Benin WT/TPR/G/131
Page 3
World Trade
Organization / RESTRICTED
WT/TPR/G/131
24 May 2004
(04-2118)
Trade Policy Review Body / Original: French
TRADE POLICY REVIEW
BENIN
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), the policy statement by the Government of Benin is attached.

Note: This report is subject to restricted circulation and press embargo until the end of the meeting of the Trade Policy Review Body on Benin.

Benin WT/TPR/G/131
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CONTENTS

Page

I. introduction 5

II. ECONOMIC ENVIRONMENT 5

(1) General economic environment 5

(2) ANALYSIS OF THE ECONOMY BY SECTOR 6

(a) Primary sector 6

(b) Secondary sector 7

(c) Tertiary sector 7

III. TRADE POLICY AND PRACTICE 8

(1) General economic and trade policy objectives 8

(2) Sectoral trade policy objectives 8

(a) Agriculture 8

(b) Services 10

(c) Industry 11

(d) Informal trade 13

(e) Energy 13

(f) Strengthening economic competitiveness 14

(g) Controlled economic management 15

(h) Poverty alleviation 16

(3) General description of the import and export regime 17

(a) Imports 17

(b) Exports 17

(4) Trade policy framework 17

(a) Laws and regulations governing the implementation of trade policy 17

IV. FRAMEWORK FOR TRADE POLICY FORMULATION AND IMPLEMENTATION 18

(1) Legislative and regulatory framework for trade policy 18

(a) Improvement of the institutional and regulatory environment for trade 18

Institutional measures 18

Legislative and regulatory measures 19

General conditions for setting up a trading enterprise 20

(2) Institutional structure for trade policy formulation and implementation 20

(a) Trade development institutions 20

V. ECONOMIC AND TRADE POLICY INSTRUMENTS 22

(1) Tariff measures 22

Customs duties 22

Export taxes 23

Degressive protection tax 23

Common External Tariff 23

Domestic taxes 23

Customs valuation 23

(2) Other economic and trade policy instruments 23

(a) Preshipment inspection 23

(b) Community competition code 24

VI. CONCLUSION 24

Benin WT/TPR/G/131
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I.  introduction

  1. Benin is a West African country bordered to the east by Nigeria, to the west by Togo, to the north by Burkina Faso and Niger, and to south by the Atlantic Ocean.
  2. Benin covers an area of 114,763 km2...The population was estimated at 6.75 million by the last population and housing census in 2002. The rate of demographic growth is 3.2 per cent per annum.
  3. Annual per capita income is US$390, placing Benin among the world's least developed countries.
  4. Benin is a secular, democratic socialist republic, and has been independent since 1 August 1960.
  5. Under the Constitution of 11 December 1990, Benin is governed by a presidential regime. The President is elected by universal suffrage for a five-year renewable term of office, and the age limit for candidates in presidential elections is 70 years.
  6. The President of the Republic holds executive power; he determines State policy and appoints the members of the Government.
  7. The current President of the Republic of Benin is General Mathieu KEREKOU, who is serving a second term in office since elections were held in March 2001.
  8. Legislation in enacted by the National Assembly which is composed of 83 deputies.
  9. Since the adoption of Law No. 97-028 of 15 January 1999 organizing the territorial administration of the Republic of Benin, the country has been divided into twelve departments each of which is placed under the authority of a Prefect.

II.  ECONOMIC ENVIRONMENT

(1)  General economic environment

  1. Since the first trade policy review in 1997 Benin has continued the reform process begun in 1990, under various structural adjustment programmes, with particular emphasis on poverty reduction. Within this framework, while continuing its macroeconomic stabilization and structural reform programme, Benin has defined the main objectives of its poverty reduction strategy, which are to control government finance, support the common monetary policy of the West African Economic and Monetary Union (WAEMU) and speed up structural reforms (cotton subsector and public sector).
  2. Since the 1990s Benin has experienced an irregular pattern of renewed economic growth. Thus, the growth rate of the gross domestic product (GDP) rose from 5.7 per cent in 1997 to 5.8 per cent in 2000, and 6 per cent in 2002.
  3. This trend was influenced by the 1998 energy crisis and the dramatic fall in earnings from the primary sector, given the serious difficulties faced by the main component of the sector, cotton, as a result of the payment of subsidies to cotton producers in certain developed countries.
  4. Benin has benefited from the implementation of the WAEMU Common External Tariff (CET) since 31 January 2000. In comparison to the previous five-year period (1992-1996), the economic situation has improved and the average growth rate has climbed from 4.6 per cent to 5.2 per cent.
  5. Tertiary sector activities continue to dominate Benin's economy, generating added value amounting to 48.5 per cent of GDP on average.
  6. From the early 1950s to the present day, Benin's formal foreign trade has been characterized by an incremental increase in the structural trade deficit.
  7. The relatively high level of external trade is largely due to the volume of re-export activity. Benin's imports consist primarily of food products, capital goods, textiles, energy products and pharmaceuticals.
  8. Cotton products (fibres and seeds) are the chief exports, representing approximately 70 per cent of the total volume of exports. Cashew nuts rank second, followed by tobacco and cigarettes.

(2)  ANALYSIS OF THE ECONOMY BY SECTOR

(a)  Primary sector
  1. The primary sector accounts for slightly more than one-third of GDP and provides employment for more than 65 per cent of the active population. In terms of added value, it contributes on average 37 per cent to GDP formation. The contribution of the primary sector to GDP growth developed unevenly between 1997 and 2002, falling from 2.3 per cent in 1997 to 1.7 per cent in 1999, before rising to 2.6 per cent in 2000.
  2. Agriculture, mainly cotton, palm oil and subsistence crop production, accounts for a significant proportion of GDP (37 per cent) and employs 70 per cent of the economically active population.
  3. All things considered, the primary sector is plagued by fluctuating circumstances and shortcomings which prevent many of its participants from overcoming poverty.
  4. The fisheries subsector employs more than 43, 000 fishermen, 4, 000 of whom ply their trade at sea over an area of 3,100 square kilometres, while 39, 000 work on inland bodies of water covering 6,700 hectares. The fish catch amounts to 42,000 tonnes and fish consumption is close to 60,000 tonnes. The fisheries subsector provides a livelihood for over 300,000 persons. Despite its social and economic importance, the subsector is not paid much attention and its development is thwarted by unresolved difficulties relating to the sale of fish products, the deterioration of river and lagoon environments due to sedimentation and the filling of bodies of water.
  5. No policy exists for the promotion of aquaculture, which is also handicapped by a lack of resources (credit-management) and poor information on fish species for breeding.
  6. Livestock subsector. Almost the entire population of livestock animals may be divided into two traditional systems: pastoral and agro-pastoral farming. Domestic herds are estimated to comprise approximately 1,350,000 bovine animals, 1,650, 000 small ruminants, 500,000 pigs and 10,000,000 poultry of all types, which are all raised under the pastoral system.
  7. Commercial stock-raising is relatively limited and is based on the use of imported inputs. The animals raised are mainly rabbits, cane rats, poultry and pigs of imported stock.
  8. This subsector plays an important role in domestic food production.
(b)  Secondary sector
Industry
  1. The secondary sector is much less important to the productive capacity of Benin. It employs less than 10 per cent of the labour force and on average contributed 14 per cent to GDP formation between 1997 and 2001. Its contribution to growth is insignificant; from 0.6 per cent in 1997, it declined until 1999, before improving in 2000 and 2001, at rates of 1.3 and 1.4 per cent respectively, which is explained by the low level of investment in industry.
(c)  Tertiary sector
  1. Trade is the main activity in the tertiary sector. It contributes close to 18 per cent of GDP formation on average but, for the most part, is concentrated in the informal sector. Many of the poorest inhabitants engage in trading activities, sometimes with the support of micro-finance facilities, confining themselves to micro-sales, as a means of earning a subsistence income.
  2. The tertiary sector has consistently played a leading role in the economy of Benin. It is the largest sector in terms of value added to GDP formation (48.5 per cent of GDP). Its share of GDP growth was 2.9 per cent in 1997 and 2.4 per cent in 2001, falling to its lowest level, 1.9 per cent, in 1998 and 2000.
  3. The transport subsector, an important branch of the tertiary sector, accounted for between 7 and 8 per cent of economic activity during the period under consideration, and is primarily geared towards facilitating trade. It provides earnings in the form of transit fees from international traffic (one-quarter of total traffic in the port of Cotonou, and almost two-thirds of rail traffic by the Organisation Commune Bénin-Niger des chemins de fer (OCBN)), and promotes domestic products by providing links for them to reach local and regional markets.
  4. Transport is a major provider of jobs, despite the predominance of informal activities, which not doubt explains the low level of recorded earnings.
  5. The various modes of transportation exhibit shortcomings that need to be corrected.
  6. Maritime transport operations centred on the port constitute an essential trade link and deserve proper support to develop their full potential as a catalyst for port activity.
  7. The state of rail transport is a cause for concern. Although it was restructured in the 1990s, the Organisation Commune Bénin-Niger des chemins de fer is still besieged by problems, which have been exacerbated by competition from large carriers following the asphalting of the Savè-Parakou and Parakou-Malanville roads.
  8. Road transport services are mainly provided by small poorly organized companies that operate with a few aging vehicles and without any market research.
  9. Air transport is marginal, with the exception of the Cotonou airport, which provides no domestic service.

III.  TRADE POLICY AND PRACTICE

(1)  General economic and trade policy objectives

  1. The Government Action Programme (PAG) adopted by General Mathieu KEREKOU and his new Government at the conclusion of a seminar held from 7 to 9 June 2001 will enhance the Government's efforts to fulfil its constitutional mandate and to plot a course determined on the basis of the guiding principles underpinning popular support for the Government's social project.
  2. The programme fully reflects the vision, approach and development objectives identified through long-range national studies initiated by the Government in 1996. It was devised with an eye to the necessary transition towards the Benin of 2025, "an exemplary country, well governed, united and peaceful, with a prosperous and competitive economy, structural influence and social well-being.
  3. The aim is to steer Benin's social and economic environment towards a harmonious, peaceful and prosperous future, and this involves the identification and consideration of precise and coherent multisectoral objectives, sensibly planned in terms of time and space.
  4. At the sectoral level, nine broad objectives have been outlined for implementation within precise time-frames, and these constitute the blueprint for the Government's programme of action:

- Consolidation of democracy and good governance;

- strengthening the material basis of the economy;

- enhancing economic competitiveness;

- skilful management of the economy and public finance;

- regional planning and balanced development;

- intensified action to combat poverty;

- youth, gender and development;

- strengthening national unity and management of social welfare programmes;

- promotion of international influence and African integration.

(2)  Sectoral trade policy objectives

  1. The specific objectives for strengthening the material basis of the economy are summarized as follows:
(a)  Agriculture
  1. The Government's agricultural policy involves:

- Modernizing and developing agriculture through improved modes and means of production, agricultural diversification, conservation and processing of agricultural products.

  1. In order to achieve this objective, the Government of Benin intends to take the following action:

- Implement the declaration on rural development policy;

- implement the rural development master plan;

- reduce the factors of production through taxation and all other appropriate measures;

- support the promotion of local knowledge and appropriate technologies;

- create professional organizations and organizations for the management of agricultural industries;

- adopt measures to promote consumption of local products;

- draft plans for the development and implementation of schemes to promote certain agricultural products such as cassava and cashew nuts; and

- ensure adequate funding for agriculture by:

- Preparing an action plan for sustainable financing of agriculture, livestock and fisheries;

- continuing support for funding mechanisms specializing in agriculture.

Animal production
  1. The aim of the Government is to modernize animal production systems by promoting development of the livestock sector and the sustainable development of small-scale fishing.
  2. The implementation of the following measures is essential to achieving this objective:

- Strengthening technical support for producers;

- implementation of development policy;

- strengthening follow-up in health matters and veterinary inspection;

- special programme to combat epizootic diseases;

- development of fodder crops and management of water supply;

- preparation and implementation of the code on fisheries;

- development of fish farming on bodies of water;

- promotion of fishery products (processing and marketing);

- study for the construction of a small-scale fishing port.

(b)  Services
Tourism
  1. The Government's objectives in the area of tourism include:

- Promotion of tourism development through the management of tourist sites;

- promotion of tourism resources and incentives to stimulate private investment in the tourism sector.

  1. This objective could be achieved by:

- Implementing the tourism plan of action;

- establishing a job training centre for the tourism sector;