World Trade Organization |
RESTRICTED |
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WT/TPR/G/197 | |
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(08-0772) |
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Trade Policy Review Body |
Original: French |
TRADE POLICY REVIEW Report by Madagascar |
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the |
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
INTRODUCTION 5
I. Recent developments in the economy 6
(1) Economic Situation 6
(2) Trade Policy Developments 7
(3) Investment Regimes 11
II. economic reforms 12
(1) At the Macro Level 12
(2) At the Sectoral Level 16
(3) Trade Prospects 25
III. INternational Relations 26
(1) The WTO 26
(2) Regional Agreements and Arrangements 26
(3) Bilateral Agreements 28
(4) Technical Assistance Needs 28
conclusion 30
INTRODUCTION
1. Situated in the south-western Indian Ocean, 350 km from the south-east coast of Africa,
2. In spite of its enormous potential, it falls into the category of the least developed countries (LDCs), with an average annual per capita income of US$348 in 2007. Problems of access to financing and electrical energy supplies hamper enterprise development, while the difficulties inherent in the transport service create obstacles to trade.
3. The Government of Madagascar, with the support of the technical and financial partners, has pursued its macroeconomic stabilization and sectoral reforms programme in accordance with the country's development plans including the Madagascar Action Plan (MAP), which since 2007 has taken over from the July 2003 Poverty Reduction Strategy Paper (PRSP). The last review of
4. The MAP is an ambitious and realistic plan of action that sets out the road map and priorities for
5. The new Constitution adopted by referendum on
6.
7. Preparation of the second Trade Policy Review is under way, and bears witness to the importance the Malagasy Government attaches to the common rules regulating world trade, the functioning of the multilateral trading system, and transparency.
8. The Ministry of Economy, Trade and Industry is responsible for formulating
9. The private sector and civil society also take part in multilateral or regional trade negotiations in the National Forum for Development and Trade Policy (FNDPC).
10. Madagascar maintains its regional integration policy in order to forge closer ties with neighbouring countries, in keeping with one of the challenges posed by the MAP, namely to exploit regional opportunities intensively by making use of its comparative advantage vis-à-vis the members of COMESA, the Indian Ocean Commission (COI) and the Southern African Development Community (SADC). It is within the Eastern and Southern African Group (AFOA) that
11. The ultimate objective of
I. Recent developments in the economy
(1) Economic Situation
12.
(a) Economic growth
13. Since 2003, economic growth has outstripped demographic growth, which was running at 2.8 per cent. In 2006 and 2007, rates of economic growth reached 5.0 per cent and 6.3 per cent respectively, thanks to a rise in public investment in real estate and infrastructure, the high level of foreign direct investment (FDI), strong growth in trade and the services sector including telecommunications, transport and tourism, and the development of free zones and enterprises.
14.
15. In accordance with the MAP objectives, economic growth will rise to more than 8 per cent in 2012.
(b) Public finances
16. The tax ratio, which stood at 10.1 per cent in 2005, reached 10.9 per cent in 2007. That trend is attributable to the various reforms undertaken at the levels of internal taxation and import taxation, good governance within the tax system and restructuring in that area. The Government's objective is to bring the ratio up to 15 per cent in 2012.
17. With a view to improving governance and facilitating coordination of the budget system, the Système Intégré de Gestion des Finances Publiques – SIGFP (Integrated Public Finances Management System) has been put in place. Initiatives have been launched to secure a rapid increase in revenue derived from taxes and customs and other duties, including a broadening of the tax base, enhanced security of revenue, increased controls and reorganization of the tax and customs administration.
18. Over the last three years, the technical and financial partners have intervened in such areas as budget support and debt relief.
(c) Monetary policy
19. Monetary policy is entrusted to the Central Bank of
20. The free floating of the currency enabled exports to grow and imports to be kept under control, thereby reducing the external current account deficit. In order to support exports, the installation of industrial zones and free zones has been encouraged. Air transport has also been liberalized.
21. The Government's strategy in this area is to apply a tight monetary policy in order to contain inflation and promote the stability of the currency while easing fluctuations in the foreign exchange market.
22. The objective set out in the MAP is to bring the rate of inflation down to 5.0 per cent in 2012.
(2) Trade Policy Developments
23.
(a) Policy objectives
24. The overall objectives of the trade policy place emphasis on:
- Establishment of healthy and fair competition;
- promotion of international trade with special emphasis on "Made in
- exploitation of the opportunities provided by regional and international organizations;
- exploitation of areas in which
- a broadening of the platform for ongoing collaboration with the private sector;
- making commercial activities more professional.
(b) Trade policy implementation
25. Implementation of
26.
27. The instruments of the trade policy are:
- Customs tariff structure
28. In order to meet the requirements of a liberalized economy,
29. Since 2007,
30.
- Customs valuation
31. The rules established by the WTO Agreement on Customs Valuation are reproduced in
32.
33. The four-year contract concluded with the Sociéte Générale de Surveillance (SGS) for the management of a programme for inspection and verification of goods upon entry ended on
- Trade facilitation measures
34. The 2007 Customs Code grants customs clearance facilities to operators whose business is in order. Duties and taxes are paid either by means of a clearing credit or by direct payment. The time taken for customs clearance has been considerably reduced.
35.
- Market access
36. The Ministry of Agriculture, Livestock and Fisheries (MAEP), through the Directorate of Animal and Plant Health (DSAPS), is responsible for implementing the Agreement on Sanitary and Phytosanitary Measures. Prior authorization in the form of a sanitary or phytosanitary permit delivered by the DSAPS is needed for the importation of foodstuffs of animal origin, live animals, animal feedstuffs, live plants, seeds or parts of live plants, plant products, soil and growing media, and plant material packages. The DSAPS also issues sanitary/phytosanitary permits for exports of these products on the strength of import permits issued in the importing country.
37. In order to promote activities geared to the domestic and external markets, the number of structures (farmers' organizations, markets, CERDIC, Chamber of Commerce) relaying market signals to producers has been increased. With a view to diversifying agricultural production, the regions have identified priority for the domestic market and for exports.
38. In order to increase the value added of agricultural goods, efforts are under way to develop agro-industry and increase the number of agri-business centres as a means of providing technical and market access support for producer groups.
39. Lastly,
40. Since 1989
41. In general, all products may be freely imported and exported except those that are subject to special regulations (negative list in Annex III of Decree No. 92-424 of
- Sanitary and phytosanitary measures and standardization
42. The standardization regime is administered by the Bureau des normes de Madagascar – BNM (Malagasy Standards Bureau) established in 1998, with assistance from a Conseil national de normalisation – CNN (National Standardization Council) in the process of being set up, under the guidance of the Ministry of Trade. Registered standards are published in the Official Journal.
43. Given the requirements of international markets, the BNM has devised standards for certain products with high export potential, including fruits and vegetables, juices and their products, honey, vanilla, edible oils and tubers.
44.
45. Sanitary and phytosanitary regulations are drawn up by the MAEP official services responsible for inspection and certification, in accordance with international standards set by the three standardization organizations (OIE, IPPC, Codex Alimentarius). They apply to both animal and plant products, from production to marketing.
- Trade-Related Aspects of Intellectual Property Rights
46.
47. The Malagasy intellectual property regime is being harmonized with the WTO Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPS). A draft law to reform Ordinance No. 89-019 of
48. Work begun since
- Services
49.
50. Air transport, financial services, consultancy, tourism activities and telecommunications have already been liberalized.
- Rules of origin
51. As it is a member of the COMESA Free Trade Area and the COI and has made an offer to lower its tariffs within the SADC as part of the implementation of the latter's Protocol on
52. It also uses the rules of origin of the AGOA and the EPA (Cotonou Plus) for its exports to the
(c) Legal and regulatory framework for trade policy
53. The Constitution is the supreme legal text, followed by laws, ordinances, decrees and orders.
54. From 2001 to 2006 trade policy was set out in the Poverty Reduction Strategy Paper (PRSP). Currently it is contained in the Madagascar Action Plan (MAP).
55. The President of the Republic has the power to negotiate and conclude international agreements, which must have the approval of the National Assembly and the Senate for ratification. He may delegate this power to a minister or to a member of the Executive.
56. In 2007, a Lega Carta project for "improvement of the multilateral legal framework for trade in
(d) Government procurement policy
57.
58. The Malagasy Government Procurement Code is contained in Law No. 2004-009 of
59. The organization and functioning of the Government Procurement Regulatory Authority are governed by Decree No. 2005-215 of
60. The Government Procurement Code of Ethics is contained in Decree No. 2006-343 of
(3) Investment Regimes
61. Investment in
62. At the institutional level, the main innovation since
The APPI (Agreement on the Promotion and Protection of Investments)
63. In the area of agreements on the promotion and protection of investments (APPIs), which are bilateral investment agreements,
Tax and customs regimes
64. Two regimes are in force: (i) the ordinary regime; (ii) the exceptional regimes applying to Major Mining Investments in excess of US$250 million, and to Free Zones and Enterprises, which are reserved exclusively for export activities.
Land tenure regimes
65. Any foreign investor is authorized to acquire real estate in
66. The possibility of entering into a leasehold contract for State or private lands continues to exist for private investors for a period of between 18 and 99 years with right in rem subject to mortgage. Other measures have also been taken to support access by foreigners to land tenure, such as the establishment of dedicated industrial zones, including a pilot free zone currently being set up in Taomasina, the country's chief port; the establishment of tourist land reserves (Réserves Foncières Touristiques); and, more generally, the establishment of Zones d'aménagement économique spéciales – ZAES (special economic activity zones).
Investment measures undertaken
67. In 2003
68. In spite of these incentives, FDI remains low for a country with
69. More particularly, the EDBM is in charge of promoting
70. The EDBM's objectives for 2012 as set out in the MAP are to attract US$500 million in FDI and to move
II. economic reforms
71. After having embarked in July 2003 on implementation of the Poverty Reduction Strategy Paper (PRSP),
72. The year 2004 saw the publication of the "Madagascar Naturellement" National Vision, translated into projects and activities in the Madagascar Action Plan (MAP), a five-year road map launched in January 2007 to reduce the poverty rate, in accordance with the Millennium Development Goals.
(1) At the Macro Level
(a) Good governance
73. In the area of good governance, the challenge is to ensure an effective and efficient government budget process, in addition to combating corruption. In that context, the following actions provided for in the MAP have been carried out by the Government:
- Increasing the financing of institutions combating corruption;
- reducing corruption through the establishment in 2003 of the Conseil Supérieur de la lutte contre la corruption – CSLCC (Higher Council to Combat Corruption), which subsequently became the Comité pour la sauvegarde de l'intégrité – CSI (Committee for the Safeguarding of Integrity), and of the Bureau Indépendant Anti-Corruption – BIANCO (Independent Anti-Corruption Bureau). It should be noted that the trend in Transparency International's latest Corruption Perceptions Index has improved significantly for
- making the overall apparatus for control of income and expenditure more effective;
- completing the reform of public finances;
- harmonizing and reviewing policies, laws and regulations on taxes, duties and charges;
- improving the system for collection of tax revenue;
- ensuring implementation of the new Government Procurement Code.
(b) Infrastructure development
74. At the global strategy level, the MAP has set as a priority the development of basic infrastructures to promote private sector investment and trade. In this context, the challenges to be met consist in according priority to development infrastructures for the growth centres, improving the effectiveness and quality of the flow of goods and persons, improving access to transport services, ensuring adequate energy supplies at affordable and competitive prices, and putting in place an efficient and universally accessible communication system.
75. Maritime transport is conducted through two main merchant ports,
76. The State has set up Aviation Civil de Madagascar – ACM, a regulatory body for air transport. Liberalization in this subsector consists in implementing the open sky policy.
77. The focus of Government action will be the rehabilitation, renewal and modernization of existing infrastructure and the maintenance of secondary airports and weather stations.
78. The rural transport policy, adopted in 2001, is aimed at extending the network of metalled roads and rehabilitating rural tracks, and at resolving funding problems by decentralizing their maintenance.
79. In 2005, 8,782 kilometres of roads were built, rehabilitated and/or maintained.
80. Progress was noted on railways, ports and airports, but these activities were confined to rehabilitation of existing infrastructures.
81. Tourism infrastructure, including transport, accommodation and related services, is confined to a few regions, such as
82. The authorities attach great importance to development of the telecommunications subsector, in accordance with their commitment under the MAP to make
83.
(c) Maintaining economic stability
84. In this area the overall objective is to establish a stable macroeconomic environment as a prerequisite for sustainable economic growth.
85. With support from the technical and financial partners,
86. In order to achieve higher, faster and more sustainable growth, the Government has put in place a number of reforms:
In the real sector:
87. In 2006 the tertiary sector accounted for 57 per cent of nominal GDP, the primary sector 27 per cent and the secondary sector 16 per cent.
88. Between 2003 and 2006 average growth was 5 per cent, thanks to efforts to promote investment in general and private investment in particular.
89. The implementation of a macroeconomic policy based on prudent management of the money supply and preservation of internal and external balances enabled inflation to be brought gradually under control, despite market prices having been liberalized.
90.
In the external sector:
91. Improvement of the business climate with a view to attracting investment, particularly FDI, is a major concern.
92. The Law on Major Mining Investments supplements the IFZ exceptional regime, the aim being to promote implementation of certain large-scale projects.
93. These mining investments should lead to a rise in imports, particularly of materials and equipment necessary for mining. In spite of the deterioration in the external current account likely to result from it, the balance of payments should remain in surplus because of the substantial flows of FDI.
94. The structure of
At government level:
95. As the budget is the Government's main tool for macroeconomic policy and stabilization, the question of tax and budget reforms is a major concern of the State.
96. In the framework of its development programme, Madagascar has applied a sound budgetary policy (involving reduction of the budget deficit), through reforms of the tax and customs system and improved management of expenditure that have led to a fall in credit to the Government, an increase in private savings and credit to the economy and, consequently, to growth in private investment.
97. The State continues to withdraw from the production and distribution sector and to devote itself more to its role as facilitator and guide. It also attaches greater importance to the social field and putting in place infrastructures that are needed for the development of the private sector.
98. In order to improve tax revenue and progressively reduce the dependence on customs revenue, the administration has adopted a number of measures such as broadening the VAT base, while controlling inflation, improving security of customs revenue, restricting exemptions, and reorganizing the tax and customs administration in order to increase the tax ratio to 15 per cent in 2012.
In the monetary sector:
99. Following the opening up of the financial sector, seven commercial banks are operating in
100. The private sector's financing needs remain largely unsatisfied. Access by small and medium enterprises to short-term financing remains limited. Use of the banking system by the population remains low and as yet there is no stock market.
101. Several micro-finance institutions support small private initiatives, but the 3 per cent monthly borrowing rate is very high.
102. Monetary policy is geared to maintaining single-digit inflation by strict and prudent management of liquidity. Market instruments (open market transactions) are increasingly used as a means of regulating liquidity.
103. Since the floating exchange regime was adopted in 1994, the external value of the currency has been freely determined by supply and demand on the interbank foreign exchange market. Intervention by the Central Bank in this market is aimed at avoiding excessive volatility in the daily exchange rate and at attaining its objectives for foreign exchange reserves.
(2) At the Sectoral Level
(a) Agriculture and Fisheries
104. Commitment No. 4 of the MAP, "Rural Development", sets out six major challenges: (i) to secure land tenure; (ii) to improve access to affordable rural financing; (iii) to launch a sustainable green revolution; (iv) to promote market-oriented activities; (v) to diversify rural activities; (vi) to increase agricultural value added and promote agri-business.
105. The Ministry of Agriculture, Livestock and Fisheries is finalizing a Sectoral Policy for Agriculture, along with a Sectoral Programme for Agriculture.
106. The Sectoral Policy aims to modernize agriculture in
Measures specific to the agricultural sector
107. Rice is currently the focus of particular efforts on the part of the Government. Surplus production will be exported, as the private sector is investing heavily in order to gain access to the regional market (COMESA) and the Asian market (
108. The diversification efforts undertaken in the last few years will be continued in order to develop fresh fruit and vegetables for exportation.
109. As from 2008,
110. For lychees, exporters and producers' organizations are to receive support to assist them with upgrading. For access to the
111. In order to develop exportation of high quality fruit to the international market, there is to be research into variety improvement and efforts will be made to establish orchards. New themes for vegetable research will be developed by the Ministry's horticultural technical centres in partnership with the World Vegetable Center (AVRDC), which has recently set up in
112. Work on developing the "biofuels" branch will be stepped up with a view to extension to other regions that lend themselves to such activities.
113. In the livestock branch, the private sector and producers' organizations favour ruminant meat (bovine, ovine/caprine), foie gras, honey, silk and milk, because there is considerable demand for these products on the regional market (COI) and the international market (Europe, USA, the Gulf … ). The Administration has taken new measures to ensure compliance with the sanitary requirements of importing countries. As part of the effort to revitalize the export of bovine and caprine meat, measures are under way to improve the quality, food safety and traceability of products by ranching beef cattle and small ruminants in the Ihorombe region and by compartmentalization in the Vohémar district (
114. The same disease surveillance arrangements will be maintained for duck and geese raised for the production of foie gras so that products can be exported from a compartment.
115. The Honey Surveillance Plan, to be validated by importing countries, is among the measures to be implemented in order to improve product quality.
116. Silk production will be intensified both in the highlands and in the coastal regions in order to respond to growing demand for domestic silk and wild silk.
117. Both milk and rice are the focus of special efforts on the part of the Government. Production is being stepped up in order to strengthen the domestic industry and also in order gradually to reduce imports of dairy products. In the medium-term access to the regional market is envisaged.
118. As from 2008, the recommendations of the World Organization for Animal Health will be implemented with a view to aligning the Malagasy veterinary services with international standards. The same procedure is envisaged for the phytosanitary services in charge of the control and certification of products destined for export. An accreditation procedure is planned for analysis laboratories.
Measures specific to the fisheries sector
119. In the interests of conserving fishery resources,
120. The following measures will accordingly be implemented over the next five years:
- Step up action against illegal fishing, including overfishing by approved vessels;
- improve and strengthen organization of the Fishing Surveillance Centre so as to extend surveillance to the entire Malagasy coastline;
- step up sea surveillance in the framework of regional partnerships (COI and SADC);
- implement a more reliable system of statistics for catch data;
- establish a service to coordinate fisheries and aquaculture research in order to produce tools for decision making.
121. Efforts in this sector will be geared towards developing aquaculture so as to maintain or increase annual exports. Priority will be given to the following products: (i) shrimp, trepang and seaweed (marine aquaculture); (ii) telapia and eel (continental aquaculture). The former destinations for exports are to be maintained (EU,
122. Partnerships with national and foreign research centres will be reinforced. Cooperation has been established between the Groupement des Armateurs de Pêche Crevettière de Madagascar – GAPCM (association of owners of shrimp-fishing vessels of
123. With regard to sanitary measures, product upgrading and capacity building for the Fisheries Sanitary Authority (ASH), particularly for export inspection posts, will continue. The efforts undertaken by two companies to obtain quality labels will be followed by others.
Measures common to both sectors
- Provide for support for investment, the establishment of new agro-industries and better access to high quality services;
- promote the export of agricultural/agri-food products at regional and international level;
- put in place a coherent institutional framework;
- promote training for occupations in agriculture and agro-industry.
124. Technical and financial partners are supporting the development of agricultural and fisheries products for export, particularly upgrading (EU, USA, Japan, IFAD, World Bank) and compliance of control/certification services and analysis laboratories.
(b) Environment and forests
125. According to official statistics, the forestry sector accounts for 5 per cent of GNP and 17 per cent of the primary sector. Aromatic and medicinal plant products, CITES species and non-CITES plant species account for most exports in the sector. The issuance of operating permits for wood products by single tender has been suspended since 2000. Operations are gradually resuming with the introduction of a bidding system for the award of permits. Efforts are also under way to combat illegal trafficking in precious woods.
126. With regard to the eco-certification of forests, the rainforest areas in the east of the country offer considerable potential for sustainable exploitation. This potential will be realised through the expansion of value-added woodworking industries supported by labels of origin and certification. However, the latter requires high-standards of governance and product traceability. A system of traceability of wood products is currently being tested in several regions. Ultimately, it may be used throughout the country.
127. According to the MAP and the Forestry Policy, the country's forests are the basis for a sector of economic activities which aims both to meet domestic household needs and to supply Malagasy and foreign markets with forestry products.
128. The economic performance of the forestry sector is to be enhanced through attainment of the following objectives:
- Meet the growing demand of the local market for better quality products;
- increase the value added of products in the interests of the national economy;
- exploit a wider range of species (woods);
- recover and use hitherto unexploited by-products;
- promote non-wood products;
- standardize products;
- regulate the exportation of forestry products;
- consolidate processing structures;
- improve the running of marketing channels;
- develop eco-tourism;
- promote the traceability of wood products;
- combat the illegal trafficking and exportation of precious woods and CITES products.
(c) Energy
129.
130. Since the 2003 surge in world prices oil companies have significantly increased investment in research and offshore exploration in
131. A large proportion of the electricity consumed in
132. The State has undertaken to liberalize the production, transportation and distribution of electricity, but so far few private enterprises have invested in this sector. The Electricity Regulatory Office (ORE) is responsible for the granting of permits and concessions. Permit holders pay a charge amounting to 1.2 per cent of turnover, which goes to the National Electricity Fund. The Fund's purpose is to finance rural electrification.
133. Forestry, mining, tourism and industrial companies produce electricity under authorization from the
134. Wood and coal are the main sources of energy for households. However, the continuing use of these resources poses a threat to the environment. In order to provide energy for all consumers while conserving the environment, the Government has set as overall objectives in this sector the sustainable supply of high quality energy at an affordable price, and the gradual extension of services to the whole population.
135. Three fundamental principles underpin the action to be taken in this field:
- To rationalize the conditions of supply, production, distribution and consumption of energy with due regard for the long-term interests of the country;
- to respect fundamental environmental balances and encourage rational management of rural areas where forests are being exploited for energy purposes;
- to provide both the rural and the urban population with access to at least basic energy services.
(d) Mining
136. Mining is a key sector in
137. The mining policy, which is in line with the Government's economic reform programme and defines the roles of the State and the private sector, calls for private investment and spells out clearly their respective rights and obligations.
(e) Tourism
138. Tourism is one of the most important sources of foreign exchange for the country. Having an environment that is rich in fauna and flora,
- Contributing to the national poverty reduction strategy through the creation of jobs and activities that generate income;
- developing tourism with due regard for the environment, social and cultural values, and the national heritage;
- developing high quality tourism;
- contributing as far as possible to the foreign trade balance by promoting international tourism;
- encouraging regional initiatives for the south-west
- promoting investment;
- promoting
- promoting training.
(f) Transport
139. The Government has withdrawn gradually from this sector and is in the process of privatizing transport services. It also plans to adopt policies that include all the necessary institutional and regulatory changes making it possible to:
- Give priority to rehabilitating transport that has a direct impact on the development of economic and tourist activities and on rural development;
- restore balance in intermodal distribution by promoting alternative means of transport;
- maintain freedom of pricing;
- introduce organization and management mechanisms to support transport infrastructure, while increasing capacity to mobilize local resources;
- for investment and infrastructure management, develop a framework for partnership between the central Government, regions, beneficiary communities, the private sector and associations.
140. These activities are part of the National Transport Plan. The State is working to update the Plan in cooperation with all the stakeholders, by transport subsector:
- Establishment of regulatory bodies: Aviation Civile de Madagascar (ACM) for aviation; Agence de Transport Terrestre (ATT) for land transport; Agence Portuaire Maritime et Fluviale (APMF), for maritime and river transport. Operation of the TCE-TA-MLA northern rail network has been outsourced under concession to Madarail;
- liberalization of transport services;
- public/private partnership for the setting up, modernization and operation of infrastructures (ports, airports, bus stations … );
- public/private partnership for transport safety and security;
- rejuvenation of the vehicle fleet (road subsector), rolling stock (rail subsector) and fleet (air, maritime and river transport subsectors);
- application of regulations (Highway Code, Maritime Code (to come into effect shortly), Civil Aviation Code … ).
(g) Telecommunications
141. Implementation of the telecommunications sector's development policy is the responsibility of the Ministry of Telecommunications, Post and Communication.
142. The Government has established a policy to liberalize the telecommunications sector and open it up to local and foreign competition by adopting the following measures:
- Reform and restructuring of the sector;
- promotion of private initiative by establishing the infrastructure needed for investment;
- broader public access to telecommunications services.
143. Liberalization of the sector has led to an influx of mobile telephone operators, producing 12 per cent growth in this branch in 2006. As with electricity, spatial coverage of the networks is still confined to centres with high economic potential.
144. The Office Malgache d'Étude et de Régulation des Télécommunications – OMERT (Malagasy Telecommunications Studies and Regulation Board) grants licences, permits for service providers and suppliers of terminals and auxiliary services.
145. Investment in this area is free and all investors are treated on a par.
146. In 2005, in keeping with the State's wish to shift to e-governance, Law No. 96-034 of 27 January 1997 was amended, liberalizing telecommunications and putting an end to State monopoly of the sector. All the recently introduced technologies should give most people access to less and less costly new tools and contribute to the country's development.
147. Law No. 2005-023 of
148. The Government's relationship with the Regulation Board has changed. ARTEC, the new Regulatory Agency, has been given a broader mandate, and transparency rules aimed at fair competition and accountability have been spelled out and endorsed in the interests of removing measures that hampered development in this sector. New investment opportunities are opening up for the private sector in telecommunications and ICT.
149. The coverage of fixed and mobile telephony continues to expand at an annual rate of 40 per cent.
(h) Handicrafts
150.
151. The objectives of the handicrafts sector are as follows:
- To increase the handicraft industry's contribution to GDP to 18 per cent;
- to improve the competitiveness of the sector in order to satisfy market needs;
- to structure the sector;
- to encourage this area of activity to become part of the formal sector and increase exports;
- to bring a professional dimension to the crafts industry.
152. Accordingly, the following actions have been undertaken and are being pursued in order to achieve those objectives:
- Setting up Centres Régionaux de l'Artisanat Malagasy – CERAM (Malagasy Regional Handicrafts Centres) in six regions, and reviving and giving impetus to professional associations;
- unifying the Centres Espace Promotion de l'Artisanat (Handicrafts Promotion Centres), whose task is to inform, guide, support and assist any operator or person doing research in the sector;
- registering craftsmen in order to enhance their awareness and encourage them to move out of the informal sector, and foster partnership and subcontracting with industry in the CERAMs;
- increasing craftsmen's awareness with a view to their integration into professional circuits;
- training craftsmen in specific fields in order to improve handicraft manufacturing and ensure the quality of handicraft products;
- facilitating trade by adopting ICTs (Internet, Trade Map);
- promoting craftsmen by giving support, advice and assistance and creating contacts between craftsmen and national and international operators;
- producing and distributing marketing aids such as handouts, brochures, catalogues, etc.;
- organizing and taking part in economic and trade events;
- establishing a "handmade" certification window for export products;
- revising the customs nomenclature.
(i) Industry
153. The industrial sector plays a key role in the national economy as a whole as the engine of economic and social change, and is regarded as one of the main growth sectors since it generates both employment and income.
154. Despite
155. Action to develop the sector focuses on two main priorities:
- Institutional and production capacity building, in order to increase industrial competitiveness at national and international level (formulation and implementation of industrial development policies/strategy; strengthening centres for the production and organization of industrial information; building up national pilot structures for industrial restructuring and upgrading);
- support for income-generating activities in rural areas (targeting the poorest populations); actions focused on processing industries, including fruit and vegetables, essential oils and silk.
156. The Lettre de Politique Industrielle – LPI (Industrial Policy Letter) will be implemented along the following strategic lines:
- Operational strengthening of the EDBM, which is an economic and industrial policy instrument and an investment promotion body, with a view to implementing the new Investment Law;
- effective application of legislation and regulations governing competition, legal metrology, standardization, and quality testing and control;
- restructuring and upgrading of local industries;
- establishment and building up of Centres d'Expansion Régionaux de Développement Industriel et Commercial – CERDIC (Regional Industrial and Trade Development Centres);
- promotion of the National Industrial Innovation System.
157. The Ministry of Industry has embarked on and will pursue:
- The promotion of industrial zones and industrial buildings;
- the introduction and implementation of Framework Law No. 99-021 of
- the setting up of specialized training centres in the various branches of industrial activity;
- the establishment of a programme for the restructuring and upgrading of export enterprises;
- the promotion of partnerships and joint ventures; establishment of the CERDICs; the development of cooperative facilities; and the promotion of one promising sector in each region.
158. The following activities are planned:
- Strengthening of the standards qualification and quality-based system for industrial products, under an ecologically sustainable industrial development approach;
- identification of market opportunities and promising sectors;
- market development through export promotion (new export legislation in preparation);
- alerting industrialists to the benefits of regional integration;
- promotion of technology transfer;
- development of the existing leasing system;
- vocational training/job promotion and matching (development of technical and vocational training to ensure a sounder command of technologies and the modernization of SMEs).
(3) Trade Prospects
159.
- Establish a single window for exports;
- facilitate access to credit by setting up a special export fund;
- encourage promotional activities by embassies and consulates;
- set up export outposts in target countries and organize promotional activities for
- foster a high-standard promotion campaign;
- accredit chemistry, microbiology and metrology laboratories;
- focus on local industrial processing of raw materials by branch and by region;
- develop reliable trade statistics and indicators;
- facilitate and make a greater contribution to international negotiations;
- increase private-sector participation in international negotiations.
160.
161. Strategies have been developed to that end; these involve:
- Continuing to ratify regional agreements in order to gain broader access to regional trade and investment opportunities;
- alerting national opinion to regional market opportunities;
- supporting regionalism through the development of inter- and intra-regional trade;
- strengthening vertical integration at regional level;
- promoting regional cooperation.
III. INTERNATIONAL RELATIONS
(1) The wto
162. Having a Permanent Mission in
163.
(2) Regional Agreements and Arrangements
(a) African Union
164.
(b) Common Market for Eastern and Southern Africa (COMESA)
165.
166. The COMESA common external tariff should be applied as from 2008 with zero per cent duty on raw materials and capital goods, 10 per cent on intermediary inputs and 25 per cent on finished goods.
167. The programme providing for the free movement of persons is to be implemented, beginning with the abolition of compulsory visas for nationals of member countries.
(c) Southern African Development Community (SADC)
168.
169.
170.
(d) Indian Ocean Commission (COI)
171. The Indian Ocean Commission has five member States:
172. The main objectives of the Commission are to promote trade between its members; strengthen the ties of friendship and solidarity among the people of the member States while respecting each State's sovereignty; improve living standards by developing cooperation in all sectors, particularly in the diplomatic, economic, social, cultural and technical fields. Seventy per cent of the Commission's work is financed by the European Union through the European Development Fund.
(e) Relations with the European Union (EU)
173.
174. Various agreements (Lomé I to Lomé IV bis and the Cotonou Agreement) have been concluded to serve as a framework for cooperation between the two parties.
175. The three pillars of cooperation are financial assistance through the EDF; technical assistance; and trade provisions for duty- and quota-free entry into the EU market for ACP products (except for products covered by the Common Agricultural Policy) on a non-reciprocal basis.
176. A WTO waiver was granted for the implementation of this preferential scheme, which does not comply with Article I of the GATT 1994 relating to MFN treatment. The waiver was set to expire on
177. The EPA negotiating process was launched on
178. As a least developed country,
(f) Relations with the United States of America
179.
180. In 2007,
181. According to the latest USITC data,
182. The new law on Industrial Free Zones and its enhancements, issued in January 2008, together with government measures aimed at attracting FDI should amplify this trend in the textile and clothing sector.
(3) Bilateral Agreements
183. Many countries, including
184.
(4) Technical Assistance Needs
185. Implementation of the measures set forth in the MAP reflect a major commitment on the part of the Government to lead the country towards rapid economic growth and thus contribute to poverty reduction. With this in view, the Malagasy authorities are relying on this second review of the country's trade policy to attain the MAP objectives through the strengthening of trade‑related technical assistance.
186.
187.
188. The WTO and other international organizations including the United Nations Conference on Trade and Development (UNCTAD), the International Trade Centre (ITC), the United Nations Development Programme (UNDP), the World Bank and the International Monetary Fund (IMF) have provided support for
189. The WTO has established a reference centre in the premises of the Ministry of Trade.
190. According to the
191.
(a) Implementation of agreements, training and policy formulation
192.
193.
194. As regards rules, the Government wishes to establish a national authority responsible for trade remedies (safeguard measures and anti-dumping actions), and legislation governing anti-dumping and countervailing duties and safeguard measures.
195. Measures to promote compliance with international standards for agricultural exports and the dissemination of information on such standards are still inadequate, which lowers
196. As regards cross-cutting issues and in order to implement the various Agreements,
197. Although a number of measures applied by its trading partners are inconsistent with WTO rules,
(b) Supply-side constraints
198. Supply-side constraints are the principal factors limiting the expansion of
199. Agriculture is
200.
201. Investors have recently been faced with restrictions on access to energy and water. The banking system's limited financing of business activities, at SME level in particular, low coverage of microfinance institutions, especially in rural areas, and inadequate services offers restrict the country's supply-side capacity.
(c) Integration of trade in development strategies
202.
203. The expansion of foreign trade and regional integration are among the lynchpins of
conclusion
204. This report has been prepared within the context of the WTO review of
205. The report takes stock of
206. Although progress has been achieved, more ambitious programmes are yet to be implemented.
207. Through the analyses contained in this document,
208. Technical assistance from all donors and its development partners will enable
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