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Benin: September 1997

“ Benin was commended on the institutional reforms and positive macroeconomic performance since 1990. These had been reflected in solid economic growth, improved public finances and a modest rate of inflation.”

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Summary of Secretariat report
  > Summary of Government report

17 September 1997

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    The Trade Policy Review Body of the World Trade Organization (WTO) concluded its first review of Benin's trade policies on 15 and 16 September 1997. The text of the Chairperson's concluding remarks is attached as a summary of the salient points which emerged during the 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 Chairperson's summing-up, together with these two reports, will be published in due course as the complete trade policy review of Benin 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), Benin (1997), Bolivia (1993), Brazil (1992 & 1996), Cameroon (1995), Canada (1990, 1992, 1994 & 1996), Chile (1991), Colombia (1990 & 1996), Costa Rica (1995), Côte d'Ivoire (1995), the Czech Republic (1996), Cyprus (1997), the Dominican Republic (1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993 & 1995), Fiji (1997), 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 & 1996), Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993), Morocco (1989 & 1996), New Zealand (1990 & 1996), Nigeria (1991), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), South Africa (1993), Sri Lanka (1995), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992, 1994 & 1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).

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    The first trade policy review of Benin was conducted by the Trade Policy Review Body on 15-16 September 1997. These remarks, prepared on my own responsibility, are intended to summarize the discussion and not to be a full report. This report will be contained in the minutes of the meeting. The discussion developed under six main themes:

Progress and prospects for economic liberalization

    Benin was commended on the institutional reforms and positive macroeconomic performance since 1990. These had been reflected in solid economic growth, improved public finances and a modest rate of inflation. Some Members expressed concern about the high dependency of Benin's trade structure on cotton exports, and its vulnerability to trade policy changes in Nigeria. In this regard, they inquired about plans for diversification of export products and destinations. Members also commented on the large scale of the informal sector; inquiries were made about how it could be brought into the formal economy and whether this might ease the process of liberalization.

    In regard to the legal structure for trade and investment, Members noted the ongoing work to enact various new laws and sought information on progress made. Note was taken of the adoption of a new investment code which, however, had not yet resulted in significant investment flows. In this connection, questions were raised concerning the scope for further simplification of investment procedures, including the adoption of automatic approval and a "single window".

    In response, the representative of Benin noted his government's long-standing concern over the country's dependence on a single crop, and continued efforts to diversify the economy, particularly agricultural production. He noted that three-fourths of all economic activity takes place in the informal sector, which the Government considered a key element to support Benin's growth. Thus, a vast programme was in place to provide a proper framework for informal activities, and eventually incorporate them into the formal economy.

    The representative of Benin recognized the need to review the Investment Code of 1990. The draft revision contained plans to abolish several sectoral restrictions, and to increase the number of fiscal and other privileges. In order to ensure consistency of approaches within the WAEMU, Benin would change its current investment legislation only after the Union decided on a regional code. It was also noted that to strengthen its investment framework, Benin had signed or was negotiating various bilateral and multilateral investment agreements. The Government was also working on the creation of an Investment Promotion Centre. The representative stressed that the new initiatives made no discrimination between foreign and domestic investors.

Transparency issues

    Members commented favourably upon Benin's clear and simple tariff structure. However, questions were raised on the public availability of the tariff schedule. One Member requested a copy of the tariff schedule. Concern was also expressed over the complexities of customs and preshipment inspection procedures, including the mechanism used for establishing import prices. In this regard, questions were asked about Benin's plans to implement the Harmonized System of Classification and the WTO Customs Valuation Agreement. It was noted that Benin had not notified any delay in the application of the Agreement under its Article 20.

    Questions were also raised over the procedures for registration of importers, especially regarding the status of "occasional" importers (importateurs occasionnels) with regard to border and internal taxation, the list of goods reserved to approved importers (importateurs agréés), as well as the requirement for membership in the Chamber of Commerce and rules applied to goods in transit. Some Members noted the absence of an effective appeal mechanism against administrative decisions and urged Benin to update its legal structure in this regard.

    In response, the representative of Benin outlined the requirements for the registration of importers, goods in transit, and the operation of the preshipment inspection mechanism. He said that his country used the Brussels definition of customs value and that the customs tariff was readily available to the public. The Harmonized System had already been adopted, and the new code being printed used that classification. Customs procedures were transparent, and this would be enhanced by the eventual binding of tariffs at the level of the whole WAEMU. Domestic legislation to apply the WTO Customs Valuation Agreement would also be adopted within the framework of the WAEMU. "Occasional" importers without an import card bore a penalty of 1% of the c.i.f. value of goods over and above usual tariffs and taxes, to encourage them to move into the formal sector. Prices established by the PSI inspection company were generally based on those in the exporting country. The Union's treaty for the Harmonization of Business Rights complemented Benin's appeal mechanisms against administrative decisions.

Other specific measures

    Generally, Members appreciated the considerable steps taken by Benin to liberalize its import markets, and to reduce export restrictions. Benin was urged to continue its trade liberalization and to embed it within the rules and principles of the multilateral trading system by increasing its binding commitments.

    Concern was expressed over the lack of clear legislative guidelines for government procurement. In this respect, information was sought on the present status of the draft law on Government Procurement.

    Questions were raised over the justification for the continuing export ban on food products (produits vivriers), and about plans for the future liberalization of remaining state monopolies. Details were also requested on Benin's use of rules of origin under the WAEMU Agreement. Members sought confirmation that Benin maintained no investment schemes notifiable under the TRIMs Agreement. They also requested information on the legal framework for, and practical application of, Benin's intellectual property legislation.

    In response, the representative of Benin noted that Benin did not maintain any local content requirements outside those contained in the rules of origin under the WAEMU and ECOWAS Agreements in order to qualify for preferential treatment. There was no ban on exports of food products. Teak exports had been regulated to prevent the destruction of protected forests. The Law on Government Procurement had been voted and promulgated in August 1997, and the implementing decree would be submitted to Parliament shortly. Copyright legislation was under review to ensure conformity with the TRIPS Agreement. In this respect, he called for assistance to ensure coordination between Customs, the Copyright Bureau (BUBEDRA) and the Ministry in charge of telecommunications.

Sectoral elements

    Participants sought Benin's views on the role of foreign direct investment in the economy, notably in the food processing sector and in mining. Some suggested that Benin might take advantage of the WTO Decision in favour of least-developed and net food-importing developing countries, which, inter alia, envisages assistance towards improvements in agricultural productivity and infrastructure.

    Some sought information on progress in reforming Benin's legal structures so as to liberalize the main services industries, including financial, maritime, air transport and telecommunication services. They noted that, as an essential part of the development of infrastructure, the telecommunications services industry would benefit from foreign investment. While a move away from the current duopoly in air transport could lead to lower freight costs. Benin was asked to consider binding its current, liberalized financial régime, as well as mobile telecommunications, in the ongoing WTO negotiations on financial services and basic telecoms. Confirmation was sought that foreign investment in hotels is allowed, as bound by Benin under the GATS.

    In response, the representative of Benin noted that most production and trade activities had been privatized, including banks, non-life insurance, petroleum production and hotels. Port activities had also been demonopolized, and private operators were to be authorized for mobile telephony; further reforms in the telecommunications sector were in planning. Private investment was being sought in the areas of life insurance, petrol distribution, cement and sugar production. Technical assistance was needed to bind Benin's legislation under the WTO Services negotiations currently under way. He confirmed that there was no restriction in foreign investment in the hotel sector; tourism was a priority development sector and certain state-owned hotels had already been privatized.

Regional integration

    Members took note of Benin's recent efforts to increase participation in regional trade agreements, including the customs union planned among WAEMU countries, In this respect, many participants asked about the prospects for the union, its expected timing, and whether it would lead to the abolition of non-tariff measures and the creation of an internal market within the union. Members emphasized the risk that the tariff convergence required by a customs union could lead to MFN tariff increases in Benin. They viewed any such increase as detrimental to Benin's economy, and suggested the use of tariff bindings under the WTO to reduce such risk. Questions were asked regarding the current state of tariff and non-tariff liberalisation under ECOWAS, and whether this agreement had been notified to the WTO.

    In response, the representative of Benin declared that WAEMU's fundamental objectives were to ensure rapid convergence towards an economic union, with a common market based on the free circulation of people, goods, services and capital. Important achievements to date included the removal of all non-tariff barriers to internal trade, and a considerable tariff reduction on internal trade in agreed products. The establishment of a common external tariff was planned for 1 January 1998. Harmonization of legislation was also underway in the areas of taxation, accounting procedures and investment. A certain delay had occurred in the implementation of the Union. Meanwhile, Benin intended to maintain its level of tariffs, which was the lowest of WAEMU countries; the National Assembly would have to ratify any change in tariffs resulting from decisions of the Union.

Benin in the multilateral trading system

    Members highlighted Benin's status as a least developed country, and its concomitant special position within the multilateral trading system. It was suggested that ways should be found of ensuring more regular participation by Benin in the work of the WTO. In this connection, Benin was asked about its expectations from the forthcoming High Level Meeting on Least Developed Countries, notably regarding market access. Participants also invited Benin to specify its needs for technical assistance in order to benefit most from WTO Agreements.

    In response, the representative of Benin hoped that the High Level Meeting on Least Developed Countries would result in commitments to improve access to markets, increase the competitive capacity of LDCs through training and information for private and public sector operators, and create a system to protect and encourage investment in LDCs. He stressed the need to maintain differential treatment for developing countries during the transition period, and to provide effective assistance to LDCs. In his view, the survival of the multilateral trading system depended on its capacity to reduce inequalities and increase trade on the basis of each member's comparative advantage. He therefore called for a concrete programme of assistance and information to LDCs to implement the WTO Agreements, participate in future negotiations, train producers to satisfy international standards in export markets and prepare strategies for the future development of trade, and provided a list of specific areas in which Benin would require such assistance.

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    Members welcomed the important steps taken in recent years by Benin towards a more open and liberal economy, through constitutional, legislative and administrative reforms and privatization programmes. They emphasized the importance of diversification of the economy and the need for development to be pursued on a sustainable basis. Members also stressed the importance of further steps to increase predictability, transparency and certainty in Benin's trade practices. The need for improved access in various fields of services was particularly noted. Overall, Members offered strong encouragement to Benin to continue and accelerate the reform process in all economic areas and responded positively to Benin's requests for assistance in the framework of WTO activities. Back to top