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Cameroon : February 1995

“The initial surge in prices had been moderated by exempting certain staples and considerably reducing import duties and taxes in general, as well as by taking measures such as the removal of obstacles to imports, the recent lowering of bank interest rates and the freezing of salaries in the public sector”

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  > Summary of Government report

16 February 1995

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The Trade Policy Review Body of the World Trade Organization (WTO) and the GATT 1947 Council conducted its first review of Cameroon on 13 and 14 February 1995. The trade review of Cameroon was carried over from the 1994 programme of reviews under GATT 1947. 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 Council to conduct a collective examination of the full range of trade policies and practices of each 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 Cameroon 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 and 1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Canada (1990, 1992 and 1994), Chile (1991), Colombia (1990), Egypt (1992), the European Communities (1991 and 1993), Finland (1992), Ghana (1992), Hong Kong (1990 and 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and 1994), Japan (1990 and 1992), Kenya (1993), Korea, Rep. of (1992), Macau (1994), Malaysia (1993), Mexico (1993), Morocco (1989), New Zealand (1990), Nigeria (1991), Norway (1991), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992), South Africa (1993), Sweden (1990 and 1994), Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey (1994), the United States (1989, 1992 and 1994), Uruguay (1992) and Zimbabwe (1994).

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1. This joint meeting of the Trade Policy Review Body and the GATT 1947 Council has provided an opportunity to review for the first time the trade policies and practices of Cameroon. As usual, these remarks are made on my own responsibility and are not intended as a substitute for the Council's collective appreciation. The full report of the proceedings of the meeting will be contained in the minutes.

The discussion focused on three main topics.

(a) Macro-economic policy and structural adjustment programme

2. The participants congratulated Cameroon on the determination with which the country had embarked upon a difficult programme of reform with a view to establishing a market economy with a liberal trade regime. This had led to an opening up of trade which had benefited not only Cameroon but also the multilateral trading system in general.

3. The effects of the devaluation of the CFA franc on Cameroon's economy aroused the interest of members, who were eager to obtain information about the measures Cameroon intended to take to contain inflation and the budget deficit and to preserve the advantages it had derived from this exchange rate adjustment.

4. Some members expressed concern about the low level of investment recorded since 1986 and asked for further information about the current investment regime and the measures which Cameroon intended to take in order to give investors greater security. The continuation of the trade reforms in progress could also help in this respect. Some members urged the Cameroon authorities to speed up the State enterprise privatization process. They also noted the need to find ways of incorporating the informal sector more effectively into the official economy.

5. In reply, the representative of Cameroon pointed out that devaluation had considerably improved the competitiveness of exports and the balance-of-payments position. There had been a significant slowdown in smuggling.

6. The initial surge in prices had been moderated by exempting certain staples and considerably reducing import duties and taxes in general, as well as by taking measures such as the removal of obstacles to imports, the recent lowering of bank interest rates and the freezing of salaries in the public sector. As regards the budget, since 1987, Cameroon had been engaged upon an extensive programme designed to bring public expenditure under control. At the same time, 50 per cent of part of its external debt had been cancelled and it had benefited from several reschedulings.

7. The CACEU customs and fiscal reforms, while reducing the customs advantages of investment, had maintained the general liberal policy, including national treatment, the free transfer of revenue, freedom to hire and fire and the industrial free zone regime.

8. Studies were in progress on the incorporation of the informal sector into the fiscal system and the financing of small businesses.

9. The privatization programme was going ahead, with several projects in preparation or being implemented and with studies aimed at defining a government strategy. Cameroon was also in the process of drafting a business code in order to provide investors with sound legal protection.

(b) The trade regime

10. The participants congratulated Cameroon on its policy of trade liberalization, in particular for having introduced new customs and fiscal regimes and a new general trade programme in 1994. They noted the elimination or significant reduction of quantitative restrictions, tariff exemptions and special customs and fiscal regimes, as well as the lowering of customs duties. The new regime had reduced the complexity of the old system and restricted the opportunities for fiscal fraud; however, the customs service of the Cameroon might benefit from other reforms and improvements. In this connection, questions were put concerning Cameroon's experience with the pre-unloading import inspection programme.

11. Members also asked for clarification concerning the legislative procedure for ratification of the WTO Agreement. As Cameroon had not signed the Tokyo Round Codes, members wanted to know how it would implement the new WTO disciplines governed by the single undertaking principle. Cameroon's intention to accede to the Agreement on Government Procurement was also mentioned.

12. Council members expressed concern about a number of matters related to trade policies:

- the small number of bound tariff lines, even at the end of the Uruguay Round, was likely to add to the uncertainty surrounding the stability of the reforms;

- explanations were requested concerning taxes, more particularly, the non-automatic temporary taxes and other taxes not directly linked to the supply of services;

- the possibility of introducing regulations concerning anti-dumping, countervailing duties and the safeguard measures provided for in Article XIX of the GATT;

- the State monopolies in specific areas, including agriculture (in particular cotton);

- finally, questions were asked about the improvement of the process of preparing technical standards.

13. With regard to export policies, several members questioned the wisdom of imposing taxes on the principal agricultural exports. Although these taxes had been introduced for fiscal reasons, they might cancel out the improvements in competitiveness resulting from devaluation.

14. In this connection, the representative of Cameroon noted that the ratification of the Agreement Establishing the WTO would be examined at the June 1995 session of the Parliament. The Secretariat would be informed of the outcome at the same time as it was notified of the binding of tariff rates resulting from the customs and fiscal reforms.

15. He said that there were plans for a generalized preferential tariff within CACEU which was moving towards an economic union: in five years, regional imports would be essentially free.

16. The import verification programme had had a deterrent effect on fraud and had led to a substantial improvement in revenue. The implementation of the programme was open to competition among the inspection companies.

17. Quantitative restrictions had been removed except in so far as needed to meet public health, security and environmental protection requirements.

18. Cameroon had recognized the need to introduce legislation on anti-competitive practices and standardization and was counting on technical assistance from the Secretariat and WTO members in these fields.

19. A revision of government procurement procedures was in progress and would take the form of a new law ensuring greater transparency and opening up the market to international competition.

20. The export taxes on certain products were intended to enable the Treasury to take advantage of the immediate effects of devaluation, but they were also a means of promoting local processing. These duties were only temporary and had been approved in the context of the Annual Finance Act.

21. The monopoly on the foreign marketing of cotton fibre was to be abolished as soon as SODECOTON had been privatized.

(c) The external environment

22. Members stressed the importance of Cameroon's trade with the European Union and wanted to see greater diversification of exports at both regional and sectoral level. Questions were asked concerning various aspects of the preferences to which Cameroon was entitled, including those granted by the LomÚ Convention. It was noted that Cameroon also had to confront a number of obstacles relating to manufactures and semi-manufactures.

23. The representative of Cameroon said that the system of commercial preferences guaranteed by certain conventions had been severely eroded and noted that the subsidy policies applied by some members were destabilizing local production units. He renewed his appeal to participants to promote investment in Cameroon which was pursuing an "open door" policy.

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24. The members congratulated Cameroon on its determination to push ahead with macro-economic stabilization and trade liberalization measures, whose irreversibility had been duly stressed. They emphasised the importance for Cameroon of making additional commitments and binding more tariffs with a view to ensuring the stability and continuity of the reforms and encouraging trade and investment. The participants expressed the hope that the consolidation of the reforms in Cameroon would attract investment and bring it sustained economic growth.