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    Country profile: Benin, Burkina Faso, Mali




    Note: This text provides brief description of the conditions foreign business will encounter in trade with Benin, Burkina Faso and Mali. It is based on a WTO Trade Policy Review for Benin, Burkina Faso and Mali early October 2010. Readers wishing for deeper analysis should turn to the original Trade Policy Review available on the WTO website. (www.wto.org/english/tratop_e/tpr_e/tp336_e.htm)

    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.



    SUMMARY OBSERVATIONS

    The eight countries belonging to the West African Economic and Monetary Union (WAEMU), which include Benin, Burkina Faso and Mali, are also members of the larger group of 15 countries belonging to the Economic Community of West African States (ECOWAS). Integration within ECOWAS is largely based on that within WAEMU. Since the review of their respective trade policies in 2004, Benin, Burkina Faso and Mali have pursued their integration and economic reform efforts within WAEMU (and ECOWAS as well). Nonetheless, the continued presence of obstacles limits the potential benefits of such integration.

    The majority of trade policy instruments, in practice import measures, have been harmonized at WAEMU level. WAEMU now also has a common framework for agricultural and mining policy, as well as for certain services categories, inter alia. Implementation is, however, far from complete in all areas.

    The challenge currently facing Benin, Burkina Faso and Mali is to provide stable financing for their budgets, for the moment essentially based on the revenue earned from international trade, while continuing their trade liberalization efforts at the unilateral, bilateral, regional and multilateral levels.

    ECONOMIC ENVIRONMENT

    Since the previous review of their trade policies, Benin, Burkina Faso and Mali have maintained positive economic growth rates, despite an adverse global environment marked by a surge in oil and food prices, and appreciation of the euro, to which their common currency, the CFA franc, is pegged at a fixed parity. There is little mechanization in agriculture, a key sector of their economies, which remain highly vulnerable to external shocks, including weather factors.

    Despite structural problems, cotton is still one of the major export subsectors in all three countries; livestock products, shea nuts, cashew nuts and fruit are also leading exports. All three countries are, however, net importers of certain cereals, including rice; the rise in global prices has had a strong impact on their populations and has led to the realization that food production has to be increased. In Burkina Faso and Mali, gold exports have been particularly buoyant. The three countries still import all the petroleum products consumed. It is imperative to upgrade the energy infrastructure.

    The restrictive monetary policy practised by the Central Bank of West African States (BCEAO) has enabled inflationary pressure to be kept under control, while budgets continued to show a deficit (excluding grants) in all three countries throughout the period 2003 2009. Following multilateral and bilateral initiatives, there was a marked reduction in the public debt in the three countries. Although it has been on the increase since 2008, chiefly because of the fall in international demand for their exports, external debt servicing as a percentage of exports of goods and services has remained low. Benin, Burkina Faso and Mali are net importers of services. The three countries' exports are not very diversified and mainly go to other African countries. The European Union, France in particular, is still the main source of imports for Benin and Mali; Burkina Faso chiefly imports from Togo, followed by France.

    In general, the three economies depend on the budget support furnished by technical and financial partners for 3 6 per cent of their GDP. Official development aid (ODA) remains indispensable for implementing their social and economic programmes and finances 43 per cent of the State's total current spending in Burkina Faso. In the main, Aid for Trade (from US$17 21 per capita in 2008 depending on the country) as well as the total amount of ODA (US$39 86 per capita in 2008) remain low in light of needs in the three countries (including the financing of their Growth and Poverty Reduction Strategies) and varies greatly from one year to another. In order to manage these resources to best effect, Burkina Faso and Mali have introduced a national aid policy based on the principles in the Paris Declaration.

    TRADE AND INVESTMENT REGIME

    Benin, Burkina Faso and Mali are pursuing their integration efforts within WAEMU and ECOWAS. The differing pace of integration within these two groups calls for harmonization and coordination not only among the countries themselves but also at the regional level. Since the introduction of the WAEMU common external tariff (CET) in 2000, a large number of legislative texts have been adopted with a view to creating a common market; the actual implementation of these texts is under way.

    In areas such as technical barriers to trade, measures to promote trade, and export restrictions, including taxation, there is still room for harmonization at the community level. In addition, although there is a community Customs Code, exemptions differ from one country to another and fiscal incentives often vary as well. The Investment Codes in the three economies proclaim the principle of national treatment. Legislation within WAEMU has not been harmonized, however, and sectoral coverage and the stipulated tax incentives vary from one country to another. All three countries belong to the Organization for the Harmonisation of Business Law in Africa (OHADA).
    As Members of the WTO, Benin, Burkina Faso and Mali grant at least MFN treatment to all their trading partners. They take an active part in the WTO's technical assistance programmes and in the Integrated Framework process intended to promote the effective integration of trade into national development plans. Diagnostic Trade Integration Studies (DTIS) were conducted for the three countries in 2004 2005 and most of the DTIS recommendations have been integrated into the respective Growth and Poverty Reduction Strategies, although levels of implementation vary among the countries and could be improved. In addition, the three countries would like to see ODA, including Aid for Trade, take the form of overall budget support rather than be earmarked for financing specific projects.

    TRADE POLICY INSTRUMENTS

    Since the previous review of the trade policies of Benin, Burkina Faso and Mali, progress has been made in computerizing customs clearance procedures and putting them on line using ASYCUDA++, although the connection infrastructure remains unreliable. Burkina Faso and Mali have introduced the ECOWAS uniform model detailed declaration. The absence of a single entry point system ("free circulation") means that the risk of double taxation persists so there needs to be a transit regime for movement of goods within community territory, and this is costly. Customs networks in the three countries are being interconnected in order to facilitate the transit operations that are vital for landlocked countries. Computer fees should, however, be eliminated in order to encourage computerized declarations. If all import formalities were fully computerized, they could be made simpler and take less time. This should be one of the foremost Aid for Trade priorities.

    It is still mandatory to use the services of an approved customs agent. Approval, when it is specific to a particular operation or customs post, is likely to restrict competition and increase trade related costs. The three countries' authorities have, moreover, started to review the need for national shippers' councils which, in some countries such as Benin, levy a whole series of additional duties and taxes on international trade.

    The provisions of the WTO Customs Valuation Agreement have been transposed into the community Code. A system of reference values for imports is nonetheless still in place in WAEMU, even though its member States no longer have waivers from the relevant WTO rules. The three countries still require preshipment inspection, in principle intended to verify the value of the goods and observance of the technical regulations in force. The inspection companies charge fees that range from 0.6 to 0.75 per cent of the f.o.b. value of the goods imported, to be paid either by the government or by the importer; in some cases, a lump sum is payable and this means much higher charges. In general, the system is complex to administer and subject to numerous exceptions.

    Technical regulations and their application at the border involve overlapping regulations and administrative measures, complicating the import process. In Burkina Faso, for example, four bodies are vested with control powers, with the parallel involvement of various ministries, to inspect certain goods before they are placed on the domestic market; up to three samples can be taken from each import, with payment of the various taxes applicable.

    The WAEMU CET has not undergone any major changes since the review of the three countries' respective trade policies in 2004. It comprises four ad valorem tariff bands (zero, 5, 10 and 20 per cent). The mixed escalation and the simple average of the rates remain unchanged (12.1 per cent) and such a structure implies costs for the economies concerned. The CET also plays an important fiscal role, with import duties and taxes providing some 16 per cent of fiscal revenue in all three countries. Other duties and taxes introduced by WAEMU and ECOWAS on MFN imports add 2.5 percentage points to the tariff, the proceeds mainly going to finance these institutions. Benin, Burkina Faso and Mali are taking part in the current negotiations on the CET in ECOWAS; a fifth band of 35 per cent is planned.

    Harmonization of tariff bindings in the WTO is under consideration by WAEMU members. For each of the three countries, bindings currently affect around 40 per cent of tariff lines; and for over 27 per cent of the bound tariff lines, the customs duties applied exceed the bound levels, sometimes by as much as 20 percentage points.

    The eligibility of goods for the WAEMU and ECOWAS community duty free regimes is governed by rules of origin, whose basic principles have been harmonized since 2004. WAEMU/ECOWAS origin is conferred systematically (without prior certification) on all local or handmade products. To be eligible, goods that have been sufficiently worked or processed must be approved and be accompanied by a certificate or origin; enterprises producing such goods must also have prior approval. The conditions for approval of such products in ECOWAS differ slightly from those in WAEMU, the WAEMU conditions having been made more flexible in 2009.

    WAEMU has adopted regulations on competition, including State aid. The legislative competence of States essentially relates to consumer protection. The national regulatory frameworks on government procurement have been harmonized by transposing the WAEMU directives, including those provisions giving a community preference; the implementing texts have not yet been adopted. The three countries have signed the Bangui Agreement establishing the African Intellectual Property Organization (OAPI), whose provisions are mostly in line with those in the WTO TRIPS Agreement; the provisions on layout designs have not yet been implemented.

    TRADE POLICY BY SECTOR

    In the agricultural sector, the major trade policy development has been the introduction of subsidies for the production of the main cereal food crops as a result of the food crisis in 2008. Cotton, whose production has fallen in the three countries, partly because of low global prices and poor governance in the subsector, has received support linked to institutional reforms. In 2003, Benin, Burkina Faso and Mali, together with Chad, adopted a joint position that led to the Sectoral Initiative on Cotton, whose overriding objective is to achieve the elimination, by the major economies, of domestic support for production and export subsidies for cotton and to obtain duty and quota free access for cotton exports from least developed countries.

    Livestock farming, which accounts for over 10 per cent of GDP in the three countries, is facing a serious problem of land tenure, which also affects other agricultural subsectors, as well as mining and quarrying, water resources, roads and tracks, forests, wildlife reserves and the environment. Security of tenure would put farming on a more stable footing. Regional land use management schemes are needed to encourage the progressive settlement of pastoralists, together with the creation of transit corridors or access to wells and pasturage. Broader access to basic veterinary services would allow production to be intensified as it does not currently cover domestic needs. Poultry breeding farms face strong competition from imports of frozen poultry. Because they did not meet the European Union's health standards, Benin had to suspend its exports of fisheries products, including shrimps, to this key market as of July 2003. Measures were taken to facilitate the resumption of exports as of February 2005. Markets lost, however, are difficult to regain and the shrimp subsector has not fully recovered from this crisis.

    The legal framework for the mining sector has been reinforced and a large number of investors have responded favourably, especially in the area of gold mining. The energy sector, on the other hand, suffers from poor governance and the lack of long term investment. Several State owned companies, especially those distributing petroleum products and electricity, have felt the impact of government measures imposing a ceiling on selling prices in order to help consumers, and are currently being reorganized in order to improve their management. The development of renewable energy is an option with considerable potential.

    Together with trade, transport and the related logistics are the backbone of economic development in the three countries. The anti competitive practices which allow for the allocation of cargo (such as "queuing") should, however, be abolished. In Benin, the number of shipping companies calling at the port of Cotonou rose following the end of the EWATA liner agreements in 2008 and a new container terminal is planned. Much still remains to be done, however, to make the subsector more competitive. Despite the liberalization of the air transport subsector, few new airlines have emerged and the regional market is still virtually a monopoly.

    Since 2004, there has been remarkable growth in telecommunications. Their liberalization has led to greater competition and lower costs; nevertheless, in Benin the regulations needed to allow the market to function properly are still awaited. One of the other services that has seen strong growth is tourism, especially in Mali, where investment and jobs have shown a substantial increase since 2003.
    Banking services have benefited from the BCEAO regulations and the prudential supervision of WAEMU's Banking Commission. The minimum capital for loan institutions has been raised. The development of microfinance is gradually making it easier for the poorest to obtain microcredit, but it needs to be better organized. Although it is governed by the CIMA Code, the insurance market is still fragmented because there is no single system of approval. Substantial progress has been made in the common regulations that henceforward allow some professionals such as public auditors to practise freely in all WAEMU countries.





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