RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/80
19 January 2001
(01-0083)
Trade Policy Review Body Original:  French
TRADE POLICY REVIEW
MADAGASCAR
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Madagascar is
attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Madagascar.Madagascar WT/TPR/G/80
Page 3
TABLE OF CONTENTS
Page
I. INTRO DUCTION ................................................................................................................. 4
II. TRADE POLICIES  AND PRACT ICES.............................................................................. 4
A. GENERAL ECONOMIC AND TRADE POLICY OBJECTIVES ................................................. 4
1. General economic po licy object ives........................................................................... 4
2. General trade poli cy objectives.................................................................................. 5
B. SECTORAL TRADE POLICY OBJECTIVES ......................................................................... 6
1. Agriculture.................................................................................................................. .6
2. Tourism...................................................................................................................... .. 6
3. Fisheries .................................................................................................................... ... 6
4. Energy ....................................................................................................................... ... 7
5. Mining ....................................................................................................................... ... 7
6. Electri city.................................................................................................................. ... 7
7. Telecommunications ................................................................................................... 8
8. Crafts....................................................................................................................... ..... 8
9. Transport.................................................................................................................... .9
C. GENERAL DESCRIPTION OF THE IMPORT AND EXPORT REGIME ................................... 10
1. Imports...................................................................................................................... .1 0
2. Exports...................................................................................................................... .1 1
3. Trade in servic es ....................................................................................................... 11
D. LEGAL AND REGULATORY TRADE POLICY FRAMEWORK ............................................. 11
1. National laws and regulations governing the implementation of
trade policy ................................................................................................................ 11
2. Formulation and review of trade po licies ............................................................... 12
3. Multilateral, regional and b ilateral trade agreements........................................... 13
E. IMPLEMENTATION OF TRADE POLICY .......................................................................... 15
1. Trade policy measures.............................................................................................. 15
2. Trade liberalization programme ............................................................................. 16
III. ECONOMIC REFO RM PROGRAMME ......................................................................... 16
IV. IMPORT AND EXPO RT TRE NDS................................................................................... 17
A. IMPORTS ...................................................................................................................... 17
B. EXPORTS ...................................................................................................................... 17
C. TERMS OF TRADE ......................................................................................................... 17
D. TRADE BALANCE ......................................................................................................... 17
V. CONCLUS ION ................................................................................................................... .1 8WT/TPR/G/80 Trade Policy Review
Page 4
I. INTRODUCTION
1. The Republic of Madagascar, the fourth largest island in the world, is 1,600 km long, 580
km wide and has a coast line of 5,000 km.  Its surface area is 587,041 km2, with 4 per cent of arable
land, 40 per cent of forests and 10,800 km2 of irrigated land.
2. Madagascar is located in the south-west of the Indian Ocean, 350 km from the coast of
south-eastern Africa.  The climate is predominantly tropical and displays marked contrasts:temperate on the plateaus, hot and humid in the east, subtropical in the west, and tropical and dry in
the south.  It has variable rainfall and there are frequent cyclones in the east and south-east.
3. With its biological diversity and exceptionally high rate of endemism (80 per cent for its
fauna and 90 per cent for its flora), it has a very rich subsoil containing various minerals.
4. The population is currently estimated at 15 million, with 80 per cent in rural areas.
5. With an annual per capita income of US$260, it falls into the category of the least-developed
countries (LDCs).
II. TRADE POLICIES AND PRACTICES
A. 
GENERAL ECONOMIC AND TRADE POLICY OBJECTIVES
1. General economic policy objectives
6. In the context of its structural adjustment programme, Madagascar has applied a controlled
budgetary policy (reduction of the budget deficit), a cautious financial policy (control of inflation
and of the expansion of the money supply) and sectoral reforms (privatization, liberalization,
independence of the Central Bank), which have led to an increase in private savings and credit to the
economy and, consequently, to a growth in investment.  In Madagascar, the interest rate is a
monetary policy instrument in the hands of the Central Bank and it is therefore flexible.
7. In 1997, economic growth outstripped the population growth, of 2.8 per cent, reaching 4 per
cent in 1988 owing to an increase in property in vestments and a substantial growth in trade, in
service sectors, such as telecommunications and tourism, and in the industrial free zones.
8. The State has withdrawn from the production and distribution sector in order to devote itself
more to its supervisory role, thereby attaching greater importance to the social field and putting in
place infrastructures that are needed for the development of the private sector.
9. To this end, it will continue to support the State private sector cooperation platforms and
will create a favourable environment for investment and trade.
10. The Government, through the Technical Committee for Public Sector Reform (CTRP), has
reformed the civil service and initiated efforts for improving the quality of the public sector.
11. In order to improve the quality of the local workforce, the Government has set up a ministry
responsible for vocational training and technical education.
12. The Government has removed all barriers to the setting up of a healthy and fair competitive
environment.  It will ensure that there is equality  of opportunity for all players involved in economicMadagascar WT/TPR/G/80
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activity and will establish a structure to settle trade disputes.  A more liberal property policy is also
being introduced.  Finally, the protection of property and persons is one of the State's priorities.
13. In order to improve tax revenue and progressively reduce the dependence on customs
revenue, the administration has adopted a number of measures such as broadening the VAT base
while controlling inflation, introducing excise duty, re stricting exemptions, increasing controls in the
granting of special tax and customs regimes and reorganizing the tax and customs administration in
order to increase the tax ratio by three GDP percentage points.
14. After a substantial depreciation in the Malagasy franc following the floating of the currency
in 1994, relative exchange rate stability has been established since 1995.  This rate is freely
determined by the market (Interbank Foreign Exchange Market-MID).  The Central Bank may
intervene in this market with the sole aim of smoot hing any fluctuations in the Malagasy franc.  All
restrictions on exchange and on current external transactions have been abolished.  The opening offoreign currency accounts is authorized, as are foreign currency loans.
15. The free floating of the Malagasy currency enabled exports to grow and imports to be kept
under control, thereby reducing the external current account deficit.  In order to support exports, the
installation of industrial zones and free zones has been encouraged.  Air transport has also beenliberalized.
2. General trade policy objectives
16. Madagascar's new trade policy is oriented towards the implementation of the liberal policy
adopted by the Government.
17. In this context, the objectives are as follows:
- The establishment of healthy and fair competition;- consumer protection;
- the promotion of international trade with particular emphasis on export activities
("Made in Madagascar") through diversification of products and export markets;
- the exploitation of possibilities offered by regional and international organizations;
- the broadening of the platform for ongoing collaboration with the private sector;
and
- making commercial activities more professional.
18. In general, the chief objective of the trade policy of the Republic of Madagascar is to
contribute to poverty reduction:  to allow the commercial and private sectors to be the driving force
in economic growth.WT/TPR/G/80 Trade Policy Review
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B. SECTORAL TRADE POLICY OBJECTIVES
1. Agriculture
19. Given that the rural population accounts for 80 per cent of the total population, Madagascar's
economic revival depends initially on the development of the primary sector.  Taking this into
account, the Government has established the Rural Development Action Plan (PADR), the chief
objectives of which are as follows:
- To redefine and improve the efficiency of the institutions and players involved in
the implementation of agricultural policy;
- to identify the key infrastructures and other investments for which the Government
must be directly or indirectly responsible;  and
- to redefine and/or clarify the roles and responsibilities of all the players involved in
rural development.
20. The marketing periods for certain agricultural products for export are managed by the
Ministry of Trade in collaboration with the local authorities according to the location of markets in
rural areas, with a view to having quality products on the market.
2. Tourism
21. Tourism is one of the most important sources of foreign exchange for the country.  Having
an environment that is rich in fauna and flora, Madagascar has all the necessary assets fordeveloping tourism.  In this sector, the Malagasy Government has set as its main objective the
sustainable development of high-quality tourism based on the following guiding principles:
- Contribution to the national strategy for poverty reduction by the creation of jobs
and activities that generate income;
- development of tourism with due regard for the environment, socio-cultural values
and national heritage;
- development of high quality tourism;- contribution, as far as possible, to the foreign trade balance through the promotion
of international tourism;  and
- encouragement of regional initiatives at the south-west Indian Ocean level.
3. Fisheries
22. Being an island, Madagascar is surrounded by sea, which is rich in fishery resources.
Currently, the main source of foreign currency in this area is shrimps.  This has led the Government
to develop different forms of fishing, namely trad itional, small-scale and industrial.  The Malagasy
Government has also set itself the following objectives:
- To optimize the economic and social impact of fisheries;Madagascar WT/TPR/G/80
Page 7
- to ensure sustainable development of the fisheries sector;
- to rationalize the exploitation of fishery resources;  and
- to step up surveillance of Malagasy territorial waters.
23. Under this policy, the Government has adopted competitive, transparent and non-
discriminatory measures for granting and withdrawing shrimping licences.
24. The Ministry of Fisheries and Fishery Resources is implementing a fisheries control and
surveillance programme in collaboration with all the partners concerned.
4. Energy
25. The principal sources of energy in Madagascar are wood and coal.  The continuing use of
these, however, is a threat to the environment.  In order to provide energy for all the Malagasy
people and conserve the environment at the same time, the Government has fixed as overall
objectives in this sector the sustainable supply of high-quality energy at universally affordable
prices, as well as the gradual extension of  services to the whole of the population.
26. In this field, three fundamental principles underpin the action to be taken:
- To rationalize the conditions of supply, production, distribution and consumption of
energy with due regard for the long-term interests of the country;
- to respect fundamental environmental balances and encourage rational management
of rural districts in areas of forestry operations for energy use;  and
- to enable the rural and urban population to have access to a  modicum of energy
services.
5. Mining
27. Mining is a key sector in Madagascar's development strategy.  The  country has an
abundance of mining resources, including chromium, gold and precious stones.  The mining policy
in Madagascar is contained in the new Mining Code and the Government will be drafting a law
establishing the tax regime that will be applicable in this field.  The general principles governing this
sector are liberalization and withdrawal of the State.
28. This policy, in line with the Government's economic reform programme and defining the
respective roles of the State and private sector, calls for investment by mining operators, while
clearly spelling out their rights and obligations.
6. Electricity
29. In Madagascar, there are two forms of electricity production:  thermal and hydroelectric.
The electricity supply is particularly concentrated in urban areas, and this is an obstacle to
industrialization in rural areas.  In certain sectors, electricity consumption is regarded as an indicator
of performance.  With a view to providing an el ectricity supply for the whole of the island, the
Government has adopted a law reforming the electricity sector which provides for majorWT/TPR/G/80 Trade Policy Review
Page 8
participation from the private sector in the operation thereof in such a way as to promote
competition.
30. In order to achieve this objective, the Government plans to:
- Privatize the State-run company JIRA MA, the sole operator in this field;
- lay down rules which will allow the system to produce and sell at least cost;  and- set up an autonomous regulatory body.
7. Telecommunications
31. Liberalization in this sector has favoured the advent of private mobile telephone operators,
producing an average growth rate in this sector of 11 per cent in 1998 and 1999.  As in the case of
electricity, spatial coverage of the networks remain s restricted only to the urban centres with great
economic potential.
32. Apart from the postal service which remains the exclusive domain of the State, the Malagasy
Government has established a policy for liberalizing the telecommunications sector and opening it
up to local and foreign competition by adopting the following measures:
- Reform/restructuring of the sector;
- promotion of private initiatives by establishing the infrastructures necessary for
investment;  and
- increased public access to the telecommunication service.
33. The policy for development of the sector is the responsibility of the Office malgache d'étude
et de régulation des télécommunications  (OMERT), the regulatory body under the auspices of the
Ministry of Posts and Telecommunications.
34. There is free investment in this field and all investors are treated equally.
8. Crafts
35. Madagascar has immense potential for the export of craft products, with an abundance of
raw materials of animal, vegetable and mineral origin, as well as recycled material.
36. The objectives of the craft sector are as follows:
- To increase the craft industry's contribution to GDP to 18 per cent;- to encourage this area of activity to become part of the formal sector and increase
exports;
- to bring a professional dimension to the craft industry;  and
- to set up professional associations.Madagascar WT/TPR/G/80
Page 9
37. Accordingly, the following actions have been undertaken:
- Setting up the Espace Promotion de l'Artisanat  (Craft Promotion Forum) with the
task of informing, guiding, supporting and assisting any operator and seeking toregister craftsmen in order to enhance their awareness and encourage them to move
out of the informal sector;
- setting up the Conseil régional de l'artisanat  (Regional Crafts Council) in each
provincial administrative centre and establishing the Conseil national de l'artisanat
(National Crafts Council);
- raising craftsmen's awareness with a view to their integration into professional
circuits;
- training craftsmen in specific fields in order to improve the quality of craft products;
- promoting craftsmen by giving support, advice and assistance and creating contacts
between craftsmen and national and international operators;  and
- setting up a pilot professional association in certain regions.
9. Transport
38. The Malagasy Government has progressively withdrawn from this sector and is pursuing the
privatization of transport services.  It also envisages adopting policies calling for all the appropriate
institutional and regulatory modifications that will make it possible to:
- Give priority to rehabilitating transport that has a direct impact on the development
of economic and tourist activities and on rural development;
- rebalance intermodal distribution by promoting alternative means of transport;
- maintain freedom of pricing;
- introduce organization and management mechanisms to support transport
infrastructures, while increasing the capacity for mobilizing local resources;  and
- develop a framework for partnership between the central government, regions,
beneficiary communities, the private sector and associations with regard to
investment and infrastructure management.
Road transport39. The State has adopted a road charter and will do everything possible to apply it.  It has also
set up a road maintenance fund (FER) and will involve the private sector in infrastructure
management.  In this field, Government measures will comprise:
- The adoption of a rural transport policy;WT/TPR/G/80 Trade Policy Review
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- the acceleration of the restoration or construction of roads for opening up remote
areas, thereby giving access to markets and helping to reduce the isolation of
individuals and communities.
Air transport
40. The State has set up Aviation Civile de Madagascar  (ACM), which is a regulatory body for
air transport.
41. The focus of Government action will be on rehabilitating, renewing and modernizing
existing infrastructure and maintaining secondary airports and meteorological stations.
Maritime transport42. The Malagasy maritime transport companies have been privatized and the management of
secondary ports has been placed in the hands of private operators.  The rehabilitation andmodernization of existing infrastructure also form part of the State's priorities.  As a parallel
measure, the development of river transport is also envisaged.
Rail transport43. In this field, the objective is to rehabilitate infrastructure in line with the priority investment
programme to be defined.  The State has already withdrawn from the sector and the franchising ofthe sole Malagasy railway company, RNCFM, is under way.
C. 
GENERAL DESCRIPTION OF THE IMPORT AND EXPORT REGIME
44. In the context of implementation of the structural adjustment policy which the country has
been undertaking since the late 1980s, numerous measures have been adopted concerning foreigntrade:
- Dismantling import licensing systems and other non-tariff barriers;- gradually eliminating tariff duties affecting intra-regional trade;- applying three non-zero rates of 5 per cent, 15 per cent, and 25 per cent, vis-à-vis
countries that are not members of the IO C and COMESA, with a weighted average
of 15 per cent;
- removing all restrictions affecting exports from Madagascar, with the exception of a
small negative list;  and
- eliminating all restrictions affecting the trade in services.
1. Imports
45. The promulgation of Ordinance No. 88-015 of 1 September 1988 on foreign trade signalled
the beginning of a vast programme of economic reform for Madagascar.  With the introduction of
the Liberalized Import System (SILI) in 1992 and the issue of Decree No. 96-777 of
3 September 1996 which completed the liberalization of imports in Madagascar, local operators are
no longer required to have special cards to be able to import goods.  Licensing and priorMadagascar WT/TPR/G/80
Page 11
authorizations have been abolished and importers are able to obtain freely the foreign currency
needed for conducting their operations.  The purchase and sale of foreign currency are undertaken
freely between the operator and the local bank at a rate of exchange negotiated between them.  The
opening of foreign currency accounts is now also authorized following the issue of Decree No. 95-082 of 24 February 1995 and there is no longer any restrictive ceiling for those travelling abroad,
and there is no longer any limit on the number of exits per year.  However, a negative list still exists
for reasons of health, safety and protection of the environment.
2. Exports
46. The issue of Decree No. 95-346 of 9 May 1995 completed the liberalization of exports of
Malagasy products with the exception of a small list concerning products subject to prior
authorization with a view to rational management of the national heritage, or prohibited under
international conventions to which Madagascar is a party, such as CITES.
47. In addition, contrary to the situation before liberalization, export activities may be
undertaken by any natural or legal persons provided they respect the regulations in force.
48. Finally, international transactions are negotiated freely between economic operators to
enable the latter to have wide-ranging freedom in their activities.
3. Trade in services
49. Air transport, financial services, consultancy work, tourist activities and telecommunications
have already been liberalized.  A law regulating the insurance sector has just been promulgated.
D. 
LEGAL AND REGULATORY TRADE POLICY FRAMEWORK
1. National laws and regulations governin g the implementation of trade policy
50. The Constitution is the supreme legal text, followed by laws, ordinances, decrees and orders.
The Constitutional Court rules on the constitutionality of trade legislation after the latter has been
examined in the Council of Ministers.
51. Trade policy is defined in the poverty reduction strategy paper (PRSP).
52. The President of the Republic has the power to negotiate and conclude international
agreements, which are ratified by the National Assembly.  He may delegate this power to a Minister
or to a member of the Executive.
53. The laws governing trade are:
- The import and export regulations (Decree No. 92-424);
- Law No. 97-024 of 1997 Instituting a National Regime for the Standardization and
Certification of Products, Goods and Services;  and
- the Law on Tourism.
54. Laws on competition and on consumer protection are currently being examined by the
Executive.WT/TPR/G/80 Trade Policy Review
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55. In addition to these laws, there are regulations concerning investments, the financial and
banking sector, customs tariffs, services and intellectual property.
56. The promulgation of Ordinance No. 88-005 concerning the banking and financial sector
marks the beginning of reforms in the area of pa yments.  The privatization of the two State banks,
the BFV and the BTM, has ended the State monopoly in this sector.  This has encouraged the arrival
of foreign banks such as UCB (Banque Commerciale Mauricienne), Crédit Lyonnais/BNI, BanqueNationale de Paris/BMOI, Société Générale/BFV, Bank of Africa/BTM, BSM and SBM.  It should
be mentioned that Madagascar has joined the SW IFT network, an international network for the
transfer of funds and financial information, and the arrival of Western Union and the agreement
between the latter and the Caisse d'Epargne is bound to develop financial institutions in Madagascar,
to which may be added the project for the development of financial institutions (PRODIF).  Law No.95-030 authorizes the establishment of offshore banks and the practice of leasing.  The Central Bank
has also been given a new, autonomous status.  A Banking and Financial Supervision Commission
(CSBF) has been set up with the aim of ensuring compliance with regulations and competition in the
financial sector.
57. Madagascar currently applies a floating exchange rate in accordance with Order
No. 2.972/95 of 13 June 1995.  The value of the Malagasy franc in relation to the different
currencies is determined freely according to supply and demand on the Interbank Foreign Exchange
Market (MID), in which the key players are the primary banks and the major companies.  There are
also approved foreign exchange offices.  Capital inflows and current transactions have also been
liberalized.
58. The Investment Code has been abolished and replaced with the General Taxation Code.
Only investments in the context of the free zone currently require prior authorizations.  At theMinistry for the Development of the Private Sector and Privatization, there is a business
development facilitation centre ( Centre de Facilitation de Création d'Entreprise  - CFCE), which
takes care of formalities surrounding the creation and registration of companies.  Its aim is to reduce
the processing time.
59. Foreign investments are no longer subject to regulatory restriction.  The law no longer
applies a share purchase ceiling for local or foreign investments.  Foreign and national investments
are subject to the same terms and conditions.
60. Exit visas have already been abolished for nationals and foreign residents, and conditions for
obtaining a residence visa and work permit have been eased for foreigners.  It is currently possible to
obtain a temporary visa at Ivato airport for a single entry valid for 7 to 30 days.  Short-stay andmultiple-entry visas may be obtained from Malagasy embassies and consulates abroad.  As regards
residence permits and work permits, the length of time taken to process each case has been reduced
to approximately two weeks and businessmen are eligible for preferential treatment.  The Malagasy
Government  is, however, prepared to ratify  the COMESA Protocol on the free movement of
persons.
2. Formulation and review of trade policies
61. The Ministry of Trade and Consumer Affairs is responsible for formulating Madagascar's
trade policy and implementing it in cooperation with other departments such as the Ministries of
Finance and the Economy, Budget and Developmen t of the Autonomous Provinces, Industrialization
and Crafts, Industry, Energy and Mining, Agriculture , Private Sector Development and Privatization,Madagascar WT/TPR/G/80
Page 13
Transport and Meteorology, Posts and Telecommunications, Tourism, Justice, Livestock Farming,
Fisheries, the Central Bank and the Technical Secretariat for Adjustment.
62. The private sector in Madagascar is widely associated with the elaboration and application
of trade policy via platforms for cooperation through the Reflection Committee on Competitiveness(CRC), representing major professional groupings, as well as professional associations.
63. The Ministry of Trade and Consumer Affairs, which regulates foreign trade, is responsible
for handling questions connected with the WTO and other multilateral trade questions.
64. Madagascar's trade policy is geared towards the implementation of commitments made
pursuant to WTO Agreements.
65. In this context, the Malagasy authorities end eavour to ensure conformity with the various
WTO agreements.
3. Multilateral, regional and bilateral trade agreements
66. The Republic of Madagascar, having opted for a liberal economy, has devoted itself to
creating the necessary conditions for its harmonious integration into the global economy by thediversification of its trade relations.  Hence, multilateral, regional and bilateral agreements have been
concluded.
Multilateral agreements
67. Madagascar acceded to the General Agreement on Tariffs and Trade (GATT) on
30 September 1963.
68. By signing the Final Act of the Uruguay Round and the Marrakesh Agreement Establishing
the World Trade Organization (WTO) on 15 April 1994, Madagascar became an original Member on
17 November 1995.
69. Madagascar enjoys the advantages granted to developing countries for the implementation
of a number of WTO commitments.  However, it is encountering difficulties in implementing the
WTO Agreements and decisions because of a lack of institutional and human capacity.
70. Madagascar grants MFN treatment at least to all its trading partners.  The aim of the
Malagasy authorities is to implement all obligations arising from the commitments made at the
multilateral level by drawing up appropriate laws and regulations.
71. Madagascar is a member of the United Nations.
Regional agreements
72. Madagascar belongs to three regional groups:  the Common Market for Eastern and
Southern Africa (COMESA), the Indian Ocean Co mmission (IOC) and the ACP-EU Partnership
Agreement.
73. Madagascar's regional cooperation policy follows the recommendations of the Cross-Border
Initiative (CBI), now the Regional Integration Facilitation Forum (RIFF), designed to facilitateregional integration in Africa.WT/TPR/G/80 Trade Policy Review
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(a) COMESA
74. The aim of this Organization is to:
- Promote cooperation and development of its member countries in all areas of
economic activity;  and
- strengthen the process of economic integration of the region.
75. The members have adopted a programme for the elimination of tariffs, which has been
applicable in nine (9) countries, including Madagascar, since October 2000.
(b) IOC
76. The IOC was set up to promote economic, social, cultural and other forms of cooperation
between the five islands of the Indian Ocean, namely Madagascar, Comoros, Mauritius, Réunion and
the Seychelles.
77. In the area of trade, the implementation of the Integrated Regional Programme for the
Development of Exchanges (PRIDE) since 1995 is ai med at the development of inter-island trade by
stimulating the private sector through the removal of barriers to trade.
(c) ACP-EC Partnership Agreement
78. Madagascar is a signatory to the Lomé C onvention, which became the ACP-EU Partnership
Agreement in February 2000.
79. This Agreement was concluded with a view to promoting and accelerating the economic,
cultural and social development of the ACP States.  Its main objective is poverty reduction.
80. Products originating from ACP countries will continue to qualify for tariff preferences on
the European Market up to 2007.
Bilateral agreements
81. Madagascar has concluded trade and cooperation agreements at the bilateral level with a
view to promoting trade relations on the ba sis of Most-Favoured-Nation (MFN) treatment.
82. The period from 1961 to 1985 was marked by the proliferation of agreements concluded
between Madagascar and its partner countries.  A total of 39 agreements were signed, namely:
- one between Madagascar and the Gulf States;
- two between Madagascar and members of the IOC;- three between Madagascar and Asian countries;
- six between Madagascar and African countries;  and
- 27 between Madagascar and European countries.Madagascar WT/TPR/G/80
Page 15
Trade agreement currently being concluded:
- Algeria – Madagascar.
Trade agreements under negotiation:
- Mauritius - Madagascar;- India - Madagascar;- Iran - Madagascar;- Russia - Madagascar;
- Turkey - Madagascar.
Memorandum of Understanding between Madagascar and Namibia signed in October 2000.
Other agreements83. Madagascar is a beneficiary country of the Ge neralized System of Preferences (GSP).  It
also signed the Agreement setting up the Common Fund for Commodities (CFC).
E. 
IMPLEMENTATION OF TRADE POLICY
1. Trade policy measures
(a) Customs tariff structure
84. In order to meet the requirements of a liberal economy, Madagascar has been reforming the
tariff system since 1988 in the context of the Structural Adjustment Programme.
85. The 1998 tariff comprised some 69 rates of duty;  the country has now regrouped these into
four categories:  50 per cent, 15 per cent, 25 pe r cent and 30 per cent with a weighted average of
17 per cent.
86. In its Letter of Intent sent to the IMF in June 1999, the Malagasy Government announced its
wish, in the context of the 2000 budget, to reduce the number of rates of customs duty to three in
conformity with the RIFF objectives.
87. The maximum external tariff rate (customs duty + import tax) has also been progressively
reduced:  from 80 per cent in 1988 to 30 per cent since 1997.
88. An excise duty is applicable to imports.
89. It should be noted that the COMESA Common Ex ternal Tariff will be instituted as of 2004.
(b) Customs valuation
90. The customs valuation procedure currently in force in the Republic of Madagascar is based
on the Brussels definition;  but application of the GATT Valuation Code is currently under
consideration.WT/TPR/G/80 Trade Policy Review
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(c) Preshipment inspection
91. From 1983 to 1990 Madagascar had a preshipment inspection contract with the Société
Générale de Surveillance (SGS) for all imported goods.
92. The contract was subsequently renewed with Bivac Veritas and is still valid.
2. Trade liberalization programme
93. Since 1988, Madagascar has been implementing a programme of progressive liberalization
of trade.
94. Import and export licences have been abolished.
95. Consultancy work, tourism, financial services, air transport and telecommunications have all
been liberalized.
96. In the context of its structural adjustment programme, Madagascar has undertaken, on a
reciprocal basis, to observe the timetable for tariff reduction set out in the 1996 Law on Finance  vis-
à-vis  the IOC and COMESA countries.
97. To this end, Madagascar and Mauritius have been applying the zero per cent rate to their
trade in originating goods in the context of the IOC since 1 January 2000.
98. As regards COMESA, nine countries including Madagascar have joined the free-trade area
since 31 October 2000.  
III. ECONOMIC REFORM PROGRAMME
99. For the next three years, the Government's programme will focus on reducing poverty,
i.e. increasing the standard of living of the popu lation.  Improving the standard of living, however,
depends on development which, in its turn, is the result of a high rate of sustainable growth.  In order
to achieve this, the Government will adopt a strategy based on stimulating supply in a stablemacroeconomic context.
100. The low rate of growth recorded to date is disproportionate to the country's resources.  In
order to stimulate supply, the Government should mobilize not only all economic players but also all
available resources in sectors such as tourism, mining, the manufacturing industry, fisheries and
agriculture, and this must be done in a rational manner.
101. The medium-term objective is a growth rate of 15 per cent per year for tourism, over 5 per
cent per year for mining, 9 per cent per year for manufacturing industry and 5 per cent for
agriculture.
102. In order to achieve these objectives, a substantial amount of investment is needed.  The
Government must therefore create an environment which will stimulate foreign direct investment,taking account of the lower level of domestic savings.
103. As regards the macroeconomic context, improvement of public deficits, control of inflation
and the pursuit of a cautious monetary policy are the main focuses of the reform.Madagascar WT/TPR/G/80
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IV. IMPORT AND EXPORT TRENDS
A. IMPORTS
104. It must be recognized that Madagascar's imports of various products have increased greatly
since the liberalization of trading activities.
Imports by category
C.i.f. value in FMG Net weight in tonnesCategory1996 1997 1996 1997
Foodstuffs 195,464,545,165 244,695,139,022 111,807 126,895
Energy 650,826,100,000 600,750,276,920 834,352 668,652
Equipment 663,899,440,187 743,621,652,562 26,343 32,190
Raw materials 491,425,290,624 701,304,777,971 169,915 209,105
Consumer goods 438,390,069,502 619,551,759,466 31,261 51,886
Source:  INSTAT.
B. EXPORTS
105. Exports of traditional export products (coffee, vanilla, cloves, cocoa) have fallen:
- In 1993:  35 per cent;
- in 1996:  24.8 per cent;  and- in 1997:  16.12 per cent.
106. Exports of non-traditional products (meat, sugar, cotton fabrics, shrimps) have increased:
- In 1993:  64.7 per cent;
- in 1996:  75.2 per cent;  and- in 1997:  83.8 per cent.
107. The growth in exports of fish products (shrimps, lobsters), which represent on average 16
per cent of the total value of exports, should be emphasized.
C. 
TERMS OF TRADE
108. From 1993 to 1995, there was an improvement in the terms of trade, from 19.7 per cent to
10.4 per cent.
109. Since 1996 the terms of trade have deteriorated, which can be explained by the fall in the
prices of export products in relation to the increase in the price of imports.
D. TRADE BALANCE
110. The evolution of foreign trade between 1991 and 1997 shows an increasing deficit in the
trade balance (from –134.6 to –211.5 billion SDR).WT/TPR/G/80 Trade Policy Review
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V. CONCLUSION
111. Since 1980 Madagascar has been undertaking a vast programme of economic reform with
the gradual introduction of a market economy.  This new direction gives a dominant role to private
sector promotion.
112. Accordingly, the reshaping of trade policy is focusing on the following points:
- Withdrawal of the State from economic activity;
- the introduction of free pricing;- liberalization of trade;
- adaptation of Madagascar's laws and regulations to the new economic environment;
and
- promotion of the private sector.
113. The rule of law, good governance and transparent, predictable and non-discriminatory
institutional structures have been established.
114. The Malagasy Government has shown that it is determined to open up its economy, by fully
participating in initiatives and agreements on the promotion of multilateral, regional and bilateral
trade, in order to enjoy the resulting advantages.  The Malagasy authorities have continued their
cooperation and regional integration efforts in the context of poverty reduction strategies.
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