BurundiWT/TPR/G/113
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World Trade
Organization / RESTRICTED
WT/TPR/G/113
5 March 2003
(03-1169)
Trade Policy Review Body / Original: French
TRADE POLICY REVIEW
BURUNDI
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), the policy statement by the Government of Burundi is attached.

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

BurundiWT/TPR/G/113
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CONTENTS

Page

I.general comments on the main socio-economic indicators5

II.overview of burundi's economy5

III.major reforms of the business environment6

(1)reform of the legal and institutional framework of trade policy6

(2)Economic Liberalization Process6

(3)sectoral reforms7

(i)Banking7

(ii)Insurance7

(iii)Foreign exchange policy7

(iv)Tax and customs reform8

(v)Agriculture9

(vi)Mining and energy sector9

(vii)Telecommunications9

(viii)Transport10

(ix)Postal sector11

(x)Forestry and the environment11

(xi)Tourism11

IV.burundi and bilateral and subregional trade agreements12

V.BURUNDI AND THE WTO Agreements12

(1)Implementation of the Doha Agreement13

(2)Services13

(3)agriculture13

(4)agreement on sanitary and phytosanitary measures14

(5)special and differential treatment14

(6)intellectual property rights14

(7)Integrated Framework for technical assistance15

VI.outlook and orientation15

ANNEX I STRUCTURE OF EXPORTS16

ANNEX II EXPORTS BY DESTINATION16

ANNEX III IMPORTS BY ORIGIN17

ANNEX IV BALANCE-OF-PAYMENTS17

BurundiWT/TPR/G/113
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I.general comments on the main socio-economic indicators

  1. The Government of Burundi has decided to submit its report on trade policy in order to explain its aims and to foster intensive and frank discussions that will reassure all its partners.
  2. The various reforms implemented since 1986 under the Structural Adjustment Programme have yielded extremely encouraging results at the economic level.
  3. In the socio-political sphere, since 1993 there has been a serious crisis that plunged the country into a war that caused considerable human and material damage.
  4. The signature of the Arusha Agreements in August 2000 gave the people of Burundi renewed hope of a return to peace and economic growth.
  5. On the basis of the reforms already put into effect and its people's determination to restore peace, Burundi should soon improve the competitiveness of its economy by developing key sectors deemed priorities, for example, food crops for food security, exports, services and industry.
  6. The Republic of Burundi covers an area of around 27,834 km2 and it has mineral deposits, including nickel, vanadium, cassiterite, colombo-tantalite, gold, iron and nickel-type metals (copper, cobalt), etc. Burundi is in Central Africa and is land-locked, the neighbouring countries being Rwanda to the north, the United Republic of Tanzania to the east and south and the Democratic Republic of the Congo to the west.
  7. In 2000, the population was estimated at 6.8 million, with a population density of 247inhabitants/km2, and the annual rate of population growth is 2 per cent, with life expectancy at birth of 40.6 years.
  8. The major activity is food crops, which include livestock, fisheries and forestry. The agricultural sector accounts for a large share of the GDP and employs 90 per cent of the labour force.
  9. Burundi's economy is mainly based on the export of coffee and tea which, together, account for almost 90 per cent of exports.
  10. In the trade sector, Burundi's geostrategic position should make it a hub for the whole subregion.
  11. The national currency is the Burundi Franc. The major objective of the Government's monetary policy is to control broad monetary growth so as to combat inflation.

II.overview of burundi's economy

  1. The downward trend in exports has continued because of the decrease in coffee prices on the global market. Imports are also decreasing due to the lack of foreign exchange caused by the crisis that has prevailed since 1993.
  2. Coffee is the most important export, followed by tea.
  3. Burundi's major trade partners in order of importance are the European Union, Saudi Arabia, Japan, China, India, Kenya and Zambia.
  4. In the tourism sector, Burundi has several tourist sites.
  5. It has two hotels of international standing in Bujumbura and several other hotels and restaurants in the towns or countryside. In some towns such as Gitega and Ngozi, hotels are being developed and this is an encouraging sign.
  6. The road network is well maintained and it is easy to move between the larger towns.
  7. The fixed and mobile telephone system is well developed throughout Burundi, which facilitates trade.

III.major reforms of the business environment

(1)reform of the legal and institutional framework of trade policy

  1. In order to create an environment favourable to business and attract foreign direct investment, the Government will continue to reform the legal and judicial system.
  2. The business-related legal and judicial framework will be reformed and harmonized by revising or adapting new texts on business law: the Commercial Code, the Code of Obligations and Contracts, the Arbitration Code, the Code of Civil, Commercial and Administrative Procedure, the Investment Code, the General Tax Code, the Customs Code, etc.
  3. All price controls have been abolished and the scope of competition extended.
  4. The Ministry of Trade and Industry continues to ensure that there is fair and transparent competition.
  5. Efforts will continue to be made to restore the principal macroeconomic and financial balances, maintain a sustainable rate of growth, control inflation, and mitigate the impact of poverty.

(2)economic liberalization process

  1. In order to establish an effective and competitive market economy, the Government has taken action to reform its trade policy, further liberalize economic activities, strengthen dialogue and partnership with the private sector through joint management of the economy, and establish a competitive environment in various sectors. As part of the economic liberalization process, action has been taken in the following areas:

-Elimination of non-tariff barriers, particularly the abolition of quantitative import restrictions;

-liberalization of the general price regime, by establishing in particular:

  • freedom to fix prices and trade margins according to market forces;
  • prevention and monitoring of anti-competitive practices;
  • application of measures to ensure fair trade transactions, particularly by eliminating discriminatory sales, refusal to sell, conditional sales and the holding of stocks for speculative purposes;

-revision of the tax and customs regimes in order to bring them into conformity with the legislative programme of the Common Market for Eastern and Southern Africa (COMESA);

-liberalization of the mining sector;

-liberalization of the coffee, tea, cotton sectors, etc;

-privatization of the management of the port and international airport in Bujumbura;

-reduced State involvement in trade-related sectors of the economy.

  1. All of these liberalization measures have led to sectoral reforms in the monetary, tax, customs, foreign exchange, insurance, labour, telecommunications, and transport sectors.

(3)sectoral reforms

(i)Banking

  1. Action has been taken to stabilize and strengthen the banking sector. For this purpose, the State has already drawn up a programme to reduce its holding in the capital of banks and this has been discussed and finalized by the State Enterprises Service, which is responsible for the follow-up. In addition, the requirements for the establishment and operation of banks have been liberalized. A regulatory framework that encourages security and professionalism in the area of microfinance is being prepared.

(ii)Insurance

  1. Pursuant to Decree Law No. 100/120 of 2 November 1982, the State abolished the monopoly for all insurance transactions previously given to the Burundi Insurance Company (SOCABU).
  2. Burundi's insurance sector comprises seven insurance companies, two of a social character and five other commercial companies. The two social insurance companies are 100 per cent State-owned and four of the five commercial insurance companies are wholly private. The fifth is a semi-public company that is currently being privatized. In 1995, Burundi acceded to the Multilateral Investment Guarantee Agency (MIGA) and in 2000 to the African Trade Insurance Agency (ATIA), which insure foreign direct investment and trade transactions respectively against political risks. Burundi is also a member of the COMESA's PTA-Reinsurance Company (ZEP-RE).
  3. A programme to reform the insurance sector is under way. The 1997 legislation has been updated and adopted by the National Assembly and the Senate. An Insurance Regulation and Control Agency will be set up during 2003.

(iii)Foreign exchange policy

  1. Since the unification of the official exchange market in June 2000, the Bank of the Republic of Burundi has allocated foreign exchange on an ad hoc basis through currency auctions. As resources available were not sufficient to meet demand, the Central Bank had to impose administrative measures temporarily in order to attenuate the pressure on exchange rates.
  2. On 2 January 2003, amended regulations for the currency auctions came into effect.
  3. The aim of these amendments is to make the mechanism more flexible and the market more competitive, the ultimate objective being to bring about convergence between the official and parallel exchange rates. The new regulations on currency auctions also set out the requirements for access to foreign exchange bureaux.

(iv)Tax and customs reform

  1. Regarding taxes, the Tax Department is designed to meet a number of needs:

-Broadening the tax base by trying to identify and register all taxpayers and thus tax the population as a whole, not only in order to strengthen the economy but also for reasons of fairness and social justice;

-the establishment of tax bureaux or authorized taxation centres, which act as an intermediary between the taxpayer and the tax administration so that tax declarations are not completed by the taxpayers themselves;

-the establishment of a code of tax procedure, a tax legislation service, taxation principles and case-law, and the training of judges specializing in tax matters.

  1. In 2003, several reforms are planned both as regards structures and procedures.
  2. As far as structures are concerned, the Tax Department in the Ministry of Finance, with the support of the IMF consultant, has recently set up a Large Enterprises Division to collect the income tax and other taxes payable by large enterprises.
  3. The enterprises in question are those whose turnover exceeds FBu100 million and enterprises in certain sectors such as petroleum, coffee, etc.
  4. As regards procedures, the measures planned include the imposition of VAT, the establishment of a single tax number in order to control the tax base, taxation in areas not hitherto taxed, immediate taxation of property capital gains, revision of some provisions of the tax law in order to make them easier to understand, the preparation of a tax procedures guide, improved procedures both as regards the tax base, control and payment, for example, by abolishing assessment notices (avertissement extrait de rôle) and replacing them by tax enforcement notices (avis de mise en recouvrement). Measures for the payment of taxes will be introduced in order to diffuse the voluntary payment procedure, simplify payment through banks, create a registration card, introduce desk inspection, including formal inspection and inspection of documents before controlling the taxpayer, computerizing procedures by choosing equipment and software and developing applications.
  5. In the customs sector,the reforms being implemented are aimed at enhancing the efficiencyof the customs administration and increasing its productivity. For this purpose, Burundi plans to lower the rates of import duty to four rates (10, 12, 15 and 40), adopt the common tariff nomenclature of the COMESA based on the 1996 HS version and generalized preferences for all products imported from COMESA member countries (reduction of 80 per cent and 100 per cent respectively for the 2003 and 2004 financial years). Other measures will also be taken, among the most important of which are the elimination of the 100per cent customs tariff on luxury products and its replacement by more modest rates and the capping of import duties at 40per cent, limiting the average time taken for customs procedures (from entry to issue of the authorization to remove the goods) to 48 hours, upgrading from version 2.7 of the ASYCUDA to ASYCUDA++, and revision of the customs tariff taking into account developments in negotiations on the common external tariff within the COMESA free-trade zone.

(v)Agriculture

  1. Burundi's economy is highly dependent on agriculture which, alone, is the major source of income for 90 per cent of the population. It provides 95 per cent of food and over 90 per cent of foreign exchange earnings. Consequently, the agricultural sector has always been and remains the guarantee of food security, the backbone of the economy and the catalyst for growth in other sectors in Burundi. The agricultural sector is composed of three subsectors: food crops, livestock, and agro-industry.
  2. In its efforts to boost the economy, the Government's major objective is to enhance the productivity and profitability of the agricultural sector so as to move from subsistence agriculture to market-oriented agriculture.
  3. With a view to increasing the production of food crops and ensuring food security for all, Burundi will rely on the development of agricultural research, training, increased use of agricultural inputs, promoting the processing and conservation of agricultural products.
  4. Measures to develop the livestock subsector include the replacement of livestock and the initiation of a programme to integrate stock breeding and forestry into agriculture, while at the same time boosting fishing and aquaculture.
  5. In order to reduce rural poverty, it is essential to undertake properly prepared activities to give renewed impetus to the production support structures, assist those working in the agricultural sector to obtain financing, notably by means of rational policies on access to credit, and to promote and diversify cash crops (traditional and non-traditional exportable crops, wheat, maize, sunflower, etc.).

(vi)Mining and energy

  1. This sector is vital to Burundi's economy. Government investment programmes have always given priority to the energy subsector for the building of hydroelectric power stations, with adequate supplies of water, and for electrification by installing power lines.
  2. With regard to mining and quarrying, geological and mining surveys are carried out by the specialized services of the Directorate General of Geology and Mining.
  3. In order to promote commercial activities in the water and energy subsectors, under Law No.1/014 of 11 August 2000, the Government took important measures to liberalize the public supply of drinking water and electricity by involving the private sector in the management and financing of some of Regideso's activities.
  4. To make the sector more attractive, the Government is considering important reforms such as revising the Mining and Petroleum Code, and drafting a policy to involve grassroots communities and the private sector in the marketing, installation and maintenance of equipment.

(vii)Telecommunications

  1. In view of the importance of this sector, the Government is fully committed to using new information and communications technologies in general and introducing the Internet in order to enhance the information capacity of commercial and financial structures both in the national and international context.
  2. The increase in the number of cybercafés and the remarkable rise in the number of mobile telephone subscribers are a reflection of the growing dynamism of this sector.
  3. The aim of the telecommunications reforms under consideration is to support new information and communications technologies so as to give social, economic and administrative sectors an indispensable tool for economic and social development.
  4. In the telecommunications sector, an independent regulatory authority, the Telecommunications Regulation and Control Agency (ARCT) has been established for the purpose of granting licences. The ARCT conducts a technical and financial analysis of the applications made by economic operators wishing to engage in activities in this sector and recommends to the Government that an operator that meets the required criteria be given a licence.

(viii)Transport

  1. In order to foster the development of a service of quality, international goods transport is carried out by both domestic and foreign private operators.
  2. The passenger transport subsector is operated by private entities and the Public Transport Board (OTRACO) so as to ensure better dispersion of transport services around the country to meet the needs of the economy. OTRACO regulates urban fares.
  3. Transport services were liberalized in 1989 as part of the Structural Adjustment Programme (SAP). Domestic goods transport is operated solely by private entities and has been fully liberalized.
  4. On the lakes, goods are transported on Lake Tanganyika from the lakeside ports, namely, Kigoma in the United Republic of Tanzania, Mpulungu in Zambia, Kalemia in the Democratic Republic of the Congo. The vessels are wholly owned by private entities which, grouped together in an association, fix the rates for transport. In order to facilitate transport on Lake Tanganyika, assist the building of new vessels and repairs in dry docks, a project to build a shipyard has been adopted under the New Partnership for African Development (NEPAD).
  5. With regard to the airports subsector, air transport is the safest and most rapid way of opening up Burundi. Perishable goods can only be exported and imported by air. The Government is considering the installation of an adequate infrastructure for the conservation and transport of perishable goods. The national airline "Air Burundi" is at present identifying the foreign airlines with which it intends to enter into strategic alliances in order to resolve the problems of transporting imports and exports.
  6. As far as rail transport is concerned, a study is under way for the building of a Great Lakes railway to link Southern and Eastern Africa. This project is part of the regional integration framework under the COMESA.
  7. Likewise, the Subregional Development Centre for East Africa, based in Kigali, is holding consultations on the establishment of a master plan for transport. This plan gives priority to maintaining the transport infrastructure (roads, railways) and the rapid transport of goods along various corridors (northern, central and southern).
  8. Subregional transport organizations such as the coordinating authority for transit traffic through the northern corridor, hold regular meetings with a view to the definitive elimination of tariff and non-tariff barriers so as to facilitate the rapid circulation of goods.

(ix)Postal sector

  1. The Ministry of Transport, Post and Telecommunications is drafting a policy to rehabilitate the postal sector for consideration by the Council of Ministers in February 2003 before being implemented.
  2. Post offices in Bujumbura will be computerized at the beginning of 2003.
  3. The National Postal Authority (RNP) will become a Board in order to improve its management and serve clients better.

(x)Forestry and the environment

  1. Integrating issues relating to national resource management and the conservation of ecological balances into development is a new and essential dimension of any action to be undertaken.
  1. In developing countries, warnings have already been given regarding soil degradation, water pollution, deforestation, the deterioration of ecosystems and the population's living standards.
  2. In Burundi, government authorities have only very recently recognized the need to integrate the "environmental" dimension in planning and development schemes.
  3. The creation of the Ministry of Land Use Planning, Environment and Tourism in October1998 was the practical expression of this political determination to institutionalize the rational management of natural resources and the environment.
  4. The bases of an environmental policy must be perceived in terms of preserving production potential and maintaining the environmental balance.