Côte d'Ivoire: July 1995
Foreign direct investment is regarded as a pre-requisite for the anticipated growth. In this regard, the recent reforms in privatization, the introduction of a new law on competition and the framing of a new Investment Code should all help to reinforce Côte d'Ivoire's traditionally welcoming environment for foreign capital and improve competition between new investors and already established companies.
POLICY REVIEW BODY: REVIEW OF CÔTE D'IVOIRE
The Trade Policy Review Body of the World Trade Organization (WTO) conducted its first review under WTO procedures in its examination on 4 and 5 July 1995 of Côte d'Ivoire's trade policies. The text of the Chairman's concluding remarks is attached as a summary of the salient points which emerged during the two-day discussion.
The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member country at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.
The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country's trade policies, including: its domestic laws and regulations; the institutional framework; bilateral, regional and other preferential agreements; the wider economic needs and the external environment.
A record of the discussions and the Chairman's summing-up, together with these two reports, will be published in due course as the complete trade policy review of Côte d'Ivoire and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995), Canada (1990, 1992 & 1994), Chile (1991), Colombia (1990), Egypt (1992), the European Communities (1991 & 1993), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992 & 1995), Kenya (1993), Korea, Rep. of (1992), Macau (1994), Malaysia (1993), Mexico (1993), Morocco (1989), New Zealand (1990), Nigeria (1991), Norway (1991), Pakistan (1995), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992), South Africa (1993), Sweden (1990 & 1994), Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey (1994), the United States (1989, 1992 & 1994), Uruguay (1992) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY: REVIEW OF
CONCLUDING REMARKS BY THE CHAIRPERSON Back to top
This first meeting of the Trade Policy Review Body under the procedures of the World Trade Organization has enabled the trade policies and practices of Côte d'Ivoire to be reviewed for the first time. The following remarks are made on my own responsibility and are not intended to replace our joint evaluation.
The discussion focused on four main areas:
Macroeconomic policy and developments
Many participants noted that the competitiveness of the Ivorian economy had revived following the devaluation of the CFA franc and the introduction of the structural adjustment measures that accompanied it. The high estimates of GDP and investment growth mean maintaining strict control over current expenditure so as to finance public investment while avoiding inflationary pressure. In this connection, the burden of debt servicing has placed an additional constraint on budgetary expenditure. The effect on competitiveness of relatively high labour costs was raised.
Foreign direct investment is regarded as a pre-requisite for the anticipated growth. In this regard, the recent reforms in privatization, the introduction of a new law on competition and the framing of a new Investment Code should all help to reinforce Côte d'Ivoire's traditionally welcoming environment for foreign capital and improve competition between new investors and already established companies. Risk assessment is a key factor in this process.
Several speakers also stressed the importance of financial and technological external assistance.
In reply, the representative of Côte d'Ivoire referred to the economic stabilization and recovery programme under way since 1991, which includes sectoral adjustment measures, the reform of monetary and fiscal policy, a large-scale privatization programme and the introduction of a new Investment Code. Investment approval procedures have been made considerably shorter and simpler, and this, together with the economic and political stability of the country, should reduce perceived risks and attract new investment flows. Following devaluation, labour costs have become more competitive vis-à-vis similar countries.
These adjustment efforts, combined with the change in the parity of the CFA franc, have contributed to stabilizing the State's financial position, reducing internal debt, restoring investor confidence and increasing the volume of exports.
Many speakers referred to Côte d'Ivoire's important role in the economy and trade of the region. Questions were put about economic integration in the West-African Economic and Monetary Union (WAEMU) and its link with the commitments made within ECOWAS. Alluding to the importance of special and differential treatment for developing countries, some members noted the erosion of preferential trade margins of Ivorian products in its traditional markets following the Marrakesh
Agreement. In this context, others stressed that Côte d'Ivoire should diversify its production, turning to new non-traditional goods and services and new markets.
In reply, the representative of Côte d'Ivoire recalled the strategy to diversify agricultural and agro-industrial exports; the boom in the mining and energy sector as a result of the exploitation of newly-discovered petroleum, natural gas and other mineral deposits; and the development of services, particularly in the sub-region, including financial services, telecommunications, transport and tourism. It was noted that the State no longer intervenes or controls sources of production in the industrial or agricultural sector, although it had warned that a transition period was necessary in areas such as coffee or cocoa production where the workers need organizational help. With regard to the treaty setting up the WAEMU, he noted that the ultimate objective is to make it a customs union with a common external tariff and greater internal cooperation. A plan of work for the various aspects of such cooperation is to be prepared before the end of 1995.
Participants congratulated Côte d'Ivoire on a 50 per cent reduction in customs duties, which now stand at approximately 22 per cent. However, the complexity and lack of transparency of import duties were noted, and clarifications asked for concerning the maintenance of reference prices, alternate duties and minimum levies, and the need to cumulate four different duties on merchandise imports. Members asked how the Government planned to reduce budgetary dependence on import duties. It was noted that there were very few bindings covering industrial products during the Uruguay Round and that the value-added tax seemed to affect imports more than domestic products. Questions were also asked about the application of the Customs Valuation Code.
Côte d'Ivoire does not apparently discriminate against foreign suppliers as regards government procurement. In this connection, participants asked whether Côte d'Ivoire planned to accede to the new Agreement on Government Procurement.
With regard to exports, Côte d'Ivoire was asked by several participants to explain the role of the coffee and cocoa export taxes which have recently been reintroduced and which seem likely to reduce both export volume and farmers' income. Generally speaking, the cumbersome administrative procedures for exports seemed likely to impair the performance of the export sector. Some members asked whether there was direct or indirect export subsidization.
In reply, the Côte d'Ivoire representative stressed the importance of simplifying customs and port procedures for importation and customs clearance, and of reducing and harmonizing duties and taxes. It was necessary to create a modern fiscal system and extend the tax base. A tariff reform has established a consolidated customs duty of 5 per cent; the four-duty structure allows optimum implementation of Côte d'Ivoire's economic and trade policy and makes harmonization of customs duties within the WAEMU possible. The VAT rate is the same for imported as for domestically-produced goods. In conformity with WTO provisions, Côte d'Ivoire has delayed application of Article 7 of GATT 1994 for five years. Rice and flour are now imported without restriction. The single export duty on coffee, cocoa and wood is assigned to both the general financial budget and the Farmers' Support Fund.
In trade in services, restrictions on shipping were referred to as a barrier to the competitiveness of Ivorian exports. Questions were also put about the Government's objectives with regard to telecommunications, and financial and insurance services. Since the latter appear to be particularly open to foreign suppliers, does Côte d'Ivoire intend to participate in negotiations in these areas? Energy and water supply services seem to be established as private monopolies with regulated prices: what mechanisms exist to prevent too high prices from impairing the competitiveness of Ivorian exports of goods and services?
Measures relating to trade and environment are of vital importance for the Ivorian wood sector, as well as other raw material exports, in view of the problem of deforestation. Some participants asked how the Government planned to use the proceeds of export taxes to remedy environmental problems.
With regard to intellectual property, Côte d'Ivoire was asked to give details of the nature of the patent protection covering chemicals, pharmaceuticals and agricultural products.
In reply, the Côte d'Ivoire representative noted the dissolution of the National Shipping Company SITRAM and the elimination of the shippers' visa, as well as a plan for the privatization of the National Telecommunications Company. He recalled Côte d'Ivoire's accession to several treaties and agreements on intellectual property, including the Bangui Agreement which applies to industrial property, patent rights and industrial designs. Harmonization of domestic legislation with the provisions of the TRIPS Agreement must be pursued.
Conclusions Back to top
Members congratulated Côte d'Ivoire on its pursuit of macroeconomic stabilization and trade liberalization, and noted the positive effects registered to date. They nonetheless encouraged Côte d'Ivoire to make additional commitments and bind more tariffs so as to ensure that current reforms continue. Participants expressed their conviction that the consolidation of reforms in the goods and services sectors would attract new investment and ensure sustained economic growth.