WORLD TRADE
ORGANIZATIONWT/TPR/M/79
3 April 2001
(01-1679)
Trade Policy Review Body
24 and 26 January 2001
TRADE POLICY REVIEW
MOZAMBIQUE
Minutes of Meeting
Chaired initially by H.E. Mr. Milan Hovorka (Czech Republic), and subsequently
by Mr. C. Boonekamp
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF MOZAMBIQUE 4III. STATEMENT BY THE DISCUSSANT 9IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 12V. REPLIES FROM THE REPRESENTATIVE OF MOZAMBIQUE AND
ADDITIONAL COMMENTS 16
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 19
ANNEX I ADVANCE WRITTEN QUESTIONS BY MEMBERS 21
ANNEX II WRITTEN RESPONSES BY THE DELEGATION OF MOZAMBIQUE 33WT/TPR/M/79
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The first Trade Policy Review of Mozambique was held on 24 and 26 January 2001.  The
Chairperson, H.E. Mr. Milan Hovorka (Czech Republic), welcomed the delegation of Mozambique,led by the Deputy-Minister of Industry and Trade, H.E. Dr. Salvador Namburete, and introduced the
discussant, Ms. Rikke Eeg-Henriksen (Norway).  He reminded Members that the discussant would
speak in her personal capacity and not as a representative of her country.  In accordance with the
established procedures, the discussant had made available, in advance, an outline of the main issues
she intended to raise.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures for the meeting.  The report by the Government of Mozambique was contained in
document WT/TPR/G/79, and that of the WTO Secretariat in document WT/TPR/S/79;  the main
issues to be raised by the discussant were cont ained in document WT/TPR/D/58.  Copies of advance
written questions submitted by Hong Kong, China;  Japan;  Switzerland;  Canada;  the EU;
Mauritius;  and the United States had been transmitted to the delegation of Mozambique.  These are
reproduced in Annex I.  Responses by the delegation of Mozambique to advance written questionsand other questions raised during the first day of the meeting are reproduced in Annex II.WT/TPR/M/79
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF MOZAMBIQUE
3. The representative of Mozambique welcomed the holding of the first Trade Policy Review of
his country.  He stated that Mozambique was quickly transforming itself into a dynamic, credible, andcustomer friendly country able to provide a wide range of services.  Capitalizing on its strategic
location and supported by its key productive sectors – agriculture, fisheries, manufacturing, tourism,
construction and electricity – Mozambique's economy was thriving.
4. Furthermore, Mozambique had registered g ood economic performance over the last five
years.  Strong fiscal and monetary policies had drastically reduced inflation to just -1.0 and 6.2% in1998 and 1999, respectively.  At the same time, the economy had achieved an average real growth of
10% per year over the period 1995 to 1999.  Over the same period, GDP per capita had increased
significantly, from US$145 to over US$240.  Though poverty remained widespread and average
incomes were still very low, Mozambique could point to an important record of economic
achievements.
5. Mozambique was a relatively small economy.  Its GDP was estimated to have reached about
US$4.2 billion in 1999;  GDP per capita had grow n by about 13.5% per year from 1995 to 1999.  The
rapid economic growth was a necessary condition for poverty eradication in Mozambique.
6. Mozambique's budget deficit was still high (est imated at almost 12% of GDP in 1999), and
had been financed by international aid provided in the form of grants and concessional credits, as well
as external debt and domestic borrowing through government bonds.
7. To support the overall policy changes, a streamlined service-oriented public sector was
essential.  To this end, customs reform, public-sector review, and the operational systems
underpinning these were undergoing changes.  The Government was working to reduce significantly
administrative barriers to trade and to investment.  To kick start the manufacturing and industrial
sectors and to boost exports, an Industrial Free Zone regime had been established.
8. The Government's careful management of fiscal policy had contributed to effective monetary
policy and had created a sound basis for the continuation of a stable macroeconomic and financial
environment.  On the revenue side of the budget, the Government had moved to broaden the tax base
and to boost revenue performance by introducing the value-added tax (VAT) in June 1999, in place of
the sales tax.
9. Major structural reforms had also been pursued.  The country had finalized privatization of all
state companies, and was preparing a strategy to deal with its remaining assets in the productive
sector.  A major civil service reform had also been implemented, including, in April 1999, the
definition of a new career and remuneration programme for government employees.  This programme
was aimed at improving institutional capacities and management of government agencies.  For the
first time, the Government had closed its budget accounts and submitted the records for auditing, for1998.  The accounts were also submitted to Parliament.  These were major steps towards fiscal
efficiency, accountability, and transparency.
10. The banking system had undergone a carefully phased process of liberalization and reform.
In 1991, the banking system comprised three banks, four bureaux de change, and one insurance
company.  Today, 12 commercial banks, one investment bank, four insurance companies, and
33 bureaux de change, were operating in Mozambique.  Moreover, in 1999, the Mozambican Stock
Exchange was created with the objective of establishing a secondary market for securities and stockmarket.WT/TPR/M/79
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11. As a result of its good economic performance, Mozambique had been included in the
Highly Indebted Poor Countries (HIPC) initiative  and was granted some US$3.4 billion in debt relief
in the third quarter of 1999.  In June 2000, Mozambique was included in the enhanced HIPCinitiative.  The expected completion point had been defined as April 2001.
12. Mozambique's export earnings continued to be generated mainly from primary agricultural
products and seafood, including cashew nuts, prawns, cotton, sugar, timber, and citrus.  The country's
major trading partners were South Africa, Portugal, Spain, the United States and Japan.
13. The main imports were consumer goods, intermediate products, and capital goods.  Energy
imports, which included mainly electricity and petroleum products, had ranged between
US$85-90 million a year during 1996-99, and were believed to have increased in 2000 as a
consequence of oil price increases in the international market.
14. To take advantage of the country's economic potential, the Government had identified five
major infrastructure, agriculture, and industry development areas.  These included the Maputo, Beira,
and Nacala development corridors, the Zambeze Valley, and the Lubombo Spatial Development
Initiatives.  To realize the combined potential of those ideally located geographic areas, the
Government had invited serious project development partners.
15. Rehabilitation of existing agriculture-related investments including roads, rail, ports, and
irrigation systems, was a priority for the Government.  The Government expected that this would
facilitate new investments, and provide viable opportunities.
16. A vigorous privatization programme, combined with strong foreign investment, was having
an impact on the manufacturing sector. There was a tremendous need to upgrade old plants, and to
invest in new sectors.  To support this process, generous investment incentives existed, and the
Government had introduced legislation allowing the establishment of free zones for export-oriented
investments.
17. Mozambique's preferential access to major markets in the United States and
the European Union could act as a powerful magnate for many labour-intensive industries.
Manufacturing accounted for approximately 10% of total output, but with the Mozal Aluminum
smelter project coming on line, the contribution of the sector would rise significantly and would lay
the foundation for a massive downstream industry, al tering the structure of the Mozambican economy.
18. The Mozambican Government had identified the following industries for development:
- food processing and agri-industries:  salt, sugar, copra, processed fish, processed
fruits and cashew nuts, milling, sisal, tea, bakery products, pasta, processed meat,
tobacco, animal feed, dairy products, and liqueurs;
- textiles and clothing;
- soaps and oils;
- chemicals;
- metallurgy (downstream of Mozal, and other products);
- metal works (construction materials, heavy equipment, furniture, structures, tools,
and parts);  andWT/TPR/M/79
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- packaging (wooden boxes, glass bottles, corrugated board, flexible packaging).
19. The Government recognized the importance of the tourism sector, given the country's
strategic geographical location (about 2,400 km. of coastline), and the abundance of natural resources.In 1995, the Government approved the National Tourism Policy and established principles for the
development of sustainable tourism through approp riate use of natural resources, and promotion of
employment, small and medium firm economic activities, and of technology transfers from the
international operators to local businesses.
20. The National Tourism Policy considered tourism as a private-sector-driven industry and had
identified four strategic zones along the coast and one at Lake Niassa for development of tourism.
Parks, reserves, and game parks were also designated as strategic zones for development of tourism,
and for promotion of tourism attractiveness and conservation sustainability.  Importantly, the
Government had created the Ministry of Tourism, whose mandate included the management of
wildlife.
21. Mozambique's external trade policies were designed to create an environment conducive to
promoting its products in international markets, especially those of the developed countries of Europe,America, and Asia, without prejudice to the promotion of intra-African trade.  Trade policies were
formulated with a view to speeding up Mozambique's industrialization process and to facilitating
access to foreign markets for Mozambican products.
22. The Government's policy was aimed at promot ing private sector investment through the
following incentives:
- exemption from customs duties and value-added tax on building materials and
equipment necessary to carry out approved investment projects;  raw materials,
intermediate products, and packaging materials for production of export goods,
medicines, educational materials, and foodstuffs;  and
- exemption of industrial free zone enterprises from income taxes on manufacturing
and other industrial free zone activities;  income from sale and rental of Industrial
Free Zone installations, and from supply of services by Industrial Free Zone
Developers, was subject only to 1% fee on gross receipts from the quarterly invoices
for these services from the 7th year onwards after the date of the issuance of the
respective certificate.
23. The investment law guaranteed the protection of property rights and transfer of funds abroad,
according to the conditions set out in the corresponding authorization.  Mozambique was a member of
MIGA, ICSID, and ICC, and enjoyed insurance against non-commercial risks from OPIC.
24. Mozambique had signed bilateral agreements on double taxation with Mauritius and Portugal,
and bilateral agreements on investment protection with South Africa, Mauritius, Portugal, Zimbabwe,Algeria, Italy, Indonesia, the United States, and Egypt.
25. Mozambique was a member of the WTO, the World Bank, the IMF, the Cotonou Agreement,
SADC, and IORARC (Indian Ocean Rim Association For Regional Cooperation).  Other trade
arrangements included:  AGOA, GSP, and the Preferential Trade Agreement with South Africa.
26. Since the Uruguay Round Agreements came into force, Mozambique, like other developing
countries, had been significantly beset by problems arising from the implementation of these
agreements.  Indeed, the Geneva Ministerial Declaration duly recognized the marginalization of theWT/TPR/M/79
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least developed countries and certain small economies.  Therefore, the effective implementation of
Mozambique's WTO commitments continued to be hampered by the lack of adequate financial,
institutional, technological, and technical capacities.
27. The Government of Mozambique called for renewed commitments to technical cooperation,
including adequate provision of resources in the regular budget of the WTO, and other core agencies,
according to their mandates.  Furthermore, the Government emphasized the need for improved
coordination in the delivery of this assistance as an urgent requirement to facilitate effective
participation.  Development perspectives should first and foremost achieve the objectives spelt out inthe Preamble to the Marrakesh Agreement, and should enable the world's people to share fully and
equitably in the achievements of the multilateral trading system.
28. These goals would bring about a sustained rise in the income of Mozambique (as a LDC), and
would offer real prospects for economic growth and poverty eradication in the new millennium.  It
was the belief of the Government that more attention should be devoted to ensuring flexibility to
address the constraints that confronted the country.
29. With regard to mandated negotiations, Mozambique acknowledged the vital roles of the
agriculture and services sectors to its economic growth and development.  The development of the
agriculture sector in Mozambique was crucial to trade growth, employment creation, environment
protection, and social cohesion.  Bearing this in mind, the ongoing reform and liberalization of
international trade in agriculture should lead to improved access to world markets for all of
Mozambique's agricultural exports.
30. It was important to note the tremendous efforts that the Government of Mozambique had been
undertaking in fulfilling its obligations regarding the WTO Agreements, despite limited resources.
Mozambique recognized that the adoption and adjustment of legislation and regulation for a better
implementation of some WTO Agreements had occurred at a slower pace than was desirable, and that
the required notifications of its trade policies had been outstanding for some time.  This situation was,to a large extent, attributable to the lack of ade quate institutional capacity, technical infrastructure,
financial resources, and human capital.  The need for capacity-building programmes was, thus,
reinforced.
31. The Government attached particular importance to achieving tangible results in the
implementation of existing agreements, particularly in the following areas, before any new round ofMultilateral Trade Negotiations could begin:
- improved market access for products originating in developing countries, particularly
for agricultural products, textiles and clothing;
- extension of bound, duty-free and quota-free market access for all products
originating in the LDCs.  This would represent a meaningful political commitment tohelp LDCs address one of the most daunting challenges of the period:  absolute
poverty;
- adoption and implementation of capacity building strategies and programmes aimed
at addressing the inextricable link between increased market access and improved
supply capacity.  The Government believed that the elimination of trade barriers must
be complemented by appropriate measures to help LDCs overcome infrastructure and
institutional weaknesses, and include investment in areas such as health care,education, and other social concerns.  The LDCs needed a WTO that actively
engaged in a real partnership with the United Nations, the Bretton Woods institutions,WT/TPR/M/79
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and other international organizations in the search for, and adoption of, integrated and
effective technical assistance strategies, tailored to the development needs of LDCs,
including appropriate funding mechanisms;
- adoption of a new global partnership that involved advancing sustainable
development strategies that put people at the centre through provision of basic human
development levels for all peoples.  Such a partnership would involve a constructive
dialogue between governments, the private sector, NGOs, and civil society at large,
and ultimately, a partnership that entailed strong support for developing countries andthe LDCs in their efforts to integrate th emselves into the world economy, focused on
the identification of targets and objectives such as poverty eradication, improved
market access, health, education, and food security.  As a LDC, Mozambique
believed in the merits of a new round of trade negotiations that encompassed a
development dimension;
- greater understanding of the need to embrace more creative solutions to debt relief.
While the Government appreciated the HIPC initiative, it emphasized the importanceof improving the implementation mechanisms.  In this regard, Mozambique praised
the efforts undertaken by the G-7 and the Bretton Woods institutions, and urged
developed countries to seize this momentum and to embark on efforts aimed at
matching debt relief with improved market access initiatives.  This was crucial for the
effective mainstreaming of the LDCs in general, and Mozambique in particular, intothe multilateral trading system;  and
- concurrence of the entire WTO membership to renew the waiver granted to ACP-EU
countries in order to allow the continuation of existing trading arrangements until the
end of the preparatory period and beyond, if necessary.  This would help address the
specific trade concerns and needs of 71 developing countries, comprising 48 LDCsand 29 WTO Members.  Mozambique believed that the reasons underlying the
extension of this waiver still prevailed and deserved positive consideration by WTO
Members.
32. The Government believed that progress in the above outlined areas was necessary, and that no
round of multilateral trade negotiations would be necessary if the WTO Members failed to achievesuch progress.
33. He stressed the belief of his Government that trade should not be seen as an end in itself, nor
as the only answer to the challenges that face d today's world.  Investment flows, infrastructure
development, education, training, and skills were critical for developing countries to take advantage
of the opportunities offered by globalization and liberalization.  Mozambique favoured an approachthat included embracing new creative cooperation paradigms so as to turn trade relations into an
important tool in developing countries' endeavours to provide better living standards to their peoples.
34. He touched upon some of the amendments that needed to be inserted in the Secretariat's draft
report.WT/TPR/M/79
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III. STATEMENT BY THE DISCUSSANT
35. The discussant (Ms. Rikke Eeg-Henriksen) noted that Mozambique had seen vast changes
over the past years.  Mozambique's policy objectives had changed as the country had pursueddifferent systems of governance.  Political development and the will to create peace had been
fundamental for the positive developments in Mozambique.
36. Becoming a member of the WTO had underlined  Mozambique's commitment to participate in
the world market.  Unfortunately, joining did not solve all problems, nor did it guarantee against the
elements.  All participants realized and commiserated with the problems caused by the extensiveflooding in Mozambique.  Last year's floods had done serious damage to an already fragile
infrastructure.  Infrastructure was one of the major w eak points in developing trade, both within and
outside of Mozambique.
37. The importance the Government placed on macroeconomic stabilization and fiscal reform had
been underlined both in the Government and the Secretariat Reports.  Mozambique had achieved a
great deal.  The country's growth in GDP had been  among the highest in the world.  Mozambique had
shown a strong commitment to reducing poverty and encouraging investment.  It had managed toreduce the rate of inflation from 55% in 1995 to somewhere in the area of 5-10%.  However, as
Mozambique itself had noted,  the country's trade deficit remained negative, domestic savings were
not sufficient to meet investment needs, and the budget deficit was high and financed by international
aid.
38. Mozambique was in the middle of an ongoing reform and rebuilding process.  It took time to
pass new laws and develop human resources.  She was concerned about the way the Government
could finance ongoing reforms and clear up old treasury accounts .  At the same time, Mozambique
needed to show positive developments to secure  the support of its own population.  She underscored
the importance of continuing to take steps in the right direction.
39. Through the HIPC initiative, Mozambique had been granted extra debt relief.  This might
result in a reduction of yearly payments to US$50 million.  However, Mozambique's total budget
deficit was roughly US$500 million, and, most like ly, Mozambique would be dependent on foreign
aid in the coming years.
40. The discussant was aware that one of the reasons that countries did not join the Government
Procurement Agreement was that it was seen as a complicated Agreement with considerablenotification obligations.  However, it instilled prudent procurement processes, and ensured efficient
use of government funds.  Mozambique, especially when donor organizations were involved,
published tenders.  Assuming that awards were also public information, she enquired whether the
Government had considered the benefits for purely domestic contracts of a regime based on open
procedures.  Even if the Government were to keep a 10% preferential margin for national products, itwould reduce the temptation to award contracts on the basis of reasons other than cost.  Participation
in the Agreement might also encourage foreign investors.
41. She noted that efforts had been made to liberalize trade through streamlining procedures.
According to the Secretariat Report, these changes had raised revenue but were still complicated.
Attempts had been made to ease export restrictions.  Mozambique's trade policy priorities, basically
aimed at the laudable objective of removing poverty, were in keeping with WTO commitments.
42. Like most other WTO Members, Mozambique participated in a number of regional trade
agreements, some of which went beyond trade issues.  She expressed the hope that these would
complement Mozambique's work in the WTO, and were not seen as an alternative.  RegionalWT/TPR/M/79
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cooperation schemes had made some progress in ha rmonizing customs and trade documentation, and
should create new possibilities in the future.  Mozambique also had several agreements aimed at
providing preferential treatment for products from the country.  She enquired about the extent to
which Mozambique had been able actually to use these agreements.
43. Mozambique had made considerable efforts to liberalize its investment regime.  There were
still a number of licences to be obtained, but it was commendable that, once established, companies
were given national treatment whether they were locally or foreign owned.  It was also commendable
that there were only a few sectors where 100% foreign ownership was not allowed.
44. Mozambique was highly dependent on agriculture.  Agricultural products were the country's
main export, and the prices for these products were liable to large fluctuations.  While Mozambique
had removed subsidies and basically liberalized the market, the Government had argued vigorously
for keeping special measures for two products, sugar and cashews.  A variable surcharge on imports
of sugar was deemed necessary for the rebuilding of the domestic sugar industry.  The export tax on
cashews, also aimed at protecting domestic processors, however, did not seem to have been effective.
She was aware that there were different opinions on the benefit of these policies, but sought theGovernment's comments.
45. Agriculture would most likely continue to play a large role in Mozambique's economy, both
in providing food domestically and as a source of exports.  Mozambique was also richly endowed
with natural resources, and had great potential in the energy sector.  Mozambique had large reserves
of coal, in addition to gas fields, and had several possibilities to expand hydroelectric powerproduction.
46. To a large extent, energy production was developed through joint ventures.  The next step was
to ensure that such energy production was utilized to the benefit of all.  The energy law of 1997
transformed a monopoly into a state-owned company and placed new performance requirements on
the leaders of the corporation.  The Secretariat Report stated that EDM still had a monopoly on the
management of a national grid.  In principle, Mozambique should have had an open energy market
including production, transmission, and distribution.
47. In the energy sector, the regional cooperation schemes appeared sensible.  The South Africa
Power Pool where Mozambique aimed to establish a regional network should eventually lead to better
utilization of energy and increase foreign revenue.  It should also help the distribution of power tolocal industries.
48. Under the GATS, Mozambique's commitments were limited to banking and other financial
services.  The Secretariat Report noted that the country's services sector in general had benefited from
privatization even though the main efforts had been concentrated on restructuring the banking sector.
There should be potential in other services subsectors as well.  The TPR reports mentioned that theMozambican telecommunications industry was profit able and was not subsidized.  Although removal
of the State's monopoly was planned, she enquired about the impact of an earlier opening of
competition in terms of reduction of infrastructure costs and extra incentives for investment.
Transportation also merited efforts.  It had been said that, even before the floods, it was more
expensive to ship a container from north to south within Mozambique than it was to ship it to Norway.
49. All the reports underlined that Mozambique had potential in a number of sectors including
agriculture, forestry, fisheries, mining, energy, and tourism.  Mozambique had put considerable effortinto reform and had made progress in liberalizing its economy.  The main goal of this process was not
merely to ship more goods around the world, but to provide better living standards for the people ofWT/TPR/M/79
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Mozambique.  She could easily agree with the conc lusion of the Mozambican Government, and hoped
Mozambique would continue to receive support in the WTO for its efforts.WT/TPR/M/79
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
50. The representative of Hong Kong, China welcom ed Mozambique's efforts to simplify its tariff
regime and its initiatives to further reduce tariffs, but noted that while Mozambique had bound its
tariffs on all agricultural products, tariff bindings on non-agricultural products were very limited.  He
encouraged Mozambique to extend its tariff bindings to the non-agricultural sector so as to provide
more certainty to its trading partners.  He expressed appreciation for Mozambique's efforts in the
liberalization of the services sector (insurance , telecommunications, transportation, etc.), and
privatization in the banking and insurance subsectors.  He encouraged Mozambique to play a moreactive part in the multilateral trading system.  He highlighted some of the views expressed by
Mozambique in future multilateral trade negotiations, including the importance of improved market
access, through the extension of duty-free and quota-free treatment, for products originating in
developing and least developed economies as a means to accelerate their integration into the
multilateral trading system.
51. The representative of Japan described her country as one of Mozambique's main trading
partners.  In 1998, exports from Japan to Mozambique amounted to US$26 million, while imports
from Mozambique amounted to US$21 million.  Japan' s cumulative investment in Mozambique at the
end of 1998 was US$42 million.  She expressed her c ountry's appreciation for Mozambique's efforts
for furthering trade liberalization through the elimination of non-tariff barriers, reduction of tariffs,
liberalization of investments, and promotion of  deregulation.  She commended Mozambique for
simplifying its existing export and import procedures, and welcomed the country's new system ofcustoms pre-declaration.  She was concerned that with regard to non-agricultural products,
Mozambique had bound its tariffs on only 17 items out of the total of 4,417 at HS eight-digit level.
She enquired about the prospects for Mozambique to expand its product coverage with regard to tariff
bindings, and about the reasons for the levying of variable surcharges on imports of sugar and other
products.  She also enquired about the contents of the draft Mozambican copyright law and theschedule for the legislative process.
52. The representative of Madagascar praised the efforts of the Mozambican Government and
people.  Despite many obstacles, they had continued with their reforms.  He called on the international
community to support Mozambique in its efforts.
53. The representative of Switzerland said that, in the last decade, Mozambique had become a
model for economic growth and trade liberalization in Africa, and that the steps taken by
Mozambique to liberalize its market had led to its remarkable economic growth.  He described the
transport and tourism industries as promising sectors of the Mozambican economy.  Trade relations
between Mozambique and Switzerland were very good;  Mozambique's exports of agricultural
products to Switzerland were considerable, and Mo zambique was an important buyer of products of
the Swiss machine industry.  Due to the Mozambican system of customs clearance, Swiss machine
industry exports were often confronted with high co sts and long delays at Mozambique's border;  he
hoped that Mozambique would resolve this problem in the future.
54. The representative of Canada stated that the cooperation between his country and
Mozambique dated back to Mozambique's Independence in 1975.  Mozambique was one of the largest
recipients of Canadian official development assistance in sub-Saharan Africa, and trade between the
two countries continued to grow.  He commended Mozambique on the progress it had made inimplementing a programme of economic reform since 1987, resulting in a significantly liberalized
trade regime and contributing to Mozambique's impressive double-digit economic growth in recent
years.  Canada was pleased that Mozambique had eliminated most of its export restrictions and
foreign exchange controls, and that the customs regime was undergoing modernization, resulting in
simplification of the import/export system and customs duties.  The present tariff rates of betweenWT/TPR/M/79
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zero to 30% were among the lowest in southern Africa.  Mozambique's progress in simplifying the tax
system including the introduction of a value-added tax (VAT) of 17%.  Mozambique, through its
successful adherence to IMF and World Bank structural adjustment and poverty reduction facilities,had qualified for substantial HIPC debt relief.  Canada was looking forward to Mozambique's
introduction of a new mining law this year to stimulate private investment, and was hoping that
Mozambique would introduce a viable law on copyright, and establish a national institute of
intellectual property.  He urged the continuation of reforms in the services sector, particularly in
transportation and telecommunications, and further progress in the programme of privatization.Canada was a firm supporter of trade-related technical assistance to least developed countries and
looked forward to more detailed discussions of Mozambique's trade capacity needs.
55. The representative of Mauritius highlighted the regional and bilateral ties between her country
and Mozambique and the continuing enhancement of those ties through both countries' membership in
SADC, the Cross-Border Initiative, the Indian Ocean Rim, and the APC Group.  She expressed her
country's admiration of Mozambique's impressive record of economic achievements over a short
period.  The signing of a bilateral investment ag reement between the two countries had encouraged
and facilitated her country's contribution to the economic development of Mozambique through
increased investments by the Mauritian private sector.  There had been a combination of efforts in
developing the economic potential of Mozambique, fo r example, the recent application for a banking
licence by a consortium consisting of South African, Mozambican, French, and Mauritian interests.
She regretted that Mozambican development remained constrained by the country's heavy debtburden, and urged that a solution be found so that the resources destined for debt servicing costs could
be allocated for other purposes, such as human and institutional capacity building.  The Mozambican
tax on exports of raw cashew nuts and the variable surcharge on imports of sugar should be
considered not only from a trade perspective, but also from a more general development perspective,
as these measures were intended to encourage cashew nut processing and provide safeguards fordevelopment of the sugar industry.
56. The representative of the European Union underscored the strong political and economic links
between the EU and Mozambique, with the instit utional links anchored in the Cotonou agreement.
The EU's bilateral trade with Mozambique amounted  to approximately € 400 million a year, and the
EU's total stock of investment in Mozambique was steadily rising.  Through the ACP agreements,Mozambique enjoyed preferential access to the EU markets for a very large part of its exports.  He
commended Mozambique for its use of trade policy as an integral part of its process of economic
reforms and political reconciliation.  Political stability had been an important factor for progress
achieved in terms of reduction of poverty and for attracting substantial foreign investment.
The European Commission in its development cooperation activities placed emphasis on increasingthe impact of aid on the development of trade, in such a way that aid and trade would reinforce each
other.  He encouraged efforts to expand upon legi slation to support the emergence of the private
sector and boost investors' confidence, and to enforce existing legislation more rigorously.  The
European Commission, as a donor, was supporting the enhancement of trade policy within the
Ministry of Industry and Commerce, and would shortly provide substantial funding to improve the
judicial system.  As a LDC, Mozambique benefited from the special and differential treatment in
respect of the implementation of the TRIPS Agreement.  Concerning the implementation of theTRIPS Agreement by 1 January 2006, he enquired about the concrete steps Mozambique intended to
undertake – and the areas where the EU could be of assistance – in order to achieve this objective.  He
encouraged Mozambique to work with the EU towards launching a new round of comprehensive trade
negotiations, citing the need to integrate developing countries fully in the global economy.  One set of
clear rules on the multilateral level could facilitate Mozambique's access to important markets, andincreased foreign direct investment.WT/TPR/M/79
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57. The representative of the United States recalled the solid commercial relationship between his
country and Mozambique;  he pointed to the Bilateral Investment Treaty signed by the United States
and Mozambique in 1998, and the African Growth and Opportunity Act (AGOA) of 2000, whichwould allow Mozambique to export a wider range of products into the United States duty free.  U.S.
exports to Mozambique were more than US$40 million annually, and imports from Mozambique were
estimated at around US$20 million in 2000.  The stock of U.S. foreign investment in Mozambique
was more than US$22 million, and U.S. investors' interest had grown steadily in recent years.
58. He commended Mozambique on its economic progress and policy reforms in recent years,
and expressed his country's support and encouragement for Mozambique to continue and expand
liberalization efforts in order to maintain moment um.  The Government was committed to progressive
lowering of tariff and non-tariff barriers to trade, and government policy and regulation had attempted
to codify the country's WTO obligations.  As a result of its good record on reform, Mozambique had
qualified for debt relief under the Heavily Indebted Poor Countries Initiative.  He expressed his
country's support for efforts to expedite the process of qualifying countries for the expanded HIPC
programme.  The United States and Mozambique shared a common commitment to strengthen themultilateral trading system through the WTO, and his country supported the mainstreaming of trade
into broader development assistance strategies.  The United States was committed to providing
effective assistance through the WTO programmes and had recently provided a US$650,000 direct
grant to the WTO to support technical assistance for African countries, including Mozambique, for
the development and production of computer-bas ed training on WTO Agreements. Noting that
application of some of the new laws and policies had sometimes fallen short of their objectives, he
expressed his country's concern that the disparity between regulations, as written, and their
administration could undermine the benefits of a liberal trading regime.  In this regard, he pointed out
problems with administration of the customs law (the import clearance process was time consuming,
bureaucratic, and expensive), and sanitary and phytosanitary measures (not well understood bycustoms agents, unevenly applied), and other barriers to trade.  Mozambique had bound only
17 non-agricultural tariff lines, and he encouraged the country to bind its entire schedule in the
context of a new trade round.  He expressed his country's pleasure that Mozambique had passed a
Property Act in 1999 and a Copyright Bill in 2000.  He further encouraged the country to expand its
commitments under GATS, and to include public utilities, including telecommunications, ports andrailroads, and certain mining enterprises into the privatization programme.
59. The representative of India pointed out that, despite the success of Mozambique's reform
programme, the country remained a LDC and one of the most heavily indebted nations.  Mozambique
was heavily dependent on agriculture, providing employment to more than 80% of the population.
Mozambique had called for improved market access for LDCs dependent on agriculture under theongoing mandated agricultural negotiations:  he understood Mozambique's position, as India was also
heavily dependent on agriculture, and joined Mozambique in urging the autonomous liberalization of
the sector in the developed countries.  He encouraged the provision of technical assistance to
Mozambique, and sought Mozambique's assessment of the efforts provided through the Integrated
Framework.  India was one of Mozambique's impor tant trading partners accounting for approximately
2.9% of imports by Mozambique and 11.8% of its exports in 1999.
60. The representative of Malaysia noted that trade between her country and Mozambique had
enjoyed stable growth and that Malaysian companies had increased their investments in Mozambique.
She further noted the strong GDP growth in Mozambique over the past few years, and expressed her
country's hope that, with greater international action in the area of debt relief, development financing
and technical assistance, the capacities and developmental prospects of LDC economies such as
Mozambique would improve.  She encouraged Mozamb ique to continue its efforts to strengthen its
economy and to diversify into other sectors, such as manufacturing and services.WT/TPR/M/79
Page 15
61. The representative of Australia commented on Mozambique's significant efforts towards
greater trade and economic liberalization.  Mozambique had persisted with its policies despite the
trauma of severe cyclone damage in early 2000.  Bilateral trade between Australia and Mozambiqueincreased five-fold from 1995-96 to reach $A 35.5 million in 1999-2000.  Imports from Australia
were expected to increase significantly in the futu re as a consequence of the recent establishment of
the new Mozal aluminum refinery.  As a result, Australia was forecast to become the second-largest
source of Mozambique's imports after South Africa.  Australian companies had been active
participants in a range of business activities in Mozambique, including the management of the Maputocontainer port, the establishment of a technology park around the Mozal aluminum refinery, and
development of mineral-sands ventures along the coast.  Australia and Mozambique were both
members of the Commonwealth and the Indian Ocean Rim Association for Regional Cooperation
where the countries worked together to address shared trade and development objectives.
62. The representative of Norway stated that relations between his country and Mozambique were
good and strong, and that Mozambique was one of  the main partners of Norwegian development
cooperation.  The main areas of cooperation concerned health, energy management and infrastructure,fisheries and business development.  Norway  also supported programmes concerning good
governance, human rights, and democracy.  An important aspect of Norwegian assistance was
balance-of-payments and general budget support, and macroeconomic competence building, aimed at
enhancing Mozambique's ability to implement fully its  poverty reduction strategy.  He agreed with the
conclusion in the Government's Report that trade should not be seen as an end in itself, and thatinvestment, infrastructure, education, training, and skills to take advantage of the opportunities
offered by globalization and liberalization were needed.  The need to better integrate or mainstream
trade into general development activities was a major reason for Norway's active involvement in
efforts to further strengthen the Integrated Fram ework for trade-related technical assistance to the
LDCs.  He acknowledged the need for better mark et access for products originating in developing
countries, in particular the LDCs.  Norway believed that regional agreements could be a useful
supplement to the multilateral system.  He sought Mozambique's views on the prospects for increased
regional cooperation, and the link between regional integration and the multilateral system.WT/TPR/M/79
Page 16
V. REPLIES FROM THE REPRESENTATIVE OF MOZAMBIQUE AND ADDITIONAL
COMMENTS
63. The delegation of Mozambique had provided written responses to advance written questions
and to questions raised during the first day of the meeting.  Three topics had emerged from these
questions:  (1) economic environment;  (2) trade policies by measure;  and (3) sectoral policies.
(1) ECONOMIC ENVIRONMENT
64. The representative of Mozambique presented his delegation's responses to questions related to
the first topic (economic environment).  He pointed to certain factual changes that his delegation
wished to have reflected in both the Report by the WTO Secretariat and the Report by the
Government of Mozambique.  The Chairperson invited the discussant to comment on these replies,
and then opened the floor for comments from other participants.
65. The discussant thanked the delegation of Mozambique for the written responses.  She
remarked that there was some uncertainty regardin g the pace of Mozambique's fulfilment of its WTO
obligations.  She was pleased that the Government had committed itself to providing the required
notifications and to ensuring transparency.  Sh e enquired whether Mozambique's bilateral trade
agreements provided for non-tariff barriers.
66. The representative of Mozambique stated that his country lacked the capacity to comply fully
with its notification requirements, and would do more in this regard.  Notification compliance was on
Mozambique's list of priorities for Technical Assi stance.  With respect to some of the country's
bilateral and regional arrangements, although Mozambique did not anticipate any short-term benefits,it did expect that benefits would accrue over time.
(2) T
RADE POLICY BY MEASURE
67. The representative of Mozambique presented responses to questions under the second theme.
68. The discussant commented that the existence of a structured consultative process on trade
policy in Mozambique was positive, and should provide a means by which the citizenry could be
informed of the work and benefits of WTO membership.  Education of the Mozambican customs
officials was necessary.  She was pleased to learn that customs procedures were perceived as having
improved, and that the Government of Mozambique had established a customs website.  She
encouraged the Government to adopt strict standards for the necessary qualification of those
participating in the trade policy consultative process.
69. The representative of the European Union understood that current procedures regarding
preshipment inspection would be phased out gradually, and noted that Mozambique was subject to
SADC commitments on this issue.  Mozambique had undertaken some efforts towards
implementation of the Customs Valuation Agreement, and that technical assistance was being
provided towards this end.  He encouraged the Government to report as regularly as possible to theCustoms Valuation Committee and relevant Secretariat staff on its progress, because Mozambique's
situation in this area was not satisfactory.  With respect to the reported 1996-waiver request, he
mentioned that Mozambique's assumption that silence from the Secretariat meant approval was not
correct.  He noted that Mozambique had not signed the Plurilateral Agreement on Government
Procurement, and that EU companies had experienced repeated problems in this area in Mozambique,
particularly with regard to the requirement that all public work contracts must go to companies with
Mozambican capital.  He was pleased that conditions for foreign investment in Mozambique had beenliberalized, but noted that some EU companies had experienced restrictions on their ability to employWT/TPR/M/79
Page 17
non-Mozambican skilled workers.  Mozambique continued to operate under structures of collective
ownership of land and real estate, which, despite the existing system of long-term leases, was a
complication in terms of future investments in Mozambique.  He asked whether the Governmentintended to modify this ownership structure.
70. The representative of Mozambique stated that customs clearance of imports and exports, and
trade policy in general, were delicate issues, requiring the involvement of skilled, qualified, and
serious people.  The prevailing view in Mozambique was that the requirements for participation in the
consultative process were too stringent.  Regarding PSI, his country's position was set forth in theSecretariat Report, the Government Report, and his delegation's responses to the written questions.  It
was the intention of the Government to phase out PSI;  currently less than 30% of imports were
subject to PSI.  He welcomed the suggestion that Mozambique report regularly on its progress to the
Committee on Customs Valuation.  Mozambique was doing its utmost to apply the Customs
Valuation Agreement, but technical assistance was urgently needed in order to do so.  The
Government's goal was to implement the Agreement by 2003;  Mozambique would welcome
assistance by the EU in achieving this goal.  Mozambique would need technical assistance in order tocomply with its notification requirements.  With respect to government procurement and alleged
problems experienced by EU companies, he had no knowledge of any such complaints, and
Mozambique reserved the right, as a Government, to disagree, until proven wrong.  He would confer
with his Government, and if there was additional information, he would so notify the WTO.  The
issue concerning employment of non-Mozambican skilled workers was a matter under the Ministry ofLabour.  All foreign investors were required to abide by applicable laws concerning employment of
foreigners.  He suggested that if current restri ctions inhibited investment, the Government might
reconsider its practices.  He explained that real estate and buildings were no longer collectively
owned;  some buildings were owned by cooperatives , but that was a voluntary association of citizens.
He further explained that, pursuant to the Mozambican Constitution, land was the property of theState.
71. The Chairperson confirmed that, in 1996, the Mozambican customs agency had requested a
delay of implementation of the WTO provisions on customs valuation.  The Market Access
Committee had rejected the request on the grounds that it had been submitted beyond the applicable
deadline.
(3) SECTORAL POLICIES
72. The representative of Mozambique presented written replies to questions raised under the
third theme.
73. The discussant noted that the cases of cashew nuts and sugar had been mentioned by several
participants.  The export tax on cashew nuts was not effective, and, in Norway, there was fear of its
distorting effects.  She enquired about the extent to which the Government of Mozambique picked
areas and sectors in which to invest and promote.  With regard to telecommunications, there were few
incentives to privatize because the telecommunications company was profitable, but she was pleased
that the Government intended to privatize the sector nonetheless.  She welcomed Mozambique's
expanded participation in the GATS.  She described the energy market as a good source of foreign
exchange, and was pleased to note that environmental matters were on Mozambique's agenda
74. The representative of the United States expressed his appreciation for the thorough work of
the Mozambican delegation in providing answers to the written questions.  The United States was
encouraged by Mozambique's plans to privatize the telecommunications sector by 2004.WT/TPR/M/79
Page 18
75. The representative of the EU urged Mozambique, in general terms, to expand its services
commitments and to liberalize its telecommunications sector.  The EU might, if necessary, pursue
discussions with Mozambique on a bilateral basis.
76. The representative of Mozambique stated that the taxes on sugar and cashew nuts were very
sensitive issues in Mozambique.  He would need a whole day to elaborate.  International institutions
had been involved for six years and still did not agree.  The Government believed that other solutions
did not work, and was thus proceeding as it believed best.  He noted that the Mozambique Telephone
Company's profitability allowed the Government to proceed at an appropriate speed;  however, theGovernment still had set a target for privatization by 2004.  He appreciated the TPR process and
thanked the participants.  He added that Mozambique should be in a position to further implement its
WTO commitments.
77. The Chairperson assured the representative of Mozambique that the changes pointed out
during the meeting would be included in the final versions of both the Secretariat Report and the
Government Report.WT/TPR/M/79
Page 19
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
78. We have had a good and informative discussion of the trade policies of Mozambique.
Members were very impressed by the excellent economic performance of Mozambique in recentyears, attributing this to its economic reforms, incl uding privatization of enterprises, the elimination
of most export restrictions and of foreign exchange controls, and simplification of its customs tariff.
Members observed with praise the fact that Mozambique's good performance often had come in the
face of serious climatic difficulties.  They also noted that Mozambique had benefited from debt relief
programmes, although some urged even greater relief.  Members also commented favourably onMozambique's efforts to attract foreign investment and urged that these efforts be strengthened and
supported.
79. Members appreciated Mozambique's active partic ipation in the multilateral trading system.
They called on Mozambique to expand its commitments under the GATS and to make every effort to
meet its WTO notification requirements.  Some Members sought further information on
Mozambique's experience with the Integrated Framework and on its technical assistance needs, and
pledged a willingness to provide continued assistance, either individually or through variousprogrammes.  Some Members joined Mozambique in urging that the regular budget of the WTO be
increased to address some of these needs better.  Members also showed an interest in the role of
regional and bilateral trade agreements in expanding Mozambique's trade, but called for greater
transparency in those agreements.
80. Members encouraged Mozambique to strengthen its domestic process of trade policy
coordination and to continue its reform process.  Some Members suggested that Mozambique further
reduce its border barriers to trade and increase the number of its tariff bindings.  Members noted with
some concern that Mozambique had not implemented the WTO provisions on customs valuation but
welcomed its intention to apply the Agreement by 2003.  Questions were raised about tariffs
(including bindings and applied rates) and about other duties and charges (including importsurcharges on products such as sugar).  Members encouraged Mozambique to further progress in the
implementation of its privatization programme.
81. Some Members noted the pending significant expansion of Mozambican exports in the
mining and power sectors, and pointed out that Mo zambican exports, almost limited to agricultural
products, could be expanded if markets were more open in developed countries.  There was alsorecognition that further expansion of Mozambican exports depended to a large extent on infrastructure
developments and foreign investment.  Some concern was expressed about its Government's
intervention in the agriculture sector, mainly on products such as cashews and sugar, and for food
security purposes.
82. Members also sought further clarification on a number of issues, including:
- pre- and post-shipment inspection;
- standards and other technical requirements;
- government procurement and eventual participation by Mozambique in the
Plurilateral Agreement on Government Procurement;
- implementation of the TRIPS Agreement in January 2006;
- investment regime, including incentives provided in export processing zones and
industrial zones;WT/TPR/M/79
Page 20
- mining, including the MOZAL project;
- industrial strategy and development corridors;  and
- structural reforms in the services sector, including financial services and
telecommunications.
83. Members appreciated the responses provided by the delegation of Mozambique to most
questions raised during the meeting.
84. In conclusion, it is my feeling that this Re view has given the TPRB an excellent insight into
the evolving trade policies and practices of one of the LDCs that is having the greatest success.Members were encouraged by Mozambique's economic performance.  Members encouraged
Mozambique to maintain both the pace and the direction of its reforms and urged that its bilateral and
regional arrangements be WTO-consistent.  In my personal capacity, I urge all Members to support
Mozambique in its efforts.  In this respect, we should pay particular attention to Mozambique's
request to the Membership for technical assistance.WT/TPR/M/79
Page 21
ANNEX I
ADVANCE WRITTEN QUESTIONS BY MEMBERS
HONG KONG, CHINASecretariat Report (WT/TPR/S/79)
Standards and Other Technical Requirements (pp. 34-35, paras. 48, 52-53)
It is noted that the National Institute of Normalisation and Quality (INNOQ) has begun a three-part
programme with the goal of producing national standards and that the first results of recent efforts
are almost complete.  We are interested in knowing the timeframe of implementation of the developedmandatory standards given the observation of the Secretariat that a system to forbid entry of any
product has not been in place.
Telecommunications Services (p. 53, para. 74)
It is noted that the current monopoly enjoyed by  the government-owned company is intended to last
until 2004 while limited privatization is expected in 2001.  Would Mozambique reveal details of the
privatization plan and advise on any plans for further liberalization of the sector?
P. 53, para. 75
With the possible introduction of new suppliers of cellular service and thus putting an end to the
monopoly of the government-owned company, would Mozambique consider adopting pro-competitive
principles (e.g. the Basic Telecommunications Reference Paper) so as to facilitate competition in the
sector?
JAPAN
Secretariat Report (WT/TPR/S/79)
III(2) p. 27, para. 18, Customs valuation
The Report states that "[f]or customs valuation purposes Mozambique uses the Brussels definition of
value (BDV)".  Japan thinks that Mozambique should take the initiative of conducting customs
valuation in conformity with the "Agreement on  Implementation of Article VII of the GATT 1994"
(Customs Valuation Agreement) as soon as possible.
P. 29, para. 25, Tariffs
The Report states that "[t]ariff bindings on non-agricultural products are very limited, only 17 lines
(out of a total of 4,417) at the HS eight-digit le vel were bound at either 5% or 15%".  Please explain
the perspective to expand the product coverage for tariff bindings.
P. 32, para. 35
The Report states that Mozambique levies "impor t surcharges" on such products as sugar, cement and
steel.  Please explain the reasons for imposing su ch charges under the heading "import surcharges",
separately from ordinary tariffs.WT/TPR/M/79
Page 22
III(4) p. 39, paras. 87-92, Intellectual property rights
The Report states that the draft of a copyright law is now working its way through the legislative
process.  Please explain in detail the contents of the draft, as well as the schedule of the legislativeprocess, with reference to its consistency with the TRIPS Agreement.
If Mozambique is now considering amending the C ode of Industrial Property Rights, as well as laws
concerning intellectual property rights, please expl ain in detail the contents of such amendment, as
well as the schedule for doing so, in compliance with the TRIPS Agreement.
Concerning the National Institute of Intellectual Pr operty, please explain in concrete terms what it
exactly is (its task, structure, management, finan ce, etc.) and how is the schedule for its creation.
SWITZERLAND
Secretariat Report (WT/TPR/S/79)
The Report by the Secretariat mentions the need of Mozambique for trade-related technical
assistance.  May Mozambique state precisely, which are its most urgent needs for technical
assistance?
Mozambique's production of sugar is about to rise.  Which are Mozambique's prospects for sale of
sugar on the world market?
Mozambique took certain measures to protect its sugar processing industry.  Does Mozambique have
the intention to limit these measures in time?
Mozambique seems to pursue a new policy in the domain of cashew in order to reduce the weakness
of its cashew industry.  May Mozambique expose this new policy more precisely?
Mozambique's system of customs clearance, i.e. cu stoms clearance by so called "despachantes", leads
to high costs and long delays.  What does Mozambique intend to do in order to solve this problem?
The trade protocol of the Southern African Development Community came for most signatory
countries into force on 1 September 2000.  What is  Mozambique's schedule for the implementation of
this protocol?
CANADA
Secretariat Report (WT/TPR/S/79)
II(2) para. 9
Paragraph 9 of the Secretariat Report notes that the private sector, amongst other members of civil
society, provide input into trade policy issues th rough informal consultations.  The quality of this
dialogue is, however, likely to be limited by the low level of understanding of WTO and other trade
issues amongst business and officials outside of the Trade Ministry (as indicated in the TPRM).
Surveys of business owners* also suggest:
- that civil servants often maintain an adversarial position vis a vis the private sector;
- some firms feel they are at a disadvantage for paying high duties on legally imported
inputs, as government is taking no action to control the inflow of smuggled goods;  andWT/TPR/M/79
Page 23
- the process for product classification is unreliable, e.g., goods originally declared as
inputs (with lower tariffs) are considered "final products" by customs inspectors upon
arrival.  This problem is exacerbated by the lack of adequate mechanisms for quickdispute settlement with government.
These and other issues substantially raise the costs of doing business in Mozambique and constrain
export growth.  What steps are being taken to improve the quality of the consultative mechanism to
ensure that importers and exporters are aware of future changes to your import regime?
(*Structure and Performance of Manufacturing in  Mozambique, T. Biggs, J. Nasir & R. Fisman,
Regional Program on Enterprise Deve lopment, World Bank, August 1999.)
III(2)(vi) para. 44
Further to the Secretariat's description of import restrictions applied by Mozambique, please advise
whether Mozambique has a Regulatory Policy, and whether Mozambique's obligations under the
WTO Agreements are binding under the Regulatory Policy if it exists.
(ix) para. 52
Noting the obligations and rights specified in Articles 2.2 and 2.4 of the TBT Agreement, as well as
those stipulated under Paragraph F of Annex 3 of the TBT Agreement (which Mozambique has
notified acceptance of), please explain what policies and procedures have been developed or
implemented to ensure that regulators and standards  developers use international standards, or their
relevant parts, to the greatest extent possible.
Of the 17 standards in the final stages of development mentioned in paragraph 52, how many of them
use existing relevant international standards?
(x) para. 57
According to paragraph 57, Mozambique is neither a signatory nor observer to the WTO Plurilateral
Agreement on Government Procurement.  What is the intention of Mozambique with respect to both
accession to the WTO Agreement on Government Procurement and seeking status as an observer tothe Agreement?
IV(5)(iii) paras. 72-79
In view of the Government's stated intention, in paragraph 74, to maintain a stake in Mozambique
Telecom, is the Government considering creating an independent telecommunications regulatory
authority in place of the Telecommunications Regulatory Authority (a quasi-governmental entity)?
Mozambique's privatization plans, and its plans to increase competition in the telecommunications
sector, might be advanced if they were to make  specific commitments on telecommunications under
the GATS, and undertake the obligations contained in the Reference Paper on Telecommunications.
Does Mozambique intend to make specific commitments in the General Agreement on Services
(GATS) with respect to telecommunications?  If yes, please provide an approximate timeframe.  If no,
please provide further details on how Mozambique plans to increase competition in this sector.WT/TPR/M/79
Page 24
EUROPEAN UNION
Secretariat Report (WTTPR/S/79)
P. 9, para. 22
The Report notes that despite strong performance in recent years, growth continues to be constrained
by a number of factors, some of which are outside the scope of trade policy but some of which interact
with it.  That said, the continued reform of the services sector, particularly telecoms and transport,
appears to be one of the key policy areas in the future for improving trade performance.  What are
Mozambique's intentions in this respect?
P. 10, para. 8
It is mentioned that the private sector, academic institutions and unions are being consulted in order
to provide input to the trade policy.  The EU w ould like to obtain more information on whether and
how Mozambique consults with civil society, incl uding NGOs, in order to define its trade policy.
P. 15, para. 34
Could Mozambique comment on the extent of the success of her operation of Export Processing
Zones?  What are the benefits and costs?
P. 16, para. 43
The Secretariat Report as well as the Government Report confirm that technical assistance is viewed
by Mozambique as essential for ensuring full compli ance with its WTO obligati ons.  It would be useful
to know if Mozambique has undertaken efforts to specify and inventory its TA needs in the various
areas of WTO activities.
Summary Observations, p. viii, para. 12
We note that Mozambique's simple average applied tariffs are, at 13.8%, among the lowest in
southern Africa.  Mozambique has bound customs duties on all agricultural products, but has only
bound rates on 17 non-agricultural tariff lines.  Would Mozambique agree that the predictability of its
tariffs would be enhanced by binding the remaining non-agricultural tariff lines?  What areMozambique's intentions in this respect?
P. 27, para. 18
On Customs Valuation, Mozambique does not s eem to have implemente d the WTO Agreement on
Customs Valuation, but has never asked any formal reservation.
P. 34, para. 46
Furthermore, Mozambique seems to use minimum values on condensed milk and fresh products, and
once again has never asked for any formal reservation.
Hence the following general question:
When does Mozambique intend to get itself into the situation of implementing the WTO Agreement on
Customs Valuation?WT/TPR/M/79
Page 25
PSI
According to WTO Agreement on PSI, any developing country can use PSI services as long at it wants
(“Noting that a number of developing country Membe rs have recourse to PSI;  Recognizing the need
for developing countries to do so for as long and in so far as it is necessary to verify the quality,
quantity or price of imported goods ”).
But the spirit of the Agreement means, on the me dium/long term, a reduction and a the removal of the
use of PSI services;  consequently, customs Admini strations should fully take charge of customs
controls.
Furthermore, the PSI activities must submit to  rules and disciplines such as non-discrimination,
transparency, protection of confidential information, delays and appeal procedures.
We acknowledge Mozambique’s efforts to reduce its dependence on PSI and its policy of reducing this
further.  What is the timescale for Mozambique’s complete elimination of the use of PSI?
Has a date been set for the approval of the Technical Arbitration Committee’s statutes, so that appeal
procedures, dispute resolution and decisions on customs rulings can be made in accordance with
WTO rules?
P. 53, paras. 72 and 74
Experience in the EU and elsewhere shows that the most effective strategy to reduce costs is to
introduce competition with an adequate regulatory framework.  This benefits in turn the whole
economy.  The EU thus welcomes the fact that Mo zambique is considering introducing competition
and recommends that it be done as early as possible.  What is the time-frame envisaged byMozambique in this respect?  How will the regulatory framework evolve in order to address the issues
that arise with the advent of new competitors;  in particular how will the issue of access to the
infrastructure of the existing operator be tackled?
The EU is puzzled by the wording of these paragra phs which seems to imply that privatization of the
existing operator could postpone the introduction of competition.  Any monopoly, whether public orprivate, has little incentive to reduce prices, whereas the existing operator would be forced to improve
the quality of its services, reduce its costs and ultimately gain market value if exposed to competition.
Could Mozambique explain this statement and its rationale vis-à-vis the need to cut costs and
increase teledensity?
Para. 73
What are or will be the respective responsibilities of the Ministry of Transport and Communications
(MTC) and the Telecommunications Regulatory Author ity in terms of attributing licences and scarce
resources and in terms of ruling on interconnection issues?
Para. 75
Experience in liberalization shows that it is in particular necessary to have precise rules about rates,
delays, physical conditions, etc., so that the existing operator does not retain an advantage that
prevents competition.  Has Mozambique decided wh en the new cellular operator will be allowed?
Will it have to use TDM as a gateway and in the affirmative why?  How can it negotiate satisfactorily
interconnection without any neutral guidelines from the regulator or without the possibility to resort
to a body that would assess whether the terms of  interconnection are not hampering competition?WT/TPR/M/79
Page 26
MAURITIUS
Secretariat Report (WT/TPR/S/79)
P. 40, para. 4
Could Mozambique provide additional information on the measures being adopted at the national
level with a view to achieving self-sufficiency and food security?  Could it equally provide information
in respect of its increased food bill (1% increase ) arising from sharp increases of food imports in
recent years?
P. 39, para. 89
Could Mozambique provide information on how it protects geographically indicated products?
UNITED STATES
Secretariat Report (WT/TPR/S/79)
Summary Observations
(3) para. 16
The Government of Mozambique has implemented an extensive programme which has successfully
privatized the vast majority of state-owned companies.  However, the Government has maintainedcontrol over companies considered "particularly important",  primarily public utilities, including
telecommunications, ports and railroads and certain mining enterprises.  When is the Government
planning to announce policies concerning these companies?
I(1) para. 7
Mozambique qualified for additional debt relief to cushion the adverse effect of its foreign debt under
the Heavily Indebted Poor Countries (HIPC) Initiative.  The Secretariat report states that
Mozambique's inclusion in the HIPC programme is, in part the result of recognition that it has
consistently implemented stringent measures laid down by the World Bank and the IMF.  How does
the Government plan to make further progress on economic reforms?
(2) para. 10
A programme for privatizing large enterprises was completed in 1998.  When will the Government's
programme for the privatization of small and medium-sized enterprises be completed?
Para. 11
The Secretariat's report notes that although the programme to contract out certain customs functions
has raised customs revenues, the complexity of the im port procedures continues to be criticized by the
business community.  What is the Government of Mozambique planning to do to further simplify its
import procedures?WT/TPR/M/79
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(5) para. 22
The Secretariat's Report states that despite its high potential and progress in recent years
Mozambique continues to be constrained by a number of key factors such as inadequateinfrastructure, insufficient managerial and adm inistrative expertise, fiscal mismanagement,
corruption, lack of accountability and poor governance.  For these reasons continued trade
liberalization and parastatal reform, coupled with progress in attracting foreign investment and
promoting non-traditional exports, will be importan t for Mozambique's development prospects.  What
is the Mozambique Government doing to keep the momentum of trade liberalization going?
II(2) para. 11
The report states that the Republic Assembly ratifies international agreements and treaties.  Once an
agreement or treaty is ratified, the Assembly brings domestic law into conformity with the
international agreement or treaty.  Therefore WTO agreements do not have the force of law, but are
implemented through the legislative process.  What  WTO agreements have been incorporated into law
in Mozambique?
(3) para. 14
In 1999 Mozambique adopted a formal Trade Policy and Strategy (TPS) to promote economic and
social development and eliminate poverty.  The TPS addresses both internal commerce and
international trade.  Please explain the major tr ade policy priorities of the TPS and implementation
strategy.
(4)(i) para. 17
In 1999 Mozambique adopted the Customs Tariff Act which regulates import procedures, the
computation of duties, and exemptions and remission of duties, and contains the newly enacted tariff
schedule.  We would appreciate a brief summary of the import procedures established under the
Customs Tariff Act.
(vii) Special Regimes
The report notes that a special regime was create d to encourage investment in the Zambesi River
Valley.  Can you please indicate when this re gime was put into law and when it was implemented?
Are the programmes discussed as part of the regimes available to all companies and industries?
In addition, with the exception of reductions in taxes in these regimes, are any other government aid
programmes provided?  That is, does the Government  offer any other aid to encourage investment in
this region?
(5)(i) para. 40
The report notes that Mozambique pursuant to Article 20.1 notified the delayed application of the
Agreement on Customs Valuation. It also states that  Mozambique intends to implement the Agreement
on Customs Valuation by the end of 2000.  What is the status of Mozambique's implementation of the
Customs Valuation Agreement?WT/TPR/M/79
Page 28
(5)(ii) para. 44
The Secretariat included in its report Mozambique's assessment of its needs and priorities for trade
related assistance.  We welcome this development whic h should also  help to guide the work of the
Integrated Framework and feed into the IMF/Wor ld Bank Poverty Reduction Strategy process.
Would appreciate additional information about wh at assistance is currently being provided by
bilateral donors and international organization and what the most urgent unmet needs are?
Implementation
(5)(a) para. 59
The report notes that to date Mozambique has made only three notifications and that the low level of
notifications derives mainly from the general lack of information and knowledge of the officials in the
responsible ministries dealing with the various WT O agreements.  It suggests that special assistance
should be envisaged to help the Government of Mozambique in its efforts to increase coordination
and interaction among the various ministries, technical and private-sector institutions to enable them
to become more active in the area of implementation.  In what areas would this type of additional
assistance be most useful?
(iii)(a) para. 75
When will negotiations on a tariff schedule for the Southern African Development Community (SADC)
member countries be concluded?  What are the ma in provisions and what products are included?
Does Mozambique intend to notify the Trade Protocol or other SADC aspects establishing a free
trade area to the WTO?
III(1) para. 3
Tariff revenue constitutes only a modest proportion of Mozambique's government revenues. The
report notes that recently adopted value-added tax will provide increasing revenue, which is expected
to allow for a furthering lowering of tariffs.  In w hat areas is the Government likely to lower tariffs
further?
(2)(ii) para. 7
Mozambique had made considerable progress in re forming its customs regime.  A major programme
to improve the customs services has been initiated and a major programme of technical assistance in
this area is ongoing.  The regulations in place are among the most progressive in the region.
However, there is still a significant disparity between the regulations as written and their utilization.What does the Government of Mozambique plan to do to further improve administration?
Para. 11
The report notes that since 1997 Mozambique's pr eshipment inspection (PSI) has been progressively
reduced so that only 30% of imports now undergo PS I.  Mozambique's policy is to continue to reduce
PSI further.  How is the Government strengthening its customs laws to fulfil this policy?
Para. 12
Companies report that import clearance procedures take 2-3 weeks on average, which places a heavy
burden on trade.  Clearances from a number of gover nment agencies, as well as customs, contributeWT/TPR/M/79
Page 29
to these delays.  Requests for paperwork not required by legislation are common.  The Customs
Services requires that importers follow procedures for providing documentation that were outlined in
the law only for cases on suspected fraud.  Furthe rmore importers complain  that customs often
inspects good multiple times, before shipment, after shipping and at final destination.  What is the
Mozambique Government doing to speed up clearance, cut back on excessive documentation and
reduce re-inspection?
Para. 18
The report notes that Mozambique in accordance with Article 20 of the Agreement on Implementation
of Article VII of the GATT 1994 has postponed the changeover to using the transaction value for
customs valuation purposes.  Customs authorities have said that Mozambique will comply, but it may
take several years before it can.  What are the major obstacles to Mozambique adopting the
transaction value for customs valuation?
(iii)(c) Other duties and taxes
Companies also complain about high customs fees, deposits, penalties, warehousing fees and poorly
trained customs agents.  The high costs and cu stoms rigidity push importers towards smugglers,
which undermines GRM revenue and custom reform efforts.  What is the Government of Mozambique
doing to reduce these costs and rigidities?
(iii)(g) Import surcharges
The Secretariat's report notes several surcharges have not been notified to the WTO.  When does
Mozambique intend to notify these surcharges?
(ix)(a) para. 50
The U.S. welcomes Mozambique's notifications of it s Technical Barriers to Trade enquiry point and
acceptance of the code of good practice on voluntary standards.  These are two good steps towards
full implementation by Mozambique of TBT obliga tions.  Recently, the TBT Committee completed the
Second Triennial Review of the TBT Agreement.  Part  of the work plan for the next year is for the
Committee to develop a demand-driven technical assistance programme.  The U.S. notes that specific
recommendations for foreign assistance, such as for computers, telecommunications facilities, etc. are
mentioned in the report.  The United States encourages the GOM to submit specific requests for
technical assistance to the TBT Committee.  In addition, Mozambique should identify the specific
needs that would allow the GOM to bring its laws  into compliance with its WTO TBT obligations,
which are notified under Article 15.7 and make specific requests for relevant technical assistance.
Para. 52
The report notes the first two mandatory regulati ons based on voluntary standards could be for salt
and cement.  The U.S. recognizes the importance of i odine in salt to reduce the incidence of goitre.
The U.S. is interested in the process by which these regulations will become mandatory.  Can
Mozambique please explain how these standards will become incorporated in regulation and the
process of public comment for both domestic and foreign interested parties?
Is there a national publication in which proposed technical regulations are announced?  How far in
advance are regulations notified to the WTO in order to allow interested parties to provide
comments?WT/TPR/M/79
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(ix)(b) para. 55
The report notes that the Secretariat was unable to obtain lists of Sanitary and Phytosanitary
Standards regulations and practices.  When does the Government plan to notify its SPS enquirypoint?
(x) para. 59
The report states that the Government establishes, for contracts of less that Mt 12 billion, an annual
list of prices and accepted bidders for each product.  For products included on those lists, are there
provisions that allow for the procurement of products that may have a higher initial price but providegreater value for money over the life of the product than competing lower priced products?
Para. 61
The report states that competition for contracts of less than Mt 12 billion is limited to suppliers that
are registered in Mozambique and registered with the Ministry of Planning and Finance.
(a) Does the Government publicize the procedures and requirements for being included
in these registries?
(b) Why are there two separate registration requirements?  Do they have different
purposes?
(c) Has the Government of Mozambique found that there are enough registered suppliers
for every product purchased by the Government to ensure that there is effective
competition for all such government contracts?
(d) Are there separate procedures for situations in which the Government wishes to
purchase a good or service for which there are not enough registered suppliers to
ensure effective competition?
(4)(iii) para. 89
The report notes that Mozambique received 20 patent requests between July 1999 and July 2000 and
about 3,000 trademark requests between July 1999 and December 1999.  Has Mozambique granted
any patents or trademarks yet?
Para. 90
We understand Mozambique passed a copyright law late last year.  Please provide additional
information about the provisions of the law.
Para. 91
What is the Government of Mozambique doing to  strengthen enforcement of intellectual property
laws?
Mozambique is a member of WIPO.  Is Mozambique  considering signing the WIPO copyright treaties
soon?WT/TPR/M/79
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IV(2)(ii)(a) para. 14
What is the mechanism for the variable surcharge on imports of sugar?  How is the surcharge
calculated?
(b) para. 15
Export tax on raw cashew nuts discourages cashew  nut producers to improve the quality of the
commodity because the export tax depresses its prices.  What is the reason for imposing the export
tax?
(f) para. 26
How does the Mozambique Cereal Institute (I CM), a grain marketing board, function?  Does
Mozambique allow private trade in cereal?  If so, what is the share of private trade?
(3)(i) para. 41
The Secretariat's report states that among the incent ives is the exemption of import duties, taxes, and
charges on exploration and mining equipment and other materials imported during , and for the
purposes of, exploration and mining operations.  Additionally, benefits available in export processing
zones might be attractive to downstream processing operations.  Can you please provide us with moredetails regarding the incentive programmes for the mining industries?
(ii) para. 47
A public enterprise, Electricity of Mozambique (EDM) currently maintains a monopoly on the
management of the national grid.  Recently however Mozambique enacted legislation to facilitate the
introduction of electricity to smaller cites and towns through power co-generation.  Have anyelectricity co-generation projects been started yet?
(4) para. 53
The Secretariat's report briefly discusses Mozambique's recently formulated industrial strategy
policy.  In particular, it mentions that the Government of Mozambique is interested in pursuing export
opportunities and import substitution particularly of basic and intermediate goods.  Can you pleaseprovide further information on these points as found in the industrial strategy paper, if they are
publicly available?
Para. 55
Can you please provide further information on the tax incentives that are available to the MOZAL
aluminium smelter project?
Para. 56
Do you have further details on the envisioned direct-reduced iron project for Maputo and the
associated steel plant?  Would government funds be used for the development of these projects?WT/TPR/M/79
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(5) Services
We commend Mozambique for the steps it has already taken to promote competition in the services
sector of its economy.  We believe that Mozambique can enhance its own competitiveness in theglobal economy by allowing its consumers ready access to better, cheaper, and more diversified
services.  The Secretariat's report points out that although the services sector comprises
approximately 37% of Mozambique's GDP it has only recently received serious attention.
Mozambique's Schedule of Specific Commitments under GATS is limited to banking and other
financial services (excluding insurance).  These commitments fall far short of its current levels ofopenness in services, is Mozambique considering increasing its commitments?
(i)(a) Banks and financial institutions
Mozambique has undertaken a major programme to privatize the entire banking system, with the last
state-owned bank privatized in 1997.  Under Mozamb ique's GATS Schedule of Specific Commitments,
any foreign bank or financial institution may operate in the country as long as it abides by the
domestic rules and regulations governing investment and operations of such institutions.  Foreign
participation in the banking system is now common place.  Is the Government planning to sell itsremaining minority holdings in two of the commercial banks?
(iii) para. 74
What plans does the Government have to privatize Mozambique Telecom (TDM) which is currently a
monopoly provider?  When will the Government license a second provider for cellular service?WT/TPR/M/79
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ANNEX II
WRITTEN RESPONSES BY THE DELEGATION OF MOZAMBIQUE
I. ECONOMIC ENVIRONMENT
This chapter addresses questions related to Mozambique's Economic Environment.  The chapter is
divided in six sections:  Macroeconomic and Structural Situation, Privatization, Investment Regimes,
WTO Implementation and Notification, Technical Assistance and Regional and Bilateral Agreements.
1. Macroeconomic and Structural Situation
How does the Government plan to make further progress on economic reforms?
Mozambique considers economic reforms as continuous process aiming to increase the performance
of the economy and reduce the level of poverty.  We don't see economic reforms as an end, that's why
our objective is to undertake broad economic reforms.
On that regard the Government is currently preparing a poverty reduction strategy, called Plan for the
Reduction of Absolute Poverty-A Growth Stra tegy which includes macroeconomic and sectoral
strategies, as well as the budget implications, the consultation process for the preparation and
monitoring of this strategy.
What is the Mozambique Government doing to keep the momentum of trade liberalization going?
The Mozambican Government is extremely concerned with poverty.  It believes that poverty
reduction over the medium and long-term will have to be achieved through rapid, sustainable and
broad-based growth.  Among different policies, trade liberalization is critical for the sustainability of a
fast growth over the medium and long-term.  To that end, the Government is pursuing a strongprogram to simplify the bureaucratic process for entry into business, imports and exports, and capital
movements.  Macroeconomic stability will continue to be pursued and consistent fiscal, monetary and
exchange rate policies will continue to be put in place.  A Trade Protocol within SADC has been
adopted and is being implemented – free trade will be achieved in the region within the next 8-12
years.  The highest tariff rate for the rest of the world on imports will be reduced to 25 per cent in2002, from 30% currently.
2. Privatization
When is the Government planning to announce policies concerning Primary Public Utilities?
The Mozambican Government's privatization plan  for large, medium and small companies was
completed in 1999 – only main utilities, the national airways company, and a public insurancecompany remained public.  Meanwhile, the water supply systems of the five most important cities of
the country are already under private management contracts since mid-2000.  The Maputo port and
the Nacala railways system are both under private management.  It is expected that the main railways
to South Africa will have a joint Mozambique/Sout h Africa private management contract during 2001
– both governments are currently addressing this issue jointly.  With respect to thetelecommunications company, the Government has decided its privatization.  An action plan for the
privatization of the remaining public companies is currently being prepared by the respective sectoral
ministries.  A final decision will be taken, case by case, as these plans are ready.WT/TPR/M/79
Page 34
A specialized group of experts has been formed and is already working out the privatization strategy,
which should be ready within six months.
With reference to the Telecommunication sector a Regulatory Authority of Telecommunications and a
Regulating Body of this sector are to be established with an objective of opening the market for
participation of private sector, as well as the elimination of the monopoly of TDM (public enterprise).
The monopoly will last for only five years after privatization process began.
When will the Government's program for the privatization of small and medium-sized enterprises be
completed?
The privatization of all state companies (including small and medium companies) was completed at
the end of 1999, with the exception of few utilities.
Is the Government planning to sell its remaining minority holding in two of the commercial banks?
Mozambique through its intensive and extensive privatization program still keeps some interests in
private companies, among them the two commercial banks.  Because of this, a strategy has been
prepared.  The main objective of this strategy is to gradually divest from private companies.  This
strategy is currently ready for evaluation and approval by the Council of Ministers (The Cabinet).
3. Investment Regimes
Could Mozambique comment on the extent of the success of her operation of Export Processing
Zones?  What are the benefits and costs?
One of the of successful examples of EPZs is Mozal.  It acts as a powerful magnate, to stimulate the
manufacturing sector.  It will lay the platform for a massive downstream industry and to the balanceof trade.
Zambezi Valley River- Can you please indicate when this regime was put  into law when it was
implemented?  Are the programs discussed as par t of the regimes available to all companies and
industries?
In addition, with the exception of reductions in taxes in these regimes, are any other government aid
programs provided?  That is, does the Government offer any other aid to encourage investment in this
region?
Through Decree 16/98, of 16 April, the Government  granted special incentives for investing and
developing social and economic activities in the Zambezi Valley.  This special regime applies to all
companies and industries that have their core activities located in the Valley.
4. WTO Implementation  Notification
When does Mozambique intend to notify these surcharges?
The Government of Mozambique is making a tremendous effort to fulfil its obligations regarding
WTO, despite its limited resources and Technical Assistance is urgently needed.
Regarding the notification of import surcharges, Mozambique is finalizing the necessary paperwork in
order to submit them to the WTO during the first semester of 2001.WT/TPR/M/79
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Implementation- Customs Valuation
Mozambique requested a delay in implementation of Customs Valuation Agreement in 1996.  There
appears to have been some communication problem since no feedback was received on this request.The agreement assumed therefore, that the silence meant consent.
The Government intends to take the necessary steps with a view to updating its notification on this
issue.
Please advise whether Mozambique has a Regulatory Policy, and whether Mozambique's obligations
under the WTO Agreements are binding under the Regulatory policy if it exists.  What WTOAgreements have been incorporated into law in Mozambique?  When does the Government plan to
notify its SPS enquiry point?
The Marrakesh Agreement Establishing the WTO was ratified by the Republic Assembly.  Since then
all the laws and regulations with direct or indi rect relevance Mozambique Trade policy have been
drafted in strict accordance with the relevant WTO Agreements.  These were, for example, the case of
the Code of industrial Property Rights and the C opyright law.  An extensive survey of national
legislation will be undertaken soon with a view to  assessing the need for adjustment vis a vis the
implementation of all WTO Agreements.  Due to Mozambique's limited technical capacity, a
technical assistance programme is urgently needed.
The WTO Agreements are binding under the Regulatory Policy because once the Agreements are
ratified they become a law within the national legal framework.
5. Technical Assistance
May Mozambique state precisely, which are its most urgent needs for technical assistance?  We
encourage therefore Mozambique to inform this Committee of its technical problems through the
WTO Secretariat as soon as possible, with a view to assessing appropriate technical assistance
solutions.
Would appreciate additional information about wh at assistance is currently being provided by
bilateral donors and international organizations and what the urgent unmet needs are?
Special assistance should be envisaged to help the Government of Mozambique in its efforts to
increase coordination and interaction among the various ministries, technical and private-sector
institutions to enable them to become more active in the area of implementation.
The United States encourages the GOM to submit requests for technical assistance to the TBT
Committee.  In addition, Mozambique should identify  the specific needs that would allow the GOM to
bring its law into compliance with its WTO TBT obligations, which are notified under Article 15.7
and make specific requests for relevant technical assistance.
A trained, skilled and adaptable workforce is essential for the management of a changing economy.
There are a number of institutions that play an important role in the implementation of trade relatedprogrammes but their effectiveness is limited due to lack of sufficiently qualified and experienced
staff and financial resources.
On the other hand the level of awareness on the Multilateral Trading System is generally limited to
the confines of the trade Department of the Ministry of Trade and Industry.  Technical Assistance is
therefore needed in the following areas, among others:WT/TPR/M/79
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- Seminars/workshops on specific themes for both private and public sectors for better
dissemination of WTO agreements, rules and regulations.
- Management aspects of production, packaging and marketing of goods in accordance
with international standards;  agriculture and textile agreements;  TRIMs;  dispute
settlement and WTO rules on anti-dumping;  subsidies, rules of origin and
notifications;  TRIPS and trade negotiations under WTO.
- Market access (training assistance in market development, marketing skills and
product development;  training in strategic planning for targeted markets andproducts;  resources-technology to increase capacity to undertake qualitative and
quantitative market analysis.
- Trade analysis and negotiating capacities at both multilateral and regional levels.
- Commitments.
- Access to international information technology networks,
- Design and adaptation of domestic legislation biding vis a vis WTO agreements.
- Development and enforcement of standards;  Sanitary and phytosanitary measures.- Technical barriers to trade.
6. Regional and Bilateral Agreements
What is Mozambique's schedule for the implementa tion of this protocol?  When will negotiations on
tariffs schedule for the Southern African Development Community (SADC) member countries be
concluded?  What are the main provisions and  what products are included?  Does Mozambique
intend to notify the Trade protocol or other SADC aspects establishing a free trade area to the WTO?
Mozambique is a founder and active member of SADC, and ratified the SADC Protocol in
December 1999.  Some amendments to the Protocol have been negotiated with the rest of the SADC
membership and were agreed upon in August 2000.  Some issues in areas such as rules of origin and
some chapters are still being finalized.  A National multi-sectoral Working Group for implementationof the Protocol is being set up.  Mozambique will begin implementation by the end of the first quarter
of 2001.
Mozambique, like other SADC LDCs, enjoys Pref erential Treatment in its exports.  The main
objective of the SADC Trade Protocol is the liberalization trade, thus creating an expanded market
and increased investment and business opportunities, in order to faster the development of the region.As far as notification to WTO is concerned, the SADC Secretariat is expected to take the necessary
action on behalf of the Members States when the conditions are deemed ripe.
We would like to hear more about how Mozambique sees the prospects for increased regional
cooperation, as well as how regional integration relates to the multilateral system.
Mozambique also has several agreements that aim to provide preferential treatment for products from
your country.  It would be interesting to know to what extent you are actually able to use these
agreements.
With regard to other Agreements, Mozambique, along with its partners, has been actively seeking the
best ways and means of deriving concrete benefits from them.  In some cases, short-term benefits are
not easily visible but the country's affiliation to those agreements opens opportunities for tangible
benefits to be drawn in the medium to long term.
Another area of concern to Mozambique is the need to expand its supply-side constrains through
greater involvement of the private sector, through private investment in areas of greater economic
potential and through other forms of partnership.WT/TPR/M/79
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The creation and strengthening of a modern and dynamic private sector in Mozambique is the
sine-qua-non condition for the country to benefit from the various international agreements it's
associated with.  This would, obviously, be complemented by a well-designed technical assistanceprogramme directed especially to the private sector with the aim of raising its awareness over the
benefits of such agreements.
II. TRADE POLICY
In this section an outline replies to questions raised by members regarding the policies and procedures
in the following areas:  consultative process;  customs valuation;  procedures;  PSI;  tariffs,surcharges, standards, government procurement, and intellectual property rights.
1. Consultative Process
What steps are being taken to improve the quality of the consultative mechanism to ensure that
importers and exporters are aware of future changes to your import regime and whether and how
Mozambique consults with civil society, including NGOs, in order to define its trade policy?
The Government of Mozambique is committed to the promotion of an inclusive and constructive
dialogue at all levels.  As far as trade policy is concerned there are three essential levels ofconsultation:  (i) Inter-Ministerial Group involving the main economic Ministries and the Private
Sector, which meets monthly;  (ii) Annual Conference on Private Sector, led by the private sector with
the participation of the Government, donors and civil society;  and (iii) Customs Technical Superior
Council (CSTA) as the technical forum for the disc ussion of trade policy issues in detail with the
involvement of the private sector.
2. Customs Valuation, Procedures and PSI
The report notes that since 1997 Mozambique's pr eshipment inspection (PSI) has been progressively
reduced.  How is the Government strengthening its customs laws to fulfil this policy ?
A decree was enacted to establish the need for preshipment inspection.  As Custom's capacities
develop, the preshipment inspection is being reduced.  Regularly new regulations are issued to allowsuch reduction.  Eventually, in future, PSI will only be required for those imports in which there is no
technical capacity in the country to evaluate if the commodities fall under any banned products (e.g.
some pesticides such as DTT for which Customs has no technical expertise to evaluate).
Companies report that import clearance procedures take 2-3 weeks on average.  What is the
Mozambican Government doing to speed up clearance, cut back on excessive documentation andreduce re-inspection?
Government data and information show that on average clearance takes about 48 hours.  From the
time the Customs Clearing Agent (despachante) prov ides the regulatory information along with the
request for clearance and the importer pays the duties immediately, the whole process takes 48 hours
on average.  In most cases the delays are not at the Customs point, but on the importer's side.  Thecountry has  a large number of importers and some of them do not know the regulatory processes, and
this delays their processes with their Clearing Agents which are private companies.  Another cause of
delay is when importers do not have enough funds to pay for duties and other taxes for final clearance.
In any case, the Government is preparing an action plan to simplify the import process, which will
help importers to get the necessary paperwork faster.  “Despachantes” are private companies officially
recognized as Customs Clearing Agents and there are no barriers to entry in the business.
Mozambique is considering changes to current legisl ation to further simplify the import process.  AWT/TPR/M/79
Page 38
simplified import process will reduce costs and expedite imports, but it is crucial that higher
competition exists among “despachantes”.
What is the time scale for Mozambique to complete the elimination of the use of PSI?In the context of SADC Trade Protocol, Mozambique has to eliminate PSI within 8 years of its
implementation.  Arrangements are underway to strengthen the technical capacity of Customs to deal
with issues of valuation and classification.  During the last 3 years, Mozambique has reduced its
reliance on PSI and now sends less than 40 percent of imports for inspections.
Explain the reasons for imposing charge under the heading “import surcharges” separately from
ordinary tariffs?
The reasons are to encourage the processing of some goods and provide the necessary safeguard for
the infant industry to develop.
What is the Government of Mozambique planning to do to further simplify its import procedures?
The process to improve the control and efficiency of imports includes a management contract for
Customs with Crown Agents, a specialized  British Company.  A management contract has been in
place since 1998, and also includes the reform of all customs process.  This reform covers:  (i)modernization of systems;  (ii) training and recr uitment of personnel and retrenchment of staff that
cannot adjust to the new needs;  (iii) development of a computerized system;  (iv) revision of the
bureaucratic procedures to simplify imports;  and (v) revision of the legal import framework.  A series
of consultations have been taking place with the private sector to identify steps and a new plan of
action will be prepared.
The WTO Secretariat report notes that Mozambique pursuant to article 20.1 notified the delayed
application to the Agreement on Customs Valuation.  It also states that Mozambique intends to
implement the Agreement on Customs Valuation by the end of 2000.  What is the status of
Mozambique's implementation of th e Agreement on Customs Valuation?
Mozambique asked for delay in implementation later than the 1996.  There appears to have been some
communication problem since no feedback was received on this request.  The Government assumed,
therefore, that the silence meant consent.  In any case an implementation plan is under discussion.
Experts from World Customs Organisation (WCO) and from the Japanese Customs delivered a course
on WTO Customs Valuation Agreement during 15-20 January 2001 in Maputo.  Very soon
Mozambican Government will be assessing the impact of the agreement and a plan for itsimplementation will be drafted.  Mozambique wishes to implement the agreement as soon as the
necessary conditions are put in place.  The targeted date is 2003.
Has the date been set for the approval of the technical Arbitration Committee's Statutes, so that
appeal procedures, dispute resolution and decision on Customs rulings can be made in accordance
with WTO rules?
A Presidential Decree announcing the date has been published in August 2000.  A time limit of 180
days has been set for the approval of the Committee.  A draft of the legislation has been presented to
the competent authority for approval.WT/TPR/M/79
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3. Tariff, Binding and Applied rates;  Surcharges and Other Duties and Charges
Tariff revenue constitutes only a modest proportion of Mozambique's Government revenues.  The
report notes that the recently adopted value-added tax will provide increasing revenue, which isexpected to allow for the further lowering of tariffs.  In what areas is the Government likely to lower
tariffs further?
Mozambique's Government believes that trade liberalization is crucial for the sustainability of rapid
growth.  A Trade Protocol aiming at creating a free trade within the SADC region has been adopted.
The highest tariff rate (consumer goods) will be brought down from 30 percent to 25 percent in 2002.The remaining tariff rates are already lower than in most Southern African Countries (7.5 percent on
intermediate goods and spare parts, 5 percent on capital goods, 2,5 percent on agricultural inputs and
0 percent on medicines and electricity imports).
What is the Government of Mozambique doing to  reduce costs and rigidities on imports:  customs
fees, deposits, penalties and warehousing fees?
Mozambique's Government believes that trade is crucial for growth.  The speeding up of imports and
the reduction of customs costs are an integral part of Government plan.  A private company iscurrently responsible for the management of Customs.  An action plan is being prepared to address
these issues.
Mozambique adopted the Customs Tariff Act.  We would like to have a brief summary of the import
procedures established under the Act .
The company must register as importer within the Ministry of Industry and Trade in order to obtain
the importer's card.  Then obtains from the Customs Department the Import Single Document
(Documento Unico – DU) to start the importation operation attaching the relevant documents.  This
process can be done through Clearing Agents (desp achantes).  A Simplification exercise is underway.
The Customs Department issues a pre-declaration (PD) and if the goods are subject to preshipment
inspection it issues the relevant certificate.  Relevant tariff and taxes (VAT and Consumption) areapplied after verification and the goods are cleared.  For more details, please visit the Website:
www.alfandegas.org.mz.
Explain the perspective to expand the product coverage for tariff binding?
For expansion of the coverage of tariff binding, the Ministry of Planning and Finance jointly with
other Ministries, is currently reviewing the matter.
4. Standards and Other Technical Requirements
Explain what policies and procedures have been deve loped or implemented to ensure that regulators
and standard developers use international standard or their relevant parts and how the 17 standards
mentioned in paragraph 52 use the existing relevant international standards?
Mozambique notified of acceptance on annex 3 to the ISO/IEC on 30 June 1997.  The notification
was published by ISO on the ISO Bulletin Volume 28 of August 28,1997 and was circulated by WTO
under reference G/TBT/CS/N/69, on 8 July 1997, to all WTO members and also published on WTO
TBT Standards Code Directory, fourth edition, on January 1999.  The Mozambican draft Directive,
was prepared based on ISO/IEC directives and it is now in process of revision to be concluded by the
end of the first semester 2001, in order to include  SADC priorities.  The Government through theWT/TPR/M/79
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Standard Body (INNOQ) is in process of setting up a working group that will co-ordinate activities
related to SPS, and it will notify the SPS enquiry point.
With reference to the 17 standards, 5 (salt, wheat flour, maize and maize flour) are based on CODEX
Standards;  10 (cement and testing methods) are based on adoption of European Standards;  2 are
based on Portuguese Standards:  Tile, characteristic and test methods, and Bricks specification and
test methods.  There are another 24 Standards being developed:  16 are adoption of the ISO Standards,
1 from CODEX, 1 based in one OIML recommendation and 6 based on Portuguese Standards.
How the standard will be incorporate in regulation?For salt, since the end of 2000, the use of iodine on salt is mandatory.  The level of iodine on salt was
agreed on Eastern and Southern Africa region and the work was developed together with UNICEF.
The regulation refers that specification for salt wi ll be according to the Mozambican Standard.  The
National Standard is based on CODEX.  When standard is developed according to the paragraph M of
annex 3 of TBT a period of 60 days is allowed for the submission of comments.  The notice is
published in the main newspaper of the country and sent by E-mail or fax to the main parts involved.
Copies of the draft are submitted for comments to the regional body (SADCSTAN).
5. Government Procurement
What is the intention of Mozambique with respect to the accession to the WTO Agreement on
Government Procurement and seeking status  as an observer to the Agreement?
In fact, Mozambique is neither a signatory nor observer to the WTO Plurilateral Agreement on
Government Procurement.  Mozambique does not in tend to become signatory of the WTO Plurilateral
Agreement on Government Procurement.
Does government procurement allow for the procurem ent of products that may have a higher initial
price but provide greater value for money over the life of the product than a competing lower priced
product?
Government procurement does not impede the purchase of higher priced products when higher quality
is the reason.  Government is even concerned with purchases of medical products where for surgery,
for example, quality is vital.
For the government procurement companies have to be registered in the Ministry of Planning and
Finance as suppliers.  Is this registration process different from the regular registration process to
initiate a business in Mozambique?  When there are no sufficient suppliers do the procurement rulesestablish a specialized procedure?
The registration of companies as Government suppliers was established by a decree and it is widely
publicized.  This procedure is different from the regular entry registration process because the
Ministry first of all wants to ensure that supplie rs have fulfilled their obligations with the tax
administration, and have financial and technical capacities to honour their contracts.  When there areno sufficient suppliers the Government invites new suppliers to get registered and to participate in the
procurement process.  However, only very few cases of shortage of bidders have occurred since the
Government currently has more than 600 registered suppliers.WT/TPR/M/79
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6. Intellectual Property Rights
Explain the contents of the draft, as well as the schedule of the legislative process, with reference to
its consistency with the TRIPS Agreement.  How does Mozambique intend to protect geographicallythe products under the trade marks and patents.
The contents of the copyright law recently approved by the Republic Assembly set up the protection
of copyrights of literary works, arts (musical, theatre, phonograms), films, photography, folklore,
applied arts and choreography.  The schedule of the legislative process includes the adoption of the
regulations by the Cabinet this year.  This copyright law as well as the Code of Industrial PropertyRights approved in May 1999 and in force since July 1999 are both consistent with the TRIPS
Agreement.  It is important to note that Mozambique became the first African Country adopting the
Industrial Property Law consistent with the TRIPS Agreement.  The question of protection of
geographical indications will be addressed in the context of implementation of the Code of Industrial
Property Rights.
Explain in detail the contents of such amendment as well as the schedule for doing so, in compliance
with the TRIPS Agreement.
The Government is planning to amend the Code of Industrial Property Rights in order to align it with
the provisions existing in the international legal instruments to which Mozambique is a member, such
as Patents Co-operation Treaty (PCT), the Madrid Agreement and its Protocol on registration of
international marks and the Harare Protocol on protection of regional patents and industrial designs.
It is scheduled to take place during the year 2001 and it is fully aligned with the TRIPS Agreements.
Explain in concrete terms what the National Institute of Intellectual Property is, how is the schedule
for its creation.
The Government of Mozambique intends to create a National Institute of Industrial Property rather
than a National Institute of Intellectual Property.  It s tasks will be to monito r the enforcement of the
Code of Industrial Property and it will be an organ with financial, administrative and patrimonial
autonomy.  Its creation will be completed by the end of year 2001.
III. SECTORAL POLICIES
This chapter addresses questions related to Mozambique sectoral policies.  The chapter is divided in
four sections:  agriculture (food security and self-sufficiency, fertilizer industry, marketing boards,
cashew and sugar);  mining, Mozal and MISP;  industrial strategy and services (trade policiespriorities, GATS, telecommunication and energy).
A. AGRICULTURE:  FOOD SECURITY AND SELF-SUFFICIENCY;  FERTILIZER
INDUSTRY;  MARKETING BOARDS;  CASHEW;  SUGAR
1. Self-sufficiency and Food-security
1.1 Could Mozambique provide information on the measures being adopted at national level with
a view to achieving self-sufficiency and food-security?  Could it equally provide information
in respect of its increased food bill (1% increase) arising from sharp increases of food
imports in recent years?
(a) Mozambique has a national food security and nutrition policy in place, together with
coordinating (SETSAN) and monitoring arrangements (early warning, vulnerability assessments).WT/TPR/M/79
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(b) Mozambique has a national agricultural s ector investment program in place (PROAGRI)
which addresses all components of the agriculture sector relevant to increased productivity and food
security (research, seed sector development, extension, irrigation etc).
(c) Mozambique is already food self-sufficient in aggregate terms in a normal year (i.e.,
excluding floods or droughts) with the exception of rice (investment in small scale irrigation is
planned) and wheat (will always need to import).
(d) A 1% increase in the food bill is insignificant and could be due to "noise" in the data".
However, an increase in imported or "luxury" foodstuffs is a natural result of economic growth and isnot necessarily an indication of lack of food security.
2. Fertilizer Industry
2.1 Are there any prospects for investments in fertilizer production?  Please give details.
Fertilizer consumption in Mozambique is still very low.  Estimates indicate an annual consumption of
about 5,000 MT.  Given this situation of a small fertilizer market, Mozambique is currently receiving
technical assistance from the International Fertilizer Development Center, under the National
Agrarian Development Program (PROAGRI), in order to develop a policy to estimulate the privatesector to distribute it.  With expansion of the fertilizer market, there will be favorable conditions to
also promote local production.  In this view, Mozamb ique is currently developing legal framework for
fertilizer industry.
3. Sugar
3.1 Mozambique's production of sugar is about to rise.  Which are Mozambique's prospects for
sale of sugar on the world market?
Once Mozambique reaches a position of a net surplus, sugar available for export to the world market,
will be low, due to existing and potential access to preferential markets, namely USA, Southern
Africa Customs Union (SACU), and, possibly, the EU.  However, the key regional market for
Mozambican sugar is the Southern African Development Community (SADC).  SADC sugar
producers are organising the trade of sugar within the region to ensure that the structure of the
regional production does not prejudice the low cost sugar producers in the region.  The resulting
Sugar Protocol will ensure that Mozambican suga r has an outlet in the neighbouring SACU market.
3.2 Mozambique took certain measures to protect its sugar processing industry.  Does
Mozambique have the intention to limit these measures in time?
Yes.  As in the case of infant industry protection a deadline has been established for the termination of
this protection.
3.3 What is the mechanism for the variable surcharge on imports of sugar?  How is the surcharge
calculated?
A special regime currently exists for the industrial users of refined sugar.  The industrial sector may
import sugar against a preferential reference price for refined sugar.  The intention is that the
differential between the reference price for industrial imports and standard (non-industrial) imports
would converge to the standard sugar reference price by April 2001.  The current system operates as
follows:WT/TPR/M/79
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(i) The National Sugar Institute (INA), fixes the variable surcharge for raw and refined sugar
every month, according to the difference between the reference price and the calculated c.i.f. prices
applicable to raw and refined sugar imports.
(ii) INA calculates and publishes indicative c.i.f. prices for both raw and white sugar, based on
the prevailing f.o.b. world market for raw and white sugar (the New York No.11 LIFFE No.5
respectively) and a margin of US$80/tonne for freight and insurance for both raw and white sugar.
(iii) Based on this price and the reference price, INA calculates the variable levy, as a percentage
of the c.i.f. price.
(iv) A tariff of 7.5% is applied to the c.i.f. price, and the ad valorem  duty is applied to the
tariff-inclusive price.
(v) Because the surcharge is applied to the c. i.f. price, inclusive of the tariff, the ad valorem
variable duty is adjusted downwards, to avoid double counting.
4. Cashew
4.1 Mozambique pursue a new policy in the domain of cashew in order to reduce the weakness of
its cashew industry.  May Mozambique expose this new policy more precisely?
In order to reduce the weakness of the cashew i ndustry, Mozambique is taking steps toward the
restructuring of the sector.  In 1997, a Cashew Development Strategy was adopted and sectoral
development plans were set up to address all components relevant for its implementation.  The
strategy includes institutional and market reforms,  investment programs to improve incentives to
cashew growers, investment in rural infrastructure, technology research and extension services.
A National Institute of Cashew was created with a view to develop sectoral development plans in
fields of production marketing and industriali zation.  Additionally, to improve dialogue among
cashew stakeholders, a cashew working group was set up comprising producers, traders, processors,
non-governmental agencies and donor community.
4.2 Export tax on raw cashew nuts discourages ca shew nut producers to improve the quality of
the commodity because the export tax depresses its prices.  What is the reason for imposing
the export tax?
The export tax on raw cashew nut was established with the aim of protecting the national industry as
well as to promote increase in agriculture production and productivity.
5. Marketing board5.1 How does the Mozambique Cereal Institute (ICM), a grain marketing board function?  Does
Mozambique allow private trade in cereal?  If so, what is the share of private trade?
The ICM current functions as a Government agency are to promote agricultural production and
marketing through:  (a) development of the capacity and techniques of storage of agricultural produce
in the country and to participate in the definition and extension of conservation technologies forcereals in order to minimize post harvest losses;  (b) renting out of ICM's extensive warehouse
infrastructure to private agricultural marketing companies as these warehouses are scarce and
strategically located in the rural areas with agricultural surplus production.WT/TPR/M/79
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The mandate of the ICM is currently under revision with idea of reformulating its political and
functional mandate and, amongst others, selling the previously mentioned warehousing facilities to
the agricultural marketing private sector with the intention of continuing the agricultural marketingactivities in those areas.
The Government of Mozambique not only allows private trade in cereals it also promotes and
facilitate traders to become active in cereal trad e.  Lately, the Government has not participated nor
intervened in agricultural marketing activities.  Market mechanisms establish prices and no minimum
or ceiling prices are applied.  As a result, private trade in cereal trade is nearly 100%.
B. MINING/MOZAL/MISP
1. Mining
1.1 The Secretariat report states that among the incentives is the exemption of import duties,
taxes, and charges on exploration and mining equipment and other materials imported
during, and for the purpose of, exploration and mining operations.  Additionally, benefits
available in export processing zones might be attractive do downstream processing
operations.  Can you please provide us with more details regarding the incentive programsfor the mining industries?
The mining sector in Mozambique has a special fiscal regime applicable only to mining sector.  All
equipment, machinery and inputs that are to be us ed for mineral exploration and mining are exempted
from import and customs duties, taxes on imports as well as the value added tax (VAT) on the
imports.  All exports of minerals are exempted from any duties as well as VAT.  They only pay aroyalty on the declared value of an average of 3%.  In case of minerals with further processing on
Industrial Free Zones (IFZ), there is no payment of any taxes on exports or imports of equipment,
machinery and input for the smelter or refinery.  In the this case there is only a payment of a rental fee
(a sort of surface tax payable on the amount of the space used on the IFZ), plus one percent on the
total revenue on the IFZ.
2. MOZAL
2.1 Can you please provide further information on the tax incentives that are available to the
MOZAL aluminum smelter project?
MOZAL benefits from full tax incentives on in come tax, customs duties, VAT (which would be
refunded anyway because MOZAL is a 100 percent exporter).  MOZAL has to pay a 1 percentturnover tax following its beginning of production.  Mozambican employees pay wage tax since the
beginning of MOZAL construction.  Expatriate workers benefited from zero percent tax on wage
income during construction, a 40 percent reduction of rates after beginning of production and for
5 years.  At the beginning of the 6th year, expatriate workers will pay full wage income tax.
3. Maputo Iron and Steel Project (MISP)3.1 Do you have further details on envisioned direct-reduced iron project for Maputo and the
associated steel plant?  Would government funds be used for the development of these projects?
There is an advanced feasibility study which is waiting final decision.  The project should take about
3 years to complete.  The MISP will produce and export about $960 million of steel slab, using about
$100 million of gas from Pande.  The estimated co st of the MISP investment is $1,600 million over
42 months, with the Pande gas costing $24 million, and the pipeline $402 million.WT/TPR/M/79
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As of now the Government has not decided whether or not to allocate funds to develop the project.
C. INDUSTRIAL STRATEGY
1. The Secretariat's report briefly discusses Mozambique's recently formulated industrial
strategy policy.  In particular, it mentions that the government of Mozambique is interested in
pursuing export opportunities and import substitution particularly of basic and intermediate
goods.  Can you please provide further information on these points as found in the industrial
strategy paper, if they are publicly available?
The objectives of industrial development identifi ed in the Government's Program include taking
advantage of Mozambique's natural resources and strategic location, the diversification of domestic
industry, the promotion of new industries including the development of micro and small enterprises,
the increase of added value to goods and services, import substitution of intermediate goods,
increased exports along with the stimulation of regional development.
Commodity supply industries for the internal and export markets include sugar and cotton industries,
while export oriented industries comprise cash ew, tea and copra.  On the other hand, import
substitution industries is constituted basically by cereals and fruit and vegetables industries.
D. SERVICES:  TRADE POLICY PRIORITIES;  GATS;  TELECOMMUNICATIONS;
ENERGY
1. Trade policy priorities
1.1 In 1999 Mozambique adopted a formal Trade Policy and Strategy (TPS) to promote economic
and social development and eliminate poverty.  The TPS addresses both internal commerce andinternational trade.  Please explain the major tr ade policy priorities of the TPS and implementation
strategy.
(i) Trade policy priorities:  Trade policy prioritises the activities and areas which:  (a) contribute
towards elimination of the obstacles which confront the development of trade within the country and
the use of currently existing opportunity for a fast recovery of the sector;  (b) promote rural and urbaneconomic integration;  (c) have a dynamic effect on other sectors of the economy and;  (d) contributes
towards the achievement of the trade policy objectives.
(ii) Priorities for the domestic trade subsector:  (a) the rehabilitation and expansion of the rural
trade network;  (b) marketing of agriculture products, mainly from the family sector and enhancement
of food security;  (c) permanent increase in the offer of essential consumer and production goods,inputs and tools, as well as other production factors, and its equitable distribution throughout the
country;  (d) creation of mechanisms which encourage the gradual integration of the informal and
formal sector, while providing the necessary infra-structure;  (e) facilitation and simplification of the
mechanisms for trade licensing;  (f) coordination with concerned institutions regarding the
rehabilitation and development of the road network with particular attention to those that are vital forrural economic activities.
(iii) Priorities for the external trade:  (a) the increase and diversification of exports of non-
traditional products;(b) exploring new markets for export products;  (c) the guaranteed provision of
raw material and equipment for the domestic market to drive the production of consumption and
export goods;  (d) monitoring of external market development and support to exporters in the areas of
market development and quality of product;  (e) increase cooperation and economic integration at
regional level, placing emphasis on the creation of economic infrastructure to improve the utilizationWT/TPR/M/79
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of available national and regional, with the aim of obtaining economies of scale, promotion of trade,
and an improvement in terms of trade;  (f) intersectoral coordination aiming at promoting the use of
national infrastructure by the trade sector for external trade operations.
(iv) Implementation strategy:  The strategy to im plement the trade policy comprises the adoption
of a set of measures that will orientate the development and strategic programming of the activities of
the sector.  Vectors of strategic actions are defined as:  (a) rehabilitation and expansion of the
commercial network;  (b) marketing systems for agricultural products;  (c) food supply and food
security;  (d) promotion of exports;  (e) imports;  (f) international relations;  (g) revitalization of tradeinspection;  (h) revision of trade legislation and simplification procedures;  (i) human resources
development and;  (j) relationship with entrepreneurial sector.
2. GATS
2.1 Mozambique's privatization plans and its plans to increase competition in the
telecommunications sector, might be advanced if were to make specific commitments on
telecommunications under the GATS, and undertake the obligations contained in the
Reference Paper on Telecommunications.  Does Mozambique intend to make specificcommitments in the General Agreements on Services (GATS)?
In the context of the SADC trade protocol, an ongoing process of evaluation of the effects of trade in
services by identifying the potential of this area in the region and to negotiate the liberalization.
Mozambique will benefit from this situation in the sense that will be able to evaluate the possible
commitments in the GATS context.
2.2 We commend Mozambique for the steps it has already taken to promote competition in the
services sector of its economy.  We believe that Mozambique can enhance its own
competitiveness in the global economy by allowing its consumers ready access to better,
cheaper and more diversified services.  The Secretariat's report point out that although these
service sector comprises approximately 37% of Mozambique's GDP it has only recentlyreceived serious attention.  Mozambique's schedule of specific commitments under GATS is
limited to banking and other financial services (excluding insurance).  These commitments
fall far short of its current level of openness in services, is Mozambique considering
increasing its commitments?
Yes.  The Government is in the process of as sessing the situation in order to determine what
additional commitments to make and when.
3. Telecommunications
3.1 In view of government's stated intention, in paragraph 74, to maintain a stake in Mozambique
Telecom, is the Government considering creating an independent telecommunications
regulatory authority in place of the Telecommunications Regulatory Authority(quasi-governmental entity)?
Yes.
The following, answers questions 3.2 to 3.9 below
Mozambique is in the process of developing a strategy for privatization as well as actions plans for
subsequent phases of the liberalization of the sector.  The studies on this matter are being carried out
with the assistance from the World Bank.WT/TPR/M/79
Page 47
The monopoly situation currently enjoyed by TDM, according to the telecommunication law, will end
by year 2004, after that Mozambique expects to have a free market in this area.
The entry of a new supplier of cellular service will follow pro-competitive principles, i.e., it will be by
a public tender which will be launched during the first semester of 2001.
The problematic of access to the infrastructure of existing operator will be dealt within the context of
a global strategy which is being prepared for the liberalization process and its subsequent phases.
Mozambique is in the process of contracting a consultant to assist in the process of tender and
licencing of the second supplier of cellular service, during the first semester of 2001.  According tothe Terms of Reference for the consultancy, there will be a revision of the existing legal framework of
the sector in order to create and promote a favour able environment towards transparent competition.
Thus the questions of international independent gateway and interconnection issues will be reviewed
before the new operator begins to supply cellular services.
3.2 It is noted that the current monopoly enjo yed by the government owned company (TDM) is
intended to last until 2004 while limited privatization is expected in 2001.  Would
Mozambique reveal details of the privatization plan and advise on any plans for furtherliberalization of the sector?
3.3 With possible integration of new suppliers of cellular service and thus putting an end to the
monopoly of the government ow ned company, would Mozambique consider adopting
pro-competitive principles (e.g. the basic telecommunication reference paper) so as to
facilitate competition in the sector?
3.4 Page 9, para. 22.  The continued reforms of the services sector, particularly telecomm and
transport, appears to be one of the key police areas in the future for improving trade
performance.  What is Mozambique's intention in this respect?
3.5 Page 53, paras. 72 and 74.  What is the time frame envisaged by Mozambique in this respect?
How will the regulatory framework evolve in order to address the issues that arise with theadvent of new competitors;  in particular how will this issue of access to the infrastructure of
existing operator be tackled?
3.6 Page 53, paras. 72 and 74.  The EU is puzzled by the wording of these paragraphs which
seems to imply that privatization of the existing operator could postpone the introduction of
competition.  Any monopoly, whether public or private, has little incentive to reduce prices,whereas the existing operator would be forced to improve the quality of its services, reduce
its costs and ultimately gain market value if exposed to competition.  Could Mozambique
explain this statement and its rationale vis- a-vis the need to cut costs and increase
teledensity?
3.7 Para. 73.  What are or will be the respective responsibilities of the Ministry of Transport and
Communications (MTC) and the Telecommunica tions Regulatory Authority in terms of
attributing licenses and scarce resources and in terms of ruling on interconnection issues?
3.8 Para. 85.  Experience in liberalization shows that it is particularly necessary to have precise
rules about rates, delays, physical conditions, etc, so that the existing operator does not
retain an advantage that prevents competition.  Has Mozambique decided when the new
cellular operator will be allowed?  Will it have to use TDM as a gateway and in the
affirmative why?  How can it negotiate satisfactorily interconnection without any neutralWT/TPR/M/79
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guidelines from the regulator or without the possibility to resort to body that would assess
whether the terms of interconnection are not hampering competition?
3.9 What plans do the government have to privatize Mozambique Telecomm (TDM) which is
currently monopoly provider?  When will the government license a second provider for
cellular service?
4. Energy
4.1 A public enterprise, Electricity of Mozambique (EDM) currently maintains a monopoly on the
management of the grid.  Recently however Mozamb ique enacted legislation to facilitate the
introduction of electricity in smaller cities and towns through power co-generation.  Have
any electricity co-generation projects been started yet?
There is no co-generation projects in Mozambique as yet.  There are however new small Thermal
Stations Supplying some villages.  This is already a result of the liberalization of the electricity
industry in Mozambique to be more specific.  The areas where these new power stations are installed
are:  Vilanculo, Inhassoro and Montepuez.  The stations are being operated by private entities.
__________