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TRADE POLICY REVIEWS: FIRST PRESS RELEASE, SECRETARIAT AND GOVERNMENT SUMMARIES

PRESS RELEASE
PRESS/TPRB/170
20 July 2001
Cameroon: July 2001

The WTO Secretariat report, along with the policy statement by the Government of Cameroon, served as a basis for the second trade policy review of Cameroon by the Trade Policy Review Body of the WTO on 18 and 20 July 2001.

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See also:

Second press release
Chairperson’s concluding remarks


Enhanced participation in the multilateral trading system can help Cameroon's economic development  Back to top

Cameroon's greater participation in the multilateral trading system could help the country improve its economic development and provide a more secure environment to attract foreign investment. But the country also needs to improve its infrastructure and diversify its exports, according to a WTO report on the trade practices and policies of Cameroon.  

The report notes that Cameroon is recovering slowly from a prolonged depression which lasted until 1995. The improved performance is due mainly to the implementation of structural reforms (economic liberalization and privatization) as well as favourable external events. Structural reforms have focused on the privatization of state monopolies and price liberalization to allow market forces to allocate resources. In this context, the Government sees trade liberalization as integral to its efforts in modernizing the economy. Trade policy objectives continue to be oriented towards a more open trade regime, and increasing market access for Cameroon's exports.

Despite its recent improved growth, Cameroon still suffers from widespread poverty, deterioration in the education and health systems, and weaknesses in governance, says the report. Agriculture and forestry are the main contributors to GDP, with the petroleum sector also of considerable importance to the economy. Cameroon's exports are dominated by petroleum and petroleum products. Other important export items include cocoa (notably beans), coffee, aluminium, and lumber. Manufactured products dominate imports. The European Union (EU) continues to be the dominant market for exports (accounting for around 66% of merchandise exports in 1999/00) as well as the main source of imports (50%).

Cameroon is a founding Member of the WTO and grants at least MFN treatment to all its trading partners. Cameroon holds observer status in the Agreement on Trade in Civil Aircraft; in mid-2001, Cameroon will become an observer to the Agreement on Government Procurement. As a developing country, Cameroon used transition periods to implement a number of commitments under various WTO Agreements. The authorities have expressed concerns about Cameroon's implementation of the Agreements owing to a lack of information and training. Most of Cameroon's annual notification requirements under the WTO Agreements are yet to be fulfilled. Enhanced technical assistance efforts by WTO Members and the Secretariat could greatly facilitate Cameroon's further integration in the multilateral trading system. Cameroon's trade policies and practices are, to a large extent, determined regionally under CEMAC (Communauté économique et monetaire de l'Afrique centrale), which also includes the Central African Republic, Chad, Equatorial Guinea, Gabon and the Republic of Congo.

Cameroon's main trade policy instrument is the tariff. All applied tariffs are ad valorem, and there are no seasonal or variable rates, adding to the transparency of the regime. The simple average applied MFN tariff was 18.3% in 2000, slightly lower than the prevailing average at the time of the last Review. As a result of the Uruguay Round negotiations, Cameroon bound all its agricultural (WTO definition) tariff lines at a ceiling rate of 80%, while only three tariff rates levied on non-agricultural products were bound. The bound tariff rates are substantially higher than the applied rates; closing this gap would further improve predictability of the tariff regime.

The report also notes that agriculture and forestry remain Cameroon's leading economic activities, accounting for more than 40% of GDP and providing employment for about 60% of the population. The agriculture sector has undergone thorough reform since 1994: quantitative restrictions on imports and exports have been removed, and most parastatals have been privatized. There have also been some reforms in forestry; however, export restrictions and taxes still apply to some forestry products. Export taxes on other agricultural products, including cocoa, coffee, cotton, sugar, and palm oil, were removed recently.

The Government sees the development of the agriculture sector as the best means for reducing poverty in Cameroon and stimulating economic growth. It is determined to further liberalize the sector, including through privatization. Its strategy is to improve the sector's competitiveness and enhance factor productivity, with a view to strengthening growth and increasing farmers' income. The Government's efforts are also aimed at diversifying domestic production and promoting export diversification. The average MFN tariff levied on agriculture (WTO definition) is 22.5%.

The services sector contributes some 40% of GDP. Cameroon has eliminated most of its previous restrictions on trade in services. Remaining restrictions are limited to the so-called strategic services, such as water distribution, electricity, public transportation, and telecommunications. The performance of the services sector has been poor, and lack of efficiency has impeded the development of other sectors.

The Cameroonian authorities are committed to continuing structural reform, with a view to stimulating private investment, enhancing competition and efficiency, and lowering costs, thus facilitating the efficient allocation of resources, reflecting Cameroon's comparative advantages, and improving economic growth. In order to attain sustainable poverty reduction, Cameroon needs to register high economic growth rates, significantly improve efficiency in public expenditure, and strengthen governance. Further efforts are needed to continue the development of the physical and services infrastructure of the economy, as well as to improve the human capital base, to overcome the constraints that weaknesses in these areas impose on development efforts. By improving the level of its multilateral commitments, Cameroon could create confidence in the irreversibility of its reforms and render them more credible, thus improving its ability to attract the needed foreign investment. Cameroon's trading partners can assist its reform efforts by ensuring stable, increased access to their markets, in particular for products of export interest to Cameroon.

Note to Editors

Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member countries’ trade and related policies are examined and evaluated at regular intervals. Significant developments which may have an impact on the global trading system are also monitored. For each review, two documents are prepared: a policy statement by the government of the member under review, and a detailed report written independently by the WTO Secretariat. These two documents are then discussed by the WTO’s full membership in the Trade Policy Review Body (TPRB). These documents and the proceedings of the TPRB’s meetings are published shortly afterwards. Since 1995, when the WTO came into force, services and trade-related aspects of intellectual property rights have also been covered.

For this review, the WTO’s Secretariat report, together with a policy statement prepared by the Government of Cameroon, will be discussed by the Trade Policy Review Body on 18 and 20 July 2001. The Secretariat report covers the development of all aspects of Cameroon's trade policies, including domestic laws and regulations, the institutional framework, trade policies by measure and by sector.

Attached to this press release is a summary of the observations in the Secretariat report and parts of the government policy statement. The Secretariat report and the government's policy statement are available for the press in the newsroom of the WTO internet site (www.wto.org). These two documents and the minutes of the TPRB’s discussion and the Chairman’s summing up, will be published in hardback in due course and will be available from the Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.

Since December 1989, the following reports have been completed: 
Argentina (1992 and 1999), Australia (1989, 1994 and 1998), Austria (1992), Bahrain (2000) Bangladesh (1992 and 2000), Benin (1997), Bolivia (1993 and 1999), Botswana (1998), Brazil (1992, 1996 and 2000), Brunei Darussalam (2001), Burkina Faso (1998), Cameroon (1995 and 2001), Canada (1990, 1992, 1994, 1996, 1998 and 2000), Chile (1991 and 1997), Colombia (1990 and 1996), Costa Rica (1995 and 2001), Côte d’Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992 and 1999), El Salvador (1996), the European Communities (1991, 1993, 1995, 1997 and 2000), Fiji (1997), Finland (1992), Gabon (2001), Ghana (1992 and 2001), Guinea (1999), Hong Kong (1990, 1994 and 1998), Hungary (1991 and 1998), Iceland (1994 and 2000), India (1993 and 1998), Indonesia (1991, 1994 and 1998), Israel (1994 and 1999), Jamaica (1998), Japan (1990, 1992, 1995,1998 and 2000), Kenya (1993 and 2000), Korea, Rep. of (1992, 1996 and 2000), Lesotho (1998), Macao (1994 and 2001), Madagascar (2001), Malaysia (1993 and 1997), Mali (1998), Mauritius (1995), Mexico (1993 and 1997), Morocco (1989 and 1996), Mozambique (2001), New Zealand (1990 and 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991, 1996 and 2000), OECS (2001), Pakistan (1995), Papua New Guinea (1999), Paraguay (1997), Peru (1994 and 2000), the Philippines (1993 and 1999), Poland (1993 and 2000), Romania (1992 and 1999), Senegal (1994), Singapore (1992, 1996 and 2000), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 and 1998), Sri Lanka(1995), Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991, 1996 and 2000 (jointly with Liechtenstein)), Tanzania (2000), Thailand (1991, 1995 and 1999), Togo (1999), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 and 1998), the United States (1989, 1992, 1994, 1996 and 1999), Uganda (1995), Uruguay (1992 and 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).


  
The Secretariat’s report: summary  Back to top

TRADE POLICY REVIEW BODY: REVIEW OF CAMEROON
Report by the Secretariat — Summary Observations

Since 1995, the Cameroonian economy has started to recover slowly but steadily from its earlier prolonged depression. Growth has averaged 4.7% a year over the last five fiscal years (1995/96-1999/00). Over the same period, inflation and the fiscal deficit have been low. The improved performance is due mainly to the implementation of structural reforms (economic liberalization and privatization) as well as favourable external events. Structural reforms have focused on the privatization of state monopolies and price liberalization to allow market forces to allocate resources. In this context, the Government sees trade liberalization as integral to its efforts in modernizing the economy. Trade policy objectives continue to be oriented towards a more open trade regime, and increasing market access for Cameroon's exports.

Despite its recent improved growth, Cameroon still suffers from widespread poverty, deterioration in the education and health systems, and weaknesses in governance; in 1999/00, GDP per capita had not yet reached its pre-depression level. The authorities seem committed to continuing the reform process, including improvements in the transparency of the legal system, particularly to reduce poverty. In concert with the continued reform effort, the IMF and the World Bank agreed at end-2000 to support a comprehensive debt-reduction programme for Cameroon under the HIPC initiative.

Agriculture and forestry are the main contributors to GDP, with the petroleum sector also of considerable importance to the economy. Cameroon's exports are dominated by petroleum and petroleum products. Other important export items include cocoa (notably beans), coffee, aluminium, and lumber. Manufactured products dominate imports. The geographic pattern of Cameroon's trade has remained more or less the same since Cameroon's previous Review, in February 1995: the European Union (EU) continues to be the dominant market for exports (accounting for around 66% of merchandise exports in 1999/00) as well as the main source of imports (50%); France is the single largest source of imports, accounting for about a quarter of total merchandise imports. As regards exports, Italy has overtaken France as the main destination market. Outside the EU, Chad and the United States are important export markets, and Nigeria, Japan, and the United States are important import sources.

Trade and Investment Policy Framework

Cameroon's general trade policy orientation and objectives have not changed significantly since its last Review. The Government has continued to undertake measures aimed at liberalizing its trade policy regime, fostering the private sector's involvement in the economy, improving competitiveness, and promoting investment. These objectives have been pursued mainly through a process of a revived regional integration effort under the CEMAC (Communauté économique et monetaire de l'Afrique centrale), which also includes the Central African Republic, Chad, Equatorial Guinea, Gabon and the Republic of Congo.

Responsibility for trade policy formulation and implementation has remained broadly unchanged during the review period. Trade policy formulation is under the responsibility of the Ministry of Industrial and Commercial Development and the Ministry of Economy and Finance. Cameroon does not have an independent statutory body to review, or advise the Government on, economic and trade policies. Consultations with the private sector take place on an ad hoc basis.

The authorities, aware of the importance of a clearer legal framework to support economic reform, are making efforts to improve the transparency and enforcement of current legislation; this should enhance the system's predictability and increase investor confidence.

Cameroon is a founding Member of the WTO and grants at least MFN treatment to all its trading partners. Its tariff binding commitments cover around 15% of its total tariff lines. Cameroon holds observer status in the Agreement on Trade in Civil Aircraft; in mid-2001, Cameroon will become an observer to the Agreement on Government Procurement. As a developing country, Cameroon used transition periods to implement a number of commitments under various WTO Agreements. The authorities have expressed concerns about Cameroon's implementation of the Agreements owing to a lack of information and training. Most of Cameroon's annual notification requirements under the WTO Agreements are yet to be fulfilled. Enhanced technical assistance efforts by WTO Members and the Secretariat could greatly facilitate Cameroon's further integration in the multilateral trading system.

Cameroon's trade policies and practices are, to a large extent, determined regionally under CEMAC. Certain areas, such as trade in services, are regulated by both supra national, and national regulation covering issues not subject to common regional rules.

The CEMAC is based on an economic and monetary union. One of the objectives of the Community is to establish a unified market allowing for open trade and capital flows between its Member States. A Common External Tariff (CET) is in place for trade with third countries, while trade inside the Community has been duty free since 1998. The CET has four rates: 5% (for essential goods); 10% (for raw materials and capital goods); 20% (for intermediate goods); and 30% (for consumer goods). A common regional central bank (BEAC) establishes and administers monetary policy for CEMAC members. Recent developments show that progress has been achieved in the Community towards economic union; efforts are also under way for the harmonization of internal taxation, facilitation of the movement of persons and capital (a regional Investment Charter was adopted in 1999), and the free circulation of services. However, trade between Cameroon and its CEMAC partners is low compared with the trade flows between Cameroon and its main trading partners in Europe.

Foreign investment is considered by the Government as a key factor in Cameroon's economic development. Various initiatives have been undertaken to attract foreign investors, including the simplification of administrative procedures, the provision of specific incentives, implementation of competition legislation, judicial reform, privatization, and a National Governance Programme to fight corruption. Cameroon's investment legislation contains all the basic elements to provide an open liberal investment climate. However, it appears that the implementation of these initiatives has been slow.

Trade and Trade-Related Policies and Measures

Cameroon's main trade policy instrument is the tariff. All applied tariffs are ad valorem, and there are no seasonal or variable rates, adding to the transparency of the regime. The simple average applied MFN tariff was 18.3% in 2000, slightly lower than the prevailing average at the time of the last Review. As a result of the Uruguay Round negotiations, Cameroon bound all its agricultural (WTO definition) tariff lines at a ceiling rate of 80%, while only three tariff rates levied on non-agricultural products were bound. The bound tariff rates are substantially higher than the applied rates; closing this gap would further improve predictability of the tariff regime.

Imports, as well as domestically produced goods, are subject to a value-added tax (18.7%), and some products to a 25% excise tax (alcoholic beverages, cigarettes, cosmetics, and jewellery). A temporary import surcharge of up to 30% was levied on a few products until June 2000. The relatively few import restrictions currently in place are aimed at ensuring security, and protecting public health and the environment. Customs procedures have been streamlined through the opening of a single- window facility. For customs valuation, Cameroon continues to use the Brussels Definition of Value, but as of July 2001 it is expected to apply the WTO Customs Valuation Agreement. Cameroon has legislation regulating contingency trade measures (anti-dumping, countervailing and safeguards) but has not applied such measures to date. Standardization is at an early stage in Cameroon.

The Cameroon export regime has been further liberalized during the review period. At present, export licences apply only to "sensitive" goods (e.g. gold and diamonds) while coffee and cocoa require an export certificate to ensure quality. Remaining export prohibitions, such as on hazardous products, are in place for health and environmental reasons. All export taxes, except those levied on logs, have been removed. Exports of logs are also subject to quotas. Cameroon does not grant any specific assistance to exporters other than tax incentives. Tax incentives are also provided to promote industrial development, encourage exports, raise value added, and create employment. These incentives are contingent upon export performance and, in certain instances, on the use of domestic inputs.

Cameroon has introduced new legislation on government procurement, particularly to enhance the transparency of the regime. In principle, local companies receive a 20% price-preference margin on all government procurement. The Government has undertaken efforts to fight corruption and increase transparency; it has established requirements for wider tender announcements, independent monitors for large contract awards, and has instituted more regular audits of tender awards.

Intellectual property legislation has been revised at the regional level (under the African Intellectual Property Organization, OAPI), to seek compliance with the TRIPS Agreement; implementation of the revised legislation still awaits ratification by five of OAPI's 15 members.

The process of privatization in Cameroon, which started in 1990, has continued; however, state monopolies remain in some utilities (water and electricity). In 1997, a new law to regulate competition policy was adopted and applies both to private and public enterprises. Services provided by state monopolies, as well as some basic goods, are subject to price controls.

Sectoral Issues

Agriculture and forestry remain Cameroon's leading economic activities, accounting for more than 40% of GDP and providing employment for about 60% of the population. The agriculture sector has undergone thorough reform since 1994: quantitative restrictions on imports and exports have been removed, and most parastatals have been privatized. There have also been some reforms in forestry; however, export restrictions and taxes still apply to some forestry products. Export taxes on other agricultural products, including cocoa, coffee, cotton, sugar, and palm oil, were removed recently.

The Government sees the development of the agriculture sector as the best means for reducing poverty in Cameroon and stimulating economic growth. It is determined to further liberalize the sector, including through privatization. Its strategy is to improve the sector's competitiveness and enhance factor productivity, with a view to strengthening growth and increasing farmers' income. The Government's efforts are also aimed at diversifying domestic production and promoting export diversification. The average MFN tariff levied on agriculture (WTO definition) is 22.5%.

Oil-related activities account for around 5.5% of GDP and 45% of exports; other mineral deposits in Cameroon remain largely unexploited. The Government's policy objectives are to develop the oil and minerals sectors' potential through further liberalization and provision of incentives, as well as to increase efficiency and transparency in the management of the oil sector. The Government is to develop a legislative and regulatory framework for mining, natural gas, and petroleum activities that will allow for the development of offshore reserves, promote and develop hydroelectric potential, and promote the distribution of petroleum products.

Manufacturing in Cameroon remains relatively underdeveloped and accounts for around 14% of GDP. Cameroon does not provide industry-specific incentives. The Government's overall policy objective for the sector is to support private-sector activity. A strategy to promote the development of manufacturing is to be adopted by mid-2001; efforts are aimed at promoting investment and exports (to the regional market), and improving professional and technical training.

The services sector contributes some 40% of GDP. Cameroon has eliminated most of its previous restrictions on trade in services. Remaining restrictions are limited to the so-called strategic services, such as water distribution, electricity, public transportation, and telecommunications. The performance of the services sector has been poor, and lack of efficiency has impeded the development of other sectors. Some services have been restructured, including through privatization and the adoption of a new regulatory framework aimed at attracting additional operators so as to improve the quality and provision of services. This regime is not, however, bound under the GATS. Cameroon's commitments under GATS cover only some subsectors of business services, and tourism and travel-related services. Exemptions to MFN treatment are maintained on maritime transport. Cameroon did not participate in the WTO negotiations on basic telecommunications, nor on financial services.

Cameroon's banking sector has undergone a thorough reform. Since the late 1980s, the authorities have implemented a programme of privatization, liquidation, and recapitalization of banks, and have reinforced the regulatory and supervisory capacity. The Government sold its last state-owned bank in January 2000. The Central African States Bank (BEAC) regulates the sector through its regional banking commission (COBAC), which shares responsibility with the national ministries of finance for licensing new banks. Cameroon is one of the 14 African countries that ratified the Treaty of the Inter-African Conference on Insurance Markets (CIMA), and adopted a common code with respect to the insurance sector.

Important efforts have been made to reform Cameroon's telecommunications sector. The sector is now regulated by the 1998 Telecommunications Law, which calls for the privatization of the sector and established a regulatory body to ensure the proper functioning of the industry and competition among individual operators.

Outlook

The Cameroonian authorities are committed to continuing structural reform, with a view to stimulating private investment, enhancing competition and efficiency, and lowering costs, thus facilitating the efficient allocation of resources, reflecting Cameroon's comparative advantages, and improving economic growth. In order to attain sustainable poverty reduction, Cameroon needs to register high economic growth rates, significantly improve efficiency in public expenditure, and strengthen governance. Further efforts are needed to continue the development of the physical and services infrastructure of the economy, as well as to improve the human capital base, to overcome the constraints that weaknesses in these areas impose on development efforts. By improving the level of its multilateral commitments, Cameroon could create confidence in the irreversibility of its reforms and render them more credible, thus improving its ability to attract the needed foreign investment. Cameroon's trading partners can assist its reform efforts by ensuring stable, increased access to their markets, in particular for products of export interest to Cameroon.

  
  
Government report Back to top

TRADE POLICY REVIEW BODY: CAMEROON
Report by the Government
— Part IV

Outlook for the Cameroonian economy – Macroeconomic policies

Motivated by the encouraging results of the implementation of its three-year programme (1997-2000), the Government has adopted a poverty alleviation programme for the 2001-2003 period. This programme reinforces the reforms launched since August 1997.

It is based on the interim Poverty Reduction Strategy Paper (PRSP-I), prepared with a participatory approach in mind and adopted in August 2000. A definitive Strategic Framework for Poverty Reduction should be established by November 2001 at the very latest. The overall aim of this programme is to create conditions for strong, sustainable growth with the potential to curb the poverty currently affecting over 50 per cent of the population, predominantly women. Cameroon intends to take up a number of major challenges, notably: (i) to ensure that GDP continues to grow at a minimum annual rate of 7 per cent in real terms in an endeavour to reduce the poverty rate by half by 2015; (ii) to discover new non-petroleum growth products to export, as catalysts for economic growth; (iii) to strengthen the national industrial fabric and improve the quality of agricultural products sold on the foreign market and the volume of which is experiencing a downward trend; (iv) to enhance governance in the fields of public finances and business with a view to: (a) improved expenditure control; (b) capacity building with regard to the design, planning, execution and following up of the Priority Investment Programmes (PIP) in particular; (c) improved government procurement procedures and greater supervision of their execution; (d) greater transparency in and modernization of the judicial system and the fight against corruption. These concerns are linked to the need to promote a dynamic private sector and ensure viable social and human development.

Sectoral polices

Over the next three years, the Government intends to develop a sectoral strategy for each sector which clarifies sector priorities and paves the way for the development of a sliding multi-year PIP.

With regard to the development of rural and industrial activities, as of 2001 the Government intends to develop both an integrated rural development strategy and an industrial development strategy. The integrated rural development strategy will, to begin with, involve developing suitable strategies for the livestock breeding and fisheries subsectors, based on their potential and on the authorities' development aspirations.

Within the framework of its poverty alleviation programme, the government will introduce so-called second-generation reforms in the three key sectors of health, education and basic rural infrastructures.

Two interim sectoral strategies have already been adopted in the fields of education and health.

The education strategy aims to introduce the principle of education for all by offering increased access to education, encouraging school attendance among girls, improving teaching quality, professionalizing teaching and ensuring that education and training are geared towards employment. The authorities decided to scrap the payments required of the parents of pupils attending public primary schools, a measure which took effect as of the school year 2000/2001.

An emergency investment programme focusing as a matter of priority on classroom repair and construction will be implemented following studies to ensure effective and efficient public spending.

In the field of health, the main objective of the sectoral strategy is to reduce infant mortality and the incidence of communicable diseases, check the spread of HIV/AIDS, promote preventive medicine and improve the access of the population to essential drugs. To this end, the Government, with the support of international health organizations, plans to swiftly step up the number of public information and awareness campaigns on this scourge.

With regard to basic rural structures, the Government has increased the resources earmarked for road network maintenance. The grant from the Road Maintenance Fund and direct funding by the Ministry of Public Works have substantially increased with the 2000/2001 budget. Additional human and technical resources will also be mobilized to enable more road works to be scheduled and related tenders awarded. Support will also be given to the small and medium enterprises (SMEs) in this sector, with a view to developing their ability to complete the contracts awarded to them within the allotted time.

The Government is resolved to expedite and broaden the scope of structural reforms in the agro-industrial, utilities, transport and petroleum sectors in order to stimulate both private investment and the competitiveness and efficiency of the economy as well as its production and export capacity.