WT/TPR/S/341 • Tunisia
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TRADE POLICY REVIEW
REPORT BY THE SECRETARIAT
Tunisia
This report, prepared for the third Trade Policy Review of Tunisia, has been drawn up by the WTOSecretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from Tunisia on its trade policies and practices.
Any technical questions arising from this report may be addressed to Mr Jacques Degbelo (0227395583); Ms Catherine Hennis-Pierre (022 739 5640); and Ms Alya Belkhodja (022 739 5162).
Document WT/TPR/G/341 contains the policy statement submitted by Tunisia.
Note: This report is subject to restricted circulation and press embargo until the end of the firstsession of the meeting of the Trade Policy Review Body on Tunisia. This report was drafted inFrench.
CONTENTS
SUMMARY 7
1 ECONOMIC ENVIRONMENT 11
1.1 Main features of the economy 11
1.2 Recent economic developments 16
1.3 Trade performance 20
1.4 Foreign direct investment 23
2 TRADE AND INVESTMENT REGIME 25
2.1 Overview 25
2.2 Institutional framework 27
2.3 Trade policy objectives 28
2.4 Trade agreements and arrangements 29
2.4.1 World Trade Organization (WTO) 29
2.4.2 Agreements with the European countries and Turkey 31
2.4.2.1 European Union 31
2.4.2.2 Agreement with EFTA 32
2.4.2.3 Agreement with Turkey 32
2.4.3 Trade relations with Arab countries 32
2.5 Investment policy 33
2.5.1 Business environment in Tunisia 33
2.5.2 Investment restrictions and controls 34
2.5.3 Investment incentives 36
2.5.4 Other tax and customs exemption schemes 36
2.5.5 International investment agreements and conventions 37
3 TRADE POLICIES AND PRACTICES BY MEASURE 38
3.1 Measures directly affecting imports 38
3.1.1 Customs procedures 38
3.1.2 Customs levies 41
3.1.2.1 Overview 41
3.1.2.2 Mostfavourednation applied tariff (MFN) 42
3.1.2.3 Other duties and charges levied solely on imports 46
3.1.2.4 Bindings 46
3.1.2.5 Internal duties and taxes 47
3.1.2.5.1 Value added tax (VAT) 47
3.1.2.5.2 Consumption tax and other internal duties and taxes 48
3.1.2.5.3 Payment of 10% tax on account 50
3.1.2.6 Duty and tax exemptions and concessions 50
3.1.2.7 Tariff preferences 51
3.1.3 Rules of origin 52
3.1.4 Prohibitions, quantitative restrictions, licensing and prior authorization 54
3.1.5 Contingency measures 56
3.1.5.1 Safeguard measures 56
3.1.5.2 Antidumping and countervailing measures 57
3.1.6 Standards and other technical regulations 58
3.1.6.1 Standardization, testing and certification 58
3.1.6.2 Technical controls 61
3.1.6.3 Sanitary, phytosanitary and environmental measures 64
3.1.6.3.1 Sanitary and phytosanitary (SPS) measures 64
3.1.6.3.2 Environmental measures 66
3.1.6.4 Marking, labelling and packaging 68
3.2 Measures directly affecting exports 68
3.2.1 Procedures 68
3.2.2 Export taxes 69
3.2.3 Export prohibitions, licences and controls 69
3.2.4 Export subsidies, promotion and support 70
3.2.4.1 Fiscal and foreign exchange incentives 70
3.2.4.2 Economic activity parks 72
3.2.4.3 Other suspensive customs procedures 73
3.2.4.4 Financial aid and other export promotion measures 75
3.2.4.5 Export insurance 76
3.3 Measures affecting production and trade 77
3.3.1 State trading, Stateowned enterprises and privatization 77
3.3.2 Incentives 81
3.3.3 Competition policy and price control 82
3.3.3.1 The new competition law 83
3.3.3.2 Price controls 84
3.3.4 Government procurement 86
3.3.5 Intellectual property rights 90
3.3.5.1 Industrial property rights 92
3.3.5.2 New plant varieties 94
3.3.5.3 Copyright and related rights 94
4 TRADE POLICIES BY SECTOR 96
4.1 Agriculture 96
4.1.1 Overview 96
4.1.2 Trends in agricultural production and trade 98
4.1.3 Access to land for foreigners 100
4.1.4 Support for production 101
4.1.5 Measures affecting exports of agrifood and fishery products 102
4.1.6 Measures affecting agricultural and fishery imports 103
4.1.7 State presence in agrifood trade 106
4.1.8 Developments in certain subsectors 107
4.1.8.1 Cereals and cereal products 107
4.1.8.2 Sugar 107
4.1.8.3 Olive oil and seed oil 108
4.1.8.4 Beverages and tobacco 109
4.1.8.5 Meat and dairy produce 110
4.1.8.6 Fishing 111
4.2 Mining and quarrying 112
4.3 Energy 114
4.3.1 Petroleum products 115
4.3.2 Natural gas 116
4.3.3 Electricity 117
4.4 Manufacturing sector 118
4.4.1 Industrial production policy reforms 120
4.4.2 Developments concerning the industrial trade regime 121
4.5 Transport services 123
4.5.1 Road transport services 123
4.5.2 Rail transport services 124
4.5.3 Port services and maritime transport 125
4.5.4 Airport and air transport services 127
4.6 Tourism 128
4.7 Insurance services 130
4.7.1 Overview 130
4.7.2 Non-resident (offshore) reinsurance and insurance companies 132
4.7.3 Resident insurance companies 133
4.7.4 Auxiliary insurance services 134
4.8 Banking and other financial services 134
4.8.1 Overview 134
4.8.2 WTO commitments 136
4.8.3 Prudential regulations 137
4.9 Telecommunications services 138
4.9.1 Overview 138
4.9.2 Market access and regulation 139
4.9.3 Universal service 141
4.9.4 International commitments 141
4.9.5 Telecommunications-related services 142
4.9.6 Telecommunications equipment 142
4.10 Postal services 143
4.11 Professional and business services 143
REFERENCES 146
APPENDIX TABLES 147
CHARTS
Chart 1.1 Trend in the human development index, 20052014 11
Chart 1.2 GDP growth (% per year) and per capita GDP, 20052015 14
Chart 1.3 Trend in merchandise trade and exchange rate, 20052015 18
Chart 1.4 External position and direct investment, 20052015 18
Chart 1.5 Official development assistance received, net, 20052014 19
Chart 1.6 Aid for Trade, 20052014 20
Chart 1.7 Structure of merchandise trade, 2005 and 2014 21
Chart 1.8 Direction of merchandise trade, 2005 and 2014 22
Chart 1.9 Trade in services, 20052015 23
Chart 1.10 Foreign direct investment flows in Tunisia, by activity sector, 20052014 24
Chart 3.1 Government revenue, 2014 42
Chart 3.2 Trend of average customs duty, 20052016 43
Chart 3.3 MFN applied rates by WTO group of products, 2005, 2015 and 2016 45
Chart 3.4 Escalation of MFN applied rates by manufacturing industry, 2016 46
Chart 3.5 Share of government procurement contracts awarded to nonresident suppliers, 20062014 89
Chart 4.1 Main imports and exports (agricultural and fishery products), 20052014 97
Chart 4.2 Customs duties on agricultural products, 2005 and 2016 98
Chart 4.3 Exports of fishery products, 20112015 112
Chart 4.4 Tunisia's energy balance, 2005 and 2015 114
Chart 4.5 Manufacturing industries, 20052014 120
Chart 4.6 Customs duties on nonagricultural products, 2005, 2010 and 2016 122
Chart 4.7 Logistics performance index (LPI), 2007, 2010, 2012 and 2014 123
TABLES
Table 1.1 Basic economic indicators, 20052015 12
Table 1.2 Balance of payments, 20052015 19
Table 2.1 Traderelated laws and regulations published since 2005 26
Table 2.2 Regional trade agreements to which Tunisia is party, 2015 29
Table 2.3 Tunisia's notifications to the WTO, 20092015 30
Table 3.1 Revenue from import duties and taxes, 20052015 41
Table 3.2 Structure of MFN duties, 2005, 2015 and 2016 42
Table 3.3 Brief analysis of MFN rates, 2005, 2015 and 2016 44
Table 3.4 Other duties and taxes levied solely on imports, 2005 and 2016 46
Table 3.5 Value added tax, 2016 48
Table 3.6 Other internal duties and taxes, 2005 and 2016 49
Table 3.7 Tariff preferences under the TunisiaEU Agreement, 2014 or 2016 51
Table 3.8 MFN applied rate and preferential rate, 2015 51
Table 3.9 Preferential rules of origin 53
Table 3.10 Products excluded from the free import regime, 2005 and 2016 55
Table 3.11 Products subject to preimportation surveillance in 2015 57
Table 3.12 Trend in the number of Tunisian standards over the period 20072015 59
Table 3.13 Products subject to systematic technical import control (List A) 62
Table 3.14 Benefits accorded to export enterprises under each regime, 2015 71
Table 3.15 Economic activity parks operational in 2015 73
Table 3.16 Suspensive procedures, 2015 74
Table 3.17 Companies with a State holding, 2015 78
Table 3.18 Current reorganization – privatization, 20152016 80
Table 3.19 Cases dealt with by the Competition Council, 2015 84
Table 3.20 Cost trends for the General Compensation Fund, 20052015 85
Table 3.21 Principal methods of awarding government procurement contracts, 20062014 89
Table 4.1 Main agricultural crops, 2005, 20102014 99
Table 4.2 WTO tariff quotas 104
Table 4.3 Unilateral tariff quotas, 2014 104
Table 4.4 Products subject to Protocol3 of the Association Agreement with the EU, 2016 105
Table 4.5 Olive oil exports, 2005, 20102015 109
Table 4.6 Beer, tobacco and wine, production and trade, 2005, 20102014 110
Table 4.7 Natural gas tariffs net of tax, 2016 116
Table 4.8 Electricity production, 20002015 117
Table 4.9 Electricity tariffs, high and medium voltage, April2016 118
Table 4.10 Exports of manufactures, 2005, 20102014 118
Table 4.11 Indicators for the main ports, 2015 125
Table 4.12 Tourism: number of arrivals and earnings, 2006, 2010-2015 128
Table 4.13 Banking system indicators, 2014-2015 135
Table 4.14 Telecommunication indicators, 2005, 2010, 20132015 139
Table 4.15 Professional and business services 144
BOXES
Box 1.1 Foreign exchange legislation specific to offshore activities 15
Box 3.1 Goods and services subject to administered or authorized prices 85
Box 4.1 Projects for the reform of the insurance sector, 2016 131
Box 4.2 Statistical overview of insurance services 132
Box 4.3 Recent amendments to the legislation governing insurance in Tunisia, 2015 133
APPENDIX TABLES
Table A1. 1 Structure of imports, 2005, 20102014 147
Table A1. 2 Structure of exports, 2005, 20102014 148
Table A1. 3 Origin of imports, 2005, 20102014 149
Table A1. 4 Destination of exports, 2005, 20102014 150
SUMMARY
- In spite of the sociopolitical crisis that hit Tunisia at the end of 2010 and the disruptions that followed, including the series of attacks culminating in 2015, economic growth has remained positive, thanks largely to the relative diversification of the country's economy to its trade performance, and to its welleducated labour force. As a result, with a per capita GDP equivalent to€3,250 in 2014, Tunisia is still classified by the World Bank as an uppermiddle income country. Trade remains extremely important for the Tunisian economy, with a ratio of trade in goods and services to GDP of about 90%. However, the fall in the share of exports in GDP (form 45% in 2005 to 39% in 2015) coupled with a rise in the share of imports (45% to 50%) suggest that reforms are needed to revive the competitiveness of Tunisian enterprises.
- In fact, trade policy has not been modernized since Tunisia's last trade policy review (TPR) in 2005, and was not included in the far-reaching reforms introduced following the adoption in2014, in the wake of the socio-political crisis, of a new Constitution. On the other hand, this constitutional reform paved the way for radical changes in the legal, political and institutional frameworks. Transparency and the rule of law are now declared principles. All draft legislation is now subject to a mandatory public consultation procedure. Similarly, the new Constitution provides that duties and taxes applicable to certain products may only be increased, reduced or suspended by laws, and not by specific decrees, which means that the country's economic policy is more transparent and predictable. A socalled "regulatory guillotine" project involving a systematic review of regulations is expected, once it is up and running, to contribute considerably to the business climate – a much needed improvement particularly when it comes to crossborder trade.
- The Government embarked on a reform of the Investment Incentives Code of 1993, initially designed to attract direct investment, especially from abroad, in activities targeting economic development and, in particular, exports. The Code offers generous tax and financial incentives, but also contains numerous restrictions that tend to discourage investment. For example, the Code allows for importation free of duties and taxes of equipment needed to carry out investments, provided there are no locally manufactured equivalents. It is these provisions, which have proven not only complex and contradictory, but also costly to administer and not very effective, that are currently being reviewed.
- A new law on competition and pricing adopted in 2015 gives greater power to the Competition Council, and imposes stricter sanctions for anticompetitive practices. However, numerous goods and services are still excluded from the free pricing regime because they are considered to be "essential" goods subsidized by the state. They include bread and other food products as well as goods and services furnished under state monopolies (water, electricity, gas, postal services, port and airport services) and certain cars. Thus, the State continues to influence vehicle imports by granting subsidies for various cars from a number of foreign manufacturers and by resorting to a quota system for other vehicles.
- New laws are currently being pushed through in an effort to modernize the banking sector's legal framework, and another recently adopted law has enabled the struggling public sector banks to recapitalize. The Government also introduced reforms to its insurance system, after further opening the sector to foreign presence in 2008. On the whole, these measures should help the financial sector to play its role in providing credit to the economy and mobilizing savings. Reforms would also be welcome in the transport and communications sector, which are essential to facilitating international trade and attracting foreign investment. Companies wishing to offer services in these sectors are still required to have a Tunisian partner, and the state has remained an important shareholder in the main transport, postal and telecommunications companies, sometimes incurring considerable losses. The same nationality requirements apply to most professional and business services.
- In the agro-industrial sector, numerous Stateowned enterprises – of which many are struggling – as well as several marketing boards (e.g. the Trade Board, the Cereals Board and the Oils Board) continue to be involved in international trade in goods and services. Tunisia being one of the world's leading exporters of olive oil and specialities (such as dates, "harissa", oranges and seafood) for which it is internationally recognized, the existence of these entities is currently the subject of a national review. A new development plan scheduled to be launched in 2016 should help to define the role of international trade and investment in the promotion of these activities. The drivers of the Tunisian economy also include tourism and the "wholly exporting" industries that are open to foreign presence, in particular activities such as hotels, electric cabling, electronic and electrical equipment, parts and accessories of motor vehicles, and textiles and clothing.
- Generally speaking, exporting from Tunisia continues to be considerably more attractive to companies with "wholly exporting" and/or "offshore" status than to other operators, who remain subject to a multitude of regulations relating to foreign currency exchange, banking domiciliation, repatriation of export earnings, tax or financial incentives and import procedures.