacturing 21
or processing enterprises
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 MFN applied tariff structure, 2006 30
III.2 Summary of MFN tariff applied, 2006 32
III.3 Fines and terms of imprisonment under the Bangui Agreement (1977) 40
and its revision (1999)
III.4 Subjects and terms of protection under the Bangui Agreement (1977) 41
and its revision (1999)
III.5 Status of the
the intellectual property protection treaties administered by the WIPO, 2007
III.6 Enterprises with State participation, March 2007 45
IV. trade policy and practice by sector
IV.1 Production of food crops, 1993-1994 and 1998-2006 48
IV.2 Exports of Robusta green coffee, 2000-2005 50
IV.3 Production and export of timber, 2000-2005 56
IV.4 Electricity rates, March 2007 60
IV.5 Basic telecommunications indicators, 2002-2006 66
APPENDIX TABLES
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I. ECONOMIC ENVIRONMENT
AI.1 Structure of exports, 1995-2005 75
AI.2 Structure of imports, 1995-2005 77
AI.3 Destination of exports, 1995-2005 79
AI.4 Origin of imports, 1995-2005 80
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Tariffs by HS chapter, 2006 81
IV. TRADE POLICY AND PRACTICE BY SECTOR
AIV.1 Applied MFN tariffs by ISIC Rev.2 category, 2006 84
(1) Economic Environment
1. Several years after the military- political crisis that undermined the foundations of its economy as from 1996, the Central African Republic, a vast and sparsely populated land-locked country in the heart of Africa, has returned to economic growth (3.7 per cent in 2006 as compared to a yearly average of 0.6 per cent from 1998 to 2005). This economic recovery, helped along by a return to constitutional order in 2004 and the holding of elections in 2005, should continue in 2007 and 2008 with the macroeconomic stabilization programme and structural reforms. During 2007, the
2. On the demand side, consumption is currently sustained by more regular payment of wages and salaries to civil servants, who absorb all of fiscal revenue (excluding grants) – hence the recurring budget deficit. Private investment, which had dried up during the crisis, is recovering in leading sectors such as mobile telecommunications, mining and forestry. Public investment being extremely limited, a number of development partners are financing, to a certain extent, the upgrading of the country's roads and other infrastructure. In 2006, grants accounted for about one third of overall budgetary receipts. Thanks to the restrictive monetary policy of the Bank of Central African States (the central bank of the Central African Monetary Union, of which the Central African Republic is a member) it has been possible, overall, to contain inflation. However, it will take some time for the country to extricate itself from its disastrous economic and financial situation and fight against the alarming poverty in which its population lives. In 2005, per capita income stood at US$338, and according to the UNDP, the
3. The Central African Republic's economy is based essentially on subsistence farming (including livestock breeding, hunting, fishing, and forestry), which provides employment for about 75 per cent of the population and produces about 50 per cent of GDP. The mining and quarrying sector and the manufacturing sector account for only 7 per cent and 2 per cent of the GDP respectively. Services, including trade, transport and communications, account for approximately 32 per cent GDP. Among the supply-side constraints are the poor state of transport infrastructure, the non-availability of inputs such as electricity, and a financial system that mainly focuses on short-term credits, not to mention the higher costs connected with the country's land-locked situation.
4. According to official statistics (which are far from complete), the ratio of merchandise trade to GDP remained at 20 per cent in 2005. Raw diamonds and wood are the leading export products. Imports are more diversified, consisting mainly of petroleum products, foodstuffs and medicines, and materials and equipment. The European Union is the
(2) Trade and Investment Regimes
5. The Ministry in charge of trade is responsible for defining domestic and foreign trade policy. For the purposes of the trade negotiations, it is assisted by an interministerial structure. The Ministry in charge of industry is responsible for industrial investment policy, while investment policy in the forestry and mining subsectors is defined by the ministries responsible for those areas. The Ministry in charge of finance handles customs and government procurement matters. The private sector would like to be more closely associated in defining trade and investment policy.
6. The
7. The
8. The new Investment Charter of the
9. Within the framework of its PRSP, the
(3) Trade Policy Instruments
10. The
11. During the
12. Domestic taxes, such as value added tax (VAT) and excise duties on certain products, are levied on imports and local products. However, unlike imports, locally-produced non-alcoholic beverages are exempted from the excise duty of 10 per cent. Moreover, unlike local goods, in keeping with CEMAC regulations the taxable base for VAT on imports also includes the excise duty. Imports whose value is at least CFAF 500,000 are generally subject to pre-shipment inspection by the company BIVAC, the cost of which is charged to the importer (1 per cent of the f.o.b. value). The
13. Approximately 80 per cent of the goods going to the
14. Sugar imports are subject to licensing, with a 90 per cent share reserved exclusively for the national producer (SUCAF-RCA) until 2008. Coffee imports are allowed only once all the domestic output has been sold. The Central African Republic observes the provisions of international treaties on environment protection as well as international standards with respect to sanitary and phytosanitary measures.
15. The privatization programme, introduced in 1996, has resulted among other things in the opening up to competition of activities downstream of the hydrocarbons sector. Prices at the pump are administered, and taxes on the products concerned were reduced in 2006 in order to limit the impact of the increase in world prices on Central African consumers. Intellectual property is protected, inter alia by the revised
(4) Sectoral Policies
16. The
towards poverty reduction. Average tariff protection in the agricultural sector (ISIC (Rev.2) definition) is 23.2 per cent, well above the overall average of 18.2 per cent.
17. The forestry subsector has traditionally attracted foreign investors. Through export duties and various forestry royalties, it accounted for approximately one quarter of fiscal revenue (excluding grants) in 2006. A large portion of the forests of the south-west are under concession, and the authorities intend to extend the areas with forest management plans that meet sustainable management criteria beyond the 6.5 per cent level of 2005 in accordance with the International Tropical Timber Organization (ITTO). Under the Forestry Code of 1990, companies are obliged to process 60 per cent of the logs felled on the spot, but in practice only 48 per cent of the total volume was processed in 2005. The new draft Forestry Code (not yet enacted) would prohibit the exportation of logs. The profitability of the wood sector is considerably reduced by high road transport costs to
18. The mining sector is fast expanding following the adoption of a new mining code in 2004. The official trade in raw diamonds appears to operate according to the
19. High protection in the agricultural sector is not conducive to the development of the agri-food industries, since it pushes up production costs. In addition to the tariff structure, the high prices and shortages of
basic inputs stand in the way of the development of the manufacturing sector, which is still confined to producing basic products for the local market. Owing to their limited production capacity, none of the Central African enterprises appears to be taking advantage of the preferential access to neighbouring markets which is available for their products under the CEMAC's GPT. Average tariff protection of manufactured products is 18 per cent.
20. The absence or poor condition of basic infrastructure (including transport, fixed telephony, hotels) and above all the irregular electricity supply, even in the capital, Bangui, coupled with the high cost of related services, are among the major challenges to the country's development, including the development of trade and tourism (for which there is immense potential). The river network, once the main access route to the Atlantic Ocean from the
21. Teledensity has progressed considerably since the introduction of mobile telephony in the Central African Republic in 1996, but basic fixed telecommunication services remain unsatisfactory. The privatization of the traditional operator, the Société centrafricaine des télécommunications – SOCATEL (Central African Telecommunications Company), which currently has a monopoly of basic services, is under consideration. Banking and microfinance services are subject to the common banking regulations of the CEMAC. Banking institutions are chiefly involved in Treasury operations and loans to support import-export transactions; their involvement
in the financing of production activities is minimal. Microfinancing helps to meet the financing needs of craftsmen, farmers and small businessmen. With the exception of compulsory insurance for automobiles and construction sites, insurance services are not very developed.
(5) Trade policy and trading partners
22. The resumption of support from the international community should help to reinforce the incipient positive impact of the country's reconstruction efforts. For this to happen, order will have to be restored in the regions where insecurity still prevails and the different reforms (including structural reforms) aimed at reducing the numerous supply-side constraints will have to be pursued. The country's land-locked situation is in itself a natural barrier to trade and tends to push up costs. However, trade facilitation measures, including the streamlining of institutional structures and the various taxation systems (import and export) which add to the costs of the goods traded, could help to contain its effects.
23. Continuation of the different reforms should facilitate the country's access to the Heavily Indebted Poor Countries Initiative and provide debt relief which, in the long term, could securitize resources to support the
ongoing financing by foreign donors of the
rehabilitation of infrastructure and to implement other components of the poverty reduction strategy, for which the paper is currently being finalized. This report for the Central African Republic's first Trade Policy Review highlights certain areas in which trade policy could play a role in that strategy. With that in mind, the
24. These efforts should help the