ࡱ> u@ ybjbj [qpoTV:::::::V;Vtz<Fd<<<<<=4=fththththththt=vRx2htMP<<MPMPht<<}tUUUMP<<ftUMPftU<UV2k(p<< HC::kTp.rt0t0pRyUy\pVVypH=&DdUdHKe===hthtVV$::UVV::World Trade OrganizationRESTRICTED DOCPROPERTY "Symbol1" WT/TPR/S/132 24 May 2004 (04-2121)Trade Policy Review Body TRADE POLICY REVIEW DOCPROPERTY "Country"Burkina Faso Report by the Secretariat  This report, prepared for the Trade Policy Review of Burkina Faso, has been drawn up by the ϲʹ Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from the Government of Burkina Faso on its trade policies and practices. Any technical questions arising from this report may be addressed to Mr Sergios Stamnas (022.739.5382. Document contains the policy statement submitted by the Government of Burkina Faso  ADVANCE \y 700  Note: This report is subject to restricted circulation and press embargo until the end of the meeting of the Trade Policy Review Body on DOCPROPERTY "Country" Burkina Faso. CONTENTS Page summary observations vii (1) Economic Environment vii (2) Trade Policy Framework vii (3) Trade Policy Developments ix (4) Sectoral policy developments xi (5) Outlook xii I. Economic environment 1 (1) Overview 1 (2) Background 1 (3) Recent Economic Developments 2 (i) Macroeconomic indicators 2 (ii) Monetary and exchange policy 4 (iii) Budget policy 6 (4) Trends In Trade 7 (5) Outlook 9 II. legal and institutional framework for foreign trade and investment trade 10 (1) Overview 10 (2) General Constitutional, Legal And Institutional Framework 10 (3) Trade And Investment Policy 12 (i) Main features 12 (ii) Institutional framework 12 (iii) Instruments 13 (4) Trade Policy Framework Agreements 18 (i) ϲʹ 18 (ii) Regional economic agreements 20 ANNEX II: TRADE-RELATED TECHNICAL ASSISTANCE 26 III. trade policy by measure 29 (1) Overview 29 (i) Import measures 29 (ii) Export measures 30 (2) Measures Directly Affecting Imports 30 (i) Registration 30 (ii) Customs procedures 31 (iii) Customs valuation 32 (iv) Customs levies 33 (v) Preferential rules of origin 40 (vi) Prohibitions, authorizations and licences, sanitary and phytosanitary measures 40 (vii) Technical standards and accreditation procedures 41 (viii) Marking and labelling requirements 43 Page (ix) Contingency measures 43 (x) State trading 43 (3) Measures Directly Affecting Exports 44 (i) Registration 44 (ii) Customs procedures 44 (iii) Export duties and levies 44 (iv) Prohibitions and products subject to licensing, sanitary and phytosanitary measures 44 (v) Export subsidies and promotion 45 (vi) State trading 45 (4) Domestic Measures 45 (i) Protection of intellectual property rights 45 (ii) Competition policy 49 (iii) Subsidies and other forms of production support 50 (iv) Government procurement 50 IV. trade policy by sector 52 (1) Overview 52 (2) Agriculture, Livestock and Forestry 53 (i) Overview 53 (ii) Agricultural policy 54 (3) Mining, Petroleum and energy 60 (i) Mining 60 (ii) Petroleum 63 (iii) Electricity 63 (4) Industries 64 (5) Services 66 (i) Overview 66 (ii) Telecommunications 66 (iii) Tourism 67 (iv) Financial services 68 REFERENCES 69 APPENDIX TABLES 73 Charts III. trade policy by measure III.1 Breakdown of customs duties, September 2003 36 III.2 Escalation of duties actually applied, September 2003 37 TABLES Page I. ECONOMIC ENVIRONMENT I.1 Basic economic indicators for Burkina Faso, 1998-2002 2 I.2 Economic indicators for Burkina Faso, 1998-2002 3 I.3 Structure of Burkina Faso's exports, 1997-2001 7 I.4 Destination of Burkina Faso's exports, 1997-2001 8 I.5 Structure of Burkina Faso's imports, 1997-2001 8 I.6 Origin of Burkina Faso's imports, 1997-2001 9 II. LEGAL AND INSTITUTIONAL FRAMEWORK FOR FOREIGN TRADE AND INVESTMENT TRADE II.1 Investment Code privileged regimes 17 II.2 Selected ϲʹ documents relevant to Burkina Faso, March 2004 19 III. TRADE POLICY BY MEASURE III.1 Breakdown of customs duties , rates actually applied and final bound rates of Burkina Faso, September 2003 34 III.2 Community Preferential Tariff Regime (TPC), 2004 38 III.3 Status of the privatization programme, 1998-2002 43 III.4 Subjects and terms of protection under the Bangui Agreement (1977) and its revision (1999) 47 III.5 Applications for titles filed by the DNPI with the OAPI, 2002-2003 48 IV. TRADE POLICIES BY SECTOR IV.1 Agricultural production, 1998-2003 54 IV.2 Spending on operations and investment in the rural sector, 1996-2000 56 IV.3 Cotton production, 1998-2004 58 IV.4 Production and official exports of gold, 1994-2002 61 IV.5 Industrial production by main branch of activity, 1994-2000 64 APPENDIX TABLES III. TRADE POLICY BY MEASURE AIII.1 Reference prices, 2004 75 AIII.2 Applied MFN tariff rates (customs duties plus main import taxes and surcharges) by HS Chapter, September 2003 76 AIII.3 Tariff lines the applied MFN rate of which is higher than the bound level of customs duties (excluding other duties and charges), October 2003 80 AIII.4 Products subject to the National Conformity Certificate (CNC), 1998 and 2004 84 AIII.5 Ratification by Burkina Faso of the intellectual property protection treaties administered by WIPO currently in force, 2004 86 SUMMARY OBSERVATIONS Since the first review of its trade policy in 1998, Burkina Faso, one of the poorest of the least developed countries (LDCs), has continued with its programme of trade, structural and macroeconomic reform. Reform of the cotton subsector the cornerstone of Burkinas economy should be underlined. The tariff reform within the West African Economic and Monetary Union (WAEMU) has led to substantial reduction and streamlining of Burkina Fasos customs tariff, achieved unilaterally. The economy still chiefly depends on the cotton crop, transfers from Burkina nationals abroad and aid from development partners. The authorities hope to achieve the objectives set in the Poverty Reduction Strategy Paper (PRSP) by developing exports that make the best use of Burkina Fasos potential in the primary sector (textiles, hides and skins, rubber). Burkina Faso is still facing major problems in competitiveness because of its landlocked situation and the high cost of inputs, as well as the burden of taxation. Structural reforms are under way in order to improve the situation. Economic Environment As was already the case in 1998, Burkina Fasos economic growth depends above all on trends in the primary sector, which is highly vulnerable to climate variations. The excellent performance during the 2003 agricultural season led to an increase in the gross domestic product (GDP) of some 5.5per cent in 2003 in the context of controlled inflation. Cereal production of close to 3.7million tonnes yielded a large surplus, which has made the food security situation globally satisfactory. Cotton production of approximately 500,000tonnes during the 2003-2004 season appears to be almost double the level in 1998. As a result of development of the rural sector, the average rate of economic growth (GDP) reached 4.8per cent over the period 1996-2003, an increase of 1.3percentage points in comparison with the 3.5per cent average for 1990-1996. This average is, however, still well below the objectives in the PRSP. Since the first trade policy review, the government finance situation (excluding grants) has deteriorated, but has stabilized since 2002. Under the Heavily Indebted Poor Countries Initiative (HIPC), Burkina Faso was given additional relief from its external debt in April 2002 in order to support the reform under way, in addition to the reduction already granted in July 2000. Few changes have taken place since the first review as regards the structure of exports, which remain little diversified and mainly composed of unprocessed primary products. Cotton is the leading export, with a share of around 55per cent, and the European Union is still Burkina Fasos main trading partner. The deficit in trade transactions is structural and has increased considerably since the first review in 1998, mainly because of the fall in the value of exports (the level of imports remaining the same) as a result of the decline in revenue from cotton fibre in CFAF terms (despite the increased volume exported). The crisis in Cte dIvoire has affected trade since it broke out in September 2002. Its impact has been felt above all in the higher cost of transport through alternative routes to the port in Abidjan and the non-availability of imports and/or consumer products. Trade Policy Framework Burkina Faso was a contracting party to the GATT (as of May 1963, after having applied the Agreement de facto since 1960) and became a ϲʹ Member on 3June 1995. It grants at least MFN treatment to all ϲʹ Members and benefits from the special and differential treatment provided in the ϲʹ Agreements. Burkina Faso is one of the sponsors of the sectoral initiative in favour of cotton, which seeks to tackle the subsidization practices of certain ϲʹ Members, and this has recently given Burkina Fasos trade policy a more important multilateral dimension. Burkina Faso does not have sufficient human and financial resources to participate fully in the ϲʹϒs work. It is planned to establish a mission in Geneva in 2004. The action planned and the action that could be envisaged for Burkina Faso in the ϲʹ consist of: trade policy courses in Geneva; regional trade policy courses; short trade policy courses on the Doha Development Agenda; workshops or seminars at the regional or subregional level on a number of issues, and negotiating techniques; meetings to promote awareness among parliamentarians; and various activities at ϲʹ headquarters. They will deal, inter alia, with the issues identified by the authorities such as building negotiating capacity, implementing the ϲʹ Agreements, and integrating Burkina Faso into world trade. Since 1998, the 1991 constitutional framework has been revised to underpin the transition to presidential rotation. At the institutional level, the Executive has strengthened the administrative structures responsible for follow-up regarding the ϲʹ and Burkina Fasos participation in the multilateral trading system under PhaseI of the JITAP. The Trade Point set up by the National Foreign Trade Board (ONAC) provides services by compiling information on access to markets both outside and within Burkina Faso. The Minister for Trade, Industry and Crafts is chiefly responsible for the drafting, evaluation and implementation of industrial, investment, crafts and trade policy. This gives priority to development of the private sector and a programme to support competitiveness and development of enterprises (PACDE) underpins this objective. One aspect is the development of promising subsectors for exports that make the best use of Burkina Fasos potential. In their plans for Burkina Fasos future, the authorities attach great importance to regional economic integration. In the context of the customs union created among its members, the WAEMU Commission is gradually defining a common trade policy, which is taking shape in particular through the negotiation of trade agreements and in common positions at the ϲʹ. The integration process within the larger Economic Community of West African States (ECOWAS), to which Burkina Faso also belongs, was revived and accelerated when negotiations were initiated with the EU in October 2003 with a view to the conclusion of an Economic Partnership Agreement (EPA). Since 2004, the members of the ECOWAS have accorded each other preferential treatment for the same products as those within the WAEMU and it is planned to establish a customs union by 2007. The new trade arrangements with the EU replace those under the ACP-EU Partnership Agreement and are the subject of a waiver granted by the ϲʹ Members. In principle, they should apply as of 2008. The Investment Code has not changed since Burkina Faso first appeared before the TPRB, but it should in principle be revised during 2004 with the objective of clarifying its provisions, expanding the scope of the incentives given and their nature in order to attract foreign direct investment and national investment. Mining investment is subject to special treatment and access to the telecommunications, financial services and electricity sectors is regulated. The Investment Code gives tax concessions and guarantees for approved investment projects depending on the amount of the investment and the number of jobs created for Burkina nationals. The export enterprise regime is restricted to enterprises which export at least 80per cent of their production. It gives concessions for customs duties and domestic taxes on equipment during the start-up period, as well as total exemption from duties, levies and taxes during the first seven years of operation and a reduction after this period has expired; eight enterprises have been approved. Enterprises that are expanding and use local materials amounting to at least 50per cent of all the raw materials directly utilized in production are permanently exempt from the business tax and receive a reduction of 50per cent in import duty on production equipment and spare parts. Since the first review, Burkina Faso has ratified a large number of bilateral investment agreements. Trade Policy Developments Burkina Fasos trade policy chiefly consists of implementing the relevant WAEMU regulations. The customs tariff is currently Burkina Fasos main trade policy instrument; VAT and excise duty are also levied by the customs and provide a large share of budgetary income. Burkina Faso has implemented the WAEMUs Common External Tariff (CET) since 1January 2000,. This groups tariff lines into four major categories: staple goods (zero per cent); basic commodities, including basic raw materials, capital goods and specific inputs (5per cent); inputs and intermediate goods (10per cent); and final consumer goods (20per cent). Burkina Faso has unified the customs tariff by replacing the uniform customs duty (5per cent) and the fiscal import duty (zero, 4 or 26per cent) by the customs duty. The special import tax (TSI) of 2per cent, which also applied at the time of the first review, was abolished on 9July 1998. One other change noted is a narrowing of the standard variation. Taking into account the standing supplementary duties of the WAEMU and the ECOWAS, levied solely on imports from third countries (including community levies of 1 and 0.5per cent ad valorem respectively and the statistical fee of 1per cent ad valorem), the simple average of MFN customs duties actually applied by Burkina Faso has fallen from 32.1per cent in 1997 to 14.6per cent (tariff of October 2003). Burkina Faso nevertheless continues to give a marked degree of protection to agricultural products, thereby reducing the purchasing power of households. The maximum rate actually applied is 27.5per cent as a result of the additional imposition of the 5per cent degressive protection tax on imports not originating in the WAEMU, refined vegetable oils, sugar, cigarettes, matches, polypropylene bags and batteries; in most cases, these products are also subject to reference values (see below). Various supplementary taxes are also levied on imports such as the contribution to the import inspection programme (CPVI), which amounts to 1per cent of the f.o.b. value in general and to 0.75per cent for certain products (rice and cement), together with the toll per tonne of imports. Following the implementation of Burkina Fasos new copyright protection regime in 2000, the customs levies taxes in order to finance the activities of the Burkina Copyright Office (BBDA). There are royalties for the reproduction of works fixed on a graphic or analogue medium (for example, photocopiers, scanners, CD burners), amounting to 0.25per cent of the c.i.f. value of the appliance and royalties for private copies on imports of blank recording media (for example, cassette tapes, CDROMs, DVDs), which is fixed at 10per cent of the c.i.f. value. Burkina Faso waives import duties on imports of goods originating in the WAEMU. This applies to local products and traditional handicrafts, as well as industrial products from enterprises approved by the WAEMU Commission. This preferential treatment has been extended to goods originating in the ECOWAS since 1January 2004. The rules of origin in the ECOWAS have been harmonized with those adopted by the WAEMU in order to make the two preferential regimes compatible and to expand the scope of free trade. Applications to benefit from the preferences for products of WAEMU or ECOWAS origin must be substantiated by a certificate of origin, except in the case of local products or traditional handicrafts. According to the analysis made by the ϲʹ Secretariat for the purposes of this review, 40.9per cent of Burkina Fasos tariff lines are bound, of which 56.4per cent (fish and fish products, fuel, soap, plastics, cotton) are subject to applied rates of up to 20percentage points above the levels bound (not taking into account the binding of other duties and levies at 50per cent). These higher levels are the result of tariff concessions made by France on behalf of French West Africa during the colonial era. Only Cte dIvoire and Senegal have renegotiated these under ArticleXXVIII of the GATT 1994, but it would appear that the WAEMU Commission is considering the submission of a new schedule for its members. Regarding customs valuation, Burkina Faso has applied the transaction value since 1June 2000, the final date for deferred application of the relevant ϲʹ Agreement. Reference values continue to apply to certain products, however, covering 33tariff lines, mainly edible vegetable oils, sugar, cigarettes (as was the case at the time of the first review), mopeds, motorcycles and bicycles, as well as their spare parts. The Burkina authorities have, however, narrowed the scope of this regime since the first review and in some cases have reduced the minimum values. Steps have been taken in the Committee regarding the retention of minimum values. There have been few changes in Burkina Fasos import ban, authorization and licensing regime since the first review of its trade policy. It maintains the requirement to produce a notice of intent to import for any operation subject to the PSI and still requires a national conformity certificate for certain products, even though there is as yet no national standard. Standardization is making progress in Burkina Faso through FASONORM, whose activities effectively began in 1999. Burkina Faso has become a subscriber member of the ISO so that it can keep abreast of ongoing work, but it does not have the resources to participate actively in the Organization. A regional accreditation programme is under consideration by the WAEMU. Burkina Faso still grants tax and customs exemptions to enterprises approved under the Mining Code or under the Investment Code. In 2002, customs exemptions under the Investment Code amounted to CFAF3billion (US$4.5million). Financing of the rural sector absorbs on average onequarter of the States budget. Even though the WAEMU has adopted regulations on competition and State aid, there have been no changes for the time being apart from the strengthening of Burkina Fasos institutional framework. The members of the WAEMU, including Burkina Faso, have not yet completed the implementation of these regulations. At the national level, all prices have now been liberalized with the exception of petroleum prices at the pump, which are determined monthly according to fluctuations in supplier prices, together with the prices of school supplies, generic essential medicines, water, electricity and telephony. The State has continued to withdraw from economic activity by opening up the capital of State enterprises to private interests, but retains a minority holding in a number of key enterprises that sometimes enjoy a legal monopoly (cotton ginning). The privatization programme adopted in 2001 encompasses, inter alia, strategic enterprises in the telecommunications, electricity and hydrocarbons sectors and the granting of concessions for supplying water. The State is also continuing to liquidate certain enterprises. The import monopoly of the Burkina Hydrocarbons Company (SONABHY) for supplying Burkina Faso in hydrocarbons (excluding lubricants) still applies. In 2003, Burkina Faso adopted a new Government Procurement Code in order to strengthen the provisions on transparency. An open invitation to tender is the most generally utilized form of awarding contracts for government procurement. A preferential margin of 10per cent of the amount of the bids is given to enterprises established under Burkina law and this margin is 15per cent if the bid comprises at least 20per cent of Burkina value added. The regime of the African Intellectual Property Organization (OAPI) has also been updated in order to harmonize it with the requirements of the TRIPS Agreement. Burkina Faso ratified the 1999 revision of the Bangui Agreement on 8June 2001. It has also revised its copyright and related rights regime, even though the authorities indicate that there are problems in defending rights. The State lacks the resources to promote awareness among the population and the human and financial resources to prevent the sale of pirated works. Burkina Faso is a member of only a few treaties administered by the WIPO and, since the first review, has ratified only those on copyright, performances and phonograms (in 2002). Sectoral policy developments Since the first review of its trade policy, Burkina Faso has continued to reform the agricultural sector within the framework of the Agricultural Structural Adjustment Programme (PASA), launched in 1992, through tariff liberalization and State withdrawal from production and distribution. The State is currently focusing on support for producers, organized in the form of cooperatives, for example by developing of infrastructure in rural areas, providing training programmes and expanding financial services (banks, decentralized financing systems, loans for projects). The introduction of the WAEMUs CET has significantly lowered the simple average of duties and taxes applicable to agricultural products, which has fallen from 31.6 in 1997 to 17.6per cent. Cotton fibre, 97per cent of which is exported and has therefore undergoes little processing in Burkina Faso, is still of vital importance for rural areas and for the manufacturing sector (cotton ginning being the major manufacturing activity). The Textile Fibres Company (SOFITEX), 25per cent of which is owned by the State (to be privatized in the long term), remains the leading operator in the subsector because of its monopoly on the collection of seed cotton in the cotton-growing areas where it is established (west and south-west), and of the initial processing of cotton, including ginning (12plants), as well as the marketing of cotton fibre. As part of the reform of this subsector, producers have been given a role as co-managers (with the State taking a secondary role) and the reform has also sought to guarantee them higher incomes and to introduce a support fund for periods when the selling price of cotton fibre on the global market does not cover the cost of production; the price guaranteed to producers prior to the season depends on previous trends in global prices and the performance of SOFITEX. Another aim of the reform is to open up new cotton-growing regions in the centre and the east (20per cent of production of seed cotton) to allow the entry of new operators able to provide cotton producers with support, as SOFITEX did in the past; this should be achieved in the near future. Industrial production of gold ceased in Burkina Faso in 2000, and the authorities have revised the regulatory framework in order to make it more attractive and to promote mining prospection. In 2000, it was decided to speed up reform of the electricity sector; the price per KWh has not changed since 1994. The main measures decided after the first review of Burkina Faso were to revise the relevant legislation, open up the capital of the Burkina National Electricity Company (SONABEL) to private interests in 2004, to put in place the interconnection with Ghana in 2012 and with Cte dIvoire (already existing), and to extend this line up to the capital in order to obtain supplies at lower cost. The major development in the manufacturing sector since 1998 has been the progress made by the State in its programme to sell its holdings, which should eventually also include cotton ginning, still a monopoly of the SOFITEX. Tariff protection has been lowered since the first review, but there are still reference values for a certain number of products and significant escalation of the customs tariff in favour of finished goods. The competitiveness of Burkina Fasos products on both domestic and foreign markets is still hampered by the high price of energy, transport and telecommunications, and the high cost of inputs, which are mostly imported. This was already noted at the time of the first review and the situation remains unchanged. It explains the continued protection granted to the sector by the State through various tariff and non-tariff measures. Consequently, although several incentives are available to investors, there is still a low level of investment in the industrial sector (with the exception of bakeries). Telecommunications is another sector in which there has been reform, although it is not included in the GATS (Burkina Faso only made commitments on tourism services). The Telecommunications Code was adopted in 1998 and determines the conditions for obtaining licences and the responsibilities for regulating the sector. The opening up of the capital of the traditional operator, the National Telecommunications Board (ONATEL), is included in the 2004 privatization programme. This company would retain its monopoly on infrastructure and basic services until the end of 2005. Three GSM mobile telephony licences were granted in 2000. The availability of financial services remains one of the most significant obstacles to Burkina Fasos economic development because the focus in the banking sector is on the SOFITEX, formal industrial activities and import-export, neglecting the needs of SMEs and farmers. Since 1998, there has been strong expansion of microfinance in Burkina Faso, mainly through mutual funds or savings and loan cooperatives or decentralized financing schemes (SFDs), and institutions financed by NGOs or by the State. Like all banking institutions, they are subject to the relevant regulations of the WAEMU. outlook The liberalization of foreign trade, structural reform and the intensified efforts made to achieve macroeconomic stabilization have helped to enhance the economic environment in Burkina Faso and have led to more positive economic performance than that recorded at the time of the first review in 1998. However, this is chiefly due to favourable rainfall during the last two agricultural seasons. Recent reforms in the water, electricity and telecommunications sectors and the progress made in the privatization programme have not yet boosted activity in the industrial sector. The structure of exports still focuses essentially on cotton, with low value added and revenue depending on trends in global prices as well as the euro exchange rate. Completing the reforms under way, streamlining the regulatory framework for private activity and improving the management of government finance are still the authorities priorities for action. As an LDC, Burkina Faso receives substantial technical and financial assistance from its development partners. It has also benefited from considerable assistance from the ϲʹ since the first review, although this has not always resulted in a satisfactory level of participation in the multilateral system. It is planned to increase aid under PhaseII of the JITAP and the authorities also hope to benefit from the pilot programme of the Integrated Framework. The negotiations on cotton under the Doha Agenda could make a major contribution to the efforts of cotton-producing LDCs, including Burkina Faso. Nevertheless, the benefits which Burkina Faso could derive from access to markets at both the regional and multilateral level will not be fully realized until its economy is able to respond competitively to external demand. 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