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2008年4月WTO对马达加斯加岛贸易政策审议-文莱布鲁萨兰政府政策声明(英)

World Trade

Organization

RESTRICTED

 

WT/TPR/G/197

27 February 2008

 

(08-0772)

 

 

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 Marrakesh Agreement Establishing the World Trade Organization), the policy statement by Madagascar is attached.

 

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, Madagascar is the fourth largest island in the world, with an area of 596,790 km2  and an estimated population of 17.5 million in 2006.  As well as biological diversity and an exceptionally high rate of endemism (80 per cent for its fauna and 90 per cent for its flora), it has a very rich subsoil containing various minerals.

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 Madagascar's trade policy took place in 2001 in the context of the Policy Framework Paper (PFP).

4.                   The MAP is an ambitious and realistic plan of action that sets out the road map and priorities for Madagascar from 2007 to 2011.  It describes the commitments, strategies and actions for rapid economic growth, in relation to the benefits and challenges of globalization, in accordance with the Millennium Development Goals and the "Madagascar Naturellement" National Vision.  The private sector is the engine for development and its promotion is central to the MAP implementation strategy.

5.                   The new Constitution adopted by referendum on 4 April 2007 specifies that the presidential mandate is for a five-year term, renewable for two further periods.  The other institutions of the State are the Presidency of the Republic and the Government, the National Assembly and the Senate, and the Constitutional Court.  Since 2004 the administrative system has been marked by increased decentralization.

6.                   Madagascar is subdivided into regions, districts, communes and fokontany.  The regions and communes are decentralized local authorities.

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 Madagascar's trade policy in collaboration with the other ministerial departments.  The private sector, through the various occupational groupings, the chambers of commerce, employers' and workers' organizations and civil society also participate in trade policy formulation.

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 Madagascar is negotiating the Economic Partnership Agreement (EPA) with the European Union.

11.               The ultimate objective of Madagascar's trade policy remains economic growth, which will enable poverty to be reduced.  The MAP has accordingly set the target of raising per capita GDP to around US$470 by 2012.

I.                   Recent developments in the economy

(1)               Economic Situation

12.               Madagascar's economic performance has improved since 2003 despite the depreciation of the national currency (the ariary).  The implementation of a sound budgetary policy (deficit reduction), an improvement in expenditure management, implementation of a prudent financial policy (controlling inflation and the money supply), the conclusion of bilateral and multilateral economic and trade agreements, inflows of aid and capital and the promotion of exports through diversification have enabled the country to meet the challenges of a changing world economic environment, which is affecting some sectors.

(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.               Madagascar's economic growth will depend on the performance of its external sector, its capacity to attract foreign direct investment and its ability to exploit its mining and oil resources.  Against that background, an Economic Development Board of Madagascar (EDBM) has been set up with the principal task of establishing a climate conducive to increased investment.

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 Madagascar.  While the years 2004 to 2006 saw the ariary depreciate, that trend has been reversed since 2007.  The rate of inflation stood at 11.4 per cent at end-December 2005, as compared to 10.9 per cent at end-December 2006 and an estimated 7.2 per cent at end-December 2007.

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.               Madagascar's trade policy is oriented towards continued liberalization and opening up the economy to world trade.

(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 Madagascar" export activities, and diversification of export products and export markets;

 

            -           exploitation of the opportunities provided by regional and international organizations;

 

            -           exploitation of areas in which Madagascar has comparative advantages.  This measure goes hand in hand with bringing products into compliance with the international standards and quality required by the trading partners;

 

            - a broadening of the platform for ongoing collaboration with the private sector;

 

            - making commercial activities more professional.

 

(b)                Trade policy implementation

25.               Implementation of Madagascar's trade policy falls to the Ministry of Economy, Trade and Industry (MECI), which is responsible for implementation of the national and international regulations concerning international trade, fair trading practices and standards.

26.               Madagascar's trade policy reflects at national level the rights and obligations under the WTO Agreements.  In that context, the authorities are striving to ensure that they comply with the rules of the multilateral trade system.

27.               The instruments of the trade policy are:

-           Customs tariff structure

28.               In order to meet the requirements of a liberalized economy, Madagascar embarked on a reform of its tariff system at the start of the 1990s, in the context of its Structural Adjustment Programme.  It reorganized its tariff structure and now applies four rates:  0 per cent, 5 per cent, 10 per cent and 20 per cent.  Most of the duties in the Customs Tariffs are ad valorem.

29.               Since 2007, Madagascar has bound 30 per cent of its tariff lines, including all agricultural and some non-agricultural lines, and applies the zero per cent rate to members of the COMESA Free Trade Area (FTA).  In EPA negotiations, Madagascar has already aligned itself with the common external tariff (CET) that COMESA plans to implement in the framework of its Customs Union.

30.               Madagascar's tariff comprises 6,353 eight-digit tariff lines from the 2007 version of the Harmonized Commodity Description and Coding System (HS).

-           Customs valuation

31.               The rules established by the WTO Agreement on Customs Valuation are reproduced in Madagascar's Customs Code.  The methods set forth in that Agreement have been in use since November 2000.  A waiver was obtained from the WTO allowing it to maintain minimum values for the customs valuation of used goods until November 2003.

32.               Madagascar also maintains a reservation regarding the order of the methods to be used if the transaction value is rejected.

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 30 March 2007.  Since 1 April 2007 collaboration with the SGS has continued in a more innovative form with the creation of GasyNet, a company incorporated under Malagasy law.  Implementation of the Bordereau de Suivi des Cargaisons – BSC (Cargo Monitoring Slip), which can be accessed on line, must be duly validated by GasyNet.  With the actual start-up of electronic processing or the IT platform, it will be possible for all public and private partners involved in international commercial transactions to be interconnected.  The customs clearance system is still based on ASYCUDA++.

-           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.               Madagascar grants duty- and tax-free entry for imports by diplomatic missions and charitable organizations, materials covered by the Florence Agreement adopted by UNESCO, and goods imported in the context of changes of residence, small consignments, etc.  Exemptions from customs duties and taxes are also granted to goods imported in the context of major mining investments, companies engaged in oil prospecting and exploration operations, and the QIT Madagascar Minerals (QMM) Company under its establishment agreement.

-           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, Madagascar's tariff policy grants relatively higher nominal protection to agricultural than to non-agricultural products.

40.               Since 1989 Madagascar has been pursuing full liberalization of imports.  The latter are not subject to any restrictions other than those relating to standards and quality.

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 3 April 1992).

-           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.               Madagascar has established standards for building materials, electrical equipment, road safety and urban transport.  Compliance with a Malagasy standard is certified by the national mark MALAGASY together with its distinctive logo.

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.               Madagascar has been a member of the World Intellectual Property (WIPO) since 22 December 1989.  It has also acceded to various agreements administered by WIPO including, recently, the Protocol Relating to the Madrid Agreement concerning the International Registration of Marks.  In Madagascar intellectual property protection is shared by the Malagasy Industrial Property Office (OMAPI), which is responsible for industrial property, and the Malagasy Copyright Office (OMDA), which is responsible for literary and artistic property.

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 31 July 1989 establishing the Industrial Property Protection Regime will be finalized before the end of 2008.

48.               Work begun since Madagascar's first trade policy review to enforce intellectual property rights, and particularly to combat piracy and counterfeiting, is ongoing and a platform consisting of the various entities concerned was set up in 2007 in order to establish a National Committee to Combat Piracy and Counterfeiting.

-           Services

49.               Madagascar is preparing to broaden its commitments in professional services, communication services, financial services and tourism services.

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 Trade, Madagascar applies the rules of origin of these organizations.

52.               It also uses the rules of origin of the AGOA and the EPA (Cotonou Plus) for its exports to the United States and Europe.

(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 Madagascar" was prepared in partnership with the International Trade Centre (ITC), the United Nations Commission on International Trade Law (UNCITRAL) and the Cooperation and Cultural Action Service of the French Embassy.

(d)                Government procurement policy

57.               Madagascar's government procurement regime has been totally overhauled.  The new regime was prepared with technical assistance from the World Bank and adopted in 2004.  It is aimed at "ensuring efficient State orders and the proper use of public funds".

58.               The Malagasy Government Procurement Code is contained in Law No. 2004-009 of 26 July 2004.  Transparent procurement processes, equal treatment and free access are the hallmarks of the Code.

59.               The organization and functioning of the Government Procurement Regulatory Authority are governed by Decree No. 2005-215 of 3 May 2005, which sets forth the statutes, tasks and responsibilities of the Regulatory Authority and establishes its administrative, financial and technical organization.

60.               The Government Procurement Code of Ethics is contained in Decree No. 2006-343 of 30 May 2006.

(3)               Investment Regimes

61.               Investment in Madagascar is governed by several laws, including Law No. 96-015 of 13 September 1996, which sets out the general guarantees offered to investors, and Law No. 2007-036 of 14 January 2008.  In order to offer guarantees for investment and confidence to investors, Madagascar has acceded to the Multilateral Investment Guarantee Agency (MIGA) with a view to protecting investors from non-commercial risks.  It is also a signatory to the Agreement establishing the African Trade Insurance Agency (ATIA) aimed at covering, inter alia, political risks affecting commercial and financial transactions.

62.               At the institutional level, the main innovation since Madagascar's first Trade Policy Review in 2001 has been the establishment of the Economic Development Board of Madagascar (EDBM).

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, Madagascar has concluded such agreements with France, Mauritius, the OPEC countries, the Belgium‑Luxembourg Economic Union, China, Germany and South Africa.  Other agreements are awaiting signature by the partner governments, such as those with Switzerland, Thailand and Morocco.  APPIs are in the process of being negotiated with Italy, Canada, the Netherlands, Russia, Ukraine and Great Britain/Northern Ireland.  The APPIs guarantee security for investors and their investments.

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 Madagascar subject to certain conditions:  submission of an investment plan and programme, provision of certification that funds in an amount of US$500,000 or more or the equivalent in foreign currency have been invested.  Depending on the sector of activity involved, the authorization issued by the EDBM relates to areas of between 5,000 and 25,000 square metres with the possibility of a waiver, depending on the size of the investment in foreign currency.

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 Madagascar set up the Guichet Unique des Investissements et des Entreprises – GUIDE (Single Window for Investments and Enterprises) pursuant to Decree No. 2003-938 of 9 September 2003.

68.               In spite of these incentives, FDI remains low for a country with Madagascar's strong potential.  In 2006, in the context of the MAP, the Government set up the Economic Development Board of Madagascar (EDBM), which has taken over the activities of the GUIDE.

69.               More particularly, the EDBM is in charge of promoting Madagascar as an attractive destination for investments.

70.               The EDBM's objectives for 2012 as set out in the MAP are to attract US$500 million in FDI and to move Madagascar up to 80th place in the Doing Business rankings.

II.                economic reforms

71.               After having embarked in July 2003 on implementation of the Poverty Reduction Strategy Paper (PRSP), Madagascar set out in 2007 on the path of change by laying the foundations for rapid and sustainable development.

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 Madagascar, rising from 1.7 out of 10 in 2002 to 2.8 out of 10 in 2005;

            -           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, Taomasina, Madagascar's main port on the east (Indian Ocean) coast, and Mahajanga on the west coast.  Antsiranana and Toliara are the country's other two main ports.  In 2007 work began on the construction of a mineral port at Ehoala (Taolagnaro) as part of the QMM – Rio Tinto ilmenite extraction project, and a study is currently under way with a view to extending the port of Taomasina.

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 Antananarivo, Nosy-Be and Île Sainte Marie.  Madagascar has adopted a sustainable development and management strategy for tourism, which has been identified as offering considerable potential.

82.               The authorities attach great importance to development of the telecommunications subsector, in accordance with their commitment under the MAP to make Madagascar "a connected nation".  TELMA, the historic operator, is currently investing in the installation of backbone fibre-optic cable infrastructure, with a view to developing fixed broadband services and telephony.  Postal services are managed by Paositra Malagasy, a public company.

83.               Madagascar's trade could be increased by 20 per cent with appropriate infrastructure support.

(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, Madagascar has continued its macroeconomic stabilization and structural reform programme under the Heavily Indebted Poor Countries (HIPC) Initiative.  It was able to benefit from a substantial reduction in its external debt in 2000 (the date of attainment of the decision point of the Initiative) and in 2004 (the date of attainment of its completion point).

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.               Madagascar's overall economic prospects are good in the short and medium terms.  Reckoning on substantial flows of FDI in the mining sector, the authorities are projecting a rate of economic growth of between 8 per cent and 10 per cent and a rate of inflation of 5 per cent in 2012.

            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 Madagascar's trade has not developed greatly since 2001.  About one half of exports comprises primary products (shrimp, vanilla, cloves, chromite and graphite), and one quarter consists of exports of clothing from the IFZ.

       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 Madagascar, four of them subsidiaries of French banks, two subsidiaries of Mauritian banks and one Chinese bank.  However, the financial system suffers from insufficient competition between banks and a limited supply of medium- and long-term financing.

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 Madagascar and to secure rapid and sustainable improvement in the performance of the principal stakeholders in agricultural development.  A branch-based approach will be developed and public-private partnership will be promoted.  This will mean developing at one and the same time a production sector able to supply agricultural goods adapted to the needs of domestic and external markets, and a dynamic industrial sector capable of providing producers with outlets.

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 (India).  Within two to three years, cassava will be among the products exported to COMESA and Asia (China).

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, Madagascar will receive support from the WTO/STDF for the upgrading of dried grains for export and from UNCTAD for fresh fruit.  For traditional agricultural goods such as spices and vanilla, the research embarked on for production and processing will be pursued in order to develop new product ranges.  Multiannual support is planned to revitalize the sugar and coffee branches.

110.            For lychees, exporters and producers' organizations are to receive support to assist them with upgrading.  For access to the United States market, the integrated phytosanitary surveillance system required by the USDA will be validated by the end of 2009.

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 Madagascar.

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 (Sava region).

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, Madagascar intends to pursue measures aimed at gradually reducing fishing (tuna, shrimp, lobster … ).

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, Japan, China, Mauritius), but the SADC market is also targeted.

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 Madagascar) and the WWF, for the preparation of eco-certification criteria for aquaculture, and with the Marine Stewardship Council for eco-certification criteria for fishing.

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.            Madagascar imports all its fuel requirements.  The Malagasy Hydrocarbons Office (OMH) issues permits for the import, processing, transport, storage and sale of hydrocarbons and ensures supply of the national territory.  Since 2004, pricing policy has shifted away from price ceilings towards liberalization.  Imports of petroleum products are subject to specific taxes and VAT.

130.            Since the 2003 surge in world prices oil companies have significantly increased investment in research and offshore exploration in Madagascar.

131.            A large proportion of the electricity consumed in Madagascar comes from hydroelectric stations, and the rest from thermal stations.  The State-owned company JIRAMA holds a monopoly on the transportation and distribution of electricity, and restructuring of the company is one of the Government's priorities in overcoming the problems of electricity supply.

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 ORE for their own consumption and may freely supply rural communities.

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 Madagascar's development strategy.  The country has an abundance of mining resources including chromium, gold and precious stones.  The mining policy is developed in the new Mining Code and a Law on Major Investments has been adopted introducing a more attractive tax regime for investors.  The general principles governing this sector are liberalization and withdrawal of the State.

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, Madagascar has all the necessary assets for developing tourism.  In this sector, the Government has set as its main objective the sustainable development of high quality tourism based on the following guiding principles:

            -           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 Indian Ocean area;

 

            - promoting investment;

 

            - promoting Madagascar as a destination;

 

            - 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 17 October 2005 was accordingly enacted to introduce institutional reform of the telecommunications sector.  Privatization and the reforms undertaken are paving the way towards an information society and competitiveness of the national economy.

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.  Madagascar has potential for the export of handicraft products, with an abundance of raw materials of animal, plant and mineral origin, as well as recycled material.

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 Madagascar's potential and comparative advantages, the industrial sector contributes only 16 per cent to GDP.

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 19 August 1999 on industrial pollution management and abatement policy;

 

            -           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.  Madagascar's international trade efforts will focus on enhancing the competitiveness of its exports and opening up more to trade beyond its borders.  It has already defined priority projects and activities to attain these goals:

            - 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 Madagascar and its products;

 

            - 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.  Madagascar intends to pursue its commitments to integration in sub-regional entities such as the SADC and COMESA as the first step towards the establishment of an African Economic Community, an objective set by the African Union.

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 Geneva, Madagascar takes part in WTO activities and Ministerial Conferences.  It supports the positions of the LDCs, the G33, the African Group and the ACP countries on issues relating to multilateral obligations and the reinforcement of technical assistance activities.

163.  Madagascar is willing to cooperate with the other WTO Members in forwarding the process of re-initiating and completing the Doha Development Agenda negotiations.

(2)               Regional Agreements and Arrangements

(a)   African Union

164.  Madagascar is a founding member of the African Union, the successor to the Organization of African Unity (OAU).  Eventually, the African Union will be an economic and monetary union whose institutions will include the Conference of Heads of State and Government, the Council of Ministers, the Peace and Security Council, the Commission, and the Pan-African Parliament, together with a Central Bank, a Monetary Fund, the African Investment Bank, the Court of Justice, the Economic, Social and Cultural Council (statutes already prepared), and technical committees.

(b)   Common Market for Eastern and Southern Africa (COMESA)

165.  Madagascar became a member of COMESA in 1995.  The objective of this organization is to improve and broaden the integration process among its members by various means, including the adoption of more comprehensive trade liberalization measures, such as the complete elimination of tariff and non-tariff barriers to trade and the adoption of a common external tariff (CET);  the free movement of capital, labour and goods, and the right of establishment within COMESA;  the adoption of a common set of technical standards and regulations, quality control procedures, certification schemes and sanitary and phytosanitary regulations;  the harmonization of tax rates (particularly VAT and excise duties) and conditions for technical cooperation, particularly regarding company law, intellectual property rights, and investment legislation;  and the establishment of a monetary union.

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.  Madagascar became a full member of the SADC on 18 August 2005.  The SADC Treaty was signed in 1992 with the objective of creating a development community that would achieve economic integration.  Through regional cooperation and integration, the Community aims to provide balanced economic growth and development, political stability and security for its 14 member States.  Decisions and agreements are legally binding on members, and the Treaty provides for several protocols in specific areas such as trade, finance, industry, agriculture, transport, and investment.

169.  Madagascar ratified the SADC Treaty in December 2004 and has acceded to the following protocols:  the Protocol on Immunities and Privileges, the Protocol on Trade, the Tribunal Protocol, the Protocol on Health, and the Protocol on Education and Training.  The Protocol on Tourism has already been adopted by Parliament.  In 2006, Madagascar signed the Protocol on Finance and Investment.

170.  Madagascar is now embarking on implementation of the SADC Trade Protocol.  Its tariff reduction plan, prepared jointly by the administration and the private sector, was adopted by the Extraordinary SADC Summit of Heads of State and Government, held at Midrand (South Africa) in October 2006.

(d)                Indian Ocean Commission (COI)

171.  The Indian Ocean Commission has five member States:  Comoros, Madagascar, Mauritius, Reunion (France), and the Seychelles.  It was established in 1984 by the General Cooperation Agreement.

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.  Madagascar is one of the 79 African, Caribbean and Pacific (ACP) countries that have maintained close economic relations with the EU since 1975, when the Group came into being in Georgetown, Jamaica.

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 31 December 2007.  The Cotonou Agreement provides for the establishment, as of 1 January 2008, of a new trade arrangement between the EU and various ACP regional groupings, in the form of an economic partnership agreement (EPA) consistent with WTO rules.  This EPA should improve ACP trade flows to the EU and eventually reduce poverty in these countries.

177.  The EPA negotiating process was launched on 27 September 2002.  Madagascar is taking part in the EPA negotiations as a member of the Eastern and Southern Africa (AfOA) Group within COMESA.  The main objectives of EPAs are to encourage sustainable development and facilitate the integration of the ACP countries in the global economy.  The guiding principle for EPAs is to build on and strengthen the process of regional integration among ACP countries, in the interests of better economic development.  Given the vast discrepancy between the two parties' levels of development, commitments will be undertaken on an asymmetrical basis, with a gradual opening up of the ACP market and provision for a transition period.  The European Commission is due to provide the necessary support to that end.

178.  As a least developed country, Madagascar benefits from the "Everything but Arms" initiative.

(f)                 Relations with the United States of America

179.  Madagascar enjoys preferential access to the United States market both under the GSP and, since 2 October 2000, under the programme initiated by the United States pursuant to the African Growth and Opportunity Act (AGOA).  Since 1 March 2002, Madagascar has been AGOA-eligible under the special textile clause as well.  Under the Act, eligible countries are granted duty- and quota‑free access (other than for clothing) for a range of products, including selected agricultural and textile products, until 2015.

180.  In 2007, Madagascar's exports of clothing products under the AGOA rose by 20.6 per cent in value terms over 2006.  This is primarily due to the favourable performance of industrial free zone companies and to their compliance with U.S. buyers' quality and sell-by date standards.

181.  According to the latest USITC data, Madagascar ranks second after Lesotho in terms of clothing exports under the AGOA.

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.  Madagascar has also adopted customs measures to streamline the dispatch, loading and unloading of goods.

(3)               Bilateral Agreements

183.  Many countries, including Canada, China and Japan, grant (non-reciprocal) preferential tariff treatment under the GSP for goods originating in Madagascar.

184.  Madagascar has signed bilateral trade agreements with several countries, such as Japan, Switzerland, Finland, Spain, Denmark, Norway, USSR, Algeria, Cuba, Seychelles, China, Mauritius, Turkey, South Africa, and Botswana.

(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.  Madagascar is among the beneficiaries of the Integrated Framework programme.  According to the recommendations made by the Hong Kong Ministerial Conference, the Integrated Framework should be strengthened or supported by additional funding from international organizations or donor countries so that needs identified in the Diagnostic Trade Integration Study (DITS) can be fulfilled.

187.  Madagascar wishes to benefit from the Joint Integrated Technical Assistance Programme (JITAP) and the Enhanced Integrated Framework.

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 Madagascar through various activities aimed at furthering development of the country's foreign trade.

189.  The WTO has established a reference centre in the premises of the Ministry of Trade.

190.  According to the Doha development mandate, LDCs should receive more extensive trade‑related technical assistance and capacity building support to enable them to take a more effective part in the negotiations, facilitate their implementation of the WTO rules, and allow them to diversify their economies.

191.  Madagascar currently needs trade-related technical assistance in a number of areas:  implementation of trade-related agreements;  participation in the WTO's day-to-day activities;  capacity building for participation in trade negotiations and for trade policy formulation;  removal of supply-side constraints;  and integration of trade and development policies.

(a)   Implementation of agreements, training and policy formulation

192.  Madagascar's main implementation-related concerns relate to WTO rules, such as anti‑dumping, countervailing and safeguard measures;  trade-related aspects of intellectual property rights (TRIPS);  sanitary and phytosanitary measures (SPS);  technical barriers to trade (TBT);  and customs valuation.

193.  Madagascar is in need of technical assistance for Geneva-based, national or regional training, courses or seminars (for the public and private sectors) in the following areas:  trade negotiation techniques;  establishment of institutional structures;  harmonization of Malagasy laws and regulations with WTO principles and rules;  notifications;  and dispute settlement.

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 Madagascar's potential to access regional and international markets.

196.  As regards cross-cutting issues and in order to implement the various Agreements, Madagascar will need capacity-building and technical assistance to bring its domestic regulations into conformity with the WTO rules.

197.  Although a number of measures applied by its trading partners are inconsistent with WTO rules, Madagascar has never had recourse to the Dispute Settlement Body (DSB).  It hopes to be able to rely on support from the WTO and the Advisory Centre on WTO Law (ACWL) should it need to resort to such procedures.

(b)   Supply-side constraints

198.  Supply-side constraints are the principal factors limiting the expansion of Madagascar's external trade.  The Government has already taken measures to develop infrastructure, but it requires further trade-related technical assistance in order to facilitate trade.  Madagascar's need in this area is for a platform from which to support the development of a multimodal transport system and devise solutions for overcoming such constraints by providing operational support to the customs administration, rehabilitating ports and roads, and resolving the problem of costly air transport.

199.  Agriculture is Madagascar's leading sector but it is poorly structured.  Producers have difficulty in gaining access to production factors and therefore suffer from low agricultural yields which prevent the country from taking advantage of foreign outlets.  Madagascar requests further efforts on the part of its technical and financial partners so that it can increase and diversify production and obtain support for product processing and the creation of value added.

200.  Madagascar's exports have suffered from the dismantling of the Multifibre Arrangement, preference erosion and falling commodity prices on the international market.  The lack of competitiveness of Malagasy products both internationally and regionally remains one of the main factors hampering the country's exports.

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.  Madagascar therefore seeks support in these areas.

(c)   Integration of trade in development strategies

202.  Madagascar has consistently devised programmes aimed at upholding its development strategy.  Its poverty reduction strategy paper (PRSP) has been updated on the basis of the "Madagascar, naturellement" vision.  In a resolute move to speed up its development and ensure more effective coordination of the development process, Madagascar is now entering the MAP implementation phase.

203.  The expansion of foreign trade and regional integration are among the lynchpins of Madagascar's development policy.  The MAP thus contains challenges relating to international trade.

conclusion

204.  This report has been prepared within the context of the WTO review of Madagascar's trade policy, which enables the country to meet its obligations within the multilateral system, whilst drawing investors' attention to Madagascar's business environment, presenting its programme for development and stating its expectations vis-à-vis its development partners.

205.  The report takes stock of Madagascar's economic situation, emphasizing efforts already undertaken and highlighting activities contemplated for the future.  It details current development and policy instruments and defines the key directions for development.

206.  Although progress has been achieved, more ambitious programmes are yet to be implemented.

207.  Through the analyses contained in this document, Madagascar has identified the strengths and weaknesses of its trade policy.

208.  Technical assistance from all donors and its development partners will enable Madagascar to overcome these weaknesses and address the development challenges that lie ahead.

 

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