ChadWT/TPR/S/174
Page 1

III.aNALYSIS OF TRADE POLICIES AND PRACTICES BY MEASURE

(1)Introduction

  1. Chad's trade policies and practices are largely determined by its membership of the Central African Economic and Monetary Community (CAEMC), although not all Community provisions have so far been transposed into the national legislation. The customs tariff, based on the CAEMC Common External Tariff (CET), is the main instrument of trade policy and one of the country's chief sources of revenue. Only 15.4 per cent of tariff lines have been bound at the ceiling rate of 80 or 75per cent.
  2. The applied rates of the Chad tariff are on average 18.4 per cent, rising to 30per cent on most consumer products. The rates are higher for agricultural products (23.2 per cent on average) than for manufactured products (18.1 per cent) and for the extractive industries (11.4 per cent). Moreover, imports are subject to a whole range of other duties and taxes, despite their being bound at zero by Chad.
  3. In general, customs procedures lack transparency, and the transit procedures for goods bound for Chad are lengthy and expensive, which adds to import costs and encourages informal trade. Chad maintains minimum values for a wide variety of imports. Few technical regulations or sanitary or phytosanitary measures are applied at importation, and the legislation makes no provision for emergency measures.
  4. The CAEMC free trade area is slow in taking shape: the barriers still in place are not conducive to intra-regional trade. Moreover, the range of exit duties and taxes applied by Chad is making the country's products less competitive and discouraging exports.
  5. Since 1992, important reforms have been successfully introduced to privatize, restructure or wind up State-owned enterprises and cut back the role of the State in production and trade. However, several services activities, in areas such as energy and communications, are still the subject of monopolies with regulated prices. A new law on government procurement came into force in 2003. The revision of the Bangui Agreement heralded the modernization of Chad's intellectual property legislation. The implementation of the provisions of the revised Agreement remains a challenge for the country.

(2)Measures Directly Affecting Imports

(i)Trader registration

  1. Enterprises that engage in trade must be registered under a 1984 ordinance the provisions of which have not been harmonized with those of the Uniform Act of the OHADA Treaty (ChapterII(3)). This ordinance classifies traders in five categories: namely, category A (suppliers); category B (wholesale importers/exporters); category C (wholesalers); category D (semi-wholesalers); and category E (retailers).[1]
  2. The ordinance also stipulates that any natural or legal person, whether Chadian or foreign, wishing to engage in a commercial activity, must satisfy the following requirements: obtain an administrative authorization (renewable every five years), issued by the Ministry of Commerce and Handicrafts, for a fee that varies from CFAF 20,000for retailers to CFAF 250,000 for the import-export trade; deposit and register the articles of association with the Service de l'enregistrement, des domaines et du timbre (Registration, Public Property and Stamps Service); make a payment of 3 per cent of the declared capital, plus CFAF 1,000per page of articles; open a bank account; enrol in the Commercial and Mortgage Register; publish a legal notice; inform the Directorate-General of Taxes and Registrations; enrol in the employers' register at the National Office for the Promotion of Employment and with the National Social Security Fund (employees and employers); and obtain an alien's card.
  3. Once these requirements have been met, the foreign trader must, within a period of onemonth, prepare a dossier with a view to obtaining a card of the kind issued to aliens engaged in a trade, industry or craft.[2] Foreign trader cards are issued automatically to nationals of countries with which Chad has signed "establishment agreements", including France. In the case of other foreigners, issuance is subject to a preliminary character report. The dossier is submitted to an ad hoc commission. A foreign trader card costs CFAF 114,000 and must be renewed every year at a cost of CFAF 85,000. According to the authorities, there is no commercial activity reserved exclusively for nationals.

(ii)Customs procedures

  1. Since 2003, imports from non-CAEMC countries with an f.o.b. value exceeding CFAF2million (€3,048), with the exception of exempt goods[3], must undergo preshipment inspection for quality/quantity control and customs value determination purposes. The inspection is carried out by Bureau Veritas BIVAC BV (BIVAC), whose charges, payable by the importer, amount to 0.90 per cent of the f.o.b. value of the goods.[4] The importer must go to BIVAC with his invoice to pay the charges and make a preliminary import application. Preshipment inspection involves both a physical examination and a price comparison. BIVAC will then issue a verification certificate.[5]
  2. The customs legislation in force in Chad is the CAEMC Customs Code. This is administered by the Directorate-General of Customs, which is part of the Ministry of Finance. It also governs transit within the Community. These provisions are of special importance for Chad because of its land-locked situation. In order for goods bound for Chad to transit through other CAEMC countries, a transit bond-note must be made out and security equivalent to the amount of duties and taxes must be lodged at the port of unloading. A claim for repayment of the security can be made once evidence of the goods having actually left the transit territory has been provided. In practice, repayment may take much longer than that. The slowness of port operations and customs procedures and the double clearance of the goods within the Community to which this may lead result in increased import costs.
  3. The CAEMCmembers are currently considering the possibility of establishing a single entry system under which products in transit within the Community and bound for another CAEMC market would be subject to customs duty only at the first point of entry into CAEMC territory. The main obstacles include the difficulty in determining how to share out the customs revenue among the member countries.
  4. For all imports a "detailed declaration" must be lodged, together with the manifest, invoices and other transport documents. Certificates may be required for products such as food, medicines, and other controlled products (Section (v) below). The declaration must include all the information needed to establish the customs value, such as the classification of the goods, their origin, and the customs procedure requested. The principal customs procedures in Chad are release into free circulation, the suspensive regime and the exemption regime.
  5. The formalities are generally completed by customs brokers (forwarders), but the use of their services is not mandatory. The profession of customs broker is harmonized and regulated at CAEMC member country level. The status of approved customs broker is granted to applicant enterprises by decision of the CAEMC Council of Ministers, at the proposal of the Executive Secretary of CAEMC, following consultation of an Inter-State Committee.[6]
  6. Declarations are lodged with the customs office for registration. At present, only four customs offices in N'Djamena are computerized, enabling declarations to be lodged electronically. The customs authorities have at their disposal the ++ version of the ASYCUDA (Automated Customs System) programme installed by UNCTAD in 2001.[7] Currently, however, only a few of its functions are actually being used by Customs. For lack of cabling, Customs is not in a position to circulate the data among its different services.[8] All the goods declared are inspected. In this connection, the IMF has recommended a reform of the inspection process to enable goods to be selected with a view to reducing the number of physical examinations, so far lengthy and expensive, by at least 50per cent.[9] The authorities are currently considering the advisability of introducing a system of selective controls.
  7. Chad is experiencing difficulties in applying the provisions of the Agreement on Implementation of ArticleVII of the GATT 1994 (the "Customs Valuation Agreement").[10] It still retains minimum values (on a wide range of products), without having entered any reservation under paragraph 2 of Annex III to the Customs Valuation Agreement. According to the authorities, all products are affected by minimum import prices when imported from Nigeria, the United Arab Emirates or Saudi Arabia, including hardware products, cleaning products, textiles and clothing, furniture, tyres, vehicles and spare parts for cars, and machinery.
  8. In the event of decisions of the Customs services being challenged, the CAEMC Customs Code provides for an appeal to the Director-General of Customs. If the latter's decision itself is challenged, the case can be referred to an equi-representational board for arbitration, although no such board exists in practice. If the declarant is not satisfied, he can,in theory, bring the dispute before the CAEMC Council of Ministers. In practice, there does not appear to be any functional appeals body for settling customs disputes.
  9. In general, Chad is facing considerable challenges in the area of customs. According to the IMF, Chad's customs offices are operating "autonomously on the informal trade model".[11] The inadequate training and low level of remuneration of customs officers is a major problem. In 2004, more than 1,300 customs officers spread over 50 customs posts were checking about 40,000declarations a year, that is to say, just over half a declaration per customs officer per week.[12] As a result, goods are taking a long time to be cleared.
  10. In 2003, the customs administration participated in the preparation of an action plan intended to reform customs procedures, and in particular: to speed up clearance operations; to improve every aspect of enforcement; and to reorganize human resources.[13] However, since then little has changed. An effective reform of the customs administration is needed to facilitate trade while moderating the possible effects of liberalization on government revenues. This reform should simplify customs procedures in order to reduce delays and costs.

(iii)Taxes collected by Customs

  1. Chad lacks an up-to-date published version of its tariff. Every year, the finance laws add or eliminate relevant provisions, but these are not incorporated in the published tariff, the latest version of which dates from 2001.
  2. Goods imported for release into free circulation are subject to the following entry duties and taxes: import duty (DDI); statistical tax (RS); Community integration tax (TCI); Community preference tax (TCP); Community integration contribution (CCI); the tax on behalf of the Rural Intervention Fund (FIR); and preshipment inspection charges (Section (i) above). The tax base is always the c.i.f. import value. Excise duty is levied by Customs on the basis of the c.i.f. value plus entry duties and taxes. In addition to the entry duties and taxes, the tax base for VAT on imports also includes excise duty. Internal taxes are levied on the "ex-works" value of local products. Altogether, the levies on imports of some products (vehicles, for example) can add up to more than 60 per cent.[14]
  3. The duties and taxes levied on imports represent about 1.3 per cent of GDP, 30per cent of tax revenues (Table III.1), and about 7 per cent of the value of imports. Their vast number and cumulative impact are such as to encourage tax evasion.

Table III.1

Duties and taxes, 1995-2005

(CFAF million)

1995 / 2000 / 2001 / 2002 / 2003 / 2004 / 2005
GDP (at current prices) / .. / 986,000 / 1,253,000 / 1,385,000 / 1,582,422 / 2,332,367 / 3,104,242
Total revenue and grants / .. / .. / .. / .. / 256,629 / 344,644 / 387,393
Total revenue / .. / .. / .. / .. / 129,606 / 217,527 / 277,162
Non-petroleum revenue / .. / .. / .. / .. / 122,506 / 147,698 / 159,689
Tax receipts / .. / .. / .. / .. / 111,178 / 119,315 / 133,359
Income and property taxes / .. / .. / .. / .. / 56,197 / 56,830 / 62,545
Internal taxes on goods and services / .. / .. / .. / .. / 21,290 / 25,939 / 26,882
Taxes on international trade / .. / .. / .. / .. / 33,225 / 35,039 / 42,803
Imports / 11,576 / 25,797 / 27,960 / 35,722 / 32,429 / 35,061 / 42,000
Customs duties / 5,601 / 8,550 / 10,151 / 12,850 / 13,118 / 14,091 / 17,982
Temporary supplementary tax / .. / 111 / 109 / 79 / 0 / 0 / 0
Temporary surtax / .. / 14 / 10 / 0 / 0 / 0 / 0
Table III.1 (cont'd)
Statistical tax (imports) / 852 / 2,439 / 2,142 / 2,803 / 2,930 / 2,524 / 3,327
Excise duties / 292 / 764 / 816 / 831 / 1,006 / 1,146 / 1,249
VAT / 4,269 / 10,209 / 13,147 / 16,747 / 16,451 / 18,415 / 24,097
TCA / .. / 531 / 509 / 0 / 0 / 0 / 0
Advance payments on tax / .. / 3,126 / 1,734 / 1,862 / .. / .. / ..
Community preference tax / .. / 54 / 43 / 70 / .. / .. / ..
Community integration tax / .. / .. / .. / 480 / 737 / 819 / 1,098
Exports / .. / 1,501 / 1,308 / 2,285 / .. / .. / ..
Export duties / .. / 1,501 / 1,308 / 1,437 / .. / .. / ..
Statistical tax on exports / .. / .. / .. / 848 / .. / .. / ..
Other / .. / 315 / 473 / 398 / .. / .. / ..
Research tax / .. / 3 / 10 / 5 / .. / .. / ..
Inspection and packaging tax / .. / 2 / 9 / 2 / .. / .. / ..
Fund transfer commission / .. / 190 / 234 / 66 / .. / .. / ..
Other duties and taxes / .. / 38 / 137 / 85 / .. / .. / ..
Penalties / .. / 37 / 33 / 151 / .. / .. / ..
Refundable jobs / .. / 8 / 3 / 4 / .. / .. / ..
Warehouse charges / .. / 23 / 17 / 8 / .. / .. / ..
Rural intervention fund / .. / 15 / 31 / 31 / .. / .. / ..
Chad national pension fund / .. / .. / .. / 46 / .. / .. / ..
Other tax receipts / .. / .. / .. / .. / 466 / 1,507 / 1,129
Non-tax receipts / .. / .. / .. / .. / 11,328 / 28,383 / 26,330
Petroleum revenue / .. / .. / .. / .. / 7,100 / 69,829 / 117,473
Royalties / .. / .. / .. / .. / 7,100 / 69,829 / 104,122
Taxes / .. / .. / .. / .. / 0 / 0 / 13,351
Total grants / .. / .. / .. / .. / 127,023 / 127,117 / 110,231
Memorandum item:
Merchandise imports / 138.0 / 170.4 / 377.8 / 1,033.4 / 452.8 / 453.9 / 449.4

..Not available.

Source:Ministry of Finance, Studies and Forecasts Directorate, Table of State Financial Operations; and Directorate-General of Customs.

  1. Advance corporation tax (IS) or personal income tax (IRPP) is also collected at the customs cordon, at the rate of 4 per cent of the customs value of the imports. Enterprises which pay corporation tax or industrial and commercial profits tax can obtain, for each release and subject to a review of their tax situation, a certificate exempting them from this deduction issued by the Directorate-General of Taxes.[15]
(a)Most-favoured-nation (MFN) tariff
  1. Since the tax and customs reform of 1993, Chad has, in principle, been applying the CEMAC/CACEU acts relating to the Common External Tariff (CET). The CET is entirely advalorem and consists of five rates: a zero rate on certain cultural products and aviation-related products[16]; 5 per cent, applicable to essentials; 10 per cent, applicable to raw materials and capital goods; 20 per cent, applicable to intermediate goods; and 30per cent on wage goods.
  2. The version of the CET applied by Chad (import duty (DDI)) has 5,688HS 2002 8-digit lines. As in the CET, all the rates are ad valorem (zero, 5, 10, 20 and 30 per cent). However, with respect to 23 tariff headings the DDI is higher or lower than the CET (Table III.2).

Table III.2

DDI and CET, 2006

(Percentage)

HS Code / Description / DDI / CET
17 lines for which the DDI is higher than the CAEMC CET
22042919 / Wines other than those of subheading 220421, in containers holding more than 20 litres / 30 / 20
48025700 / Paper and paperboard, not containing fibres obtained by a mechanical or chemico-mechanical process, weighing 40 g/m² or more but not more than 150 g / 10 / 5
48025800 / Paper and paperboard, not containing fibres obtained by a mechanical or chemico-mechanical process, weighing more than 150 g/m² / 10 / 5
48026900 / Other paper and paperboard, of which more than 10 per cent by weight of the total fibre content consists of fibres obtained by a mechanical or chemico-mechanical process / 10 / 5
59113100 / Textile fabrics and felts, endless, weighing less than 650 g/m2 / 10 / 5
59113200 / Textile fabrics and felts, endless, weighing 650 g/m2 or more / 10 / 5
60052100 / Knitted or crocheted fabrics, of cotton, bleached or unbleached, other than of headings 6001 to 6004 / 20 / 10
60053100 / Knitted or crocheted fabrics, of synthetic fibres, bleached or unbleached, other than of headings 6001 to 6004 / 20 / 10
60054100 / Knitted or crocheted fabrics, of artificial fibres, bleached or unbleached, other than of headings 6001 to 6004 / 20 / 10
74082900 / Wire of other copper alloys / 10 / 5
83071000 / Flexible tubing, of iron or steel and fittings / 20 / 10
83079000 / Flexible tubing, of other base metal / 20 / 10
84512100 / Drying machines, of a capacity not exceeding 10 kg / 20 / 10
84631000 / Draw-benches for bars, tubes, profiles, wire or the like / 20 / 10
87042200 / Utility vehicles, diesel, g.v.w. exceeding 5 tonnes but not exceeding 20 tonnes / 20 / 10
87043200 / Utility vehicles, petrol, g.v.w. exceeding 5 tonnes / 20 / 10
94021020 / Chairs for hair-dressing salons and similar chairs and their parts / 30 / 10
6 lines for which the DDI is lower than the CAEMC CET
10089010 / Other seed cereals / 5 / 30
11010010 / Wheat flour / 5 / 30
29372300 / Oestrogens and progesterones / 5 / 10
35052010 / Glues based on starches, for industrial uses / 5 / 10
48025400 / Other paper and paperboard / 5 / 10
85069000 / Parts of primary cells and primary batteries / 10 / 20

Source:Information supplied by the Chadian authorities; and IZF information online. Consulted at:

  1. The simple average DDI is 18.4 per cent (TableIII.3). The coefficient of variation of 0.52 indicates a moderate dispersion of the rates of DDI. Agricultural products (WTO definition) are subject to heavier taxation (simple average 22.8per cent) than non-agricultural products (simple average 17.6 per cent). Under the ISIC (Rev. 2) definition, agriculture remains the most protected sector (with an average tariff of 23.2 per cent), followed by manufacturing (18.1 per cent) and mining (11.4per cent). The highest rates of DDI are applied to products such as refined cane or beet sugar, live animals, dairy products, coffee, tea, cocoa, fruit and vegetables, beverages and spirits, fish and fishery products (Table III.4).

Table III.3

Structure of MFN duties, 2006

DDI / Uruguay Round
1 / Tariff lines bound (as a percentage of all tariff lines) / 15.4 / 15.4
2 / Tariff lines eligible for duty-free entry (as a percentage of all tariff lines) / 0.6 / 0.0
3 / Duties other than ad valorem (as a percentage of all tariff lines) / 0.0 / 0.0
4 / Tariff quotas (as a percentage of all tariff lines) / 0.0 / 0.0
5 / Simple average rate / 18.4 / 79.9
Agricultural products (WTO definition)a / 22.8 / 80.0
Non-agricultural products (WTO definition)b / 17.6 / 75.7
Agriculture, hunting and forestry (ISIC 1) / 23.2 / 80.0
Mining and quarrying (ISIC 2) / 11.4 / n.a.
Manufacturing industries (ISIC 3) / 18.1 / 79.8
Table III.3 (cont'd)
6 / National tariff peaks (as a percentage of all tariff lines)c / 0.0 / 0.0
7 / International tariff peaks (as a percentage of all tariff lines)d / 49.6 / 100.0
8 / Global standard deviation of rates applied / 9.6 / 0.7
9 / Nuisance duties (as a percentage of all tariff lines)e / 0.0 / 0.0

n.a.Not applicable.

aWTO Agreement on Agriculture.

bExcludes petroleum.

cNational tariff peaks are duties that are higher than three times the simple average of the rates applied (indicator6).

dInternational tariff peaks are duties that exceed 15 per cent.

eNuisance duties are rates that are not zero but less than or equal to 2 per cent.

Source: WTO Secretariat calculations based on data provided by the Chadian authorities.

Table III.4

Summary analysis of MFN tariff, 2006

Product description / Number
of
linesa / Simple average rate (per cent) / Range
(per cent) / CVa / Imports 2005 (US$ million)
DDIb / DTIc / DDI / DTI / DDI / DTI
Total / 5,689 / 18.4 / 21.6 / 0-30 / 3-37.4 / 0.5 / 0.5 / 301.9
By WTO categoryd
Agriculture / 854 / 22.8 / 26.7 / 5-30 / 8-37.4 / 0.4 / 0.4 / 30.3
Animals and products of animal origin / 103 / 21.9 / 27.1 / 5-30 / 10.4-35.4 / 0.3 / 0.2 / 1.6
Dairy products / 28 / 26.4 / 32.7 / 10-30 / 13.4-37.4 / 0.2 / 0.2 / 0.5
Coffee and tea, cocoa, sugar, etc. / 202 / 26.0 / 29.9 / 5-30 / 8-35 / 0.3 / 0.3 / 16.0
Cut flowers, plants / 40 / 10.0 / 13.2 / 5-30 / 8-33 / 0.5 / 0.4 / 0.3
Fruit and vegetables / 173 / 29.7 / 34.1 / 5-30 / 10-35 / 0.1 / 0.1 / 2.5
Cereals / 27 / 14.3 / 17.3 / 5-30 / 8-33 / 0.7 / 0.6 / 3.0
Oilseeds, oils and fats / 73 / 20.8 / 23.8 / 5-30 / 8-33.4 / 0.5 / 0.4 / 2.6
Beverages and spirits / 60 / 29.3 / 32.3 / 5-30 / 8-33 / 0.1 / 0.1 / 3.4
Tobacco / 11 / 20.9 / 23.9 / 10-30 / 13-33 / 0.5 / 0.4 / 0.2
Other agricultural products / 137 / 12.9 / 16.4 / 5-30 / 8-35.4 / 0.6 / 0.5 / 0.2
Non-agricultural products (excluding petroleum) / 4,814 / 17.6 / 20.7 / 0-30 / 3-35.4 / 0.5 / 0.5 / 254.1
Fish and fishery products / 134 / 23.6 / 28.7 / 5-30 / 8-35.4 / 0.2 / 0.2 / 0.2
Mineral products, precious stones and precious metals / 345 / 18.8 / 21.8 / 5-30 / 8-33 / 0.6 / 0.5 / 18.2
Metals / 624 / 16,1 / 19.1 / 10-30 / 8-33 / 0.5 / 0.4 / 24.8
Chemicals and photographic goods / 898 / 11.6 / 14.6 / 5-30 / 8-33 / 0.5 / 0.4 / 33.0
Leather, rubber, footwear and travel goods / 169 / 20.8 / 24.3 / 0-30 / 3-34.4 / 0.5 / 0.4 / 1.9
Wood, wood pulp, paper and furniture / 352 / 21.8 / 24.8 / 0-30 / 3-33 / 0.5 / 0.4 / 4.7
Textiles and clothing / 868 / 22.6 / 25.6 / 0-30 / 3-33.4 / 0.4 / 0.3 / 5.2
Transport equipment / 164 / 15.2 / 18.2 / 0-30 / 3-33 / 0.6 / 0.5 / 14.7
Non-electrical machinery / 552 / 12.3 / 15.3 / 0-30 / 3-33 / 0.5 / 0.4 / 90.1
Electrical machinery / 255 / 16.6 / 19.6 / 10-30 / 13-33 / 0.5 / 0.4 / 47.4
Non-agricultural products n.e.s. / 453 / 22.8 / 25.8 / 0-30 / 3-33.4 / 0.4 / 0.4 / 13.8
By ISIC sectore
Agriculture, hunting, forestry and fishing / 433 / 23.2 / 27.4 / 5-30 / 8-35.4 / 0.4 / 0.4 / 3.9
Quarrying and mining / 109 / 11.4 / 14.4 / 5-30 / 8-33 / 0.4 / 0.4 / 0.4
Manufacturing industries / 5,146 / 18.1 / 21.2 / 0-30 / 3-37.4 / 0.4 / 0.5 / 294.6
By stage of processing
Raw materials / 777 / 19.5 / 23.4 / 5-30 / 8-35.4 / 0.5 / 0.5 / 8.1
Semifinished products / 1,842 / 14.7 / 17.8 / 0-30 / 3-35 / 0.5 / 0.4 / 47.0
Finished products / 3,070 / 20.2 / 23.3 / 0-30 / 3-37.4 / 0.5 / 0.4 / 243.9

aCoefficient of variation.