World Trade Organization |
RESTRICTED |
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WT/TPR/S/197 | |
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(08-0771) |
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Trade Policy Review Body |
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TRADE POLICY REVIEW Report by the Secretariat MADAGASCAR |
This report, prepared for the second Trade Policy Review of Madagascar, 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 Madagascar on its trade policies and practices. Any technical questions arising from this report may be addressed to Mr Jacques Degbelo (Tel.: 022 739 5583). Document WT/TPR/G/197 contains the policy statement submitted by Madagascar. |
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 Madagascar.
CONTENTS
Page
SUMMARY OBSERVATIONS
(1) Economic Environment vii
(2) Trade and Investment Regimes viii
(3) Trade Policy Instruments viii
(4) Sectoral Policies x
(5) Trade Policy and Trading Partners xi
I. Economic environment 1
(1)
(2) Recent Economic Developments 2
(3) Trade and Investment 5
(i) Trade in goods and services 5
(ii) Investment 6
(4) Outlook 7
II. trade and investment regimes 10
(1) Overview 10
(2) Policy Objectives 12
(3) Trade Agreements and Arrangements 13
(i) WTO 13
(ii) Regional agreements 14
(4) Investment 20
Annex II.1: Trade-Related Technical Assistance 23
(1) Implementation of Agreements, Training and Policy Formulation 23
(2) Supply-Side Constraints 24
(3) Ongoing Integration of Training Agreements and Policy Formulation 24
III. trade policies and practices by measure 26
(1) Introduction 26
(2) Measures directly affecting imports 27
(i) Registration 27
(ii) Customs procedures 27
(iii) Rules of origin 29
(iv) Customs levies 29
(v) Prohibitions, quantitative restrictions and licences 36
(vi) Standardization, accreditation and certification 37
(vii) Sanitary and phytosanitary (SPS) measures 38
(viii) Rules on packaging, marking and labelling 39
(ix) Contingency measures 40
(x) Other measures 40
Page
(3) Measures directly affecting exports 40
(i) Customs procedures 40
(ii) Export duties and taxes 40
(iii) Prohibitions, quantitative restrictions, controls and export licences 41
(iv) Export subsidies, promotion and assistance 41
(v) Industrial Free Zone 41
(4) Measures affecting production and trade 42
(i) Incentives 42
(ii) Competition and price controls 42
(iii) State trading, State-owned enterprises and privatization 43
(iv) Government procurement 48
(v) Protection of intellectual property rights 49
IV. TRADE POLICies AND PRACTICEs BY SECTOR 52
(1) Introduction 52
(2) Agriculture and Related Activities 53
(i) Overview 53
(ii) Agricultural policy 55
(iii) Policy by subsector 57
(iv) Fisheries and aquaculture 60
(v) Forestry 61
(3) Mining, Energy and Water 63
(i) Mining products 63
(ii) Petroleum products and natural gas 65
(iii) Electricity and water 66
(4) Manufacturing 68
(5) Services 70
(i) Transport 70
(ii) Tourism 73
(iii) Telecommunications and postal services 74
(iv) Financial services 75
REFERENCES 77
APPENDIX TABLES 81
CHARTS
Page
I. Economic environment
I.1 Structure of trade in goods, 2000-2006 8
I.2 Direction of trade in goods, 2000-2006 9
III. trade policies and practices by measure
III.1 Applied MFN tariff rates, by HS section, 2008 31
III.2 Breakdown of MFN duties applied, 2008 32
III.3 Escalation of MFN duties applied, 2008 33
TABLES
I. Economic environment
I.1
I.2 Main economic indicators, 2000-2006 3
I.3 Balance of payments, 2000-2006 5
II. TRADE AND INVESTMENT REGIMES
II.1
II.2 Status of WTO notifications, 1995 to August 2007 14
II.3 Fiscal regulations under the industrial free zone regime, December 2007 22
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Itemized customs revenue from imports, 2000-2006 30
III.2 MFN applied tariff structure, 2007-2008 31
III.3 Summary of MFN (DD) tariff, 2008 33
III.4 Differences between excise duties/charges applied to local and imported
products, 2007 35
III.5 State holdings, October 2006 43
III.6 Thresholds for the award of public contracts,
III.7 Industrial property applications and titles issued, 1994-2006 51
IV. TRADE POLICies AND PRACTICEs BY SECTOR
IV.1 Production of food crops, 2001-2005 54
IV.2 Trend in the food balance sheet for rice, 2000-2005 54
IV.3 Trend in the export of fisheries products, 2003-2006 55
IV.4 Exports of forest products, 2006 62
IV.5 Breakdown of activities in the manufacturing sector outside the free zone, 1999-2006 68
IV.6 Telecommunications service indicators, 2001-2006 74
APPENDIX TABLES
Page
I. Economic environment
AI.1 Structure of exports, 2000-2006 83
AI.2 Structure of exports (including re-exports), 2000-2006 85
AI.3 Structure of imports, 2000-2006 87
AI.4 Destination of exports, 2000-2006 89
AI.5 Destination of exports (including re-exports), 2000-2006 90
AI.6 Origin of imports, 2000-2006 91
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Import duties by HS chapter, 2008 92
IV. TRADE POLICies AND PRACTICEs BY SECTOR
AIV.1 Applied MFN tariffs by ISIC Rev.2 category, 2008 95
(1) Economic Environment
1. The socio-political crisis experienced by
2. Despite the reform efforts, recent economic performance and international support,
3. Government finance is facing considerable structural problems, particularly because of the common practice of giving tax and customs exemptions and the narrow tax base as a result of the size of the informal sector (estimated to be around 30 per cent of total GDP). Improvements are expected as regards governance, including transparency in fiscal management. The primary budget deficit of some 4.4 per cent of GDP in 2006 is financed by development aid, whose net total (grants less debt servicing) was estimated to be 10.4 per cent of GDP in 2006. The European Union (EU) and its member countries are large donors to
4. In addition, the restrictive monetary policy followed by the Central Bank of Madagascar (BCM) since 2005 has allowed the inflationary trends that emerged in 2004 to be brought under control. In 2005, the ariary replaced the Malagasy franc. Its real exchange rate has remained fairly stable since 2005, which has probably helped
5. The ratio of trade in goods and services to
(2) Trade and Investment Regimes
6. The Ministry of Trade is responsible for defining and implementing
7.
8.
9. Since
(3) Trade Policy Instruments
10. All
11. VAT (20 per cent in 2008) and, where applicable, excise duty, is also levied, but the latter does not respect the principle of national treatment, a matter of consistency that was already a concern at the time of
12. Overall, the tariff shows mixed escalation, which is unlikely to encourage the establishment of certain industries (where escalation is negative) or boost the competitiveness of certain domestically-manufactured products (which are given strong effective protection because of the positive escalation) on international markets. In addition, companies in the free-trade zone are given exemption from duties and taxes on all types of imports together with refund of VAT on inputs of Malagasy origin once it has been proved that the finished products have been exported. The temporary admission regime is often utilized for the equipment needed for mining or petroleum prospecting.
13.
14. In 2004,
15. Royalties apply to commonly exported goods such as forestry, fisheries and mining products. There is also a ban on exports of logs of any species and their semi-finished products in order to boost processing. A new Government Procurement Code was adopted in 2004 and has gradually come into effect since 2005. It provides for invitations to tender, although according to the authorities 22 per cent of the contracts in 2007 were awarded as a result of a single tender. A national preference margin of 10 per cent is provided in the new legislation.
16.
(4) Sectoral Policies
17.
18. One of the MAP's objectives is to achieve a "sustainable green revolution" by expanding production and then improving the way in which it is managed, and also by removing constraints (particularly road transport) on its marketing. A policy to ensure more secure land tenure is making rapid headway in order to make it easier to finance agricultural activities. The State no longer intervenes in fixing the purchasing price from farmers, but subsidizes the supply of seed and inputs and small-scale equipment for growing rice; since 2002, these products have been subject to a zero tariff. Consultation forums for each branch (rice, litchis and vanilla) facilitate public-private dialogue on support measures in each branch. A monitoring centre keeps an eye on the price of rice on local markets and disseminates this information in order to streamline the market's functioning. Several projects financed through external funds support rural development.
19. Together with mining and tourism, fisheries and aquaculture are one of the three major activities on which the authorities are relying as a basis for
20. Environmental protection is also an element taken into account by the authorities when considering large-scale mining projects before authorizing them. Since 2005, an incentive framework has been available for such investment and it is expected that there will be a sizeable increase in the production of mineralized sands, cobalt and nickel in the near future. These projects call for modernization of the railway and the building of new mineral ore ports.
21. In addition to the companies set up under the free-zone regime, which must export 95 per cent of their output, the manufacturing sector is composed of companies producing for the domestic market, mostly foodstuffs, beverages and tobacco. They are given relatively high tariff protection of 16.7 per cent; excise duty applies at a higher rate to imported alcoholic beverages and cigarettes than to those domestically produced. Obstacles to the development of manufacturing include problems in
22. The number of leisure tourists has shown a marked increase since 2003 (over 20 per cent annually between 2003 and 2005), underpinned by a policy to open up
access to which is open to foreigners, even though the supply of the necessary water, domestic transport and telecommunications services is inadequate. Financial services (banks, micro-finance institutions and insurance) are open to competition from foreign suppliers. A new regulatory framework governs micro-finance.
(5) Trade Policy and Trading Partners
23.
24. In general, stronger multilateral commitments by