ࡱ> q ibjbjt+t+ 5AA e]L8FFFZZZZ8dZ6ff(6666666$796F6FFfFF6ZZFFFF6!w/FF6 \ ZZJk6*trade and investment regimes institutional framework The Republic of Burundi's transitional Constitution was adopted in October 2001 in replacement of that in force since 1998. The new Constitution is part of the Arusha Agreement on peace and reconciliation in Burundi signed at Arusha (United Republic of Tanzania) in August2000. It will govern the functioning of institutions in the Republic of Burundi until the entry into force of a post-transition Constitution. The transitional period, lasting 36 months, is to be used inter alia to ensure the adoption of a post-transition Constitution by referendum in compliance with the principles set out in the Arusha Agreement. Executive power is in the hands of the President of the Republic, a Vice-President of the Republic, and a transitional Government of national unity. The President and Vice-President were appointed as part of the Arusha negotiations and confirmed by the transitional National Assembly. It is provided that during the transitional period the Presidency shall be exercised in two periods of 18months. According to this arrangement, the current Vice-President of the Republic will become the President of the Republic during the second transitional period. The Arusha Agreement provides that at the end of the transitional period - expected to be 28 October 2004 - the President will be elected by universal suffrage for a five-year term of office. The President is both the Head of State and Head of Government. He signs and ratifies international treaties and agreements. He exercises his authority through decrees countersigned by the Vice-President. The President and Vice-President, after consulting the leaders of the parties that concluded the peace agreement, appoint the members of the transitional Government of national unity, whose maximum number is 26. Legislative power is currently exercised by the transitional Parliament, composed of the transitional National Assembly and the transitional Senate. Parliament's role is to adopt legislation and monitor action by the Government. Pursuant to the Constitution, the areas covered by legislation include the following: financial and monetary matters, i.e. the issuance of money, the State's budget, definition of the tax base and rates of taxes and levies, disposal and management of State property; nationalization and privatization of enterprises and transfers of ownership from the State to the private sector; the State's economic and social objectives. The transitional National Assembly is composed of the following: members of the National Assembly elected on 29 June 1993; four members appointed by each of the "participating parties" not represented following the 1993 elections; 28 members representing civil society within the National Assembly; and the members currently belonging to the National Assembly despite the return of former members. The transitional Constitution provides that legislation must be adopted by a two-thirds majority of members present or represented. Under the Constitution, the transitional Senate is appointed by the President of the Republic, the Vice-President of the Republic, and the Bureau of the transitional National Assembly, observing a political, ethnic and regional balance. The Senate's decisions are taken by a two-thirds majority of senators. The National Assembly elects its President and Vice-President after the first session following its inauguration. The President and Vice-President must belong to two different political factions. The President and Vice-President of the Senate are elected in the same way as those of the National Assembly. The functions of the transitional Senate are the following: (i) to approve amendments to the Constitution and basic legislation; (ii) to approve texts concerning political parties; (iii) to undertake enquiries into government administration; (iv) to monitor the application of the constitutional provisions on representativeness or balance in the composition of any components of the civil service; (v) to advise the President of the transitional National Assembly on any matters; (vi) to ensure compliance with the Arusha Agreement; (vii) to make comments or propose amendments concerning the legislation adopted by the transitional National Assembly; and (ix) to approve appointments to various posts, including the head of the defence and security corps; provincial governors and local administrators; members of the Supreme Court; Presidents of the High Courts, the Commercial Court and the Labour Court. Under the Constitution, the National Assembly does not have any functions other than those within the competence of parliament, namely, the adoption of legislation and monitoring the Government's action in relation to the following: (i) the citizen's fundamental rights and obligations; (ii) the status of persons and property; (iii) the political, administrative and judicial structure; (iv)environmental protection and the conservation of natural resources; (v) financial and monetary matters; (vi) nationalization and denationalization of enterprises and transfers of ownership from the public to the private sector; (vii) the educational and scientific research regime; (viii) the State's economic and social objectives; and (ix) labour, social security and trade union legislation. The National Assembly is specifically given responsibility for adopting the budget (see below). The Constitution provides that the Judiciary is impartial and independent of the Legislative band Executive. The Supreme Court is the highest ordinary court in Burundi and comprises the following: an appeal court; an administrative court; and a judicial court. The Constitutional Court decides on the constitutionality of laws and interprets the transitional Constitution. The Supreme Court and the Constitutional Court sitting together constitute the High Court of Justice. Commercial cases are judged by the Commercial Court, established by presidential decree in 1987. The Commercial Court ensures respect for the provisions of the Commercial Code and deals with violations thereof. The Judiciary also comprises a Higher Judicial Council, responsible for ensuring that justice is administered properly, and a Court of Audit responsible for examining and auditing the accounts of all government services. Pursuant to the Constitution, at the provincial level, Executive power is delegated to a provincial governor responsible for coordinating administration of the province. Provincial governors are appointed by the President of the Republic following consultation with the Vice-President and confirmation by the transitional Senate. policy formulation and implementation Policies are formulated and implemented through laws, decrees or orders. Both houses of parliament, the President of the Republic and the transitional Government conjointly may propose laws. Each Ministry is responsible for formulating policies within its competence and for preparing the relevant draft legislation. This is done in coordination with other ministries which may be affected by the measures under consideration. Draft laws or decrees are first discussed by the transitional Government and then put before the bureaux of the transitional National Assembly and the transitional Senate simultaneously. Draft laws must specify whether their content is within the competence of the transitional Senate or not. In either case, the National Assembly transmits the text to the Senate after having adopted it. If the text concerns a matter within the competence of the Senate, the latter has 30 days to consider it. If this is not the case, the Senate has 10 days and the text is only examined at the request of the Senate's bureau or at least one third of its members. If the Senate amends a draft law adopted by the National Assembly, the text is sent back to the Assembly for a further reading. A draft law only enters into effect when it has been adopted by both houses and enacted by the President. The President may request a second reading of all or part of a draft law. In such cases, the law may not be enacted until it has been adopted by a majority of three quarters of the deputies and three quarters of the senators. The President may, after consultation with the Vice-President of the Republic, the President of the National Assembly and the President of the Senate, submit any draft constitutional, legislative or other text to a referendum if it could have a significant effect on Burundi's existence or future or on the nature or functioning of its institutions. The Constitution also states that proposals or amendments by the two houses are not admissible if the result of their adoption would be to decrease public revenue substantially or to impose or increase large-scale public expenditure unless the proposals or amendments also include proposals on compensatory revenue. Under the Constitution, in order to carry out its programme, the Government may request parliament for authorization to take measures that are normally the prerogative of the law in the form of decree-laws for a limited period. A special procedure is laid down for the national budget. If the National Assembly considering the draft finance law does not adopt it, the budget is given effect through a decree-law adopted by the Council of Ministers. Trade policy is formulated and implemented by the Ministry of Trade and Industry. Other institutions are also involved in implementing trade policy, for example, the Ministry of Finance (including the customs administration); the Ministry of Agriculture; the Ministry of Planning and Reconstruction; the Ministry of Justice; the State Enterprises Service (SCEP); and the Permanent Secretariat for following up economic and social reform (SP/REFES), which is part of the Vice-President's office. The Ministry of Trade and Industry has designated a focal point to coordinate its contribution to preparing the Poverty Reduction Strategy Paper. The Economic and Social Council is an advisory body with competence for all areas related to economic and social development and it must be consulted on any draft development plan or any regional or subregional integration project. On its own initiative, the Council may also make recommendations in order to draw the attention of parliament or the Executive to economic and social reforms which it considers to be contrary to the general interest. More consultation with the private sector is a priority in the transitional Government's programme for 2002-2004. The private sector is called on to become a true partner of the public sector in boosting investment and creating jobs. It has been involved in the process of preparing the Interim Economic Growth and Poverty Reduction Strategy Paper (Interim PRSP). It is recognized, however, that additional efforts are needed to develop more systematic consultation between the Government and the private sector on the formulation of trade policy. Although the transitional Constitution empowers the President of the Republic to sign and ratify international treaties, in practice wide-ranging powers are given to ministers (including the Minister for Trade and Industry) in their respective areas of competence, and to the Minister for Foreign Affairs in general. In the past, there was an interministerial committee responsible for coordinating trade matters, but following the political crisis in Burundi during the 1990s it ceased to operate. The Government is considering re-establishing this committee. trade policy objectives Burundi intends to seize the opportunity provided by the establishment of the customs union of the Common Market for Eastern and Southern Africa (COMESA) in order to continue liberalizing its trade regime. One short-term objective is to abolish customs duties on imports from the COMESA so as to allow Burundi to join the free trade area by 2004. In the medium term, Burundi's full participation in the COMESA's custom union, planned for the year 2004, will require a reduction in the rates applied under its MFN tariff as the tariff range envisaged for the COMESA's common external tariff so far is 0 to 30 per cent (section (5) below). One of the Government's priorities is to diversify exports so as to lessen dependence on coffee. It intends to revise the Investment Code and provide incentives to boost investment in non-traditional sectors. A Free Zone Law was adopted in 2001 and a Foreign Trade Promotion Agency (APEE) has been set up. It is expected that small and medium enterprises (SMEs) would play a key role in expanding non-traditional subsectors so SMEs receive more favourable treatment under the Investment Code. The establishment of a single window for investment is also under consideration. In order to lessen the negative impact of inadequate supply of basic services including telecommunications, transport, financial services, and energy on Burundi's participation in international trade, the Government intends to pursue sectoral reform through its privatization programme launched in 1991. A law on competition is also being drafted. The transitional Government's programme for 2002-04 will allow the creation of a macroeconomic environment that should help to ensure the success of trade reforms. The programme provides for upgrading of the infrastructure, in particular communications, involving three means of transport land, lake and air. For a landlocked country such as Burundi, exploitation of its trade potential requires an efficient communications infrastructure. A campaign to eradicate corruption has been initiated, inter alia, in order to establish a business-friendly environment. For this purpose, the transitional Government has created a Ministry for good governance one of whose tasks is to ensure the application of transparent administrative procedures. laws and regulations The Commercial Code provides for free trade and the principle of freedom to fix prices. It also sets out the accounting principles to be followed by enterprises. Any enterprise wishing to engage in trade must be listed in the Commercial Register, which is kept by the clerk of the Commercial Court. The Code also provides sanctions ranging from a fine to closure of the establishment due to failure to observe the Code's provisions. It defines unfair competition and lays down provisions on consumer protection. The 1971 customs legislation defines the procedures for import, export and imposition of import and export duties and taxes. It also covers customs valuation and the various customs regimes, inter alia. Provisions in other laws and regulations such as the Investment Code also affect trade. TableII.1 contains a list of the main trade-related legal texts and instruments in force in Burundi. Table II.1 Main trade laws and regulations, December 2002 Area Instrument/Text Date of entry into force Business activities in Burundi (including unfair competition and consumer protection), competitionCommercial Code, Decree Law No. 1/045 9 July 1993Investment guarantees; rights and obligations; investment regimes Investment Code, Law No. 1/00514 January 1987Free zone regime Law No 1/015 revising Decree Law No. 1/3 of 31 August 1992 establishing a free zone regime in Burundi 31 July 2001Taxes, levies and duties General Taxes and Duties Code. Amendment of certain provisions on income tax or professional taxes Amendment of certain provisions on taxes on income from movable capital or movable property Revision of Law No. 1/011 of 30 December 1998 establishing a fixed levy on certain taxes. Law No 1/006 of 13 March 2001 amending certain provisions of the Decree Law of 31 January 1989 on reform of the transaction tax 13 March 2001 13 March 2001 Customs legislationOrder No. 030/186 of 30 December 1971 giving effect to Decree Law No.1/158 of 12 November 1971 amending the customs legislation 30 December 1971Intellectual property (Copyright)Decree law regulating copyright and intellectual property in Burundi 4 May 1978Labour code Decree Law 1-037 of 07 July 1993 revising Burundi's labour code 7 July 1993Phytosanitary legislation Decree Law No 1/033 of 30 June 1993 on plant protection in Burundi 30 June 1993State enterprise privatization programme Law No 1/003 of 7 March 1996 amending Decree Law No 1/21 of 12August on the privatization of State enterprises 7 March 1996 Source: Information supplied by the Burundian authorities. The Investment Code guarantees freedom of establishment and capital investment for any natural or legal person wishing to establish a production company in Burundi. The company may have national, foreign or joint capital. The Code also guarantees any enterprise (without discrimination) acquired rights in movable or immovable property, legal exercise of economic activities, freedom to establish and move residence, and the right to transfer capital and earnings (subject to the exchange regulations in effect). The Code defines the four principal regimes under which investment may be made, together with the rights, obligations and special benefits applicable to each of them. The regimes are: the ordinary law regime; approval as a priority activity; official approval; and the decentralized enterprise regime. The following are the requirements for being considered a priority enterprise: produce technical and financial guarantees deemed adequate; undertake to give priority to the recruitment and training of Burundian staff; create or expand activities in sectors deemed priorities; directly or indirectly contribute to the achievement of objectives in the economic and social development plan; participate in Burundi's economic and social development through large-scale investment, the creation of permanent jobs and the production of consumer or capital goods; help to improve the balance-of-payments by increasing exports; promote the dissemination and development of technologies; help to maintain the regional balance of economic and general social development; and observe the provisions for implementation of the Code. For projects in which investment does not exceed Fbu100 million, the National Investment Commission is responsible for approving priority enterprises. In other cases, approval is the responsibility of the Council of Ministers. An "officially approved" enterprise is one that meets the following conditions in addition to the eligibility criteria applicable to priority enterprises; its project has been approved by the Commission; it is deemed to be of considerable importance for Burundi's economic and social development; and it meets the job creation and investment requirements determined in an order by the Minister for Planning. With regard to the latter condition, the enterprise must meet at least one of the following requirements: - Agricultural or agro-industrial enterprises must create at least 150 permanent new jobs and other activities must create 100 jobs; - Agricultural or agro-industrial enterprises must invest at least FBu 1 billion and other sectors, including services, FBu 2 billion. A decentralized enterprise is one that has been approved as a priority or officially approved enterprise and is established outside Bujumbura's city limits and neighbouring zones. Lastly, the ordinary law regime does not give any special privileges. In order to enjoy the benefits provided in the Investment Code, a pre-investment study highlighting the legal, economic and technical features of the project must be deposited with the National Investment Commission, chaired by the Minister for Planning, Reconstruction and Development. The Commission is responsible for making a recommendation, inter alia, on whether or not the investment project is a priority, the regime under which the enterprise is eligible, and the benefits to be granted. The Investment Code specifies the criteria that determine the regime applicable to an investment project and also the relevant incentives according to the eligibility criteria (Chapter III(4)(i)). The incentives are usually of a fiscal nature and are intended to promote certain types of special industrial investment in the context of development policies, including those which help to create jobs, promote non-traditional sectors, and the decentralization of economic activities. The authorities recognize that the Investment Code has become difficult to apply. The time that elapses between the filing of an application with the National Investment Commission and the granting of benefits may last as long as a year. In addition to the special incentives in the Investment Code, the law of July 2001 on the creation of free zones determines the benefits available to enterprises that meet the eligibility criteria (Chapter III (3)(v)). The regime does not apply to a specific geographical area but is more a system of free points: Article 2 of the Law describes the free zone regime as a special legal status granted to certain enterprises established in Burundi under specific conditions. The law on free zones provides that applications must be processed within 15 days. Notwithstanding the provisions in the Investment Code, the degree of openness of the investment regime is in practice limited by the existence of a State monopoly or state enterprise in a dominant position, particularly in subsectors such as fixed telephony, the textile industry, the sugar industry, electricity and water, postal services, tourism, marketing of pharmaceuticals, marketing of coffee and tea, and road and air transport services. trade agreements and arrangements Burundi is a member of the ϲʹ, the United Nations Organization and its agencies, the World Bank Group, and the International Monetary Fund. It has signed the Cotonou Agreement between the European Union and the ACP countries and belongs to the African Union (formerly the Organization of African Unity), the Common Market for Eastern and Southern Africa (COMESA), and the Economic Community of Central African States (ECCAS). The Government of Burundi considers that Burundi's participation in regional agreements, particularly the COMESA, constitutes an important component of its strategy for integration into the global economy. At December 2002, Burundi had not been involved in any dispute settlement procedure at the multilateral, regional or bilateral levels. World Trade Organization (ϲʹ) Burundi has been an original member of the ϲʹ since 23 July 1995, after having been a contracting party to the GATT since 13 March 1965. As a least developed country (LDC), Burundi benefits from a more extensive regime of special and differential treatment than that given to developing countries. Under certain agreements, this means longer transitional periods and less onerous commitments. Nevertheless, problems due in particular to lack of capacity have delayed Burundi's implementation of the ϲʹ Agreements and mean that it has been unable to make the best use of the opportunities afforded by the multilateral trading system. Technical assistance needs, including those related to implementation, are described in detail in section (6) below. Table II.2 shows Burundi's main notifications to the ϲʹ. Burundi has not signed any of the ϲʹ plurilateral agreements and is not an observer to any of these agreements. Table II.2 Status of ϲʹ notification obligations, December 2002 ϲʹ AgreementObligation PeriodicitySymbol of the latest notificationDecision on notification procedures for quantitative restrictions (G/L/59)NotificationsFirstly, by 31 January 1986, and then at two-yearly intervals G/MA/NTM/QR/1/Add.8, 1March2002Antidumping (Article 18.5)Laws and regulations Once before March 1995 and then when any changes are madeG/ADP/N/1/BUR/1, 24 April 2002Customs valuation (AnnexIII, para. 1)Extension of the delay for application of the AgreementAt the end of the delay granted to developing and least-developed countriesG/VAL/38, 18 January 2001Import licensing procedures (Article 7.3)Questionnaire: regulations and information concerning procedures for submitting applicationsYearly for the questionnaire; once only, then when any changes are made to the regulations or informationG/LIC/N/3/BUR/2, 7 November 2001 G/LIC/N/3/BUR/1, 27 April 2001Import licensing procedures (Articles 1.4(a) et 8.2 (b))Laws and regulationsOnce only, then when any changes are madeG/LIC/N/1/BUR/1, 27 April 2001Rules of origin (Articles 5.1 and 5.2)Notification of non-preferential rules Once only, then when any changes are madeG/RO/N/33, 2 May 2001Subsidies (Articles 18.5 and 32.6)Laws and regulationsOnce by March 1995, then when any changes are madeG/SCM/N/1/BUR/1, 24 April 2001 Safeguards (Article 12.6)Laws and regulationsOnce only, then when any changes are madeG/SG/N/1/BUR/1, 30 April 2001Article XVII GATTLaws and regulationsOnce only, then when any changes are madeG/STR/N/7/BUR, 15 May 2001TRIPS (Article 63.2)Laws and regulationsOnce only, then when any changes are madeIP/N/1/BDI/1, 18 June 2001TRIPS (Article 69)Contact pointsOnce only, then when any changes are madeIP/N/3/Rev.6, 1 March 2002TRIMS (Article 6.2)Contact pointsOnce only, then when any changes are madeG/TRIMS/N/2/REV.9, 28September2001GATS (Articles III.4 et IV.2)Contact pointsOnce only, then when any changes are madeS/ENQ/78/Rev.1, 5 October 2001 Source: ϲʹ documents. From a more general standpoint, Burundi attaches great importance to continued reform of the international agricultural market, in particular, by removing obstacles to market access, decreasing domestic support, and abolishing export subsidies in industrialized countries. Burundi also considers that the ϲʹ dispute settlement system is too costly and difficult to access for LDCs. Regional agreements Common Market for Eastern and Southern Africa (COMESA) COMESA'a programme is to broaden and expand the integration process in member countries by adopting general measures to liberalize trade, for example, the abolition of all tariff and non-tariff barriers and the adoption of a common external tariff; free movement of capital, labour and goods, and the right of establishment in the region; the adoption of a common set of standards, technical regulations, quality control procedures, certification systems, and sanitary and phytosanitary regulations; tax harmonization (including VAT and excise duties), and provisions on industrial cooperation inter alia, company law, intellectual property and investment; application of a harmonized competition policy; and the establishment of a monetary union. COMESA has been notified to the ϲʹ under the enabling clause. COMESA should therefore lead to a customs and monetary union. Its free-trade area (FTA) was set up on 1 November 2000; nine of its member countries were able to respect this deadline, whereas Burundi has been given a waiver to allow it to apply a 60 per cent reduction of its MFN tariffs on exports from COMESA. Burundi is planning an 80 per cent reduction as of 1January2003 and full integration into the area by 2004. A number of other members intended to accede to the FTA in 2001. The customs union should come into effect on 1 November 2004, with a common external tariff (CET) comprising four rates: 0, 5, 15, and 30 per cent (these rates apply to capital goods, raw materials, intermediate goods, and finished goods, respectively). Because of the current range of MFN rates it applies, imposition of the CET at these rates will constitute a challenge for Burundi if it wishes to join the common market. The granting of tariff preferences is subject to regulations on rules of origin. The COMESA lays down four criteria for determining the right to receive preferential treatment: the goods must be wholly produced in the region, without any raw materials of foreign origin; or the imported content must not exceed 60 per cent of the c.i.f. value of all the materials used in production; or the ex factory value added must account for at least 35 per cent of the price of the finished good; or the value added must be at least 25 per cent if the finished good is deemed "particularly important" for the development of a member State (in accordance with the previously defined list of products), or the processing implies a change in the tariff heading. The monetary harmonization programme is to be implemented in three stages between 1992 and 2025. The last stage should result in a proper monetary union in which there will either be a permanently fixed exchange rate or a single currency; the full harmonization of the member States' economic, budgetary and monetary policies; full integration of the financial structure; pooling of exchange reserves; and the establishment of a single monetary authority. In May 1999, this programme was boosted by the introduction of limited convertibility of currency among member States that have important cross-border trade. A coordination body composed of experts from central banks and ministries of finance in the region has been set up in order to oversee the application of the measures and ensure that the harmonization process makes progress towards monetary union. Several institutions have been set up to facilitate the development of COMESA's members. The Trade and Development Bank for Eastern and Southern Africa (PTA Bank) finances foreign trade transactions and projects by public or private investors resident in one of the member States. To date, Burundi has not received any financing from the PTA Bank. The COMESA clearing-house has become less important following the liberalization of the exchange regime in the majority of member countries. Its role has changed and now it focuses mainly on enhancing the efficiency of clearing operations in order to supplement the services provided by commercial banks; give business persons a form of insurance against political risks in intra-regional trade; and facilitate harmonization of monetary and budgetary policies within the region. The PTA reinsurance company (PTA-RE) helps to promote insurance and reinsurance in the region. Burundi signed the Agreement establishing the PTA-RE and the Burundi Insurance Company (SOCABU) is a shareholder. The African Trade Insurance Agency (ATIA) was set up in August 2001 to boost investors' confidence by providing cover against political risks. The ATIA is a COMESA creation, but all members of the African Union (AU) may belong to it. The COMESA tribunal started to operate in 1998 and is responsible for resolving any issues brought before it under the Treaty. Burundi has never been involved in any official dispute within this framework. The Protocol on the free movement of persons is to be implemented in several stages; the first stage is to abolish obligatory visas, which was to enter into force in 2000, and the majority of countries, including Burundi, no longer require citizens of other COMESA countries to possess a visa. For Burundi, the COMESA measures to facilitate movement of persons and transit of goods are particularly important because of its landlocked situation. Economic Community of Central African States (ECCAS) In addition to Burundi, the following are members of the ECCAS: Angola, Cameroon, Central African Republic, Chad, Democratic Republic of the Congo, Equatorial Guinea, Gabon, Republic of the Congo, Rwanda, and Sao Tom and Principe. It was established in 1985, but the integration process has been at a standstill since 1992. The Economic Community of the Great Lakes Countries (CEPGL) The Economic Community of the Great Lakes Countries was set up in 1975 and is composed of Burundi, Democratic Republic of the Congo, and Rwanda. Joint entities have been established, including a joint bank, an agricultural and animal research institute, an energy generating company (energy from the Great Lakes). The signatories have also agreed to apply reciprocal trade preferences and have identified a list of products eligible for such treatment. As a result of the crises in the three countries, the CEPGL no longer operates. Consequently, the signatory countries, including Burundi, have been unable to apply the relevant preferential treatment. Regional Integration Facilitation Forum (RIFF) The Regional Integration Facilitation Forum (RIFF), formerly known as the Cross-Border Initiative, is aimed at integrating the economies of member countries (including Burundi) by facilitating private investment, trade and payments among the countries, as well as cross-border movement of labour and capital. A number of countries in eastern and southern Africa and the Indian Ocean belong to the Forum. The RIFF was developed in close consultation with the region's economic integration organizations. As a forum, it is intended to reinforce and supplement the activities of these organizations. It was established in 1992 and is supported by the European Commission, the International Monetary Fund, the World Bank, and the African Development Bank. The RIFF does not have any regional secretariat and operates on a voluntary basis. African Union (AU) and the African Economic Community (AEC) The African Union came into being on 8 July 2002 as the successor to the Organization of African Unity (OAU). The OAU Treaty was signed by 30 African countries on 25 May 1963. The objective of the 1991 Treaty of Abuja (Nigeria) is to establish an African Economic Community, but this is not yet in operation. Other agreements and arrangements Burundi has not signed any bilateral trade agreement. The Cotonou Agreement and the "Everything But Arms" initiative Burundi has signed the Cotonou Agreement (which replaced the Lom Convention) between the EU and 77 African, Caribbean, and Pacific countries (ACP). This Agreement renews the majority of the non-reciprocal trade preferences which the EU already granted to the ACP countries. At the Doha Ministerial Conference, the Members of the ϲʹ granted the waiver requested by the parties to the Cotonou Agreement from commitments under Article I.1 of the GATT 1994 (MFN treatment) until 31 December 2007. Before then, the parties should conclude new trade arrangements that are in compliance with the ϲʹ Agreements. This should lead to the gradual elimination of barriers to trade among the parties and strengthen their cooperation in all trade-related areas, particularly through the establishment of a free-trade area within a period of 12 years, i.e. by 2020. During this period, the EU must negotiate with ACP countries, which should have begun in September 2002, in order to conclude bilateral partnership agreements or agreements with various regional groups (regional economic partnership agreements), which should come into effect at the latest by January 2008. These agreements will be based on reciprocal liberalization so that, in principle, Burundi, like the other ACP countries, should gradually grant preferential access for the EU's exports. Nevertheless, a special clause in the Cotonou Agreement gives LDCs the right not to enter into a reciprocal partnership agreement, in which case the country in question would receive the preferences granted by the EU under the "Everything But Arms" initiative. This initiative was launched in March 2001 and grants duty free access and quotas for all products imported from LDCs, with the exception of arms. A timetable has been set for applying preferential treatment to sugar, rice and fresh bananas. African Growth and Opportunity Act (AGOA) The AGOA gives extended preferential access to the United States market to Sub-Saharan African countries which meet certain eligibility criteria. At present, 36 African countries are eligible. For the moment, Burundi does not meet these criteria. The American Government intends to work together with some 12 African countries which do not yet benefit from the AGOA so that they can meet the eligibility criteria. Generalized System of Preferences (GSP) and Global System of Trade Preferences (GSTP) Burundi receives GSP treatment from industrialized countries, but it has not yet acceded to the GSTP Agreement among developing countries. trade-related technical assistance The Government of Burundi has recognized that lack of capacity in trade and trade policy is a major factor limiting the benefits (for example, economic growth and poverty reduction) that the country should derive from its participation in the ϲʹ. Due to the internal crisis and civil war, Burundi has only received very limited technical assistance since 1993. The mission undertaken by the ϲʹ in June 2002 in order to launch the trade policy review was the first ϲʹ technical assistance activity in Burundi. The development of the peace process and the commitments made by the international community have made it possible to envisage increasing the quantity and quality of technical assistance aimed at building trade capacity. Burundi is also one of the LDCs for which the revised Integrated Framework (see footnote) for Technical Assistance and Capacity Building was set up in 2002. The analysis of Burundi's trade-related technical assistance requirements highlights different areas in which technical assistance and capacity building measures are needed. These concern the implementation of trade agreements; participation in trade negotiations; formulation of trade policies; supply constraints; and the integration of trade and development policies. Implementation of agreements, formulation of policies, and negotiations Burundi's assistance requirements relate to: (i) the harmonization of laws and regulations with ϲʹ requirements; (ii) notifications; (iii) staff training and the establishment of institutional structures to facilitate the implementation and observance of agreements; and (iv) the formulation of policies which allow maximum benefit to be obtained from the application of the agreements and minimize any possible costs. The implementation of the ϲʹ Agreement on Customs Valuation is a major concern for Burundi. It forms part of the wider context of reform of the customs system, which is considered to be a key component of a strategy aimed at creating conditions favourable to the private sector and conducive to its participation in international trade. Burundi has been granted a waiver which allows it to delay implementing the provisions of the Agreement until August 2002. When the waiver was granted, a technical assistance plan was adopted, but it did not prove possible to implement it, no doubt due to the civil war (Chapter III). Burundi's customs administration has identified the following specific needs: (i) training of customs officials on the content and implementation of the Agreement on Customs Valuation; (ii)review of domestic legislation and administrative procedures concerning valuation; (iii) training on valuation, post-clearance auditing and anti-fraud techniques and control, within the framework of the Agreement; (iv) modernization of legislation, and revision of the customs tariff; and (v)computerization of central services, customs offices and border posts. Technical standards and regulations, and sanitary and phytosanitary measures are one area of major concern to Burundi's authorities. The Burundi Standardization and Quality Control Bureau (BBN) needs support in order to adopt, adapt and develop domestic standards based upon internationally recognized standards. This would give exporters better access to regional and international markets, and allow them to make the quality of their products known. The sub-sectors with the most to gain from the introduction of such standards are textiles and agricultural foodstuffs, particularly coffee and tea, which face a highly competitive market in which recognition of a quality label is an important factor. During the period 2002-2003, the Bureau intends to, inter alia: adopt the EEC standard for organic products; adopt ISO standards for coffee and tea; develop a standard for cotton yarn and textiles; adopt the Codex Alimentarius standard for sugar; develop or adopt a standard for cement; and adopt a standard for mineral fertilizers. The BBN also needs support in the use of legal and industrial metrology. The establishment of certification structures is a second-tier need. The BBN cooperates with a number of national laboratories, but is faced with a lack of both the appropriate laboratory equipment and calibration equipment used to check and correct industrial measuring instruments. As regards training, the requirements are: eight officials to work on standardization; six on certification; four on quality assurance; five on metrology and testing; and three on document management. The BBN also plans to assign part of its staff to provide technical assistance to domestic enterprises, especially product quality control in priority sub-sectors such as agricultural foodstuffs and textiles. As a first step, Burundi plans to revise its laws on copyright protection and industrial property. The existing law on industrial property protection dates from 1964, and a draft revision is under consideration. The existing law on copyright protection was enacted in 1978; requests for its revision have been made, particularly by associations of Burundian artists, composers and performers, with a view to promoting the local music industry. Technical assistance needs involve: (i) the analysis of draft legislation on copyright and industrial property so as to verify its conformity with the TRIPS Agreement; (ii) support in setting up the copyright management office, and in strengthening the industrial property department in the Ministry of Trade and Industry, inter alia, by providing information technology tools and Internet connections; and (iii) training of staff responsible for the implementation and observance of intellectual property laws. The 1978 law, for example, was not implemented, partly due to a lack of competent personnel. Assistance has also been requested with a view to future negotiations on geographical indications of interest to Burundi, particularly those for coffee and tea. Burundi does not have any legislation on contingency trade measures (anti-dumping, countervailing and safeguard measures) and has not received any technical assistance in this field. The Government believes that the liberalization process, whether in a regional or multilateral context, may give rise to a certain amount of anxiety on the part of private operators regarding unfair or harmful trade practices, including dumping. It would therefore be important to develop the Government's capacity to deal with cases of unfair competition without taking measures of a purely protectionist nature. In the area of subsidies and Trade-Related Investment Measures (TRIMS), assistance would help to ensure that the measures planned (particularly the proposed revision of the Investment Code) comply with ϲʹ provisions, and do not lead to inappropriate allocation of Burundi's economic resources. The increasing number of negotiations, with their different timetables and procedures for example, the ϲʹ Doha negotiations; COMESA regional negotiations; and negotiations with the European Union under the Cotonou Agreement will be a tough test for Burundi's capacity to formulate trade policy. In addition, there is also the economic recovery programme, involving important trade and sectoral policy reforms, including the liberalization of goods and services sectors. In order to ensure the credibility and irreversibility of unilateral reforms (carried out independently), they must be consolidated during multilateral and regional negotiations. Technical assistance priorities are: (i) identification of important sectors and issues; (ii) training in negotiating techniques; and (iii) identification of the reforms to be adopted in order to implement the results of the negotiations. As regards negotiations on trade in services, Burundi needs technical assistance on how to structure its specific commitments. This assistance must not only be aimed at negotiators, but also ministry officials responsible for formulating sectoral policies on services. For example, the Ministry of Transport, Post and Telecommunications has requested assistance specific to its field to allow it to identify how sectoral reforms could become specific commitments at the multilateral level. The Central Bank has indicated that it needs technical assistance to carry through its policy on the liberalization of exchange rates and to totally eliminate the two-track system that has operated in Burundi for several years. Supply constraints As is the case in many LDCs, supply constraints are one of the main barriers to expanding Burundi's foreign trade. This is mainly due to the following factors: Burundi's landlocked situation, which makes freight transport services and freight charges too costly; quality management; the lack of qualified personnel; difficult access to technology; and the lack of trade information. The under-developed banking system makes access to financing difficult, as the interest on long-term loans is 20to 22 per cent. The cost of certain public services is another factor; for example, electricity rates are more favourable to households than other users, with higher rates for large, commercial consumers (Chapter IV(3)(ii)(a)). A large number of the supply constraints stem from the poor quality of the infrastructure used to store perishable goods and problems with air transport, in a country already handicapped by its geographical location (landlocked). This situation seems to have noticeably reduced the possibilities for developing so-called "non-traditional" lines of production, in which Burundi would have a comparative advantage. Certain issues related to infrastructure can be found in the interim PRSP and in the Government's sectoral strategies, including those regarding privatization. The introduction of private mobile telephone operators has slightly improved access to means of telecommunication in Burundi, which had one of the lowest teledensities in the world. The Government is aware of the fact that an improvement in economic competitiveness depends on the reform of State-owned enterprises. The financial situation of the majority of these is weak, and their investments do not often reflect the realities of the market. Enterprises which should provide infrastructural services are often not in a position to do so satisfactorily. They are a considerable financial burden on the Government and generate a serious misallocation of resources. The Government has initiated a reform process (Chapter III(4)(ii)). The technical assistance and capacity-building needs for carrying out this programme are manifold: training of officials responsible for managing State-owned enterprises and implementing their internal reforms; training of experts to strengthen the capacity of the State Enterprises Service; development of diagnostic studies for certain enterprises in the context of their privatization; and support in establishing an adequate regulatory framework for those sectors for which liberalization or privatization is planned. Integration of trade into development strategies Burundi is a participant in the Integrated Framework, which emphasizes the need for each country to take its trade priorities into account in its national development plan or poverty reduction strategy. If foreign trade is to stimulate economic growth that improves the living conditions of the poor, integration should be at the political and institutional levels, and in partnership between the Government and donors. In Burundi, political integration is not yet systematic. Although several of the priority areas in the interim PRSP completed in March 2002, and the final version of the PRSP completed in December 2002, are closely concerned with trade policy issues, trade is not explicitly recognized as a poverty reduction strategy. An Integrated Framework diagnostic study is scheduled to be conducted in the first half of 2003. This will allow certain trade policy-related priorities to be identified, so that they could then be included in future revisions of the Poverty Reduction Strategy Paper. At the institutional level, integration will involve the supervision of all economic policy reforms by the Vice-President's Office and the Permanent Secretariat for following up economic and social reform. The Ministry of Trade has also designated a single focal point for the Integrated Framework and the PRSP. However, there are plans to revive a committee on trade policy coordination that involves the Ministry of Trade and other ministries responsible for different aspects of economic policies. The round tables held in Paris (December 2000) and Geneva (December 2001) gave donors and funding agencies their first opportunity to coordinate their support for Burundi's transition and reconstruction programme. However, coordination of specifically trade-related assistance still needs to be improved. The implementation of the Integrated Framework should allow donors to target their technical assistance according to the priorities established by the Government. There are plans to designate a donor to act as facilitator.  Article 77 of the transitional Constitution.  The SP/REFES is responsible for supervising and coordinating all matters related to the economic reform and structural adjustment programme.  The privatization law was adopted in 1996.  At the end of 1994, the Preferential Trade Area for Eastern and Southern African States became COMESA. In addition to Burundi, the other members are: Angola, Comoros, Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. The United Republic of Tanzania, Lesotho and Mozambique have withdrawn.  Further details can be found at http//:www.comesa.org/obj.htm  The nine members are Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe. Goods transactions among the members of the COMESA's FTA are duty free, without exception.  "Value added" is defined here as being the difference between the ex factory price of finished goods and the c.i.f. value of the inputs imported from countries not members of the COMESA. The minimum level of value added was brought down from 45 to 35 per cent in 2000. Egypt and Uganda, however, continue to apply the 45 per cent threshold.  Almost all African countries belong to the AU.  See ϲʹ (2002) for further details.  In order to benefit from the AGOA, a country must make progress towards a market economy, a multiparty system and the rule of law, the elimination of discriminatory barriers to trade and investment by the United States, the protection of intellectual property, combating corruption, protection of human rights and labour standards, and the abolition of certain forms of child labour.  The Integrated Framework was set up in 1996. An implementation review was conducted in 2002 and it was decided gradually to extend the Framework to include LDCs that fulfil certain criteria, including the following: (i) firm commitment by the Government to integrate trade into its national development strategy and Poverty Reduction Strategy Paper (PRSP); (ii) the country must at least be preparing its PRSP; (iii) the country must at least be at the preparatory stage for forthcoming meetings of the World Bank Consultative Group or UNDP Round Table; and (iv) the country must provide a conducive operating environment (e.g. infrastructure level, resource base of the World Bank, IMF and UNDP country offices, donor response, and the pace of domestic reform).  Government of Burundi (1999).  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