WT/TPR/S/80 Trade Policy Review
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
(1) INSTITUTIONAL FRAMEWORK
1. Madagascar has been an independent Republic since 26 June 1960.  The current constitution,
approved by referendum in March 1998 and replacing the 1992 Constitution, provides for more
autonomy to the provinces (e.g. administration of municipalities and provincial police, and
management of public utilities).
2. The Constitution calls for a parliamentary form  of regime with a separation of powers among
the executive and legislative bodies.  The Parliament is intended to consist of two chambers:  the
National Assembly and the Senate.  The Senate has yet to be put in place.  Municipal and provincial
elections were scheduled to be held before the end of 2000;  all the institutions called for in the
Constitution will be established by March 2001.
3. Madagascar's President is elected by direct, universal suffrage for a five-year term, renewable
only once.  The President serves as head of State.  The President is responsible for matters of national
sovereignty such as foreign affairs and national defence;  he appoints a Prime Minister.  The Prime
Minister appoints his cabinet of ministers with the approval of, and in consultation with, the President.
The Prime Minister and his Cabinet constitute the Council of Government.  The President, the PrimeMinister and the Cabinet together constitute the executive branch.  The constitutional framework
intends that the National Assembly, with the approval of the Senate (once established), can impeach
and remove the President.  The President and the Council of Government can dissolve the National
Assembly by decree.
4. The unicameral National Assembly has 138 deputies, all elected to serve four-year terms.  A
Speaker, elected from among the deputies, leads the National Assembly.  The last election for the
National Assembly was held in 1998.  The National Assembly has established 12 commissions eachwith responsibility for a particular subject matter.
1
5. Madagascar's three-level judiciary is based on the French system.  Appeal is from the Court
of First Instance, through the Appeal Court, to the Supreme Court.  Magistrates are appointed by the
President (orders in the Council).  Madagascar also has a Constitutional Court.
6. For administrative purposes, Madagascar is divided into six provinces:  Antsiranana,
Mahajanga, Toamasina, Antananarivo, Fianarantsoa, and Toliary.
(2) FORMULATION AND IMPLEMENTATION OF POLICIES
7. The Council of Government is responsible for planning and formulation of government
policy.  The Council's role is to aid and advise the President on national policies.
8. The agencies in charge of trade policy formulation include the Ministries of Trade and
Consumption;  Finance and the Economy (currently the portfolio of the Prime Minister);  Agriculture;
Budget and Autonomous Provinces;  Industr ialization and Handicraft;  Energy and Mines;
Privatization and Private Sector Development;  Public Works;  Justice;  Information, Culture and
Communication;  Transport and Meteorology;  the Central Bank of Madagascar;  and the Technical
Secretariat for Adjustment.
                                                     
1 Malagasy National Assembly online information.  Available at:  http://www.an.online.mg/en/
discours.htm.Madagascar WT/TPR/S/80
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9. Trade policy implementation is primarily the responsibility of the Ministry of Trade, which is
responsible for regulating imports, promoting exports, ensuring fair trade, protecting certain
intellectual property rights, and setting and enforcing standards.  The Ministry also has responsibility
for regional initiatives such as the Common Market for Eastern and Southern Africa (COMESA), the
Indian Ocean Commission (IOC), and the Cross-Border Initiative (CBI), as well as the WTO and
most other multilateral trade issues.  The Ministry of Budget and Autonomous Provinces isresponsible for the collection of taxes and import duties.  Other ministries have responsibility for trade
issues that fall within their overall responsibilities (e.g., the Ministry of Agriculture).
10. There are no formal coordinating bodies for the formulation and implementation of trade
policy.  All of the concerned agencies work together to address trade-policy-related issues as
necessary.  A national committee to follow the implementation of the WTO Agreements will beestablished.  There are no independent bodies with a formal mandate to carry out public review and
assessment of the Government's trade policy.
11. The private sector provides input into trade policy formulation through groups organized
according to sectoral branches;  the traditional branches of coffee, spices, and rice;  and through
professional associations, such as the Reflection Committee on Competitiveness (CRC), grouping allprivate associations, Femmes Entrepreneurs de Madagascar (FEM), Syndicat des Industries de
Madagascar (SIM), Chamber of Commerce, Indus try and Agriculture (CCIA), and Groupement des
Entreprises de Madagascar (GEM).
12. The legislative process calls for the executive and legislative branches to share the legislative
initiative.  Each ministry develops the text of a proposed new law in its field of activity.  The relevant
department within the responsible ministry studies the proposed law and provides advice thereon.
The Council of Government examines the bill and presents it for adoption in the National Assembly.Once adopted by the Assembly, the bill is examined by the Constitutional Court, which assesses the
constitutionality of every bill before it is promulgated by the President and published in the gazette.
The President may send the bill back to the Nationa l Assembly (only once) for further consideration.
13. Madagascar's legal system is based on the Napoleonic Code and the 1998 Constitution, with
traditional local additions.  The hierarchy of Malagasy legal instruments is as follows:  theConstitution is supreme.  In descending order of importance are laws of the National Assembly,
decrees setting out the regulations implementing the laws, and orders.
14. The WTO Agreements do not have the force of law but, like all international treaties, are
implemented through the legislative process.  The Constitutional Court assesses the constitutionality
of a proposed treaty;  the treaty is then ratified by the National Assembly and promulgated by thePresident.  Domestic laws are brought into conformity with the treaty following ratification and
promulgation.
(3) P
OLICY OBJECTIVES
15. Since the mid 1990s, the Government of Madagascar has taken significant steps to reform and
liberalize its economy and to encourage domestic and foreign investment.  The Government intends tocarry on the reforms, emphasizing poverty reduction strategies.
16. While Madagascar does not have any formally enunciated overall trade-policy objectives,
government policymakers focus on the promotion of Malagasy exports and the maintenance of open
markets abroad, with particular emphasis on areas where Madagascar has export capacities, such as in
agriculture (e.g. coffee, vanilla, and litchi) and fisheries.WT/TPR/S/80 Trade Policy Review
Page 12
17. Production and exports of mineral products are being promoted;  new legislation is to be
adopted to promote private investment in the sector both by nationals and foreigners (Chapter IV(3)).
A new law was adopted in 1999 to further increase exports by companies in export-processing zones
(section (4)(iv)).
18. Madagascar's trade policy is guided by WTO rights and obligations.  Madagascar is also
committed to the process of regional integration, and is pursuing closer ties with neighbouring Africannations.  In this context, intra-regional trade is to fully reflect comparative advantages of each member
country.  Areas so far earmarked for Madagascar  include seafood, wood, building materials, and food
products.  Madagascar also intends to further promote domestic production of these goods by the
private sector.
(4) L
AWS AND REGULATIONS
(i) Trade legislation
19. Madagascar's legislation relating to international trade is contained in a variety of laws,
decrees, and regulations.  The most important among these is Ordinance No. 60-084 of
18 August 1960, which regulates import procedures , and the computation, exemption, and remission
of duties.  Law No. 99-032 of 3 February 2000, the 2000 Finance Act, contains the newly enactedtariff schedule for Madagascar (Harmonized System, eight-digit level).  Laws that have an impact on
trade are shown in Table II.1.
Table II.1
Trade-related laws
Law Area
Ordinance No. 60-084 of 18 August 1960 Import procedures, computation of duties, exemptions and remission of duties
Law No. 99-032 of 3 February 2000 Tariff schedule
Law No. 96-015 of 13 September 1996 Foreign Direct Investment
Law No. 91-020 of 12 August 1991 (under review) Export Processing Zones
Law No. 99-013 of 24 November 1998 Insurance
Law No. 95-017 of 25 July 1995 Tourism
Decree No. 92-993 of 2 December 1992 Protection of industrial property
Law No. 94-036 of 9 December 1994 Protection of literary and artistic works
Decree No. 99-024 of 20 January 1999, modified by
Decree No. 2000-109 of 16 February 2000National Council on Standardization
Decree No. 92-424 of 3 April 1992 Import/export regulations
Law No. 96-034 of 13 December 1996 Telecommunications
Law No. 99-022 of 30 July 1999 Mining
Law No. 98-019 of 2 December 1998 Arbitration
Law No. 99-025 of 19 August 1999 Companies (transparency)
Source: Information provided by the Malagasy authorities.
(ii) Investment regime
20. Madagascar has undertaken significant efforts to encourage foreign direct investment in the
Malagasy economy.  Since 1996, foreign direct investment has been completely liberalized and most
sector-specific investment regulations have been eliminated and replaced by a scheme of taxincentives.  Investment in Madagascar is given na tional treatment.  With a few exceptions, mainly in
areas still under state control (Chapter III(4)(i)), 100% foreign ownership is permitted in most sectors,
including commercial banking.  Ownership of land is still problematic for foreigners although the
Government has committed itself to streamlining the process of securing long-term leases to address
concerns of foreign investors.Madagascar WT/TPR/S/80
Page 13
21. Investment in Madagascar is governed by a variety of laws.  Law No. 96-015 of
13 September 1996 provides for general guarantees for investment in Madagascar.  In 1994,
Madagascar established a "one-stop shop" for assisting prospective investors, mainly in administrative
procedures.  However, this entity did not have legislative authority and served primarily as a clearing-
house for information and to facilitate the interact ion between potential investors and relevant line
ministries.  Currently, an office called Espace Promotion des Investissements (EPI), within theMinistry of Industry, promotes local and foreign investment.  The EPI canvasses local markets andprovides information on business opportunities in Madagascar to prospective investors.
22. An entity needs to be legally established in Madagascar in order to benefit from investment
incentives.  The incentives include reduced tax on profits, accelerated depreciation on goods related to
the investment, reduced customs duties of 5% on imported equipment, and exemption from import
and excise taxes during the start-up of an investment.
23. Special benefits are directed toward investment in agriculture, fisheries, crafts,
manufacturing, mining, energy, touris m (hotels), and transportation.  For example, taxes related to the
acquisition of buildings is reduced from 12% to 10% for these activities.
(iii) Mining
24. The Government of Madagascar has been working with the World Bank to encourage the
process of reform in the mining sector.  As part of that effort, Madagascar has liberalized investment
provisions in the mining sector to encourage foreign investment.  Currently, the Government is in theprocess of enacting new mining legislation, which wo uld provide incentives for projects in excess of
US$200 million.
25. Enterprises engaging or intending to engage in  the mining sectors are required to follow the
approval process administered by the Ministry of Energy and Mines.  Ownership of minerals is vested
in the State and mining activities are subject to licensing requirements.
(iv) Export-processing zones
26. Madagascar has been actively promoting export-oriented activities since 1991, and
export-processing zones (EPZs) in particular, as a means of increasing foreign direct investment.  Theregulations related to EPZs are governed by Law No. 91-020 of 12 August 1991, which is currently
under review.  About 50% of the companies licensed to  operate within EPZs are concentrated in the
apparel and textile branches, with the balance divided among food processing, footwear, jewellery,and service providers such as data processing (Table II.2).
27. Enterprises are eligible to participate in EPZs if their activities can be classified in at least one
of the following categories:  export-oriented manufacturing;  development or management of EPZs;provision of export-oriented services, including serv ices to EPZ companies;  or production of inputs
intensively used by other EPZ enterprises.  EPZ en terprises must export at least 95% of their output.
Subject to prior authorization by the customs administration, the enterprises may sell up to 5% of their
production in the local market;  customs duties are levied on those sales.  Legislation was passed in
1999 to overcome difficulties related to the enforcement of EPZ eligibility criteria (mainly thethreshold of 95% of the production for export).  Under this legislation, EPZ companies pay a
refundable 20% VAT on imports of inputs.  The refund is made within one month upon proof of
export and is intended to ensure that EPZ products do not end up on the domestic market.WT/TPR/S/80 Trade Policy Review
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Table II.2
Firms and investment in export-processing zones, 1994-99
Activities No. of firms No. of employees Investments (FMG billion)
Agro-food processing 31 2,346 58
Textiles 126 38,831 328
Hides and skins 5 477 5
Wood processing 21 1,567 39
Data processing 26 2,163 20
Chemicals 8 549 17
Electrical and mechanical 4 129 5
Mineral processing 5 380 29
Handicrafts 15 1,951 9
Jewellery 7 477 9
Other 3 142 13
Enterprises promoting and managing EPZs 1 66 112
TOTAL 252 49,048 644
Source: Information provided by the Ministry of Finance and Economy.
28. Incentives under the EPZs scheme include:
- a grace period on the corporate tax for the first 2-15 years of operation (depending on
the type of business), the rate of taxation is 10% as opposed to 33% for non-EPZ
companies;
- after the grace period, the corporate tax is reduced by an amount based on 75% of the
non-initial investment;
- exemption from customs duties and taxes on imported equipment, inputs, spare parts,
packaging, and building materials;
- taxation of dividends is reduced from 25% to 10%;
- 99 year leases are available for investment (land is generally not available for
purchase by foreigners);
- free repatriation of profits after payment of taxes;  and
- 100% foreign ownership.
29. Investment in the EPZs comes primarily from:  France;  Mauritius;  India;  Hong Kong,
China;  and Malaysia.  Employment in the EPZs is estimated to be approximately 50,000 (see alsoChapter IV(4)).
(5) T
RADE AND INVESTMENT AGREEMENTS AND ARRANGEMENTS
(i) Multilateral agreements
30. Madagascar signed the Final Act of the Uruguay Round and the Marrakesh Agreement
establishing the World Trade Organization on 15 April 1994, and became a member of the WTO on
17 November 1995.2  Under the Single Undertaking, all WTO Multilateral Agreements were to
become binding on Madagascar.
31. As a developing country, Madagascar benefits from a transition period to implement a
number of its commitments under various WTO Agreements.  Pursuant to Article 20.1, Madagascar
has notified the delayed application of the Agreement on Implementation of Article VII of
GATT 1994 (Customs Valuation);  Madagascar intends to implement the Agreement by
November 2000.
                                                     
2 Madagascar deposited its instruments of ratification with the GATT Secretariat on 18 October 1995.Madagascar WT/TPR/S/80
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32. Madagascar grants at least MFN treatment to all its trading partners.  Table II.3 shows
Madagascar's status in relation to notification requirements under the WTO agreements as ofNovember 2000.
Table II.3
Selected notifications by Madagascar
Agreement Article/instrument
imposing obligationsWTO document date Comment
Agreement on Implementation
of Article VI of GATT 1994Article 16.4 G/ADP/N/47/Add.1/Rev.1
20.04.99Semi-annual report on anti-dumping actions
Agreement on Implementation
of Article VII of GATT 1994Annex III(2) WT/LET/112
25.09.96Reservation on implementation of the
Customs Valuation Agreement
Agreement on Implementationof Article VII of GATT 1994Annex III(3) WT/LET/112
25.09.96Reservation on implementation of the
Customs Valuation Agreement
Agreement on Implementation
of Article VII of GATT 1994Annex III(4) WT/LET/112
25.09.96Reservation on implementation of the
Customs Valuation Agreement
Agreement on Implementation
of Article VII of GATT 1994Article 20.1 WT/LET/85
09.05.96Deferred application
Agreement on Import
Licensing ProceduresArticle 1.4(a) and
8.2(b)G/LIC/N/1/MDG/2
31.03.00Absence of import licensing.
Agreement on Pre-shipment
InspectionArticle 5 – first time G/PSI/N/1/Add.4
31.07.96Implementation of Pre-shipment Inspection
Agreement
Agreement on Rules of Origin Article 5.1, Annex 2(4)
– first timeG/RO/N/11
31.07.96Rules of origin measures
Agreement on Trade-Related
Aspects of Intellectual
Property RightsArticle 69 IP/N/3/Rev.3/Add.5
25.05.99Contact point for intellectual property issues
Agreement on Trade-Related
Investment MeasuresArticle 6.2 G/TRIMS/N/2/Rev.7
18.01.00Identification of TRIMs
General Agreement on Trade
in ServicesArticle III:3 S/C/N/110
07.10.99Annual report on services actions
General Agreement on Trade
in ServicesArticle III:3 S/C/N/132
06.10.00Law on activities and control of credit
institutions
General Agreement on Tradein ServicesArticle III:3 S/C/N/133
06.10.00Decree on minimum capital requirements
General Agreement on Trade
in ServicesArticle III:3 S/C/N/134
06.10.00Order on new exchange system
General Agreement on Trade
in ServicesArticle III:3 S/C/N/135
06.10.00Order concerning transfers of profits
General Agreement on Trade
in ServicesArticle III:3 S/C/N/136
06.10.00Order concerning the opening of exchange
bureaux
General Agreement on Trade
in ServicesArticle III:3 S/C/N/137
06.10.00Decree and Order on the regulation of
foreign currencies
General Agreement on Trade
in ServicesArticle III:4 or IV:2 S/ENQ/37
21.01.97National enquiry point for trade in services
Source: WTO Secretariat.
33. Madagascar is active in the WTO, representing its own interests.  Nonetheless, familiarity
with the WTO Agreements is generally limited to the Ministry of Trade.  General awareness and
understanding of the Agreements and their impact are not widespread within the Malagasy public or
private sectors.
34. Malagasy officials are continuing the process of preparing legislation and regulations
consistent with various WTO obligations.  Technical assistance is viewed to be essential for
Madagascar to achieve full compliance.
(ii) Trade-related assistance
35. In the context of its participation in the GATT and then in the WTO since 1995, Madagascar
has regularly utilized the technical assistance provided by several international institutions, including
the WTO Secretariat.  Until 1996, this technical assistance was provided on a one-off basis inWT/TPR/S/80 Trade Policy Review
Page 16
response to requests made by the Malagasy authorities.  Following the adoption of directives on
providing technical assistance on the basis of parameters set by the Committee on Trade and
Development, a three-year plan was drawn up for all the countries benefiting from such aid, including
Madagascar.
36. As part of the preparations for the high-level meeting on the least-developed countries in
October 1997, the Malagasy authorities undertook a special assessment of their overall needs coveringa period of several years.
3
37. This assessment was to serve as the basis for a subsequent round table on Madagascar's trade,
called for in the integrated framework (WT/LDCH L/1/Rev.1).  The round table did not take place,
however, due to problems in implementing the integrated framework itself.  Despite these problems,
the first assessment of needs, in 1997, showed that the needs listed were not sufficiently detailed and
had not been classified in order of priority.  It also showed that the replies given by the six
agencies/institutions only partly responded to the needs expressed.  Consequently, several agencies
were unable to implement the technical assistance indicated in their replies.
38. In the context of this Review of Madagascar's trade policy, a WTO mission undertook an
assessment of the technical assistance that could be provided on a long-term basis.
39. The conclusions set out below establish a link between the trade policy review exercise and
the support needed, as well as the preparation of the meeting of the World Bank's advisory group, atwhich one of the main questions should be how to respond to the trade policy concerns expressed.
40. The technical assistance assessment shows that Madagascar wishes to ensure that aid
provided by the WTO would help in attaining the following objectives:
(i) assist Madagascar's efforts to give the various economic and political sectors in
Malagasy society better information on the multilateral trading system and itsdevelopment;
(ii) help in training the actors/groups of persons who should have expertise in the various
multilateral issues so that they can fulfil their task of advising decision-makers or
implementing various instruments of Madagascar's policy;
(iii) assist the Government of Madagascar in implementing the agreements it has
voluntarily concluded, in particular the commitments made upon its accession to theWTO;
(iv) allow Madagascar to adapt better to the realities of multilateralism by helping it to
become more familiar with trade negotiations and better defend its interests;  and
(v) allow Madagascar to make better use of the various instruments/tools needed for the
conduct of its trade policy.
Information
41. Information on the trade system continues to be one of the essential parameters for
Madagascar.  The scant awareness of the multilatera l system noted in this respect, both among public
authorities and in the private sector and universities, results in an inadequate understanding of the
advantages and challenges of the multilateral system.  This explains in part Madagascar's difficulties
in implementing its commitments within the WTO.
                                                     
3 WTO document WT/COMTD/IF/6.Madagascar WT/TPR/S/80
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42. Information is not conveyed satisfactorily, especially by the media.  Neither the press nor the
audio-visual media appear to attach great importance to the WTO and the multilateral system;  if they
do it is on an ad hoc basis only.  The Malagasy authorities would like to see explanatory material
provided to the national media on a regular basis and the inclusion of these institutions in the lists for
WTO publications/bulletins/reviews.  A wish was also expressed that journalists from the
representative national press be invited to WTO Ministerial Conferences with their expenses paid.
43. Few information seminars have been held in Madagascar.  Most information activities have
been undertaken in the capital, Antananarivo, although one seminar was held at Toamasina in 1999.
The Malagasy authorities expressed the hope that, in future, other activities could be organized both in
the capital and in the five other provinces.
44. Information sessions or seminars of a general nature are usually organized by a particular
Ministry, for example, the Ministry of Trade and/or the Ministry of Foreign Affairs;  the other
ministries invited show little interest.  This lack of interest is probably because these Ministries are
unaware of the areas of convergence between their own activities and the WTO's spheres.  This has
been noted in the case of agriculture, indust ry, telecommunications, environment, and justice.
45. Information activities directed at these institutions are needed on a regular basis according to
a timetable to be included in the national implementation plan, and through better circulation of
information.
46. With regard to the private sector, with the exception of some actors, business circles are not
well informed about the multilateral trading syst em, which they see as preventing them from
maintaining their well-established position in the domestic market after liberalization.  Only one
information session has been organized since 1994, by the Chamber of Commerce and Industry of
Antananarivo.  Special information sessions, directed at the world of business or their representativeinstitutions, are needed both in the capital and in the provinces, utilizing in particular their support
institutions.  A request has been made for assistance to hold sessions in two cities, Majunga and
Nossi-Bé.
Training
47. Training should be directed at every sector and at all levels of Malagasy society dealing with
questions related to the WTO Agreements.  Only around a dozen officials, mainly from the Ministryof Trade, have participated in the GATT/WTO regular trade policy training courses;  and three
officials from the Ministry attended the short-term trade policy courses organized by the WTO since
1998 for the least developed countries.  No official from other ministries has followed the trade policy
training courses held by the WTO.
48. As a first step, officials from the other Ministries concerned by multilateral activities should
be given an opportunity to take part in training activities.  In view of Madagascar's considerable needs
in the area of training, consideration should be given to organizing such activities on a regular basis,possibly annually, in the form of special training courses at the national level.
49. These activities could be held in addition to the short-term training courses organized by the
WTO for the least developed countries.  They could be carried out at the regional level, as is the case
for the training courses for LDCs, more specifically in the context of a trade policy course for
members of the Indian Ocean Commission.  It is esse ntial that representatives of the private sector be
involved in these projects.WT/TPR/S/80 Trade Policy Review
Page 18
50. Shorter training courses, in the form of special seminars on particular subjects, these have
been held only infrequently, and there has often been too long a gap between them.  The Malagasy
authorities would like to see such seminars organize d on a regular basis, in line with the points being
discussed in the multilateral context.  The participants sent to these courses have often been
generalists and not specialists in the subjects of these seminars, this is particularly true of the SPS and
TBT Agreements, rules, and the environment.
51. Some officials have referred to the possibility of organizing courses or training modules on
the multilateral trading system for their own staff.   This has been proposed in connection with the
curriculum at the National Customs School in Toamasina (e.g. on the valuation method based on the
transaction value), and in the Ministry of Trade and the Ministry of Agriculture.
52. Lastly, several enquiries were made regarding the possibility of taking part in the training of
trainers programme, as it operates within the JITAP programme, in which Madagascar has officially
requested to participate.
Implementation
53. The burden related to implementing the various WTO Agreements is so important that public
and business sectors wonder whether Madagascar will be in a position to meet its obligations in themedium term.  The constraints can be classified unde r the following headings:  (a) notifications;  (b)
adaptation of legislation;  and (c) effective implementation.
(a) Notifications
54. As at November 2000, only few notifications have been sent to the WTO Secretariat
(Table II.3).  The reasons for this shortcoming can be found in the reticence of the technical ministries
to notify to the WTO on matters that they consider  to be within their exclusive domain.  This mainly
reflects unawareness of the obligations undertaken by the Government of Madagascar when itacceded to the WTO.
55. Some senior officials do not understand why they are asked to notify when they are unable to
take action due to the absence of legislation, for example, on anti-dumping or safeguards.  Further
problems concern the number, complexity, and technical nature of the majority of the many
notifications requested.
56. Some notifications are not made because they require concerted action and proper
coordination, and do not allow for disputes over competence among the various ministries and
institutions.
57. Therefore, the Malagasy authorities would like further assistance on notifications, especially
in the form of technical missions to the various ministries/institutions concerned.
(b) Adaptation of legislation
58. Madagascar is facing a problem in adapting its legal system to the WTO Agreements.
Nevertheless, an effort is being made by the authorities, particularly the Ministry of Justice.  This
work, which covers, inter alia , the Code of Commerce, is being undertaken as part of an overall
reform of the judicial system, being carried out with the support of several bilateralinstitutions/partners, including the World Bank and the Caisse Française de Développement.Madagascar WT/TPR/S/80
Page 19
59. The amendment of existing legislation (in particular the definition of dumping) or the
preparation of legal acts to incorporate the WTO Agreements (in particular, safeguards) into
Malagasy law, would appear to be a relatively long-term and difficult task due to their scope and the
limited resources available, as well as political problems underlying any change.
60. Technical assistance on the legal matters, for example, in the form of opinions and advice,
could also be provided by the WTO Secretariat, at the request of the authorities.
(c) Effective implementation
61. Problems in implementing the WTO Agreements remain, despite the technical assistance
provided by various institutions such as the WTO, the World Bank, the WIPO, the WCO, the FAO,
the IOE, and UNCTAD, and despite the transitional periods allowed to Madagascar as an LDC.
62. The Malagasy authorities have drawn attention to  significant problems related mainly to the
training of staff in the ministries responsible for implementation;  some of these problems go beyond
the framework of trade policy implementation.
63. These difficulties are due to scarcity of resources for implementing the Agreements in relation
to, inter alia ,  customs valuation, technical barriers to trade, sanitary and phytosanitary regulations,
and intellectual property;  the lack of human resources to carry out the implementation;  and disputes
over competence resulting from the overlap between institutions/ministries (information does not
circulate freely among them).  Furthermore, the customs administration intends to update
computerization of customs data;  therefore, it needs the related material.  The version of theAutomated System for Customs Data and Management (ASYCUDA) currently used by the customs
administration needs to be updated.  Equipment is also needed for tests, sanitary and phytosanitary
controls, and to combat infringements of intellectual property rights.
64. Overall, substantial technical assistance should be envisaged for the effective implementation
of the Agreements, particularly those on customs valuation, technical barriers, sanitary regulations,
intellectual property, and anti-dumping and safeguards.  However, it would be necessary first toundertake an in-depth assessment of the assistance needs of each institution concerned.
Participation in the multilateral system
65. In the context of Madagascar's future participation in the multilateral trading system, contacts
in Geneva and within the Ministries in Antananarivo indicate that additional technical assistance isneeded from international institutions, including the WTO.  The technical ministries do not receive
regular information on the multilateral system and its issues, especially the ministries with
competence for agriculture and services;  they do not appear to be in a position to prepare/advise theGovernment on such matters.
66. In general, all the ministries contacted wished to be better prepared for the future negotiations
and their issues through technical assistance, for example, in the form of specialized workshops.
They also wished to be better prepared, for example, through training negotiators, negotiation
simulation exercises, and workshops on the techniques used.
67. The Malagasy authorities would like to improve their understanding of the specific issues
resulting from the decisions taken at ministerial sessions, particularly as regards e-commerce and the
environment.  For competition and trade issues, as well as trade facilitation, the technical assistance
provided by the various institutions appears to correspond to the needs noted.WT/TPR/S/80 Trade Policy Review
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Reference centre
68. The WTO Reference Centre is situated within the Ministry of Trade.  However, among its
problems is the failure of other ministries to use its facilities.  This is due to the lack of publicity about
the Centre, both among the other ministries and the private sector.  It is also particularly difficult for
any potential user outside the Ministry to have access to the Centre;  and maintenance costs,
particularly for repairs, and the high cost of office equipment needed to operate the facilities,including the printer, are limiting factors.  Very few people have been trained to use the computer
equipment and electronic documentation;  at present, no ministry official is able to use the e-mail.
About ten people seem to be able to make effective use of the equipment provided.
69. The hard copies of documents provided by the WTO are not suitably stored nor logically and
systematically organized;  there is no librarian attached to the Centre.  Breakdowns appear to occur
frequently, however, repairs generally take several weeks, during which the Reference Centre is notoperational.
(iii) Regional agreements
70. At the regional level, Madagascar's economic cooperation arrangements currently revolve
around the African region, including the Common Market for Eastern and Southern Africa
(COMESA), the Cross-Border Initiative (CBI), and the Indian Ocean Commission (IOC).
Madagascar intends to join the Southern African Development Community (SADC).
(b) Common Market for Eastern and Southern Africa
71. Madagascar became a member of the COMESA in 1995.  The current members are Angola,
Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya,
Madagascar, Malawi, Mauritius, Namibia, Rwanda , Seychelles, Sudan, Swaziland, Uganda, Zambia,
and Zimbabwe.
72. The COMESA Treaty superseded the Preferential Trade Area for Eastern and Southern
African States (PTA).  Its agenda is to deepen and broaden the integration process among member
States through:  the adoption of more comprehensive trade liberalization measures, such as the
complete elimination of tariff and non-tariff barriers to trade and the adoption of a Common External
Tariff (CET);  the free movement of capital, labour, goods, and right of establishment withinCOMESA;  the adoption of a common set of standa rds and technical regulations, quality control
procedures, certification schemes, and sanitary and phytosanitary regulations;  the standardization of
taxation rates (including value-added tax and excise duties), and conditions regarding industrial
cooperation, particularly on company laws, intellectual property rights and investment laws;  and the
establishment of a Monetary Union.
4
73. COMESA members resolved to create a free-trade area (FTA) by 31 October 2000.5
However, only nine of the twenty members, i.e.  Djibouti, Egypt, Kenya, Madagascar, Malawi,
Mauritius, Sudan, Zambia, and Zimbabwe, met this deadline.  Other members are to join the FTAover the coming year.  COMESA has also agreed  to implement a Common External Tariff by 2004;
the CET will be 0%, 5%, 15%, and 30% on capital goods, raw materials, intermediate goods, and final
goods, respectively.
6  In 1998, intra-COMESA trade am ounted to some US$1.5 billion and
represented 7.7% of total exports by the member States, down from 9% in 1970.7
                                                     
4 COMESA online information.  Available at:  http://www.comesa.int/background.htm.
5 COMESA online information.  Available at:  http://www.comesa.int/trade/tradftao.htm.
6 COMESA online information.  Available at:  http://www.comesa.int/finance.htm.
7 Financial Times , 31 October 2000.Madagascar WT/TPR/S/80
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74. In order to facilitate trade within the regi on, COMESA members have agreed to implement
the Automated System for Customs Data and Management (ASYCUDA) and EUROTRACE.  The
objective of ASYCUDA/EUROTRACE is to assist the business community to clear goods faster from
customs areas, make available up-to-date and accurate international trade statistics, modernize
customs administrations and, through improved efficiencies, increase revenues.8  Madagascar has
implemented ASYCUDA and EUROTRACE.
75. COMESA rules of origin stipulate that goods must be:  wholly produced;  contain imported
content of not more than 60% of the c.i.f. value of the total cost of materials used in production;
contain not less than 45% ex-factory value added;  or contain not less than 25% value added if the
final product is considered to be of particular importance to the economic development of
member States.  All goods eligible for preferential tariff treatment must be accompanied by aCOMESA Certificate of Origin, completed, stamped, and authenticated by the authorized signatories
in the country of origin.  Once the FTA is established, the rules of origin are to be simplified.
9
76. The Monetary Harmonization Programme is to be implemented in four phases, from 1992 to
2025.  The final phase should culminate in full monetary union, which will imply the use of
irrevocable fixed exchange rates, a single currency, or parallel currencies;  full harmonization ofeconomic, fiscal, and monetary policies of member States;  full integration of the financial structure of
member States;  pooling of foreign resources;  and the establishment of a common monetary
authority.
10
77. The COMESA Heads of State have established several institutions to assist members in
attaining their development objectives:  the Eastern and Southern African Trade and Development
Bank (PTA Bank);  the COMESA Clearing-House;  the PTA Reinsurance Company;  and the
COMESA Bankers' Association.  The PTA Bank provides trade and project financing to public and
private investors domiciled in member States .  At present, the Bank has 15 members11;  Madagascar is
not yet a member.
78. The COMESA Clearing-House was brought into existence when the countries of the region
had strict exchange control regimes in place and foreign exchange was scarce.  The importance of theClearing-House has diminished as most of the CO MESA countries have liberalized their foreign
exchange markets.
12  The PTA Re-Insurance Company (ZEP-RE), established in 1990, has
17 signatories and is aimed at  fostering/assisting the development of the insurance and reinsurance
industry in the COMESA sub-region, and promoting the growth of national, sub-regional and regional
underwriting and retention capacity.13  The COMESA Treaty also prov ides for a Court of Justice
(section (v) below).
(c) Indian Ocean Commission
79. The Indian Ocean Commission (IOC) has five member States:  Madagascar, Comoros,
Mauritius, Reunion (France), and the Seychelles.  The IOC was created in 1984 by the General
Agreement of Cooperation.  Its founding members were Madagascar, Mauritius and the Seychelles;
Comoros and Reunion (France) joined in 1986.  The main objectives of the IOC are to:
- promote commercial exchanges among its members;
                                                     
8 COMESA online information. Available at:  http://www.comesa.int/trade/tradaseu.htm.
9 COMESA online information.  Available at:  http://www.comesa.int/trade.htm.
10 COMESA online information.  Available at:  http://www.comesa.int/finance.htm.
11 PTA Bank online information.  Available at:  http://www.ptabank.co.ke/mission.html.
12 COMESA online information.  Available at:  http://www.comesa.int/finance/econcch.htm.
13 PTA Reinsurance Co. online information.  Available at:  http://www.zep-re.com.WT/TPR/S/80 Trade Policy Review
Page 22
- strengthen the friendship and solidarity links that exist among people of the member
States while respecting each State's sovereignty;  and
- improve the standard of living by developing cooperation in all possible sectors, in
particular, in diplomatic, economic, social, cultural, and technical fields.14
80. The work of the IOC is carried out with the financial support of the European Union (EU), its
main sponsor.  EU support of the IOC comes primarily through the European Development Fund.15
Since it was created, the IOC has completed projects on regional handicraft, a foreign trade statisticsprogramme, a meteorological programme, phases I and II of the regional tuna fishing programme, and
an international transit centre programme.
16
81. The Indian Ocean Commission Council meets once a year in ordinary sessions to define the
broad orientation of activities to be carried out.  Each member State is represented on the Council, and
in turn assumes the presidency of the Council fo r one year.  The presidency is currently with
Madagascar.  Each member State is also represented on the Committee of Permanent Liaison Officers
(CPLO);  each representative is responsible for the coordination and implementation of regional
cooperation in their home country.  The IOC General Secretariat is the administrative arm of the IOC;it is responsible for the implementation of politica l decisions of the Council and of the CPLO.  The
General Secretariat is headed by a General Secretary who is nominated by the Council and serves a
non-renewable, four-year term.
17
82. The Integrated Regional Programme for the Development of Exchanges (PRIDE) is aimed at
executing a regional strategy facilitating and promoting the free movement of goods, services, capital,and labour.  A plan to eliminate customs duties on intra-regional trade (on a reciprocal basis) has been
fully implemented by Madagascar and Mauritius since 1 January 2000.  Other member States are in
the process of implementation.
83. Other current IOC regional projects include programmes for the environment, tourism, the
eradication of the fruit fly, an oil spill contingency planning project, and a programme for the
university of the Indian Ocean.  Future projects include environmental education, regional security,
fishing, health, culture, and plants.
18
(d) Cross-Border Initiative
84. The Cross-Border Initiative (CBI) aims to move its member countries (including Madagascar)
towards increased economic integration by facilitating private investment, trade, and payments
between them.  Member States are the countries in eastern and southern Africa, and the Indian Ocean.
The CBI has been developed in close collaboration with the economic integration organizations in theregion.  Launched in 1992, the CBI is co-sponsored by the European Commission, the International
Monetary Fund, the World Bank, and the African Development Bank.
(iv) Other trade agreements or arrangements
85. Madagascar is a signatory to the Cotonou Agreement (the successor agreement to the Lomé
Convention), which affords a group of 71 African, Caribbean, and Pacific (ACP) countriespreferential trade and aid links with the EU.  The current 20-year agreement was signed in Cotonou,
                                                     
14 IOC online information.  Available at:  http://www.coi-info.com/anglais/presenta/objectif.htm.
15 IOC online information.  Available at:  http://www.coi-info.com/anglais/presenta/partenai.htm.
16 IOC online information.  Available at:  http://www.coi-info.com/angalis/projects/r-bot.htm.
17 IOC online information.  Available at:  http://www.coi-info.com/anglais/presenta/instance.htm.
18 IOC online information.  Available at:  http://www.coi-info.com/angalis/projects/r-bot.htm.Madagascar WT/TPR/S/80
Page 23
Benin, on 23 June 2000, and replaced the previous agreements signed in Lomé in 1975, 1979, 1984,
and 1989.19  ACP and EU member States have yet to ratify the new agreement.
86. Under the Cotonou Agreement, the EU grants n on-reciprocal trade preferences to imports of
industrial and processed agricultural products originating from the ACP States (but not unprocessed
agricultural products), and provides special market access under "commodity protocols" (bananas,
rum, beef and veal, and sugar).  The Cotonou Agreement abolishes Stabex, Sysmin, and the rumprotocol of the Lomé Conventions.  The curren t all-ACP non-reciprocal tariff preferences are
maintained until 31 December 2007.  Starting in 2008, a set of Economic Partnership Agreements
(EPAs) will replace them.  These free-trade agreements are expected to be reciprocal and
WTO-compatible;  they will be implemented over 10 to 12 years.
20
87. Madagascar also benefits from preferential tariff treatment granted by Australia, Canada,
the EU, Japan, New Zealand, and the United States under the Generalized System of Preferences
(GSP).21
(v) Trade disputes and consultations
88. Madagascar is not currently involved, either as a complainant or defendant, in any trade
dispute, either at the WTO or any regional organization.
89. Madagascar's current membership in the Common Market for Eastern and Southern Africa
affords it access to COMESA's Cour t of Justice.  The Courts' primary function is to uphold the rule of
law in the operation of the Treaty by ensuring adherence to law in the interpretation and application of
the Treaty.  Its general jurisdiction is to adjudicate upon all matters that may be referred to it under theTreaty.  The Court of Justice is established under Article 7 of the COMESA Treaty as one of the
organs of COMESA.  The Court became operational in 1998.
22
(vi) Investment agreements or arrangements
90. Madagascar is a signatory to the Convention establishing the Multilateral Investment
Guarantee Agency (MIGA), and a member of the International Centre for the Settlement of
Investment Disputes (ICSID).
91. The principles, which were embodied in the Lomé Convention between the ACP States and
the European Union, and protected European inve stments in the ACP countries (Articles 260, 261,
and 262 of the Convention), are continued in the Cotonou Agreement (Articles 75, 76, 77, and 78).23
92. Madagascar has bilateral treaties for the promotion and protection of foreign direct
investment with:  Germany, signed on 21 September 1962 and entered into force on 21 March 1966;
Switzerland, signed on 17 March 1964 and entered into force on 31 March 1966;  Sweden, signed on
2 April 1966 and entered into force on 23 June 1967;  and Norway, signed on 13 May 1966 andentered into force on 28 September 1967.  Madagascar also has bilateral investment treaties for the
avoidance of double taxation with China, France, Germany, India, Italy, Luxembourg, Malaysia,
Pakistan, Singapore, South Africa, Sri Lanka, Swaziland, Sweden, the United Kingdom, and
Zimbabwe.  Madagascar has signed such agreements with Belgium, Indonesia, Kuwait, Mozambique,
and Russia;  these are in the process of ratification.
                                                     
19 Information available at:  http://www.one world.org/acpsec/gb/cotonou/accord1e.htm.
20 Information available at:  http://www.oneworld.org/ecdpm/lome/lnb8_gb.htm.
21 Turkey indicated its intention to grant Madagascar preferential tariff rates under the Global System
of Trade Preferences (WTO document WT/COMTD/W/ 39, 30 March 1998).
22 COMESA online information.   Available at:  http://www.comesa.int/court/courjuri.htm.
23 The Cotonou Agreement [online] is available at:  http://www.oneworld.org/thinktank/eucoop.htm.