ࡱ> q }Ebjbjt+t+ 7AAo@]\tbbbb* bch(^f((L4)4)4)./$˾Eb04)4)b0b0F4)4)'2FFFb0 4)4)^V b0FFLV0 4):% "bb6< rAnnex 5 kingdom of swaziland contents Page I. The Economic Environment 309 (1) Main Features 309 (2) Recent Economic Developments 310 (3) Trade performance and Investments 312 (4) Outlook 313 II. trade AND INVESTMENT regimeS 314 (1) Policy Formulation and Implementation 314 (2) Trade Agreements 315 (i) The Common Market for Eastern and Southern Africa (COMESA) 316 (ii) The Regional Integration Facilitation Forum (RIFF) 318 (iii) Other trade arrangements 318 (3) Investment Framework 320 (4) Trade-related Technical Assistance 320 (i) Implementation of ϲʹ Agreements and capacity building 320 (ii) Supply-side constraints 322 III. TRADE POLICIES AND PRACTICES BY MEASURE 323 (1) Overview 323 (2) Measures Directly Affecting Imports 323 (i) Registration, and import duties and related measures 323 (ii) Import prohibitions and licensing 325 (iii) Government procurement 326 (iv) Standards and other technical requirements 327 (v) Other measures 328 (3) Measures Directly Affecting Exports 328 (i) Registration and taxes 328 (ii) Export prohibitions, controls, and licensing 329 (iii) Export subsidies and assistance 329 (4) Measures Affecting Production and Trade 330 (i) Incentives 330 (ii) State-owned enterprises and privatization 330 (iii) Competition policy and price controls 333 (iv) Intellectual property protection 333 IV. trade policies And Practices by sector 335 (1) Overview 335 (2) Primary sector 335 (i) Agriculture and related activities 335 (ii) Mining and quarrying 339 (3) Manufacturing 340 (4) Services 341 (i) Financial services 341 (ii) Telecommunications 342 Page (iii) Transport 343 (iv) Tourism 344 references 347 APPENDIX TABLES 349 TABLES I. The Economic Environment I.1 Main economic indicators, 1997-01 312 I.2 Swaziland's commodity export price trends, 1996-00 313 II. trade AND INVESTMENT regimeS II.1 Swaziland's trade-related legislation in force and in progress, February 2003 315 III. TRADE POLICIES AND PRACTICES BY MEASURE III.1 Levies on milk and dairy products under Legal Notice No. 2 of 2000 324 III.2 Import levies on agricultural products 325 III.3 Goods requiring import permits 326 III.4 Operating surpluses/deficits of selected public enterprises, 1996-00 331 III.5 Public enterprise performance indicators, 1998-00 332 III.6 Registration of intellectual property rights, 1991-02 334 IV. trade policies And Practices by sector IV.1 Receipts and Bednights Sold, Tourism, 1997-00 344 APPENDIX TABLES I. The Economic Environment AI.1 Merchandise exports, 1997-01 351 AI.2 Merchandise imports, 1997-01 352 AI.3 Merchandise exports by destination, 1997-01 353 AI.4 Merchandise imports by origin, 1997-01 354 The Economic Environment Main Features With an area of some 17,000 square kilometres, and a population of just under 1 million, Swaziland is the smallest country in southern Africa. It is classed as a medium-development country by the United Nations and as a lower middle-income country by the World Bank. However, this classification conceals a high level of poverty and of inequality among economic sectors (particularly between the cash and subsistence economies, and also related to geographical location and land tenure systems (see below)). Swazilands position as a small, landlocked country bordering on South Africa and Mozambique makes it heavily dependent on its neighbours for access to the sea and to world markets, and for supplies. The ending of the civil war in Mozambique reopened the avenue to the Indian Ocean through Maputo, which has become the principal port of outlet for Swazilands overseas exports. Swaziland has a diversified, but heavily dualistic, economy, based on its varied terrain and land tenure systems, and on industrial and services development, which, in many cases, began before the end of apartheid in South Africa. The main agricultural crops in the formal sector are sugar, which has for many years benefited from preferential access to the European Union and United States markets, maize, meat, dairy products, pineapples, citrus and other fruit such as avocados, bananas, grenadillas, litchis, and guavas. The informal or subsistence sector can also produce some maize, sugar, and livestock on a commercial basis in good years. The industrial sector, which accounts for about 35% of calculated GDP, produces goods based on value-added in sugar (confectionery, soft drinks Swaziland has the principal Coca-Cola concentrate plant for southern and eastern Africa), maize meal for human consumption, animal feeds based on maize and other grains, milk and other processed dairy products, canned fruit, beer, pulp and paper, and plastic packaging. Under incentives provided by the U.S. African Growth and Opportunity Act (AGOA), the textile and clothing sector is now beginning to grow. Swazilands population was, until recently, believed to be growing by 2.9% annually. However, a very high incidence of HIV/AIDS and related diseases may have reduced population growth to around 1%, has seriously affected age structure and life expectancy, and will have serious effects on the social structure and the countrys future economic performance. Current estimates by UNAIDS and other agencies suggest that some 170,000 of Swazilands 950,000 population had the HIV infection at end-2001, that the proportion of the adult population (ages 15-49) affected was 33.4%, the second highest infection rate in Africa, that life expectancy has fallen to 40 years, and that currently there are up to 40,000 AIDS orphans. The Government formed the National Emergency Response Committee on HIV/AIDS (NERCHA) in December 2001 with an operating budget of E 32 million (U$3 million) for 2002/03; E 20 million of this sum was allocated from the national budget. NERCHA estimates that the cost of treating the full-blown AIDS population (not including those with HIV at an earlier stage) would be some E 60 million annually. The Government has submitted an application to the Global HIV/AIDS Fund for E160 million per year during 2003-07 and has in the meantime received a donation from one pharmaceutical company of anti-retroviral drugs for free distribution to prevent mother-to-child transmission of the HIV virus, for a period of five years. Recent Economic Developments Since the last review of SACU, the annual growth rate of Swazilands GDP has declined, from 3.8% in 1997 to 2% in 2000 and to 1.8% in 2001, well below the previously estimated growth of population. The Central Bank attributes the sharp decline in growth of 2001 mainly to sluggish performance in agriculture caused by a combination of reduced planting, high input costs (partly due to the depreciation of the lilangeni, see below), and regional drought and floods. The slowdown in agriculture and the downturn in South Africas growth in 2001 affected performance in manufacturing (which is also largely dependent on food processing). Offsetting these factors in 2002 may be a spur to exports outside the CMA through the depreciation of the currency and possible new opportunities in the U.S. market under the African Growth and Opportunity Act (AGOA). However, inflation is rising and reached 12% in July 2002, partly reflecting the food crisis, and this may counteract beneficial effects of currency depreciation. Income distribution remains highly unequal, with 10% of the population owning 40% of the wealth. Unemployment is high  over 20% overall and over 40% among the 15 to 24 age group  and increasing, and rural and periurban poverty are widespread; 70% of the population lives in rural areas and 66% exists below the poverty line. Informal sector employment has increased in recent years, including a 4% increase in 2001, as companies have restructured within Swaziland and the number of Swazi workers employed in South Africa has fallen. Increasing unemployment has put severe strains on the rural economy. In addition, in the last three years, a combination of excessive rains and drought has had a severe impact on agricultural production, particularly in the "Swazi nation" rain-fed subsistence areas. Consequently, at present, Swaziland is undergoing a severe food supply crisis, with a particularly heavy impact on women, children, the elderly and those orphaned or made vulnerable by HIV/AIDS. Approximately onequarter of rural homesteads have suffered varying degrees of crop failure, and in some cases the failure has been complete. The FAO estimated in May 2002 that at least 144,000 people, or 15% of the population, had been severely affected by the food crisis and were in immediate need of food aid; some estimates suggest that by end 2002 some 280,000 (29% of the population) could require food aid. The government sector accounts for one third of total domestic consumption, and 26% of GDP. SACU customs revenue in 2001 was estimated to account for just over half of that share  13.2% of GDP  down from 14% of GDP at the end of the 1990s, and projected to fall further. Net incoming transfers add between 10% and 12% annually to GDP. Gross national savings (GNS) and investment varied between 14% and 17% of GDP between 1998 and 2001. The current account deficit of Swazilands balance of payments, measured in U.S. dollars, declined from US$94 million (6.9% of GDP) in 1997 to US$22 million in 1999, rising to US$52million in 2000 and 53 million (4.1% of GDP) in 2001. According to the Central Bank, Swazilands bilateral balance of current payments with South Africa is consistently in substantial deficit; depending on the year, this has tended to be offset by the balance with the rest of the world. In 2000, South Africa accounted for 55% of Swazilands export receipts and 88% of its import payments in lilangeni terms (section (3) below); South Africas dominance of the services account is less marked, with 58% of credits and 49% of debits in 2000, but Swaziland remains in substantial deficit on the services account both worldwide and to South Africa. Inward transfers of SACU revenue are an important positive element in Swazilands current account balance, and account for 51% of government revenue. Between 1997 and 2000/01, their value is estimated to have increased from E 547 million to E 1,407 million; in dollar terms, the equivalents would be US$118.9 million and around 140 million (see Chapter II(2), and Main Report, ChapterII(2)(i)). Swazilands international reserves position has fluctuated, but declined in relative terms over recent years; net official foreign exchange reserves stood at 2.5 months of imports of goods and services at end 2001, as against 2.7 months at end 1997 (Table I.1), with a U.S. dollar value of imports in 2001 lower than in 1997. Total external debt rose from 21% to 26% of GDP between 1998 and 2000, this share fell slightly in 2001. Debt servicing, which had fallen from 2% to 1.5% of exports of goods and services between 1997 and 1998, rose to 2.3% by 2001. Table I.1. Main economic indicators, 1997-01 19971998199920002001Miscellaneous(% change)Real GDP growth (at market prices )3.83.33.52.01.8Consumer price inflation (all groups index) 7.84.99.16.47.5Government finance(% of GDP)Central government balancea (excluding grants)1.60.5-1.5-1.4-2.8Balance of payments(US$ million)Current account balanceb -80-94-22-52-53of which:- Trade balance-214-107-131-137-74- Services balance-120-178-109-106-95- Net income13857886735- Net transfers11613413112481MemorandumNet official reserves (months of imports of good and services)2.72.93.02.82.5Debt service ratio (% of exports of goods and services)2.01.52.32.72.3a Fiscal year. b Includes transfers of SACU revenue. Source: Central Statistical Office; Central Bank of Swaziland; and IMF (2002), Staff Report, February. Trade performance and Investments The U.S. dollar value of Swazilands merchandise exports and imports, having increased somewhat up to 1998, declined over the period 1998-01 (Tables AI.1 and AI.2). A large part of the dollar decline in exports may be attributed to the effects of nominal rand/lilangeni depreciation: in local currency terms, the value of exports increased by 4% between 1998 and 2000, and was expected to rise by a further 11% in 2001. However, the market prices received by Swaziland for its principal export commodity, sugar, have fallen considerably since the mid-1990s particularly on the unprotected, residual market outside the EU and U.S. markets  and this is reflected in the foreign exchange value of sugar exports, while the volume exported has increased (Table I.2). Prices for wood pulp, asbestos, citrus fruits and canned fruit have also fallen. Thus, Swaziland has experienced a substantial terms of trade loss, particularly since 1998. Food and chemicals (mainly sugar-based flavourings) made up 60% of Swazilands total exports in 2001, as against 56% in 1997 (Table AI.1). The share of clothing has also increased, from 4% to nearly 12%, particularly in 2001 and 2002 as market access to the United States under AGOA conditions began to have its effect. According to national statistics supplied to the United Nations, 70% of Swazilands exports and over 90% of its imports (average 199901) are destined to and sourced from South Africa (Tables AI.3 and AI.4). As noted above, this is likely to be highly distorted, particularly on the import side, because goods, once within the SACU area, circulate freely; internal border controls within SACU are not strong; and goods destined for the smaller markets, like Swaziland, may well be broken-bulk within South Africa. The figures must therefore be treated with caution. In recent years, the balance between South Africa and "other" markets for exports has changed in favour of the latter; other markets accounted for 44% of the lilangeni value of exports in 2000 as against 39.6% in 1998. This may reflect an increase in competitiveness of Swazi exports outside the CMA as the rand and lilangeni have depreciated in nominal terms. Table I.2 Swazilands commodity export price trends, 1996-00 19961997199819992000Average unit price, US$/tonneSugara - Volume ('000 tonnes) - Value (US$ million) - European Union - United States - Other - World average 244 147 574 640 739 597 254 126 540 450 365 496 267 108 451 371 295 406 237 103 486 382 171 435 275 97 429 380 171 355Wood pulp442347221347331Asbestos522471365391234Citrus fruit399297250222194Canned fruit844774722698630Coal1521232018a In 2000, Swaziland exported 183,000 tonnes of sugar to the EU, 16,000 tonnes to the United States, and 76,000 tonnes to other destinations. Source: Swaziland Sugar Association/Central Bank of Swaziland, in IMF, Staff Report, February 2002, Statistical Appendix, tables 34 and 35. Outlook Macroeconomic growth in the Swaziland economy continues to slow, and the short-term outlook is not optimistic as it depends heavily on developments in the South African, COMESA, United States, and EU markets. Swazilands status as a middle income developing country disguises the heavily dualistic nature of the economy, which remains a major constraint on meaningful progress. Dependency on one main product (sugar and related products) and preferential, highly supported access to one principal market outside SACU (the European Union) should be a major concern for the Swazi authorities. The food supply situation is becoming increasingly precarious for the majority of the population, who live in main cities or on Swazi nation land; in combination with the very high incidence of HIV/AIDS, which is slowing population growth, decimating the working population, and severely hollowing out the overall population structure, this represents the severest mediumtolong-term challenge facing economic and social policy-makers in Swaziland, as in other small southern African countries. trade AND INVESTMENT regimeS (1) Policy Formulation and Implementation Swaziland is a monarchy, one of three in Africa, with a unique combination of western (Roman-Dutch) and traditional legal systems. The Parliamentary system consists of two houses: the upper house (Senate) comprises 30 senators, 20 appointed by the King and 10 elected by the lower house (House of Assembly); the House of Assembly, has 55 Members directly elected under the tinkhundla system (which has three stages, nomination, primary elections, and secondary elections) and ten royal appointees. Under the traditional system, the Swazi National Council (Libandla), which is headed by the King and the Queen Mother and comprises a cross-section of society, advises the King. The Parliaments task is to pass and amend legislation. At the national level (i.e. on issues not covered by the SACU Agreement), a large number of Ministries have responsibilities for different aspects of Swazilands trade policy. Although it is recognized within Government that policy coordination is seriously lacking, little or nothing has been done to rectify it. Formal responsibility for trade relations, ϲʹ participation, Cotonou renegotiation, and trade promotion rests with the Ministry of Foreign Affairs and Trade (MOFAT); it was transferred to MOFAT following the abolition of the Ministry of Commerce and Industry in November 1996. The Ministry of Enterprise and Employment (MEE) remains responsible for internal trade regulation and for the promotion of foreign and domestic investment. The Ministry of Agriculture and Cooperatives (MOAC) is responsible for Swazilands participation in the ϲʹ agriculture negotiations (the only aspect of ϲʹ where a Swazi delegation participates regularly and actively). The Ministry of Finance (MOF) is in charge of SACU relations, because of the revenue aspects. The Ministry of Economic Planning and Development (MEPD) is responsible for overall economic policy planning; Customs is responsible for the administration of border measures, sales tax and collection of import and export statistics; the Ministry of Justice and Constitutional Affairs is the custodian of laws relating to intellectual property; and the Central Statistical Office (CSO) is responsible for publication of statistical series. The 2001 SACU Agreement also provides for a National Body to be established in each SACU member country. Swazilands National Body, which will be a unit of the International Trade Department of MOFAT, will be in charge of SACU issues (including tariff changes) at the national level and will make recommendations to the Customs Union Commission (Main Report, Chapter II(2)(ii)(a)). The International Trade Department (ITD) of MOFAT, established in September 2002, has overall responsibility for external trade policy questions. It therefore has to deal with the complex relations among SACU, SADC, COMESA, the RIFF, the African Union, new African initiatives like NEPAD, the Cotonou renegotiations, AGOA, and the ϲʹ. However, the ITD is extremely understaffed and will have to struggle to establish real authority to undertake these roles. Efforts are being made in Swaziland to improve coordination, not only among different aspects of trade policy (with the creation of the ITD), but also among the political and economic actors involved domestically. A National Coordinating Network, of Government, business and civil society, has been set up and has held one meeting so far. Table II.1 presents Swaziland's main trade-related laws. Table II.1 Swaziland's trade-related legislation in force and in progress, February 2003 AreaLegislationCustoms and ExciseCustoms and Excise Act, 1971 and Customs and Excise (Amendment) Act, 2001Sales TaxSales Tax Act, 1983Trade facilitationBusiness and Trade Facilitation Bill, 2001Import permitsImport Control Order, 1976; Legal Notice No. 60, 2000Agricultural import leviesNational Agricultural Marketing Board Act, 1985; Legal Notice No. 2, 2000 Government procurementSwaziland Government Stores Regulation, 1975Standards, quality controlStandards and Quality Act, 2001Health and sanitary controlsAnimal Disease Act, 1965; Plant Control Act, 1981; Seeds and Plants Varieties Act, 2000Export financingSmall Scale Export Credit Guarantee SchemeFair trading and competition policyFair Trading Act, 2001; Competition Bill, 2002Public enterprise deregulationPublic Enterprises (Control and Monitoring) Act 1989Intellectual property: Trade marksTrade Marks Act, 1981 Patents, utility models, industrial designsPatents, Utility Models and Industrial Designs Act, 1997 CopyrightCopyright Act, 1912; Copyright Bill, 2003ForestryNatural Resources Act 1951; Control of Tree Planting Act, 1972; Flora Protection Act, 2001 MineralsMineral and Environmental Authority Act, 1992Financial servicesMoney Laundering Act, 2001; Central Bank of Swaziland (Amendment) Bill, 2002; Financial Institutions Bill, 2002; Securities Bill, 2002; Insurance Bill, 2002; Retirement Funds Bill, 2002TelecommunicationsPosts and Telecommunications Act, 1983TourismTourism Authority Act, 2001Source: Information provided by the Swaziland authorities. Trade Agreements Swazilands trading relations are complex and difficult for a small administration to handle. The country is a member of the ϲʹ, the Southern African Customs Union (SACU), the Southern African Development Community (SADC), and the African Union (AU), as well as a signatory to the Cotonou Agreement governing relationships between the ACP (African, Caribbean and Pacific) group and the European Union (Main Report, Chapter II). In addition to these trade agreements, of which all SACU countries are members, Swaziland (as well as Namibia) also participates in the Common Market for Eastern and Southern Africa (COMESA), and the Regional Integration Facilitation Forum (RIFF) (section (ii) below). Within SACU, Lesotho, Namibia, Swaziland, and South Africa (but not Botswana) form the Common Monetary Area (CMA) under which the lilangeni is maintained at par with the South African rand, which circulates freely in Swaziland (Main Report, ChapterII(3)). Swaziland benefits from duty-free access to the U.S. market under the AGOA, including the special provisions for textiles and clothing, and from preferential access to the markets of most developed countries under the Generalized System of Preferences (GSP). Swaziland, like other smaller SACU members, has until now had to accept certain trade policy instruments laid down by South Africa, which are not necessarily the most appropriate for these smaller economies. It is thus required to bear the impact of, inter alia, customs tariffs and extensive anti-dumping and safeguard duties set by South Africa (Main Report, Chapter II). Furthermore, because of the reworking of SACU's revenue-sharing formula and the effects of the South Africa/European Union free-trade agreement (Trade, Development and Cooperation Agreement (TDCA)), the revenue available for Swaziland and other smaller SACU members is expected to fall with effect from 2005. Although Swaziland has no mission in Geneva, it has participated actively in the negotiations on agriculture under the post-Uruguay Round "built-in agenda" and in phase II of the negotiations since the Doha Ministerial Conference. It does not, however, participate actively in other aspects of the Doha Development Agenda at present. Swaziland has made no notifications to the ϲʹ since its previous Trade Policy Review. Swazilands trade-related technical-assistance needs are summarized under section (4) below. (i) The Common Market for Eastern and Southern Africa (COMESA) Swaziland is a member of COMESA; it ratified the Treaty establishing the organization in 2002. The COMESA agenda is to deepen and broaden the integration process among member states through: the complete elimination of tariffs and non-tariff barriers to regional trade, and the adoption of a common external tariff (CET); the free movement of capital, labour, goods, and the right of establishment within COMESA; the adoption of a common set of standards and technical regulations, quality control procedures, certification schemes, and sanitary and phytosanitary regulations; the standardization of internal taxation (including value-added tax and excise duties), and conditions regarding industrial cooperation, particularly on company laws, intellectual property rights, and investment laws; application of harmonized competition policies; and the establishment of a monetary union. COMESA was notified to the ϲʹ under the Enabling Clause in 1995. COMESA is intended to become a customs and monetary union. The COMESA free trade area (FTA) was launched on 1 November 2000; nine members met the deadline for implementation. The status of the participation of several other members, including Swaziland, varies considerably. Both Swaziland and Namibia operate under derogations from the Treaty, which permit them to apply the full SACU customs duties to goods imported from other members. This derogation is in principle due to expire during 2003; through the National Coordinating Network, Swaziland is, currently considering its options regarding its relationships simultaneously with COMESA and SACU in the event the derogation is not renewed. The COMESA customs union is to be implemented by 1November 2004 with a common external tariff (CET) comprising four tariff bands: zero, 5%, 15%, and 30% (on capital goods, raw materials, intermediate goods, and final goods, respectively). However, since most COMESA members have maximum tariff bands below 30%, discussions are under way on the possibility of reducing the agreed CET rate on final goods. Tariff preferences under COMESA are subject to rules of origin requirements. The agreement provides four alternative criteria for determining origin on which an exporter may claim eligibility for preferential treatment: that goods are wholly produced in the region using no outside materials; that imported content of goods is not more than 60% of the c.i.f. value of the total cost of materials used in production; that goods contain not less than 35% ex-factory value added , reduced to 25% if the final product is considered to be of "particular importance" to the economic development of a member state; or that there is a change of tariff classification heading following transformation. Swazilands exports to other COMESA members were approximately US$100 million, or 12% of its total exports in 2000; the value of imports from COMESA sources is only some 3% of the value of exports to the area possibly in part because of the MFN rates charged by Swaziland on imports from COMESA members under the SACU agreement. The main regional destinations are Mozambique, Zimbabwe, Tanzania, Kenya, Zambia, and Angola. The COMESA Monetary Harmonisation Programme is to be implemented in four phases, from 1992 to2025. The final phase should culminate in full monetary union, with the use of irrevocable fixed exchange rates, a single currency or parallel currencies; full harmonization of economic, fiscal, and monetary policies of member states; full integration of the financial structure; pooling of foreign reserves; and the establishment of a common monetary authority. A coordinating body, comprising regional experts from central banks and finance ministries, was formed to oversee implementation of policy measures and to advance the process of monetary harmonization towards monetary union. Several institutions have been established to assist COMESA members in their development. The Eastern and Southern African Trade and Development Bank (PTA Bank) provides trade and project financing to public and private investors domiciled in a bank member state. The COMESA Clearing House has diminished in importance following liberalization of most members' foreign exchange regimes. Its role is being re-directed towards improving the efficiency of clearing operations to complement the services offered by commercial banks; providing traders with some form of political insurance on intra-regional trade; and facilitating monetary and fiscal policy harmonization within the region. The PTA Re-Insurance Company (ZEP-RE) assists the development of the insurance and re-insurance industry in the COMESA region (Swaziland is not a member at this point, reflecting the absence of road-based trade). The Africa Trade Insurance Agency (ATIA), launched in August 2001, is aimed at creating investor confidence by providing cover against political risk. Although promoted by COMESA, membership of ATIA is open to all the member states of the African Union, formerly called the Organization of African Unity (OAU). The COMESA Court of Justice became operational in 1998. Its general jurisdiction is to adjudicate upon all matters that may be referred to it under the Treaty. Swaziland has not been involved in any formal disputes within this framework. The protocol on free movement of persons is to be implemented in several stages; the first stage of removing visa requirements was adopted in 2000. Although several countries have removed the visa requirements they are still maintained by Swaziland, as well as by Angola, Burundi, the Democratic Republic of the Congo, Djibouti, Egypt, Ethiopia, Madagascar, Rwanda, and Sudan. The Regional Integration Facilitation Forum (RIFF) Swaziland and Namibia are the only SACU members that participate in the Regional Integration Facilitation Forum (RIFF), formerly known as the Cross-Border Initiative (CBI). RIFF is open to countries in eastern and southern Africa and the Indian Ocean that are members of COMESA, SADC, East African Community (EAC), and the Indian Ocean Commission (IOC). RIFF aims to move member countries towards increased economic integration by facilitating private investment, trade, and payments between them, as well as crossborder mobility of labour and capital. The RIFF was developed in close collaboration with the economic integration organizations in the region. As a forum, the RIFF is to reinforce and complement efforts undertaken by these organizations. Launched in 1992, the RIFF is co-sponsored by the European Commission, the International Monetary Fund, the World Bank, and the African Development Bank. It has no Secretariat at the regional level and works on a voluntary basis. According to the authorities, Swaziland has made great progress in achieving the activities set out in the RIFF Matrix. It was assisted through the RIFF framework in establishing the Swaziland Investment Promotion Authority in 1998. Currently, a work programme has been developed within Swaziland for the promotion of RIFF activities in the financial year 2002/03. Other trade arrangements Swaziland maintains no bilateral trade agreements with other countries. Swaziland has preferential access to the EU market under the Cotonou Agreement, subject to meeting the relevant rules of origin (Main Report, Chapter II(6)(i)). Swazilands principal interest in the EU market has historically been in two products: sugar and beef. Most of Swazilands sugar exports go to the EU, under a special protocol attached to the Cotonou Agreement under which 17 ACP sugar-producing countries receive duty-free access and a supported price. However, Swaziland will already become subject to greater competition in the EU market for sugar from 2008, because of the extension of duty-free access for sugar exports from all least developed countries (LDCs) Swaziland is not an LDC under the EU's "Everything But Arms" Initiative. Diversification of Swazilands markets for sugar, as well as further development of sugar-using industries, is therefore crucial and the SACU, SADC, and COMESA markets are of principal importance. Swazilands beef exports to the EU benefit from a tariff quota under which the ad valorem element of the EUs common external tariff on beef is reduced by 92%. Like other SACU countries, particularly non-LDCs, Swaziland is weighing the balance of its interests in the future Cotonou negotiations between allying itself to the South Africa-EU free-trade agreement or some other arrangement possibly within SADC. Swaziland is in the preliminary stages of a study to assess the impact and sustainability of an economic partnership agreement (EPA) with the European Union, either for SACU as a group or by joining the EU/South Africa Trade and Development Cooperation Agreement (TDCA). On 18 January 2001, Swaziland became the 35th country added to the list of AGOA beneficiaries (sub-Saharan African countries) as a lesser-developed beneficiary country (LDBC), following the passage of the revised Industrial Relations Act in November 2000. As an LDBC, the major advantages Swaziland gains from the AGOA are in access to the U.S. market for textiles and clothing. Countries with per capita GDP below US$1,500 in 1998 enjoy, until 30 September 2004, duty-free access for clothing made from fabric originating anywhere in the world; in contrast, the general AGOA rule provides unlimited access for clothing made from U.S. fabric, yarn, and thread, and permits up to 3.5% of overall U.S. imports of clothing originating in AGOA beneficiaries (in quantity terms, measured in square metre equivalents) to be made from African fabric and yarn until 2009. A 2002 report by USTR, on U.S. trade and investment policy toward Sub-Saharan Africa states that: "Swazilands duty-free exports to the United States under AGOA were valued at US$14.8 million in 2001, primarily textiles, apparel and agricultural products." Swaziland has seen a substantial increase in investment, especially in textiles and clothing. Investors have been primarily from Chinese Taipei and South Africa. By end-2002, AGOA had contributed nearly 17,000 jobs to Swazilands economy; roughly 20 textile and apparel factories had begun or expanded operations and other new investments were under consideration. Statistics compiled by the United States International Trade Commission show total imports into the United States from Swaziland nearly doubling between January-November 2001 and the same period of 2002, from US$55.6million to US$104.6million. Textiles and apparel accounted for US$48 million (74% of the total) in 2001, but only US$8 million of this benefited from AGOA provisions. Other main U.S. imports from Swaziland were "agricultural products" (sugar) and "forest products" (wood pulp). Independently of the AGOA, Swaziland benefits from tariff rate quota access to the United States for sugar under the United States ϲʹ commitments. Swazilands guaranteed minimum access to the U.S. market is 16,000 tons. If the U.S. market is in deficit, Swaziland may also benefit from a variable amount of extra access dependent on a stocks-to-use trigger ratio of 15% (Box IV.1). Investment Framework Swaziland is in the process of updating its legislation on investment conditions. As yet, there is no comprehensive Investment Code, although the idea has been discussed. A draft Trade and Business Facilitation Bill (see Chapter III(2)(i)) is before Parliament; a new Companies Bill, replacing the Companies Act of 1912, and a draft Competition Bill are before the Cabinet for approval, prior to submission to Parliament. A new Fair Trading Act and a new Standards and Quality Assurance Act were enacted in 2001 (Chapter III(2)(iv) and (4)(iii)). Swaziland has joined the Multilateral Investment Guarantee Agency (MIGA). Trade-related Technical Assistance Swaziland faces many challenges and obstacles in the development of its trade policy. Technical assistance is therefore of utmost importance to Swaziland. Swaziland has, as yet, no diplomatic representation in Geneva, although the Government has decided to establish a Mission there; its nearest representation is in Brussels. Its participation in the multilateral trading system and the ϲʹ has therefore been very limited. Other constraints include lack of awareness and understanding of the ϲʹ and its Agreements; weak human and institutional capacity, including lack of coordination, although this is being addressed (section (1) above); and supply side constraints. Swaziland's trade-related technical assistance needs can be classified into two categories: the implementation of ϲʹ Agreements and institutional and human capacity building; and supply-side constraints. (i) Implementation of ϲʹ Agreements and capacity building In Swaziland, there is a general lack of awareness and understanding of the ϲʹ and its Agreements. Implementation of the Agreements is therefore difficult. Although it has benefited from technical assistance provided by the ϲʹ, Swaziland considers that it needs a more focused programme of technical assistance activities in many areas, at the national level. These include the alignment of national laws, rules and regulations on ϲʹ requirements; notification requirements; and training of Government officials on ϲʹ matters. Swaziland's implementation-related concerns are in the areas of TRIPS, customs valuation, and sanitary and phytosanitary measures (SPS). Lack of understanding of the relevant provisions makes it difficult to translate ϲʹ Agreements into national laws; in addition, Swaziland lacks the human and institutional capacity to implement the agreements. This weak human capacity includes lack of legal expertise, particularly with regard to the implementation of the TRIPS Agreement. Assistance is also required in the enforcement of laws, particularly through training of customs and police officials. Swaziland has made no notifications to the ϲʹ since its previous Trade Policy Review (section (2)). The authorities have stated that this is due to a lack of understanding of the notification requirements and how to submit notifications to the ϲʹ. In its technical assistance request for 2003, Swaziland has indicated the need for a national seminar on notification requirements and implementation of ϲʹ Agreements. As a ϲʹ Member without local representation, Swaziland has not been fully engaged in the day-to-day activities of the ϲʹ nor has it been able to participate effectively in the ongoing negotiations. The Government is making efforts, particularly with regard to the negotiations on agriculture, where officials from the capital have attended some of the Special Sessions of the Committee on Agriculture and Swaziland has submitted two proposals. Swazi officials have participated in the "Geneva Weeks" organized by the ϲʹ for non-resident Members and Observers. As a non-resident member of the ϲʹ, Swaziland may also benefit from the assistance provided by the Agency for International Trade Information and Cooperation (AITIC), which is based in Geneva. In October 2000, the AITIC Non-Residents Unit was established to assist ϲʹ Members (like Swaziland) and Observers with no representation in Geneva. The type of assistance provided by AITIC includes the provision of background notes and summaries of meetings as well as logistical support to non-resident officials attending meetings in Geneva. Swaziland may also benefit from technical assistance supplied by the Commonwealth and ACP, as a member of both of these organizations, as well as the research of such institutions as the South Centre. Swaziland plans to establish a national Reference Centre in the newly-established International Trade Department of the Ministry of Foreign Affairs and Trade. This would enable Government officials, business and the academic communities, and others, to obtain trade-related information and documents from the ϲʹ Internet web site and databases. Until recently, lack of coordination of trade matters added to Swaziland's ineffective participation in the multilateral trading system. As already noted, many different Ministries have responsibility for particular trade policy issues. Creation of the International Trade Department in MOFAT, and of the National Coordinating Network, is intended to alleviate these problems. Training of officials (including in negotiating skills) and sensitization both of the public and private sectors, including Members of Parliament, on ϲʹ issues would be useful. Swaziland has also indicated the need to train trainers on trade policy issues. Although Swazi officials have benefited from a number of regional training courses organized by the ϲʹ, since 1995, no national trade policy course has been organized in Swaziland and only three Swazi officials have benefited from the three-month trade policy courses held at the ϲʹ Secretariat. Further participation in such trade policy courses would greatly increase knowledge and understanding of trade policy issues. Sensitization of all stake holders civil society, media, academia on the ϲʹ could increase the awareness of the multilateral trading system, and assist trade policy formulation and implementation in Swaziland. Swaziland has expressed the need for training of officials as well as for keeping Members of Parliament informed on the developments in the ϲʹ. This is particularly important since Swaziland is currently in the process of enacting new laws in such areas as intellectual property, fair trading, competition policy, etc. Supply-side constraints Swaziland's supply-side constraints include its position as a small, land-locked country, heavily dependent on agricultural production for exports; its limited domestic market, shortage of skilled labour and infrastructural deficiencies. However, the Government is taking measures to address some of these constraints, in particular infrastructural impediments. As mentioned in the Economic and Social Reform Agenda (ESRA), the Government's action programme, a number of infrastructural programmes are being carried out. Swaziland has identified the transport sector as a priority area. The high priority placed on the improvement of transportation corridors reflects the Government's commitment to fostering investment and growth in industry. Other areas of infrastructure improvements are energy, rail transport, roads, air transport, telecommunications, and water. Swaziland is highly dependent on its rail and road networks for the transportation of exports and imports of various commodities. In southern Africa, most countries are linking up in transborder programmes such as the Maputo Development Corridor, which connects South Africa and Mozambique, and the Lubombo Spatial Development Initiative, connecting Swaziland, South Africa, and Mozambique. Swaziland has consequently concentrated on further extension of road and rail networks so as to exploit the potential economic benefits that could be derived from these two programmes, and a substantial amount of the budget is targeted at improving the country's road network (Chapter IV(4) (iii)). Such improvements would ensure a free flow of people, goods, services, and information within the economy. TRADE POLICIES AND PRACTICES BY MEASURE (1) Overview Like other SACU member states, Swaziland continues to apply the SACU Common External Tariff. Until the revised SACU agreement comes into force, duty rates therefore are effectively determined by South Africa, without necessarily having reference to the economic structures of the smaller SACU members (Main Report, Chapter III(2) and (3)). As a small developing economy, Swazilands export policies are largely determined by external conditions. These include, principally, access to, and policies pursued by, South Africa, but also access to SADC (and to a certain extent COMESA) member States and to the European Union. Access for sugar determines not only Swazilands attitude to EU relations as such, but also affects its participation in ϲʹ negotiations and dispute procedures (BoxIV.1). To comply with the provisions of the U.S. African Growth and Opportunities Act (AGOA), Swaziland has been required to introduce new licensing and visa mechanisms for textiles and clothing (see below and Chapter II(2)(iii)). The trade and cooperation agreement between South Africa and the European Union has also affected, and will continue to affect, Swazilands import structure, by effectively granting preferences in SACU to goods of European Union origin, as well as reducing the future tariff revenue available from the SACU revenue pool (Chapter I(2)). Imports into and exports from Swaziland are governed by the Customs Act. Goods entering the SACU area are charged customs duty once only, at the port of entry. This means that, in practice, the Swaziland customs department is responsible for the clearance and levy of customs duty on goods arriving directly from Mozambique or by air, and for the levy of sales tax on goods originating in all sources, including South Africa. (2) Measures Directly Affecting Imports Registration, and import duties and related measures Under the 1969 SACU Agreement, BLNS countries, including Swaziland, have implemented import duty rates and related measures determined by South Africa. In practice, applied customs tariffs, excise duties, valuation methods, origin rules, and contingency trade remedies are, so far, the only trade policy measures harmonized throughout SACU. These common policy measures are covered under the Main Report (Chapter III). As regards import duties and related measures, differences exist among SACU members in customs clearance procedures, import levies other than customs tariffs and excise duties, and duty and tax concessions. Swaziland has never been required to apply South African anti-dumping (AD) and countervailing (CV) duties, as no goods bearing such duties have ever entered the customs union through Swaziland. However, goods imported via South Africa, on which AD or CV duties are applied on entry into South Africa, do bear these extra duties when imported into Swaziland; this can affect the Swazi economy, as do the "formula duties" applied to "sensitive" agricultural products by South Africa. Swaziland does not have any independent legislative provisions concerning AD or CV duties. Import levies have been used by Swaziland to relieve import pressure on such products as maize, vegetables, chicken, eggs, milk and milk products. In addition, the National Agricultural Marketing Board (NAMBOARD) may suspend imports of such products if they are considered too high for the local market to bear. All businesses operating in Swaziland must be registered. Most trades and professions are covered by specific Acts of Parliament; if not registered under specific legislation, a trading firm must be licensed under the Trading Licence Order by the Ministry of Economy and Enterprise. A Trade and Business Facilitation Bill, aimed at simplifying procedures for trade licensing, is currently going through the Swaziland Parliament. As of mid-January 2003, the Bill had passed through the House of Senate but still had to pass through the House of Assembly. Certain imports (now a relatively short negative list) require an import permit, issued by the Ministry of Finance, to which an invoice for the goods would be attached (see section (ii) below). Exports require a form F178, provided by the companies' bankers, which indicates the value of goods to be exported; this is used to monitor the repatriation of the proceeds of sale and for statistical purposes. Swaziland does not conduct preshipment inspections for its imports. Customs clearance takes on average one day, provided that all documents are in order. Appeals against Customs decisions are made to the Minister of Finance and appeals against the Ministers decisions may be heard in the courts. Swaziland has from time to time exercised its right under the SACU agreement to protect infant industries. Fertilizers, cement, beer and most recently flour milling have been covered by this process (see Main Report, Chapters II(2)(i) and III(3)(i) for details of the provision on protection of infant industries by BLNS countries). Swaziland imposes import levies on a number of agricultural products for protective reasons. Dairy products are subject to fixed levies of between 40 cents and E 4.00 per litre or per kg. under the Dairy Act, 1968, and the related regulations most recently amended in 2000 (Table III.1). Other agricultural products are subject to variable levies under the National Agricultural Marketing Board Act, 1985, as amended in 2002 (Table III.2). The rates of the levies are "made known publicly in advance by the Board". Table III.1 Levies on milk and dairy products under Legal Notice No. 2 of 2000 ProductsImport levyFull cream UHT milk and flavoured milk40c per litreLow fat UHT milk40c per litreFresh full cream, low fat or skimmed milk35c per litreFermented milk/Emasi/Buttermilk50c per litreFresh/sour cream or UHT creamE 1.85 per litreDairy juice25c per litreYoghourt85c per litre or kg.Condensed milkE 1.50 per litreDessert or ice cream mixturesE 1.20 per kg.Baby formulasE 3.60 per kg.ButterE 2.60 per kg.Full cream milk powderE 3.80 per kg.Skim milk powder/ dairy powder blendsE 1.50 per kg.Whey/buttermilk powder55c per kg.Cheese (Cheddar, Gouda or other)E 4.00 per kg.Source: Information provided by the Swaziland authorities. Table III.2 Import levies on agricultural productsa ProductsImport levybMaize, including seed maize, yellow maize and popcornbetween 1% and 4.5%Maize products, including processed poultry feed, animal feed and maize starchbetween 1% and 10.5%Rice3.5%Fresh fruits, excluding apples, pears, peaches, grapes and bananasbetween 1% and 7.5%Apples, pears, peaches and grapesbetween 1% and 4.5%Bananasbetween 6.5% and 25%Fresh vegetables, excluding cabbages, tomatoes, potatoes and sweet potatoesbetween 1% and 10%Cabbages, tomatoes, potatoes and sweet potatoesbetween 1% and 20%Poultry and poultry products including live broiler birds, day old chicks and hatching eggsWheatbetween 3% and 5%Wheaten productsbetween 7% and 18.5%a Import levies under Section 6 of the National Agricultural Marketing Board Act, 1985 as defined in the Import and Export of Scheduled Products (Amendment) Notice, 2002. b On all items except rice, the actual rate of levy to be applied at any particular date will be made known publicly in advance by the Board. Source: Information provided by the Swaziland authorities. Petrol and diesel are subject to fuel levy, fuel oil levy, and fuel tax at rates of 16 cents, 5 cents and 40 cents per litre (a cumulative rate of 61 cents/litre); the fuel levy includes a contribution to motor vehicle accident insurance. Swaziland plans to introduce value-added tax within the next two years. Currently, sales tax is applied to goods and services, under the Sales Tax Act of 1983. The tax is applied either at the point of entry into the country or at the point of sale from the local producer. The current rates of sales tax are 14% for goods and services and 25% for luxury goods (e.g. alcohol and tobacco). Sales tax is not applied to goods that form part of a final product for resale; agricultural inputs (fertilizers, seeds, etc.); plant and machinery used for manufacturing; basic foodstuffs, such as dairy products, maize, bread, meat, vegetables, sugar, and salt; other foodstuffs imported by hotels and restaurants (who charge sales tax at the point of final sale); scholastic materials; medical and surgical supplies; and electricity and water. There are also general exemptions to sales tax for the diplomatic corps and for goods and services provided under technical assistance agreements; other exemptions may be provided as part of bilateral or multilateral agreements. Duty on purchases of new and used clothes up to a value of E1,250, and wines and spirits between E 1,250 and E 10,000 is reduced by 20% (a flat rate of 20% applicable on wines and spirits). Goods provided in the context of foreign aid to the Swaziland Government, or as part of technical assistance programmes, are exempted from duties. There are also provisions for duty rebates on goods imported for use by the Government. Import prohibitions and licensing Since its 1998 Trade Policy Review, Swaziland has markedly liberalized its import permit system. The basic legislation remains the Import Control Order, 1976. However, Legal Notice No. 60 of 2000 reduced the number of products subject to import permits to 15 broadly defined categories (Table III.3). Import licensing is now used to monitor the flow of licensed goods mainly for health, safety, and environmental reasons. Table III.3 Goods requiring import permits Used motor vehiclesAutomotive partsUsed earthmoving equipmentArmsUsed clothingDrugsUsed tyres and tyre casingsGold and other precious metalsUsed footwearWild animal productsUsed textilesSpecified agricultural products (wheat flour, dairy products, maize, rice)Mineral fuelsElectrical appliancesMineral oilsSource: Import Control Order, 1976 as amended by Legal Notice No. 60 of 2000; information provided by the Swaziland authorities. All applications for import permits have to pass through the Import Permit Committee. The Committee is chaired by the Director of Import Permit within the Ministry of Finance, and comprises representatives of the Ministries of Finance, Foreign Affairs and Trade, Enterprise and Employment, Income Tax, and Customs and Excise, as well as the Central Bank of Swaziland. The Committee meets weekly on Wednesdays. Any individual, firm or institution can apply for an import permit, which is valid for one year. Applications may be filed weekly until Tuesday at 3.30 p.m. First-time applicants must present a certificate of incorporation, memorandum and articles of association, trading licence, tax clearance certificate, original proforma invoice for the articles to be imported, and most recent bank statement, and must agree to inspection of their premises. Subsequent applications need to be accompanied only by the current trading licence, tax clearance, and proforma invoices. On importation of the goods, the importer must produce an invoice, bill of entry, bill of lading, and any other relevant documents. An administrative charge is levied on import permit goods at the rate of E 1.00 per E2,000 of value (0.05%). The National Agricultural Marketing Board (NAMBOARD) may limit imports of agricultural products by defining quantities that may be imported and by raising import levies. Levies and quotas are set on the basis of the balance of local production, or of seasonal production (e.g. of bananas) or in relation to national disasters (e.g. the present food shortage), or in relation to infant industry protection under which the quantity or quality of imports is monitored. Government procurement Government, local government, and parastatal organizations are not restricted under Swazilands laws as to the source of goods and services. Such restrictions may be imposed, however, by the terms of donor or technical assistance agreements. Swaziland is neither a signatory nor an observer to the Plurilateral Agreement on Government Procurement. Swazilands procurement procedures are set out in the Swaziland Government Stores Regulation, 1975. Part I of the regulation covers purchases of vehicles; Part II all other goods and services. There are two tender boards: the Central Tender Board, chaired by the Principal Secretary of the Ministry of Finance, is responsible for sale or purchase of government immovable property and other capital projects and agreeing contracts for works or services, including the employment of consultants; the Treasury Tender Board, chaired by the Accountant-General, is responsible for all sales or purchases of government moveable property, and letting of contracts for annual supply arrangements and individual purchases. Goods and services above E 500,000 in value for any one item are put out for tender by open advertisement or direct reference to the Crown Agents. In construction tenders below E 1 million, preference shall always be given to Swazi small business companies registered with the Ministry of Works and Construction. Supply tenders up to E 100,000 are restricted to Swazi owned and registered companies. Performance bonds of 5% of the value over E 500,000 of contracts are required. In all other cases, a 15% preferential price difference is granted in favour of Swazi owned and registered companies. These conditions apply to contracts supplied from all sources including SACU, SADC and COMESA. Standards and other technical requirements Until recently, Swaziland applied South African standards procedures and relied on the relevant authorities in the Republic for all questions relating to standard-setting, testing, certification, etc. A new Standards and Quality Assurance (SQA) Act was enacted in 2001, and implementing regulations are being drafted at the time of writing (January 2003). The Act establishes a new Swaziland Standards Authority (a Category A State enterprise) whose function will be to draft Swaziland standards, including mandatory standards as may be decided by the responsible Minister, and to provide for inspection, testing and certification of products. It is anticipated that national standards will be adopted and adapted from international standards. Live animals and birds are subject to the Animal Disease Act of 1965, which specifies various import requirements in terms of veterinary certification, and a quarantine period of 30days. The same Act regulates the import of hides and skins, meat, and eggs. Animals brought in for slaughter are not subject to quarantine, but must be slaughtered within 48 hours of arrival. Livestock from approved regional suppliers may be imported without restriction. Swaziland and South Africa have a fairly open border with respect to the movement of animals, vegetables, and their products, provided that the point of origin is an approved establishment. Nevertheless, Swaziland applies quarantine regulations to the live animals and requires vaccination certification. Several animal diseases are worrisome, for example rabies, foot-and-mouth, and Newcastle disease. Swaziland is free of foot-and-mouth disease, as is South Africa, and has a protective cordon down the eastern side of the country to prevent the movement of cattle from east to west. Import of plants and seeds is controlled by the Plant Control Act of 1981 in respect of phytosanitary requirements (Chapter IV (2)(i)(a)), and the Seeds and Plants Varieties Act of 2000. To import citrus fruit or trees, phytosanitary certificates are required from the Ministry of Agriculture under the Plant Control Act; in respect of cotton, the Cotton Board is empowered to issue certificates and works through agricultural research stations to prevent the spread of pests and diseases. The Sugar Act of 1967 empowers the sugar industry itself to determine the varieties of sugar cane that can be imported, and the conditions for import and for testing varieties of sugar. The importation of seeds produced under certification of the International Seed Test Association is not restricted; however, Swaziland has no Association members. Otherwise, under the Seeds and Plants Varieties Act, all imports must be tested by a phytopathologist and issued with a clearance certificate. Phytosanitary standards are set by notice in the Government Gazette and are updated as new diseases are identified. Swaziland has a closed list of seed and plant varieties, which requires that items added to the list must be distinct, uniform and stable, and must be certified for value, cultivation use, and merit. Additional requirements are imposed to protect farmers. The list applies to important, certified crops and includes maize, beans, sorghum, groundnuts, tobacco, cotton, and cowpeas. Other seeds are not controlled in this way. For a variety to be added to the list it must be tested, usually over a twoyear period, by the Agricultural Research Station and then be considered by the Variety Committee of the Ministry of Agriculture. Seeds produced by regional producers of good repute are allowed entry without any certification. Four companies in South Africa and one in Zimbabwe fall into this category. Indigenous plants imported from the region require a permit issued by the National Trust Commission. This body also protects local plant species and maintains a list of protected and specially protected species for which an export permit would be required. Labelling, packaging, and marking regulations are being drafted under the Standards and Quality Assurance Act. Swaziland has already constructed a food technology laboratory to ensure that domestic production conforms to what the Government requires from others. Swaziland has no specific policy in respect of genetically modified varieties of plants or animals, or materials made therefrom. According to the authorities, consultations are ongoing in a SACU sub-committee established to harmonize policy in this area; the Swaziland Tourism Authority, under the Ministry of Environment, is the responsible agency in Swaziland. Other measures Swaziland has no countertrade or offset arrangements, or agreements with foreign governments or enterprises designed to influence the quantity or value of goods and services exported to Swaziland, nor does it maintain any surveillance measures on imports. Trade sanctions have not been imposed unless required by resolution of the United Nations. Swaziland has no requirement for local content other than the preferences given under government procurement. It generally does not maintain strategic stocks of food or other commodities but, rather, financial reserves to allow it to purchase as and when need arises. (3) Measures Directly Affecting Exports (i) Registration and taxes The same business licence procedures apply to exporters as to importers (section (2)(i) above). Export firms are required to register as exporters with the Trade Promotion Unit (TPU) of the MOFAT; for purposes of registration, an exporter must have a certificate of incorporation (for a company) and a trading licence; at the time of export, an exporter must be in possession of completed and signed commercial invoice, bill of entry and certificate of origin forms and an Export Proceeds Declaration form signed and stamped by its commercial bank. Export declarations relate to certificates of origin under SADC, COMESA, GSP schemes, Euro I (ACP) conditions and AGOA. The Trade Promotion Unit of the Ministry of Foreign Affairs and Trade is responsible for certification of origin uner SADC, COMESA and GSP, and the Department of Customs for certification under Euro I and AGOA. The only tax or fee collected on exports is the Sugar Levy (Chapter IV(2)(i)(a)), which is charged at a rate of 5.75% of the proceeds from the net ex-mill export protocol sales to the EU, and applies two years in arrears. (ii) Export prohibitions, controls, and licensing Export prohibitions apply to products controlled under the various conventions on threatened species, etc. to which Swaziland belongs. Export prohibitions may also be imposed in case of food shortages resulting from drought or other natural disasters. Swaziland has been required to amend its Customs and Excise Act to satisfy the provisions of the United States African Growth and Opportunity Act. This involves introducing visa and certificate-of-origin provisions and permitting joint inspection of premises by Swazi and U.S. customs officials. (iii) Export subsidies and assistance No export subsidies are provided to exporters in Swaziland. The authorities have in the past considered the creation of export processing zones but this was not considered viable. Items incorporated into an export product may be imported free of all duties or a duty refund may be obtained. The Department of Customs and Excise is responsible for monitoring this concession and determining any refund due. Refunds are normally issued as duty credits. The Central Bank of Swaziland administers a Small Scale Export Credit Guarantee Scheme (ECGS), available to small and medium-sized enterprises (SMEs) in Swaziland involved in the export trade. Exporters, or prospective exporters, must submit complete viable project proposals to their commercial bank to access ECGS funds. Businesses must be registered in Swaziland and present a business plan containing budgets and cash flow projections, audited accounts for the previous period (if already in operation) and the owners contribution (security or collateral) to financing the project; export orders contracts or letters of credit indicating the list of customers and volume of export trade anticipated, and any other information considered material or relevant by the bank. Loans under the ECGS are made at prime lending rate, and the ECGS guarantees 75% of pre-shipment and 85% of post-shipment loans approved by the commercial banks under the scheme. According to the authorities, the scheme is not widely used, partly because very few SMEs are involved in the export trade and partly because the conditions of the scheme are quite rigorous. The Trade Promotion Unit (TPU) within the Ministry of Foreign Affairs and Trade is the national focal point for trade promotion; its main objective is "to promote the growth of exports by acting as a catalyst to motivate exporters by providing directly, or in cooperation with other institutions, the services that they require." The unit supports private-sector enterprises by promoting their goods on world markets, identifies new export products and market opportunities, and helps enterprises to participate in regional and overseas trade fairs and exhibitions by paying for the shipment costs of the exhibits and for the exhibition space. (4) Measures Affecting Production and Trade (i) Incentives The structure of direct corporate taxation and tax incentives in Swaziland has been simplified considerably in recent years. The corporate tax rate was cut from 37.5% to a flat rate of 30% in July 2001. Tax concessions for investors (such as a five-year tax holiday for new manufacturing enterprises) were replaced in 2000 by a concessional flat rate of 10% for a ten-year period, applicable to new investors or new product lines in manufacturing for export, with criteria relating to capital employed and number of people to be employed also taken into account. Dividends are exempted from withholding tax for ten years, and 15% of human resource training costs can be offset against tax. Allowances with respect to depreciation of machinery, vehicles, and equipment are reported to vary according to the nature of the item. The Swaziland authorities state that the main reasons for making these changes include the need to discourage "footloose" industries that may be attracted by a highly incentive-driven tax structure. Changes in South Africas business taxation, and the need to remain competitive with the Republic, are also relevant factors. (ii) State-owned enterprises and privatization A large number of parastatal enterprises operate in Swaziland. Data from the authorities show 19 Category "A" public enterprises active in the year 2000; three (Royal Swazi National Airways, the Swaziland National Provident Fund, and the NIDCS) have ceased to function. The Government has a smaller portfolio of minority shareholdings in a number of commercial businesses, some of which are classified as Category "B" public enterprises. The Cotton Board and the Central Co-operative Union, which are owned by members, and SEBENTA (adult education) are not owned by the Government, but are eligible for subventions from the Government. Category A public enterprises represented almost 7% of formal-sector employment and 22% of public sector employment in 1998. Performance indicators for public enterprises between 1996 and 2000 show that as a whole (excluding the education sector) they have been profitable; but performance varies widely between enterprises and between years (Tables III.4 and III.5). The major loss-making public entities have been the Swazi National Provident Fund and Swazi Bank (both of which are now undergoing major restructuring) and the University of Swaziland, while the major consistently profit-making enterprises have been the Swaziland Electricity Board and the Posts and Telecommunications, both of which are public monopolies. The Public Enterprises Unit believes that the ratios reflected in Table III.5 are in some cases inappropriate for a proper explanation of the characteristic of all the parastatals included, thus it is in the process of developing "a new set of financial and non-financial indicators specific to each public enterprise, which will be reflected in the Units forthcoming Annual Report". Table III.4 Operating surpluses/deficits of selected public enterprises, 1996-00a (Emalangeni) Sector19961997199819992000AgricultureSwaziland Dairy Board1,041-916-1,43273-1,717National Maize Corporation29,088-1,7462,9673,0423,881Swaziland Cotton Board1871,063364652301NAMBOARD1,4418051,115-936125Sub-total31,757-7943,0142,8302,590Transport sectorRoyal Swazi National Airways-8,669-20,706-1,612Swaziland Railways11,7008,294-375,5222,323Sub-total3,031-12,412-1,6495,5222,323Finance sectorSwaziland National Provident Fund17,53023,66011,412-15,987Swazi Bank-33,401-36,354-13,382-25,308-11,723Entreprise Trust Fund3245,0439,700MVA......-632-914Sub-total-15,857-6,972-1,646-36,884-2,937Utilities sectorSwaziland Electricity Board15,98535,37930,25538,54223,615Posts and Telecommunications 5,24632,30437,04925,29726,939Swaziland Water Services Corporation-6,6691,360-803-1,5512,938Sub-total14,56269,04366,50162,28853,492Business promotion sectorNIDCS1,2431,2451,032SIPA......-1,8015,054Small Enterprises Development Co.1,295248-1,272-1,212-1,218Sub-total2,5381,493-240-3,0133,835OtherPiggs Peak Hotel-28546-533-91Swaziland Television Authority-4,976-8,262National Housing Board-1,890344-764-130815National Trust Commission327198580-5,574-5,584Sub-Total-6,824588-717-13,967-4,860Grand total29,79350,94668,64916,77754,443Educational sectorUNISWA-2,916-512-3,795-55,865-22,055Sebenta259569614-1,490-1,177Sub-total-2,65757-3,181-57,355-23,233Grand Total (including eduction)27,10651,00365,468(40,578)31,210.. Not available. a Year end 31 March. Source: Data provided by the Swaziland authorities. Table III.5 Public enterprise performance indicators, 1998-00a (Emalangeni) Revenue/Fixed assets ratioReturn on capital employedReturn on revenueSector199819992000199819992000199819992000Agriculture4.137.593.350.140.080.050.070.030.04Transport0.920.630.99-0.010.030.01-0.010.070.02Finance0.691.111.95-0.05-0.09-0.02-0.35-0.46-0.06Utilities0.750.670.700.150.080.060.200.140.11Business promotion0.621.114.090.00-0.340.30-0.06-1.150.32a Year end 31 March. Source: Data provided by the Swaziland authorities. In addition to these public enterprises, there are two principal holding companies with investments widespread across sectors: the Swaziland Industrial Development Company (SIDC) and Tibiyo Taka Ngwane (Tibiyo). SIDC is a joint venture between the Swaziland Government and a number of major international and local financial institutions. SIDC currently offers the following services to potential or actual investors in Swaziland: assistance in project appraisal and identification of local or foreign joint venture partners; financial services including equity finance and medium- and long-term loans "at competitive interest rates"; and leasing of factory buildings, particularly in the Matsapha Industrial Estate. Tibiyo is a Swazi Nation organization, separate from the Governmental structure and reporting to the King. Its objectives are to: complement government in fostering economic development and self sufficiency; increase formal sector employment; increase income in the hands of citizens; earn or save foreign exchange; develop rural communities; foster and support Swazi tradition and cultural heritage; and assist financially and materially in the education and training of citizens. Tibiyo is heavily involved in the sugar sector through a number of joint ventures, such as: the Royal Swaziland Sugar Corporation, jointly owned by Tibiyo, Tate and Lyle, Commonwealth Development Corporation (CDC), the Nigerian and Swaziland Governments and other minority shareholders; Ulombo Sugar, jointly owned by Illovo Africa Ltd and Tibiyo; Mhlume Sugar Company, jointly owned by CDC and Tibiyo; and the Inyomi Yani Swaziland Irrigation Scheme. The organization also has significant investments in maize cropping and milling, rice milling, cattle ranching, dairy farming, a number of manufacturing sectors (brewing, brickworks, printing, and confectionery manufacturing), and smaller participation in mining and services (tourism, insurance and wholesale trade). The Public Enterprises Unit (PEU) within the Ministry of Finance was established under the Public Enterprises (Control and Monitoring) Act 1989. The Act mandates the PEU to monitor and report on the performance of all Category A public enterprises, to ensure their efficient operation, to provide technical assistance whenever necessary, and to advise the Cabinet Standing Committee on Public Enterprises (SCOPE) on the relevant issues. Recently the Swaziland Government has introduced a policy of separating the regulatory functions of parastatal enterprises from their commercial operations. For example, the Dairy Board has been split from its former selling organization, Pamalat, which now operates as a separate, commercial entity; other splits are being considered. This raises new questions for Swaziland, of how to deregulate productive activities and ensure competition in a small economy. (iii) Competition policy and price controls Swaziland has until recently had no competition policy. An incipient structure for competition policy is contained the Fair Trading Act, 2001, and the Competition Bill, 2002, which in January 2003 was still before Cabinet. The objectives of the Fair Trading Act (FTA) are: to establish a standard code of trading conduct and prohibit deceptive trade practices; to prohibit conduct liable to mislead the public in relation to employment or to sale of goods or services; to prohibit false representation of goods or services; and to protect proprietors of trade marks, and consumers, from unscrupulous supply of goods bearing false trade marks. Thus the FTA links both to consumer and to intellectual property protection. The Competition Bill is "to provide for the encouragement of competition in the economy by controlling anti-competitive trade practices, mergers and acquisitions, protecting consumer welfare and providing for an institutional mechanism for implementing the objectives of the Bill and other matters incidental thereto". Price controls in Swaziland are imposed under the Price Control Order, 1973. This provides for the fixing of maximum prices for both goods and services. Currently, only three products are under price control; bread, gasoline, and sugar. (iv) Intellectual property protection Swazilands legislation relating to protection of trade marks, patents, utility models, and industrial designs is relatively modern; it consists of the Trade Marks Act, 1981 (Act No. 6 of 1981) and the Patents, Utility Models and Industrial Designs Act, 1997 (Act No. 6 of 1997). Copyright is protected under the Copyright Act 1912; however, a new Copyright Bill has been drafted. The Fair Trading Act, mentioned above, is also relevant to TRIPS questions as it aims to deal with violations of trade marks in future. Swaziland is a member of the African Regional Industrial Property Organization (ARIPO), and a signatory to the Paris Convention for the Protection of Industrial Property, the ARIPO Protocol on Patents and Industrial Designs, the Patents Cooperation Treaty, 1970, and the Berne Convention. A number of ϲʹ Members have posed questions to Swaziland in the context of the TRIPS Council review of intellectual property legislation, but so far Swaziland has not replied, nor has it yet notified its legislation as required by the TRIPS Agreement. Swazilands intellectual property legislation is currently under review by WIPO. General responsibility for TRIPS issues falls under the Registrar-Generals Department in the Ministry of Justice. The Trade Marks Act, 1981 establishes a Registrar of Trade Marks (in the Registrar-Generals Office of the Ministry of Justice). Trade marks may be registered for a period of ten years, and may be renewed for subsequent periods of ten years. The registered proprietor of a trade mark in Swaziland has the exclusive right to use the mark, and any assignment or transmission of the mark must be registered by the assignee. Appeals against the Registrars decisions regarding trade marks may be made to the High Court. The Fair Trading Act, 2001 also provides for pursuit and penalties in the case of violation of trade marks. The Patents, Utility Models and Industrial Designs Act, 1997, establishes a Registrar of Patents, in the Registrar-Generals office. Patents are valid for 20 years from the time of application, subject to working of the invention. Utility model certificates are valid for seven years from the application date, without possibility of renewal. Registrations of industrial designs are valid for five years from the date of application, renewable for two subsequent periods of five years. Copyright legislation (the Copyright Act 1912) covers literary, dramatic, and artistic works, performances, and sound recordings first published in any part of the Commonwealth. The authorities admit that the legislation is considerably deficient; for example, currently, there is a severe problem of piracy in audio and audiovisual cassettes, CDs, and DVDs, and no provisions exist for royalties to be paid to musicians, authors or performers. A new Copyright Bill, currently awaiting presentation to the Cabinet (February 2003), addresses the administration of copyright and neighbouring rights, audiovisual works, expression of folklore, and computer programs. It will establish a Copyright Society, which will be responsible for the promotion of the interests of authors, artists, and performers, and a Copyright Administrators office in the Registrar-Generals office. Penalties for infringement of IP legislation vary between a maximum fine of E 2,000 and/or imprisonment for six months in the case of the Trade Marks Act to a maximum fine of E 10,000 and/or five years imprisonment in the case of the Patents, Utility Models and Designs Act. Civil suits relating to damages may also be brought. Table III.6 shows statistics on registration of IP rights since 1991. Table III.6 Registration of intellectual property rights, 1991-02 YearTrade/Service MarksPatentsIndustrial designs199144659121992554478199358042519941,45327519951,0684851996846393199780342319986592321999631439200060417..20014318..20024705.... Not available. Source: Information provided by the Swaziland authorities. trade policies And Practices by sector Overview As noted in Chapter I, the economy of Swaziland remains heavily imbalanced by sector. The agriculture sector is divided between the cash economy, mainly dependent on sugar and on preferences in the EU and U.S. markets, and the subsistence sector, which remains very underdeveloped. Manufacturing has until recently been almost entirely dependent on sugar and other food-based production, mainly subject to developments in South Africa (although COMESA as an outlet is growing in importance). New preferential outlets in the United States for clothing under the African Growth and Opportunity Act (AGOA) offer some prospect of diversification and Swaziland is classed as a "lesser-developed beneficiary" under AGOA. Swaziland is in the process of modernizing its legislation concerning financial, transport, and tourism services; however, little modernization or deregulation has yet taken place in telecommunications. Primary sector Agriculture and related activities Selected crops and animal products Agriculture accounts for some 10% of Swazilands GDP. As noted in Chapter I(1), the sector is highly dualistic, broadly speaking, with large-scale, commercial, irrigated, export-oriented production on "title-deed" land, and small-scale, rain-fed, production for local markets (often informal or subsistence level) on "Swazi nation" land (SNL). Large-scale agriculture focuses on production of sugar (Swazilands largest single crop), meat, dairy products, citrus, and other fruit, while the smallscale sector is devoted mainly to production of maize, cotton, vegetables, and other foodstuffs, as well as cattle (largely regarded as a store of value, and with little commercial significance) and other livestock. There is some limited overlap between the two sectors, and some steps are being taken to make the SNL sector, in particular, less vulnerable to weather fluctuations through the provision of irrigation; however, such efforts are still at an embryonic stage. In policy terms, Swazilands main export products  sugar, citrus and other fruit  remain heavily dependent on the maintenance of existing preferential access to the EU, U.S. and South African markets. Sugar in particular is very heavily dependent on duty-free and price-supported access to Europe, and to a much lesser extent to the United States. Withdrawal of these preferences in a short period would probably cause the collapse of the sector. Sugar accounts for more than half the volume of farm output in Swaziland; established in 1958, the industry now contributes 18% of national output, 16% of private-sector wage employment, and 11% of national wage employment. Most sugar production is by large estates on irrigated titledeed land; a small volume is produced by small farmers on Swazi nation land. The opening of the Maguga Dam is expected to boost output of sugar still further, including through smallholder schemes. According to the Swaziland Sugar Association, more than 92% of the sugar produced in Swaziland is exported. Roughly half of the output is sold within SACU, around 30% to the EU, 3% to the United States, and the rest on the world market. Swaziland sugar benefits from preferential access to three markets: SACU, the European Union and the United States (Box IV.1). In all cases, Swazilands sugar benefits from preferential access to the markets concerned; from agreed supply quantities at agreed prices in the EU and United States, and from supported prices (see TableI.2). Without this protection, Swaziland would receive prices based on competition from world market sugar, including from Brazil, Cuba, the EU itself, Australia, India, and Thailand. In the framework of the ϲʹ negotiations on agriculture, Swaziland has presented two papers: "Market Access under Special and Differential Treatment for Small Developing Countries" , and "Trade Preferences A Proposal for Small Developing Countries" (non-paper no. 8876, dated 26November 2001) The first paper proposed that current preferential market-access arrangements enjoyed by small developing countries (SDCs) should be protected in the new negotiations for a sufficient period for meaningful development and adjustment to occur, and that provisions must be included to allow SDCs to protect local agriculture from threatening imports, with a gradual phase-out of such protection but retaining a safeguard provision; that tariff escalation should be reduced to enable SDCs to move from production of raw materials to processed products; that the reduction of support measures in developed countries "should be approached with flexibility, imagination and innovation so that the progress of SDCs is not stunted"; and that no SDC should be disadvantaged by giving special and differential treatment to other developing countries. The second paper set out a framework for redefining trade preferences in the ϲʹ, including a reformulation of the Enabling Clause to include all vulnerable developing countries, namely least-developed, small, island, and landlocked states; definition of a subset of countries deserving special support because of small size and vulnerability, together with graduation clauses; commitment by developed markets to preferences on a multi-year basis, with a period sufficiently long to enable meaningful structural adjustment and human development in receiving countries; definition of trade preferences in absolute (e.g. monetary) rather than relative terms, avoiding erosion of preferences as tariff rates fall; increase of tariff rate quotas under the GSP for small, vulnerable developing countries; and reduction of tariff peaks and tariff escalation to encourage diversification and higher value-added production for export. The combination of sugar growing and access to the SACU markets has also encouraged growth of food industries based on sugar (see below); sudden changes in the situation could lead to the withdrawal of these investments, just as it could for the sugar industry itself. Some commentators have asserted that the sugar-using industries in Swaziland have been adversely affected by exports of subsidized sugar-containing products to their main markets in SACU (see section (3) below). Citrus and other fruit production is also a significant element in large-scale production on title-deed land. Pineapples and other fruit are largely canned locally for export to South Africa as well as to the EU, United States, and Japan; citrus is largely marketed, together with South African produce, through the South African Cooperative Citrus Exchange. Again, the industry is highly dependent on the maintenance of preferential conditions. As noted in Chapter II, Swazilands beef exports to the EU benefit from a tariff quota under which the ad valorem element of the EUs common external tariff on beef is reduced by 92%. As noted in Chapter III, Swaziland requires import permits on a number of farm and processed products (wheat flour, dairy products, maize, and rice) and maintains import levies on a range of dairy products under Legal Notice No. 2 of 2000, and on a number of other products under the National Agricultural Marketing Board Act, 1985 (see Chapter III(2)(i) and (ii)). Price controls under the Price Control Order, 1973 apply to bread and sugar for consumption. Veterinary and animal health conditions are laid down in the Animal Disease Act of 1965, as modified by regulations issued up to 2001. Under the Act, the Minister of Agriculture and Cooperatives may restrict imports or exports of animals, animal products, live virus, and other pathogens or biological or chemical products for the treatment of animals or the use of the latter. He may also, in case of disease among stock and in his estimation, in the public interest, fix maximum and minimum wholesale and retail prices for any animal or animal product for sale within Swaziland (or specified areas thereof). The most recent regulation, of 2001, deals with reclassification of foot-and-mouth diseases guard areas; prohibition of movement of animals and animal products; movement of persons, vehicles, and containers; sanitary measures; presentation of susceptible animals for examination; testing and destruction of infected animals; and offences and penalties. In 1999, to guard against the spread of BSE, the Director of Veterinary and Livestock Services issued a directive requiring all Veterinary Officers and Animal Husbandry and Extension Officers to ensure that no ruminant animals were given feed containing animal by-products and to ensure proper reporting and investigation of animals showing signs of the disease. An amendment to the Act following the directive is pending. Phytosanitary conditions, including for the import of plants, are laid down in the Plant Control Act, 1981 (Act No. 7 of 1981). The First Schedule of the Act defines a list of plants and living materials prohibited from import into Swaziland. The Second Schedule lays down that any other plants or materials require an import permit. The Third Schedule specifies a list of plant materials that, although requiring a permit, will not normally be restricted if they bear proof that they are from South Africa; this list includes fruit and vegetables other than citrus, flowers and other materials regularly sold by florists and greengrocers; seed potatoes; and a range of other plants or vegetables including certain subtropical fruit and crops, vegetables, graminaceae, legumes, ornamentals, and others. Purchases by individuals of plants from state-registered nurseries, fruit and vegetables (including not more than 20 kg. of citrus per person), and cut flowers, wreaths and herbaceous pot plants bought in South Africa, for immediate use or consumption and not for sale, may be imported without a permit (Fourth Schedule of the Act). The Ninth Schedule contains the general phytosanitary requirements for the import of plants, plant portions, and certain seeds. Swaziland has not yet notified its legislation on SPS issues to the SPS Committee. Its enquiry point is noted in G/SPS/ENQ/13 and its national notification authority in G/SPS/NNA/3. Box IV.1: Market access conditions for Swazilands sugar Swaziland benefits from substantial, ongoing support, in terms both of guaranteed quantities for sale and of price preferences, for its sugar production and exports to major developed markets, particularly the EU. This has been a major factor in the development of the large-scale industry in Swaziland since 1958. Sugar occupies, on a mono-crop basis, the majority of the productive land in Swaziland. Concerns about this overdependence were raised at the first National Conference on sugar held in 2001, where it was stated that "From an overall macroeconomic perspective, this overdependence on sugar is risky and must be redressed. The industry is concerned with its own economics. It will expand as long as it is profitable to do so. It is up to government to provide an enabling environment to encourage the start-up of non-sugar industries." The position of Swazi sugar in its protected markets also has a major influence on Swazilands position in ϲʹ negotiations on agriculture. (a) The EU market Swazilands access to the EU market is principally governed by the Sugar Protocol, annexed to the Cotonou Agreement. This is independent from the agreement and is of indefinite duration, unlike the Cotonou Agreement, which runs till 2007. Under the Protocol, ACP sugar is tied into the Common Agricultural Policy through the Common Organization of Markets in the Sugar Sector. Under the Sugar Protocol, the EU agrees to purchase and import "agreed quantities" at a "guaranteed price", free of duty. The total quantity imported from all ACP sugar sources under the Protocol in 2000 was 1,297,000 tonnes white sugar equivalent; Swazilands share of this was 117,845 tonnes or about 9%, at a supported price of 523.70/tonne. In addition, under the Special Preferential Sugar Agreement (SPSA) of 1995, Swaziland benefits from an additional tariff quota (TQ), at a reduced rate of duty, of some 62,000 tonnes (one-fifth of a global TQ of 300,000 tonnes) at a price of 427/tonne. This compares with a "world" market price of US$171/tonne (roughly 200/tonne) in 2001 (see Table I.2). The United States market Swaziland benefits from a preferential tariff quota, currently around 16,000 tons of sugar, into the United States. This represents Swazilands share of the minimum sugar imports bound by the United States under the ϲʹ Agreement on Agriculture. Swazilands share of the U.S. market has declined; until 1999, Swaziland also benefited from an additional variable amount dependent on the excess demand for sugar in the U.S. market, using a stocks-to-use trigger ratio of 15%, but the present sugar surplus in the United States has limited Swazilands share to the bound volume. Between 1971 and 1987, total sugar imports into the United States fell from between 5,000 and 6,000 short tons to little more than 1,000 short tons in raw value; during the 1990s the volume fluctuated between some 3,000 and 1,700 tonnes. For years 2001/02 and 2002/03 the tariff quota for U.S. sugar imports (under which sugar is imported duty free or at a reduced rate was maintained at the minimum level of 1,117,195 metric tons, plus a further 105,788 metric tons importable from Mexico under NAFTA provisions. The tariff quota allocation is based on trade patterns established during 1975-81; discounting Mexico, Swaziland is 11th of 39 countries among which the TQ is allocated. In 2000, sugar production in the United States was reckoned at a record level. The out-of-quota duty of 15.36 cents per pound is considered by the U.S. Department of Agriculture to be "high enough to be generally prohibitive". The SACU/SADC markets Under the SADC Sugar Cooperation Agreement signed in 1998, Swazilands sales of sugar to the SACU market are likely to face lower-cost competition from SADC exporters such as Mozambique and Zimbabwe. The agreement, which is an annex to the SADC Trade Protocol, has the long-term objective of full liberalization in the sugar sector in the region after 2012; in the meantime it provides for temporary measures "to insulate member States sugar producing industries from the destabilizing effects of the distorted global market." Currently, an annual tariff-free quota of 45,000 tonnes is shared out among all SADC surplus producers; an additional 20,000 tonnes per annum is available in the SACU sugar market to non-SACU SADC member states producing surplus sugar, and will be allocated according to each producers relative net surplus production. Allocations of this additional quota will not be transferable among SADC member States (See also Main Report, Chapter II(4)). Source: Summary of Discussion from the Floor, Session I: Swaziland Sugar Journal, Special Edition, September 2001; Price, J., "The Position of the Swaziland Sugar Industry in the International and particularly the EU Sugar Markets", Swaziland Sugar Journal, Special Edition, September 2001; United States Department of Agriculture, Briefing Room, "Sugar and Sweetener: Trade" ( HYPERLINK "http://www.ers.usda.gov/briefingsugar/trade.htm" http://www.ers.usda.gov/briefingsugar/trade.htm); U.S. Raw Sugar Tariff Rate Quota; and Agricultural Outlook, September 2000, "Weak Prices Test U.S. Sugar Policy").(b) Forestry Around 45% of Swazilands terrain is covered by forests and woodlands; natural forests, woods and bush cover some 35.6%, plantation forests 6.4% and wattle forests (largely now uncultivated) 1.4%. The subsector accounts for about 17% of formal employment and 15% of GDP. As in agriculture, there is a dichotomy between cultivated plantation forest largely for commercial purposes  and "natural" woodlands and scrublands largely on communal lands, where there is little formal economic development and degradation has been increasing due to factors such as conversion of forest lands to agriculture, uncontrolled extraction of forest products, and large livestock populations. The principal export-related production is unbleached kraft pulp from plantation pine forests, which accounted for nearly 9% of exports in 2001 (Table AI.1); other export products include mining and construction timber, doors and pallets, wooden furniture and shelving units, as well as eucalyptus oil. In the context of the National Development Strategy, the Cabinet is currently (February 2003) considering a National Forest Policy and Regulation with the declared aim "to achieve efficient, profitable and sustainable management and utilization of forest resources for the benefit of the entire society, and to increase the role of forestry in environmental protection, conservation of plant and animal genetic resources and rehabilitation of degraded land." Existing legislation concerning forestry in Swaziland consists of the Natural Resources Act 1951, the Flora Protection Act, 2001, aimed at protecting indigenous flora, including environmental impact assessment in respect of any activity impacting on such flora, and the Control of Tree Planting Act, 1972, which, inter alia, discourages the expansion of plantations on title-deed prime agricultural land. The Forest Policy covers a wide variety of issues, including economic and social sustainability, biodiversity, pollution control, relations between commercial forestry and community development, taxation questions, certification of forestry activities under Forest Stewardship Council (FSC) or ISO 14001, and relation of forestry management to such Swazi laws as the Standards and Quality Assurance Act, 2001 (Chapter III(2)(iv)) and the Industrial Relations Act, 2000. In relation to trade policy measures, it focuses on creating an enabling environment for downstream, value-adding industries, through enhancing existing tax incentives. It suggests investigating whether this could better be achieved through offering pioneer status with tax exemption and industry protection for a given period of time, or whether introducing export taxes on unprocessed or semi-processed products could have the desired effect. Mining and quarrying Swaziland has deposits of asbestos, coal, quarryable stone, sand and soapstone, and kaolin, gold, talc and silica on a limited scale. All mining rights are vested in the King, and held in trust for the Swazi nation; royalties are assigned to the royal fund Tisuka Taka Ngwane. Little export-related activity takes place; mineral exports, mainly of anthracite coal and asbestos, account for around 1.4% of total exports. Quarried stone is generally used for local road construction and repair; the principal anthracite mine closed during 2001 but mining has resumed under a new 20-year renewable lease to joint-venture ownership between Tibiyo Taka Ngwane and several American investors. Asbestos production has closed down as a result of the declining use of asbestos for insulation and international anti-asbestos campaigns related to health concerns. Excavation of sand and soapstone is strictly controlled under the Mineral and Environmental Authority Act of 1992, which provides for substantial penalties for illegal extraction. Manufacturing Much of Swazilands manufacturing production remains based on inputs from the sugar, dairy, and forestry subsectors. The main local input-based exports are flavourings and other food preparations; these together accounted for 37% of exports in 2001. As noted above, wood-based products are also significant value-added exports. Tissue and kraft wrapping paper are exported to South Africa, based on recycled waste paper mainly imported from South Africa. Since 2000, exports of clothing have increased markedly under AGOA conditions. Most food and fodder exports (soft drink concentrates, confectionery, canned fruits, wheat and maize-based animal feeds) are to the SACU region, principally South Africa, although Swaziland also exports throughout the SADC and COMESA regions, principally to Mozambique, Angola, Tanzania, and Zimbabwe. COMESA is considered by the authorities as an important region for the development of trade. The structure of SACU tariffs is of concern to Swazilands sugar-using and wheat-using industries. They would wish to benefit from lower cost sources for their raw materials than within SACU and have made representations to the Government about the present situation. Sugar-based products are also subject to the effects of policies determined elsewhere. One UK-based NGO, ActionAid, has recently alleged that "subsidized EU sugar products, primarily confectionery products, are seriously undermining the Swazi sugar processing industry. For example, the Sugar Daddy factory used to provide sugar confectionery products for the South African market However, in recent years the South African outlets have increasingly switched to buying cheaper, subsidized EU confectionery imports and in 2001 the Sugar Daddy factory was forced into liquidationthe dumping of EU sugar products has led to the loss of some 16,000 jobs in the Swazi sugar industry and 20,000 jobs indirectly linked to the industry, such as packaging and transport". As noted in Chapter II(2)(iii), Swaziland has been eligible for AGOA benefits in the UnitedStates since January2001, including on textiles and clothing, and is counted as a less developed beneficiary country (LDBC). Between 1999 and 2001, the valve of U.S. imports from Swaziland increased by 72%, from US$37.8 million to US$65 million. The largest part of this trade was in textiles and clothing (US$48million in 2001). Data for the period January-September 2002 show a very rapid increase in the share of this trade falling under AGOA benefits (88% of all imports in January-September 2002); almost 100% was textiles and clothing. Swaziland has seen a substantial increase in investment, especially in textiles and clothing. Investors have been primarily from Chinese Taipei. The AGOA has contributed nearly 17,000 jobs to Swazilands economy. At end 2002, roughly 20 textile and apparel factories had began or expanded operations, and other new operations are under consideration. Services Swazilands sector-specific commitments under the GATS reflect the Governments policy of maintaining liberal cross-border supply of services and encouraging commercial presence. The commitments cover nine sectors or subsectors (engineering services, integrated engineering services, medical and dental services, consultancy services related to the installation of computer hardware, research and experimental services on natural sciences and engineering, management consulting services, technical testing and analysis services, hospital services, and hotel and restaurant services). In all cases, Swaziland has left measures affecting cross-border supply (mode 1) unbound, and allows market access without limitation on consumption abroad and commercial presence (modes 2 and 3). Under mode 4, movement of natural persons, Swaziland has bound measures affecting supply, by a limited range of senior professional staff, in engineering, medical, computer, management consulting, hospital, and hotel and catering services. Swazilands MFN exemptions in services relate to financial services, where an exemption is made for the preferential access that members of the CMA enjoy to the Swaziland capital and money markets and the maintenance of exchange controls by the CMA; and to any existing or future bilateral agreements relating to international road transport (including road/rail transport) reserving or limiting the provision of a transport service "into, in, across or out of Swaziland" to members of such agreements (e.g. the SADC Protocol on Road Transport). Financial services Four commercial banks, one building society, one insurance company, and the National Provident Fund (a compulsory savings, life insurance, and pension institution), operate in Swaziland. The commercial banks are First National Bank/Wesbank, Nedbank Swaziland, Standard Bank Swaziland, and Swazibank (previously Swaziland Development and Savings Bank). The existing banking legislation, contained in the Financial Institutions (Consolidated) Order 1975, requires banks to apply for and obtain a licence from the Central Bank of Swaziland before they start operations. Commercial bank lending is dominated by short-term loans to the agri-processing sector, principally the sugar industry; according to the IMF, foreign-controlled businesses and the Government do not rely on the local banking system for finance. There is not yet a government securities market in Swaziland. Swazibank was restructured during 2000-01, but still depends on transfers from the general budget. It is licensed to provide the full range of banking services but is also required under its statutes to promote rural development, infrastructure development and local empowerment; these are higher-risk areas by national standards. The Swaziland Building Society is the countrys major provider of long-term mortgage lending; however, it operates only on title-deed land properties. The Swaziland Royal Insurance Corporation is the only national insurance company, with a monopoly on insurance policies of all classes under the Swaziland Royal Insurance Corporation Order 1973. This company and the National Provident Fund have recently seen their investment base seriously eroded by the falls in global stock markets and by the effects of the HIV/AIDS epidemic. In recent years, Swaziland has enacted, or is in the process of formulating, several inter-related new laws to reform the financial sector, which should create conditions more consistent with good international practice and open the market to competition in some areas. Thus, the Money Laundering (Prevention) Act 2001 defines the crime of money laundering, lays down penalties, and places a legal responsibility on institutions to report suspicious transactions to a supervisory authority. The Securities Bill, 2002 creates a regulatory structure for the capital market in Swaziland. The Financial Institutions Bill will, when passed, repeal the existing Financial Institutions (Consolidation) Order. It seeks to incorporate the Basle Core Principles for Effective Bank Supervision, as endorsed by the East and Southern Africa Bank Supervisors Group (ESAF), into Swazilands legislation; to implement a consolidated system of supervision and exchange of information with other Central Banks or supervisory authorities; to provide for investigation of institutions taking illegal deposits; to enhance the duties of auditors; to provide a framework for reporting suspicious transactions; to provide for the seizure, winding up, and re-organization of financial institutions; and provide for prudent and sound corporate governance for financial institutions. The Bill defines future provisions for operating banks and other financial institutions in Swaziland (whether domestic or foreign owned), lays down levels of capital and reserve accounts, prescribed investments and minimum liquid assets, sets out the duties of auditors and terms of financial reporting, and defines such things as the liabilities of directors and officers, anti-competitive agreements, and liquidation or reorganization of financial institutions. The Bill does not apply to building societies, cooperative institutions or insurance companies. The Insurance Bill, 2002 aims to demonopolize the insurance industry while setting in place a legal framework for the supervision of insurance companies and intermediaries to ensure that they are managed with due diligence and professionalism. It provides for: the establishment of a Registrar of Insurance and Retirement Funds, an Insurance and Retirement Funds Board and an Insurance Adjudicator; the supervision of insurance companies and intermediaries; regular reporting by insurance companies; standardization of procedures governing the operations of insurance companies and intermediaries; and sanctions for offences committed against the procedures laid down in the Act. The Bill opens the insurance market to foreign investors under certain conditions: only public companies with a paid-up share capital of at least E 2 million may apply for registration as insurers; at least 15% of the shares of the company must be held either by natural persons who are citizens of Swaziland or by juridical persons. At least 51% of the shares or interest of juridical persons (or, in the case of a retirement fund, of its membership) must be held by citizens of Swaziland; at least 10% of the directors of the company must be citizens of Swaziland; and any insurer registered in Swaziland must maintain a principal office and appoint a principal representative in Swaziland. The Retirement Funds Bill, 2002 lays down conditions for the operation of retirement funds, including registration, management (fiduciary responsibilities, rules, contributions, and bank accounts), statutory obligations and statutory restrictions on the disposal of retirement fund benefits. It establishes a Registrar and Adjudicator of Retirement Funds and provisions for dealing with complaints. Overarching this new structure of bills and acts governing the financial system is the Central Bank of Swaziland (Amendment) Bill, 2002, which seeks to amend the Central Bank of Swaziland Order of 1974, so as to provide for the promotion and operation of payment systems, the establishment of an Ombudsmans office, the supervision of financial institutions, the establishment of a Monetary Policy Consultative Committee (although, because of its membership of the Common Monetary Area, Swaziland is not in a position to conduct an independent monetary policy), the publication of policy directives by the Prime Minister, and the Banks accountability to Parliament. Telecommunications Fixed telecommunications services in Swaziland are still in the hands of the national monopoly, the Swaziland Posts and Telecommunications Corporation (SPTC), established in 1983 under the Posts and Telecommunications Act and responsible to the Ministry of Tourism, Environment and Telecommunications. The cellular network is also under the monopoly control of Swazi MTN, a consortium made up of SPTC, MTN of South Africa and a local empowerment company. According to the authorities, "service needs in Swaziland are to be met by means of a 20year development master plan that will ensure an orderly telecommunications network expansion." The Government has formulated a new Telecommunications Policy aimed at liberalizing the sector through the passage of a new Telecommunications Act. This will eliminate the SPTC and separate posts and telecommunications into two separate corporations. The telecommunications business will be incorporated as a telecommunications company under the Companies Act. A new regulatory body, the Swaziland Communications Commission (SCC), will be set up. A period of exclusivity for the new Telco will determined at the date of commencement of the Act and competition will be opened for private networks, internet services, value added services and customer premises equipment within 90 days after the effective date of SCCs operating authority. Current developments plans include the modernization of telephone systems in rural areas by the replacement of copper wire with optic fibre systems; and the subsequent installation of ISDN systems, data circuits, and high-speed Internet connections. The Internet was introduced to Swaziland in 1995 and a local Internet portal, Swazi.net was introduced in 2000. SPTC also offers subsidized rates to schools to assist in connecting them to the Internet. The cellular network reportedly covers over 70% of the geographical area, including all major business centres, as well as continuous coverage from the Ngwenya border, along the Mbabane-Manzini highway and on to the Mozambique border. (iii) Transport Most of Swazilands trade is transported by road: however, the rail network, some of which has become dilapidated, is being overhauled and new lines are being constructed to link more effectively with Maputo, the main port for Swazilands exports. Air services are also relatively poor. A National Transport Policy adopted in 2000 sets out a new strategy for the integrated development of all transport subsectors. Transport infrastructure development accounts for between 36% and 43% of the government budget. Like many developing countries, Swaziland's challenge is that construction of roads, railways, and airports may be relatively easy, often using external aid resources, but that maintenance has been inadequate. Under a National Transport Policy adopted in June 2000, an autonomous and accountable roads authority is to be established and steps are being taken to develop a road funding policy, partly based on user charges on one major highway. The general policy document also includes a rural access policy, under which the Ministry of Public Building and Works has been mandated to take over responsibility for maintenance of the feeder road network, using labour-intensive methods. The policy also seeks to improve the regulatory structure for road transport and to this end a new Road Transport Bill and Road Traffic Act are before Parliament. In respect of rail development, the volume of goods moved by Swaziland Railway in import-export trade has been growing steadily, despite difficulties with the main east-west line and generally with capacity. In the financial year 2001/02, import-export trade carried by rail increased by 19.4% over the previous year, reaching the highest level since 1995; the main contributions came from sugar, coal, timber, and cement, and transport of wood pulp returned to the rail network. The eastwest line to the border with Mozambique is under rehabilitation with Italian assistance. Expansion of the inland container depot (Matsapha dry port) has been completed, with assistance from Chinese Taipei. Swazilands rail network is directly competitive with Mozambiques ports and transport links to and from Zimbabwe and northern parts of South Africa; to that end a new western rail link into South Africa has been studied and is before the Ministry for consideration. Air transport links with Swaziland are limited: one company (Airlink Swaziland, a joint venture between the Government and South African Airways) operates the principal link between Manzini and Johannesburg and a second (Swazi Express) operates the Manzini-Durban and ManziniMaputo routes. Royal Swazi National Airways, which was the national carrier, ceased to operate in 1999. There is no significant air freight operation. Plans are afoot to upgrade Matsapha airport and to construct a new international airport at Sikuphe in the Lowveld area. (iv) Tourism Tourism is a potentially important subsector for Swazilands economy; although it currently contributes under 2% to GDP, it accounts for roughly one quarter of services exports. The industry has had to reorient itself since the advent of democracy in South Africa and that countrys approval of the opening of casinos and gaming houses. In recent years, a decline in South African visitors has been partly compensated by an increase in other visitors. In terms of local currency, tourist receipts held up reasonably well between 1997 and 2000; however, because of the depreciation of the currency, receipts in U.S. dollar terms fell markedly during the period (Table IV.1). Statistics for 2001 show that 341,000 tourists visited Swaziland during the year. Table IV.1 Receipts and Bednights Sold, Tourism, 1997-00 1997199819992000Bednights sold415,600424,116438,996421,407Total receipts - E million - US$ million 170.0 36.9 179.0 32.7 185.0 30.2 188.7 27.3Source: Swaziland Business Yearbook (2002). A new parastatal body, the Swaziland Tourism Authority, funded by the European Union and the World Bank, was launched in 2001 under the Tourism Authority Act. The aim is to develop a Swaziland Tourism Strategy to promote and improve the industry. A draft Tourism Policy was adopted in 2001 with six key principles: that tourism development should be private-sector driven, with Government playing a supportive role; that tourism development will be managed to ensure sustainability and the conservation of the countrys environment and natural resources; that tourism development will promote active Swazi participation in the subsector as entrepreneurs and suppliers of goods and services and as customers, and that community-based tourism will be encouraged; that tourism development will aim to maximize the opportunities afforded by strategic regional initiatives such as the Maputo Development Corridor, the Lubombo Spatial Development Initiative marrying the efforts of South Africa, Swaziland and Mozambique, the Lubombo Trans-frontier Conservation Area and the Bio-diversity and Tourism Corridors; that Swazland will provide a clean, healthy, and safe environment for tourism, linking up with other service sectors; and that the Swaziland tourist industry will develop a marketable identity focussing on selected niches and products that can differentiate itself, where necessary, from its neighbours. Effective development of tourism in Swaziland will also depend on cooperation with South Africa for joint holiday reservations, as well as on improvement of the road infrastructure within the country and of the air services to Manzini. The Government has recognized this, inter alia, through the designation of the Lubombo Spatial Development Initiative, linking Swaziland with the South African provinces of Mpumalanga and Kwazulu-Natal, as well as with Mozambique; the creation of the South East African Tourism Committee (SEATOC) comprising these same areas along with South Africas Northern Province, and the Millennium Project, launched early in 2000 to accelerate new investment in infrastructure and tourism facilities. Under this programme, targets for increased tourism revenue were set at 10%, 15% and 25% in 1999, 2000, and 2001 respectively. Swaziland is also a member of the Regional Tourism Organization of Southern Africa (RETOSA), which promotes tourism throughout the southern African region and has a well-developed website. References ActionAid (2002), Farmgate: The developmental impact of agricultural subsidies, London. Central Bank of Swaziland (2002), Annual Policy Statement. Central Bank of Swaziland (2001), Annual Report 2000/2001. Clay, Edward, Louise Bohn, Enrique Blanco de Armas, Singand Kakambe and Hardwick Tchale, "Climatic variability, economic performance and the uses of climatic forecasting in Malawi and Southern Africa", Disaster Risk Management Working Paper Series No. 7, World Bank (forthcoming). EIU (2001) Country Profile, Economist Intelligence Unit, London. Haacker, Marcus (2002), "The Economic Consequences of HIV/AIDS in Southern Africa", IMF Working Paper WP/02/38, International Monetary Fund, Washington D.C IMF (2002), Staff Report for Article IV Consultation, November. Ministry of Agriculture and Cooperatives (2001), National Forest Policy, October. Ministry of Enterprise and Employment (2002), Swaziland Review 2002. Ministry of Public Works and Transport (2002), "Transport Bulletin: 2001/2002". SADC (2001),. "SADC Free Trade", SADC Review, 2001, Special Feature . [Online]. Available at:  HYPERLINK "http://www.sadcreview.com/special%20features%202001/sac/freetrade/frfreesugar.htm" http://www.sadcreview.com/special%20features%202001/sadcfreetrade/frfreesugar.htm. Swaziland Business Yearbook (2002). Swaziland Sugar Journal (2001), "Markets for Swazi Sugar: Patterns, Challenges and Strategic Considerations",special edition, September. U.S. Trade and Investment with Sub-Saharan Africa. Available online at:  HYPERLINK "http://reportweb.usitc.gov/africa/by_country.jsp" http://reportweb.usitc.gov/africa/by_country.jsp. UNAIDS/WHO (2002), Epidemiological Fact Sheet, 2002 update. UNICEF, "Southern Africa crisis Swaziland" [Online]. Available at:  HYPERLINK "http://www.unicef.org/noteworthy/safricacrisis/swaziland.html" http://www.unicef.org/noteworthy/safricacrisis/swaziland.html UNICEF (2002), . "Swaziland Situation Report", 5August 2002 [Online]. Available at:  HYPERLINK "http://www.unicef.org/emerg/Country/Swaziland/020805.htm" http://www.unicef.org/emerg/Country/Swaziland/020805.htm. World Bank (2000), Swaziland, Reducing Poverty through Shared Growth, summary report, January, Washington D.C. APPENDIX TABLES Table AI.1 Merchandise exports, 1997-01 (US$ million and per cent) Description19971998199920002001Total exports845.0967.7924.5900.8693.9(Per cent)Total100.0100.0100.0100.0100.0Total primary products55.756.455.945.552.9Agriculture54.354.655.344.351.5Food45.144.845.733.639.3210690 Food preparations nes6.010.89.010.418.2170111 Raw sugar, cane21.216.318.39.89.2170490 Sugar confectionery (including white chocolate), not containing cocoa4.53.13.81.42.8170240 Glucose and glucose syrup, containing in the dry state at least 20% but less than 50% by weight of fructore0.20.71.00.91.0170191 Refined sugar,in solid form, containing added flavouring or colouring matter1.11.51.01.00.8Agricultural raw material9.29.89.710.712.2470311 Chemical wood pulp, soda or sulphate, coniferous5.25.75.76.78.8440729 Other0.10.20.30.60.9Mining1.41.80.61.11.4Fuels0.31.00.10.70.9270111 Anthracite, whether or not pulverised but not agglomerated0.30.90.10.50.8Ores and other minerals1.00.80.40.40.5Non-ferrous metals0.00.00.00.00.0Manufactures44.043.343.954.346.8Chemicals11.316.417.320.121.2330210 Mixtures of odoriferous substances for the food or drink industries9.714.515.418.418.4Clothing3.96.78.413.911.7Other consumer goods5.03.53.35.65.1610990 T-shirts, singlets and other vests, of other textile materials, knitted1.33.75.16.85.0Machinery and transport equipment14.99.48.59.74.6Other non-electrical machinery2.72.62.44.52.2Other semi-manufactures4.44.13.72.52.1610910 T-shirts, singlets and other vests, of cotton, knitted1.20.80.21.41.9Textiles3.82.72.62.41.9610510 Mens/boys shirts, of cotton, knitted0.00.00.11.01.6Automotive products1.61.31.01.21.3491199 Printed matter, nes1.00.30.60.91.2940360 Furniture, wooden, nes0.70.60.71.81.0960720 Parts of slide fasteners0.81.00.90.80.9481500 Floor coverings on a base of paper, whether or not cut to size0.60.30.40.40.9610610 Womens/girls blouses and shirts, of cotton, knitted0.00.00.51.90.8540252 Yarn of polyester filaments, single, >50 turns per metre, not put up0.40.60.81.40.8960711 Slide fasteners fitted with chain scoops of base metal0.00.10.20.70.8330190 Conc&aqueous distls of essentl oils; terpenic by-prods of essentl oils0.10.00.00.00.7Other electrical machines9.35.14.63.40.4Office machines & telecommunication equipment0.90.30.30.30.4Other transport equipment0.30.10.10.20.2Agricultural machinery and tractors0.10.10.10.10.1Iron and steel0.70.60.10.20.1Power generating machines0.20.00.10.10.1Other0.30.30.20.20.3Source: ϲʹ Secretariat calculations, based on data provided by the Swaziland authorities; and UNSD, Comtrade database. Table AI.2 Merchandise imports, 1997-01 (US$ million and per cent) Description19971998199920002001Total imports1,180.81,168.61,142.41,110.3846.8(Per cent)Total100.0100.0100.0100.0100.0Total primary products35.334.335.934.435.0Agriculture21.820.522.721.122.4Food18.316.820.218.719.5100590 Maize (corn) nes0.10.20.50.71.1230990 Animal feed preparations nes1.01.11.31.21.0020210 Bovine carcasses and half carcasses, frozen0.30.10.10.00.8220210 Waters incl mineral&aeratd, containg sugar o sweeteng matter o flavourd0.40.50.90.60.6Agricultural raw material3.53.72.42.32.9470790 Waste&scrap of paper or paperboard, nes (includg unsorted waste&scrap)1.00.90.50.70.8520100 Cotton, not carded or combed0.81.10.70.30.5Mining13.413.813.313.312.6Ores and other minerals0.30.30.40.50.7Non-ferrous metals0.40.40.30.30.5Fuels12.713.112.512.611.5271000 Petroleum oils&oils obtained from bituminous minerals, o/than crude etc.8.010.810.610.29.2270119 Coal nes, whether or not pulverised but not agglomerated0.20.20.20.40.6Manufactures63.164.162.264.264.3Iron and steel3.03.01.72.22.1Chemicals11.311.314.411.213.2300490 Medicaments nes, in dosage0.70.60.40.81.0330210 Mixtures of odoriferous substances for the food or drink industries0.71.00.50.70.8391721 Tubes, pipes and hoses, rigid; of polyethylene 0.40.70.50.30.5310520 Fertilizers cntg nitrogen,phosphorus&potassium in pack weight 1500 cc to 3000 cc0.60.32.32.32.4870431 Gas powered trucks with a GVW not exceeding five tonnes0.00.00.51.51.6870899 Motor vehicle parts nes2.12.22.21.61.4870490 Trucks nes0.10.10.80.21.2Other transport equipment0.51.10.80.60.6Textiles3.23.72.93.53.9600242 Warp knitted fabrics, of cotton, nes1.42.41.41.81.4Clothing2.52.42.22.92.8Other consumer goods6.86.86.86.98.2960720 Parts of slide fasteners0.40.20.40.30.5Other1.71.61.91.40.7Monetary gold0.00.00.00.00.0Gold0.00.00.00.00.0Source: ϲʹ Secretariat calculations, based on data provided by the Swaziland authorities; and UNSD Comtrade database. Table AI.3 Merchandise exports by destination, 1997-01 (US$ million and per cent) Description19971998199920002001Total exports845.0 967.7 924.5 900.8 693.9 (Per cent)America4.15.23.58.94.0United States4.15.23.58.84.0Canada0.00.00.00.00.0Other America0.00.00.00.00.0Europe17.512.114.06.92.4EU(15)17.312.014.06.92.4United Kingdom8.44.46.83.71.1Italy0.30.20.50.90.4France3.14.33.00.70.3EFTA0.20.00.00.00.0Eastern Europe0.00.00.00.00.0 Former USSR0.00.00.00.00.0Other Europe0.00.00.00.00.0Asia0.10.11.82.61.1Middle East0.00.00.11.40.0East Asia0.10.11.70.41.0China0.00.00.00.00.7Chinese Taipei0.00.00.00.30.3South Asia0.00.00.00.70.1Oceania0.00.00.40.40.2Africa78.382.580.381.192.3Sub-Saharan Africa78.282.480.279.991.8South Africa68.565.372.059.778.0Mozambique4.711.23.76.24.6Angola0.00.00.00.71.5United Republic of Tanzania1.31.61.13.01.4Zimbabwe1.51.81.53.71.1Mauritius0.50.70.41.40.8Kenya0.00.20.20.40.7Congo0.00.00.00.40.6Zambia0.70.70.20.90.6Ethiopia0.00.00.00.70.5Uganda0.30.40.40.90.5Madagascar0.00.00.00.20.4Rwanda0.00.00.00.10.4Malawi0.60.40.61.10.3Other Africa0.10.20.11.20.4Reunion0.00.10.11.20.4Source: ϲʹ Secretariat calculations, based on data provided by the Swaziland authorities; and UNSD, Comtrade database. Table AI.4 Merchandise imports by origin, 1997-01 (US$ million and per cent) Description19971998199920002001Total imports1,180.8 1,168.6 1,142.4 1,110.3 846.8 (Per cent)America1.21.41.80.30.3United States1.01.20.20.20.2Canada0.20.11.40.00.0Other America0.00.10.10.00.1Argentina0.00.00.00.00.1Europe6.04.96.81.01.0EU(15)5.84.96.70.91.0Italy1.00.90.60.30.4United Kingdom1.71.44.60.20.2Germany0.40.90.20.10.1Belgium-Luxembourg0.50.20.10.10.1Portugal0.10.00.00.00.0EFTA0.20.10.10.00.0Switzerland0.20.10.10.00.0Eastern Europe0.00.00.00.00.0Former USSR0.00.00.00.00.0Other Europe0.10.00.00.00.0Asia6.37.24.33.73.4Middle East0.20.10.20.10.1Israel0.00.00.10.00.0East Asia5.66.83.93.63.2Hong Kong, China0.60.90.51.11.0Japan1.71.51.10.70.9Chinese Taipei0.61.30.70.70.6China0.30.30.20.40.5Singapore1.31.70.50.30.1Indonesia0.00.10.10.10.1Korea, Rep. of0.40.70.40.30.0South Asia0.50.30.20.00.0Oceania0.20.20.00.00.0Australia0.20.20.00.00.0Africa84.784.786.793.894.9Sub-Saharan Africa84.784.6986.793.694.9Mozambique0.60.70.70.40.3Zimbabwe0.20.20.10.00.1South Africa83.683.585.893.294.5Other Africa0.00.10.10.10.0Other areas n.e.s1.51.40.41.20.3Source: ϲʹ Secretariat calculations, based on data provided by the Swaziland authorities; and UNSD, Comtrade database. __________  There are four main land areas: highveld ([xx-yy] metres), middleveld ([aa-bb] metres), lowveld([cc-dd] metres) and the mountainous Lubombo area bordering Mozambique. [Please specify altitude ranges] Land tenure takes two forms: title deed land (largely leased to large-scale commercial farming, often based on foreign capital and using irrigation intensively, particularly in the sugar sector) and Swazi nation land (over 50% of the cultivable area, without written tenancies, largely dedicated to small-scale subsistence farming and highly affected by weather conditions).  See Haacker (2002). In the Staff Report for the 2002 Article IV Consultation (November 2002), the IMF estimates that if current trends are not reversed, by 2010 the countrys population could start to shrink by 0.4% annually, life expectancy could fall to 27 years, and the number of orphans could rise to 25% of all children. According to the Swaziland Human Development Report, other economic costs from a shrinking tax base, increasing pressure on pension funds and lower productivity could cumulatively amount to over E 1billion. Haacker suggests that the level of per capita output could fall by some 7% over the medium term.  Following Botswana.  UNAIDS/WHO (2002) and IMF (2002).  The Swazi currency is the lilangeni (plural emalangeni) which is maintained at par with the South African rand. Although the rand circulates freely within Swaziland, it is not legal tender. Recent reports suggest that the authorities are considering reclassifying the rand as legal tender, as it was before 1986.  For a discussion of this question, see Clay et al. (forthcoming).Clay, Bohn, Blanco de Armas, Kakambe and Tchale, Climatic variability, economic performance and the uses of climatic forecasting in Malawi and Southern Africa, Overseas Development Institute, London [forthcoming at this stage a draft].  However, recent reports suggest that the United States may be reconsidering the terms of Swazilands access to AGOA, following a crisis in the countrys judicial system.  IMF estimates show an appreciation of 1% in the real effective exchange rate during 2001.  The World Bank estimated in 2000 that some 43% and 41% of rural and urban Swazis live in poverty, and that Swaziland required an annual growth rate of 5% in real GDP to prevent the numbers of the poor from rising (WorldBank, 2000).  Central Bank of Swaziland (2002).  UNICEF (2002).  Central Bank estimates put final consumption expenditure at 82.5% of GDP in 2001, growing by 15.3% in that year, largely due to escalation in government personnel expenditure (Central Bank of Swaziland, 2002).  IMF (2002) estimates. Central Bank of Swaziland estimates that GNS fell from 32.2% of GDP in 2000 to 28.4% in 2001 (Central Bank of Swaziland, 2002).  The current account of the balance of payments has been fully liberalized and Swaziland has accepted the obligations of Article VIII of the IMF Agreement on 11 December 1989.  Accurate trade and payments analysis is difficult in all the smaller SACU countries. Because of the transit of most goods through South Africa and the lack of national customs checks within the SACU area, import data (both total and by source) are notoriously unreliable: export data may be better, but this is subject to the accuracy of valuation and recording of consignments. IMF (2002) notes that "Deficiencies in the quality of Swazilands economic data are pervasive and hamper internal policymaking and effective surveillance national accounts and international trade data are reported with irregular periodicity and with substantial lags."  IMF (2002, Staff Report for Article IV Consultation, November 2002).  Central Bank of Swaziland (2001).  Central Bank of Swaziland (2002). However, IMF suggests that the CPI-based real effective exchange rate of the lilangeni appreciated by about 9% between 1998 and September 2001, mainly because of the inflation differential between Swaziland and South Africa.  UNSD, Comtrade data, reflected in Table AI.3, show that there has also been some diversification from raw and refined sugar to a group called "flavours, industrial use" or "mixtures of odoriferous substances for the food industry", which presumably refers to Coca-Cola concentrate production.  Data are difficult to verify: the Central Bank of Swaziland estimates 55% and 88% in 2000; IMF (2002), suggests 50% and 80% for 2001.  For example, all of Swazilands oil is sourced through South Africa, but no doubt does not originate from there.  The others are Lesotho and Morocco.  The SADC Trade Protocol, concluded in 1996, also comprises the SADC Sugar Cooperation Agreement, concluded in July 2000. The agreement has two components: market access and cooperation. Its long-term objective particularly important for Swaziland, but also opening it to competition from other sources  is the reciprocal, full liberalization of trade in sugar within the SADC region from 2013.  See Chapter I(2). IMF (2002) estimates that SACU receipts will fall from 14.1% of GDP (49.8% of total revenue and grants) in 2000 to 12.3% of GDP (46.5% of revenue and grants) in 2003. Goods imported into South Africa, and hence the SACU area, from the European Union will be free of import duty; by the end of the transition period (Annex 4 on South Africa). This will improve their competitive position vis--vis SouthAfrican and SACU-produced goods and reduce the value of import duties charged and earned by the SACU countries.  Swaziland has presented two papers in the ϲʹ agriculture negotiations: G/AG/NG/W/95, "Market Access under Special and Differential Treatment for Developing Countries", and a later non-paper presenting an informal proposal for trade preferences for small developing countries (see Chapter IV).  The other members are Angola, Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Uganda, the Democratic Republic of the Congo, Zambia, and Zimbabwe. Tanzania, Lesotho, and Mozambique have withdrawn.  See COMESA online information. Available at: http://www.comesa.org/obj.htm.  The nine members are Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe. Tariffs are at zero for merchandise trade between the COMESA FTA members, without exception.  The status of implementation of the tariff reduction programme varies substantially among the members yet to join the FTA. Rwanda has published legislation effecting a tariff reduction of 80% from 1January 2002, 90% from 1 January 2003 and 100% from 1 January 2004. Burundi has decided to introduce a further tariff reduction of 80% from the current level of 60% as from January 2003, and will effect a 100% reduction in January 2004 (on COMESA originating products). Consultations are continuing with the Democratic Republic of the Congo, Seychelles, Comoros, and Uganda. Eritrea and Ethiopia are still studying the implications of membership. Namibia and Swaziland (both are SACU members) are under a derogation that excuses them from the obligation to provide (on a reciprocal basis) preferential access to goods originating in other COMESA countries until 31 July 2003. This is intended to allow time for consultations between the COMESA Secretariat and the two countries as well as to enable them to seek the concurrence of the other SACU member states. The COMESA Treaty therefore provides for a multi-speed integration programme.  Value added is defined as the difference between the ex-factory cost of the finished products and the c.i.f. value of material inputs imported from outside the COMESA sub-region. The minimum level of value added was reduced from 45% to 35% in 2000. Egypt and Uganda maintain the 45% ex-factory value-added level.  A wide list of approved products is specified in the COMESA Treaty as being of particular importance to the economic development of the members.  Not all COMESA members are members of the PTA Bank: Angola, Namibia, Seychelles, Swaziland, Uganda, and the Democratic Republic of the Congo are not members. Egypt joined the Bank in2000. Since 1994, non-COMESA members have been permitted to become PTA Bank members; Somalia, Tanzania, and, since2001, China are such members.  Founding members of the ATIA are Burundi, Kenya, Malawi, Rwanda, Tanzania, Uganda, and Zambia. Only Tanzania is a non-COMESA country.  See Swaziland Sugar Journal (2001). The price obtained by Swaziland under the EU Sugar Protocol in February 2001 was 3,600/tonne, nearly two and a half times the then world price of 1,463. Exports to the United States of "tariff quota" sugar earned 3,426/tonne in the same period. See also trade data in Table I.2.  See WTO document WT/COMTD/N/4/Add.2, 5 October 2001, and Swaziland Business Yearbook (2002), page 73.  Cotonou Agreement, Trade Rgime Applicable during the Preparatory Period, Protocol 4, Articles 1 and 2.  Act No.1 of 2000.  "U.S. Trade and Investment with Sub-Saharan Africa". Available online at  HYPERLINK "http://reportweb.usitc.gov/africa/by_country.jsp" http://reportweb.usitc.gov/africa/by_country.jsp.  Swazi Sugar Association.  Information in this section is based on consultations held in Swaziland in connection with this Trade Policy Review; Swaziland's request for technical assistance (letter dated 1/07/02); and selected literature.  Geneva Week is a week-long event where officials from non-resident countries are briefed on the state of play in the work of the ϲʹ, including briefings on the negotiating bodies as established by the Trade Negotiations Committee.  Logistical support includes the provision of temporary offices, meeting rooms, secretarial services, and internet facilities. One of the fundamental mechanisms of the AITIC Non-Resident's Unit is the "Early Warning System" designed to: determine the key external trade sector(s) for each non-resident; monitor from Geneva the ϲʹ meetings relating to these sectors; keep non-residents informed prior to and following each meeting; advise non-residents as early as possible of the orientation of ϲʹ discussions directly related to these key sectors, to enable them to intervene before critical decisions are taken in their absence; and to facilitate the presence of representatives at ϲʹ meetings of importance to them. Information is available online at: www.aitic.org.  Regional activities in which Swaziland has participated include: Regional Seminar on SPS for Southern African Developing countries (Namibia, 1999); Conference on TRIPS Agreement and Implementation Requirements (Botswana, 1999); Regional Seminar on Trade and Environment (South Africa, 2000); Rules Implementation Seminar (South Africa, 2000); Regional Workshop on Competition Policy (South Africa, 2001); Seminar for SADC countries on Agriculture and the ϲʹ (Botswana, 2001); ϲʹ/ISO Workshop on International Standard Settings for Sub-Saharan Africa (Kenya, 2002; Intensive Training Course on Trade and Investment for Anglophone Africa (South Africa, 2002); First ϲʹ-ECA-ADB Trade Policy Course for African countries (Ethiopia, 2002); SACU Trade Policy Review Seminar (Lesotho, 2002); Trade and Environment Seminar (Namibia, 2002).  In total, from 1995 to the end of 2002, Swaziland has taken part in 36 ϲʹ technical assistance activities.  Ministry of Enterprise and Employment (2002).  Act No. 28 of 1968.  Act No. 13 of 1985.  Rate of Sugar Levy Notice, 1997 (Act No. 4 of 1997).  TPU online information is available at:  HYPERLINK "mailto:tpu@realnet.co.sz" tpu@realnet.co.sz.  Ministry of Enterprise and Employment (2002).  Swaziland Business Yearbook (2002).  Swaziland Business Yearbook (2002).  "Category A" public enterprises, as defined in the Public Enterprises Act 1989, are enterprises that are wholly owned by Government or in which the Government has a majority interest or that are dependent upon Government for their financial support. In addition to the enterprises listed in Table III.4, Category A includes the Central Transport Administration, the Commercial Board, and the Swaziland Tourism Development Company.  Communication from the authorities, January 2003.  Order-In-Council No. 25 of 1973. Questions by Members: Canada: IP/C/W/314; Switzerland: IP/C/W/315; United States: IP/C/W/316; European Union: IP/C/W/320; Japan: IP/C/W/322; and Australia: IP/C/W/328.  It is estimated, inter alia, that the Maguga Dam project in northern Swaziland, scheduled for completion in 2006, will benefit about 20,000 people by enabling irrigated sugar cane production by small farmers; another water development, the Usutu River basin, may open 25,000 hectares of land for exclusive use by small farmers [by when?] (Swaziland Business Yearbook, 2002).  The Economist Intelligence Unit considers that "Only drastic reform of the land tenure system will encourage the transformation of SNL agriculture" (EIU, 2001).  Figures supplied by the authorities show that the quantity of sugar sales within SACU during the period 1997/98-2001/02 represented on average 53.3% of output; this masks a fall in the SACU share from 56% to 48% of a rising total output between 1997/98 and 2000/01, when sales to SACU were rising, and an increase in the SACU share to 59% in 2001/02 when total production declined.  ϲʹ document G/AG/NG/W/95 dated 22 December 2000.  Ministry of Enterprise and Employment (2002).  Cotonou Agreement, Trade Rgime Applicable during the Preparatory Period, Protocol 4, Articles 1 and 2.  Act No. 7 of 1965.  "Veterinary surgeon" is defined in the Act as "a member of the Royal College of Veterinary Surgeons of Great Britain, or anyone possessing a veterinary qualification recognized by that institution as equivalent to its own, or a possessor of a Bachelor of veterinary science degree of the University of East Africa, or anyone possessing a veterinary qualification recognized by the Minister by notice published in the Gazette".  The Principal Secretary of the Ministry of Agriculture and Cooperatives.  SADC (2001).  Swaziland Business Yearbook (2002).  Ministry of Agriculture and Cooperatives (2001), Section 1.1.  Swaziland Business Yearbook (2002).  National Forest Policy, section 1.2. . National Forest Policy, section 1.6.  National Forest Policy, section 2.1.5.1.  Ministry of Enterprise and Employment (2002).  ActionAid (2002).  USITC online information. Available at:  HYPERLINK "http://reportweb.usitc.gov/africa/by_country.jsp" http://reportweb.usitc.gov/africa/by_country.jsp.  ϲʹ document GATS/SC/81, 15 April 1994.  Ministry of Enterprise and Employment (2002).  Kingdom of Swaziland, Draft National Telecommunications Policy, 2001.  Swaziland Business Yearbook (2002).  The Ministry of Public Works and Transports 2001/2002 "Transport Bulletin", notes that "shows that Ttransport infrastructure spending absorbsed more than 2035% of the government annual capital budget in FY 2001/02 and 5.4% of the recurrent budget.Unfortunately, such huge investments have tended not to be matched by corresponding increases in maintenance expenditure to ensure the long-term sustainability of the assetsIndications are that in future major works in road infrastructure will be centred on periodic and routine maintenance of the already existing networkA major focus will be on maintenance and on improving and upgrading the feeder roads in the country".  The network was originally constructed under the aegis of the Ministry of Agriculture, but no clear responsibility was assigned for its maintenance.  Ministry of Public Works and Transport (2002).  SEATOCs main objective is stated to be the promotion of the sub-region as a distinctive destination: to this end it will develop theme routes across borders, produce and distribute publicity materials, establish better communication among members, develop a data base for land tourism, facilitate access of SMEs to the tourism sector, and undertake joint promotion of the sub-region as a tourism destination.  Ministry of Enterprise and Employment (2002).  RETOSA online information. Availabe at:  HYPERLINK "http://www.retosa.co.za/" http://www.retosa.co.za/ . RETOSA covers Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe. WT/TPR/S/xx Trade Policy Review Page  PAGE 6 SACU-ϲʹ Members WT/TPR/S/xx Page  PAGE 6 WT/TPR/S/114/SWZ Trade Policy Review Page A5- PAGE 346 SACU-Kingdom of Swaziland WT/TPR/S/114/SWZ Page A5- PAGE 347 Page I. PAGE \* MERGEFORMAT 1 WT/TPR/S/114/SWZ Trade Policy Review Page A5- PAGE 354 SACU-Kingdom of Swaziland WT/TPR/S/114/SWZ Page A5- PAGE 353 +/0P1hg 6 7 ; ? 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