WORLD TRADE
ORGANIZATIONWT/TPR/M/113
21 May 2003
(03-2727)
Trade Policy Review Body
2 and 4 April 2003
TRADE POLICY REVIEW
BURUNDI
Minutes of Meeting
Chairperson:  H.E.  Mrs. Mary Whelan (Ireland)
Page
I. INTRODUCTORY REMARKS BY  THE CHAIRP ERSON.....................................................3
II. OPENING STATEMENT BY THE  REPRESENTATIVE OF BUR UNDI .............................4
III. STATEMENT BY THE DISCU SSANT....................................................................................5
IV. STATEMENTS BY PARTICIPANTS.......................................................................................7
V. REPLIES FROM THE REPRESENTATIVE OF BURUNDI AND ADDITIONAL
COMMENTS....................................................................................................................... .....11
VI. CONCLUDING REMARKS BY  THE CHAIRP ERSON........................................................15WT/TPR/M/113
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The first Burundi Trade Policy Review was held on 2 and 4 April 2003.  The Chairperson
welcomed the delegation of Burundi, led by the Minister Charles Karikurubu, and the discussant,
Mr Didier Chambovey (Switzerland).  As usual, the discussant spoke in his personal capacity and not
as a representative of his country.  In accordance with the established procedures, the discussant hadmade available, in advance, outlines of the main issues he intended to raise
(document WT/TPR/D/92).
2. The Chairperson recalled the purpose of the Trade Policy Review Mechanism and the main
elements of the procedures for the meeting.  The report by the Government of Burundi was contained
in document WT/TPR/G/113 and that of the WTO Secretariat in document WT/TPR/S/113.  Copies
of advance written questions by Hong Kong, China; Japan; Canada; the Republic of Korea; the
European Union; and the United States had been transmitted to the delegation of Burundi.
3. The Chairperson observed that the documentatio n prepared for the meeting stressed the
Burundian Government's intention to implement trade policy reforms within the context of its
development strategy.  However, this documentation left no doubt as to the extent of the reforms
which would have to be undertaken if Burundi was to enjoy the sustained growth rates necessary to
reduce poverty.  A start had been made on implementing a tariff reduction programme, and progressin this area would contribute to the rationalization of the various overlapping incentive schemes, to
the more efficient allocation of resources and to the diversification of production and exports.  The
Chairperson noted that a privatization programme had been drawn up and that its implementation
would be an indispensable supplement to the trad e policy reforms, insofar as extensive State
intervention in the economy, whether through administered prices or State enterprises, had been asource of budgetary costs and inefficiencies.  It was clear that the success of these reforms would
depend upon Burundi's being provided with appropriate technical assistance for capacity building.
The Burundi's participation in the Integrated Fr amework should prove beneficial in this respect.WT/TPR/M/113
Page 4
II. OPENING STATEMENT BY THE  REPRESENTATIVE OF BURUNDI
4. The representative of Burundi said that his country had undertaken far-reaching reforms,
within the framework of the structural adjustment programmes, with a view to establishing a market
economy.  Various trade facilitation measures had been adopted to consolidate the liberalization
process and to improve the business environment.  He recalled the main reforms previouslymentioned in the Secretariat report, in particular, the exchange policy reforms and the customs
reforms undertaken in January 2003.  The Government of Burundi had committed itself to pursuing
any reform considered necessary, for example, the harmonization or adoption of provisions on
business law and investment, the abolition of price controls, the extension of competition and the
restoration of macroeconomic and financial equilibrium.
5. As far as sectoral policies were concerned, the representative of Burundi stressed his
government's intention to turn a subsistence agricu lture into a market agriculture and to pursue a
policy of liberalization and privatization in sectors such as energy, transport and telecommunications.
6. Burundi attached great importance to bilateral and multilateral cooperation, which remained
essential to the realization of its political, economic and social programme.  It needed assistance to
improve the quality of its agricultural and industrial products and to implement the WTO Agreements.WT/TPR/M/113
Page 5
III. STATEMENT BY THE DISCUSSANT
7. The discussant drew attention to the particular context of the Burundi Trade Policy Review.
He noted that the political crisis and social disturbances which had so severely shaken Burundi since
1993 had exacted a heavy tribute in human lives and had also delayed the implementation of the
economic reforms planned in the 1980s.  The Government's main objective was still to re-establishpeace and it was with that objective in mind that Burundi's trade policy should be reviewed.
(i) Macroeconomic environment
8. The discussant noted that a growth rate of 2 per cent of real GDP in 2001 was a good first
step on the road to recovery.  Real GDP had contracted by 30 per cent between 1993 and 2003 and
more than two thirds of the population was living be low the poverty threshold.  Much remained to be
done to create a favourable environment for investment.  The monetization of public sector deficits
and the efforts to rescue the coffee sector by money creation were liable – because of the inflationthey generated – to discourage investors.  He welcomed the efforts made to establish an exchange rate
that more closely reflected market conditions.
9. The heavy dependence on traditional exports (coffee and, to a lesser extent, tea) had made the
Burundian economy extremely vulnerable to fluctuatio ns in the international terms of trade for these
two products.  The strategy of diversifying producti on being followed by the authorities was therefore
crucially important, especially as Burundi, as an LDC, had been granted – under various tariff
preference schemes – facilitated access to some important export markets, in particular those of the
European countries.  However, the diversification strategy could only be successful if the incentives
structure favoured the expansion of non-traditi onal crop production and if the country had the
technical skills and know-how essential to exploit the new outlets.  In this connection, the discussantinvited the delegation of Burundi to say what it expected from the Integrated Framework.
(ii) Trade policy regime
10. The discussant noted that the reforms introduced on 1 January 2003 had reduced the average
incidence of customs duties by almost a quarter and lowered the maximum rates from 100 to 40 per
cent.  However, the Secretariat report had revealed that the tariff structure and the distribution of tariffpeaks were tending to isolate certain sectors, particularly agriculture where productivity was lagging
because of the lack of exposure to market forces.  This meant that local goods were unable to face up
to foreign competition.
11. The mixed tariff escalation in some sectors was doing nothing to encourage investment in
processing activities.  It might be preferable to restructure the tariffs so as systematically to reduce the
related costs and make Burundi more attractive as a production location.  The discussant wanted to
know if the Burundian authorities had drawn up me dium-term plans along these lines, since a reform
measure of this kind would make it possible to dispense with the system of exemptions from customs
duty currently being used as a means of promoting investment.  The exemptions should be replaced
by more stable and predictable measures that would create a more favourable environment for the
rational deployment of investment.
12. The pre-shipment inspection fees of 1.5 per cent of the customs value, being paid by
importers, represented a considerable transaction cost, possibly higher than the actual inspection costs.
Moreover, for some products, the internal tax on transactions was higher on imports than on local
goods, a practice contrary to the principle of national treatment, which was one of the cornerstones of
the WTO Agreements.WT/TPR/M/113
Page 6
13. Noting that the free zone enterprises (beneficiaries of exemptions and concessions designed to
improve their export competitiveness) accounted for only 0.3 per cent of total exports, the discussant
wished to know whether the authorities had considered this problem and whether they had found out
the cause of this disappointing performance.
14. The privatization programme begun in 1991 had been disrupted by the political disturbances.
Many enterprises were still in State ownership and their economic efficiency left much to be desired.
However, a new privatization programme, for the period up to 2005, had been launched and
competition legislation was being studied.  Such legislation was clearly a corollary of any extensive
privatization policy.  The question was how the Burundian authorities assessed the prospects of the
privatization programme and what were the chances of its being speedily supported by a law on
competition.
(iii) Sectoral policies
15. The discussant noted that some traditional agricultural products – coffee and tea – benefited
from numerous incentive measures which were creating a certain supply-side inertia.  This system had
frustrated the authorities' plans to diversify.  It was hard to dismantle a support system without
upsetting someone; it was an illusion to believe that desirable adjustments could be made
instantaneously and painlessly.  However, there was still room gradually to create incentives todiversify production while improving the productivity of traditional crops, particularly coffee.  The
discussant asked whether there had been any studies to determine the feasibility of a policy consisting,
in particular, of tilting the balance of the incentive systems in favour of new crops.  He also wanted to
know whether it might not also be possible, at the sa me time, to undertake a progressive reform of the
processing and marketing chains – which operated as a monopsony – in order to induce producers toadapt to real market conditions and provide more rational encouragement for greater productivity.
16. As far as services are concerned, the discussant noted the considerable transaction costs of the
banking sector and the asymmetry, to the detrimen t of commercial customers, of the pricing system
applied by the national electricity company, which was liable to discourage small businesses.  He
wished to know whether the authorities were considering remedial measures.
17. The discussant concluded his statement by noting that Burundi was at an extremely delicate
turning point in its history at which the Government had to pursue a range of essential reforms while
endeavouring to deal fairly and preserve political stability.  It was therefore necessary to bear in mind
that economic policy and trade policy – this was always true but particularly so in the case of
Burundi – could not constitute ends in themselves but were tools at the service of society which
should be used to consolidate peace and maximize the public benefit.WT/TPR/M/113
Page 7
IV. STATEMENTS BY PARTICIPANTS
18. The representative of Japan noted that, despite the impact of the socio-political crisis whose
consequences were described in the Secretariat report, Burundi had undertaken a new programme of
economic reform designed to improve macroeconomic management and achieve growth rates that
would enable poverty to be reduced.  It was clear that Burundi considered trade to be an engine ofeconomic growth and, in this context, the liberalization of regional trade could have a favourable
impact on the country.  The harmonization of Burundi's trade policies with WTO rules was an
effective means of promoting its trade.  In this connection, technical assistance and capacity building
were priorities and Members should discuss, within the framework of the Doha Development Agenda,
how these objectives might be achieved.
19. The representative observed that the tariff was Burundi's principal trade policy instrument and
congratulated the Government on the tariff reforms instituted in January 2003.  Burundi shouldincrease the number of bound lines (currently about 20 per cent of tariff lines) to make its tariff more
predictable.  After noting that imports were subject to various internal taxes, some of which were
inconsistent with the principle of national treatment, she asked for these measures to be reviewed.
Japan hoped that Burundi would continue to improve its national intellectual property regulations and
appreciated the fact that the copyright law was being reviewed.  In this connection, Japan hadsubmitted questions of a technical nature and would be grateful for Burundi's detailed replies.  In
conclusion, the representative of Japan noted that the Doha Development Agenda could be of benefit
to both developing and developed countries.
20. The representative of the European Communities referred to the effects of the socio-political
crisis and the fact that Burundi's level of develo pment was distinctly lower than that of the other
countries in the region.  Burundi needed two-digit GDP growth in order to bring about a significant
and lasting reduction in poverty, and this objective could be more easily achieved by continuing and
extending the reform programme.  Burundi's in tegration into the COMESA Customs Union had
necessitated tariff reforms, which could encourage, among other things, the expansion of the non-
traditional subsectors.  It was important to consolidate these reforms, at both regional and multilaterallevel, in order to establish their credibility.  Th e fact that African intra-regional trade accounted for
only 10 per cent of its global trade was further evidence of Burundi's need for integration into the
world economy through increased participation in the WTO multilateral trading system.  Burundi's
participation in the Integrated Framework should make it possible to incorporate the trade policy
reforms in the global development strategies and to respond to its numerous technical assistance
requirements.
21. Burundi's relations with the European Union in the field of cooperation for development fell
within the framework of the Economic Partners hip Agreements (EPA) governed by the Cotonou
Agreement.  Burundi, as an LDC, also benefited from the provisions of the "Everything But Arms"
initiative.  The European Union had submitted questions in writing.
22. The representative of the United States said that her delegation had submitted written
questions to the Government of Burundi with a view to obtaining clarifications and further
explanations concerning certain points raised in  the Government and Secretariat reports.  The
Burundian Government deserved full credit for having taken the opportunity provided by the review
of its trade policies to evaluate their effects on economic growth and development and to undertake to
implement the reforms necessary to attract investment and diversify its economy.  The decision to
reactivate its inter-ministerial committee on trade clearly showed how governments of developingcountries could take advantage of periodic global and impartial trade policy reviews.  In the
Secretariat's excellent report this committee would find an ample source of trade policy
recommendations which could serve as a programme for reforms designed to promote sustainable
growth and economic recovery.  Much remained to be done to create a business and economicWT/TPR/M/113
Page 8
environment that would encourage productivity, export diversification and, above all, foreign
investment.  Burundi was applying various tariff and tax exemptions largely designed to encourage
import substitution.  This was an ill-advised approach, since it could divert economic resources from
sectors in which Burundi had a comparative advantage.  The discretion enjoyed by the authorities in
granting exemptions reduced the transparency of the investment and trade regimes, which couldpotentially restrict growth and might encourage corruption.  Uniformly lower duty rates were of more
benefit to domestic enterprises than exemption schemes.  The high costs associated with State
enterprises confirmed the need to carry the reactivated privatization programme to completion.
23. The representative listed the reasons why Burundi was not yet eligible for the trade benefits of
the African Growth and Opportunity Act (AGOA).  The complete implementation of the Arusha
Agreement and the application of economic reforms could improve Burundi's chances of eligibility.
After observing that the Government, in its report, had described the sanitary, phytosanitary andtechnical standards applied by the developed countries as "disguised trade barriers", the representative
considered that the fundamental problem was the lack of capacity of countries such as Burundi.  In
this connection, she noted the various technical assistance initiatives undertaken by the United States
in this field.  She also pointed out that the Government's concerns about obstacles to market access for
agricultural products, such as subsidies, tariff peaks, and tariff escalation, had been addressed in theproposal made by the United States within the context of the negotiations on agriculture.  The United
States shared Burundi's view that special and di fferential treatment was an integral part of the
WTO Agreements and was of the opinion that the provisions relating to special and differential
treatment should take into account the individual circumstances of each Member, while recognizing
that the ultimate objective was the application of the same single set of rules by each Member.
24. The representative of India noted that, despite the positive effects of the structural adjustment
programmes on economic growth, certain difficulties nevertheless remained, in particular the high
level of military expenditure and the loss of revenue resulting from the subsidies granted to State
enterprises.  The determination of the Governme nt to persevere with the reforms would doubtless
enable these difficulties to be overcome.  Although the Burundian Government regarded trade as anengine of development, its weak manufacturing base and its dependence on exports of two primary
commodities made its economy vulnerable.  Burundi was trying to apply the various provisions of the
WTO Agreements but needed substantial and well-targeted technical assistance.  India and Burundi
maintained valuable long-standing bilateral relations and, within the limitations of its resources, India
was providing Burundi with technical assistance in various fields.
25. The representative of Brazil said that he was impressed by the Burundian Government's
determination to pursue its reforms.  The review had revealed the importance of certain negotiating
issues under the Doha Development Agenda; these negotiations could have a beneficial outcome for
Burundi if the development dimension was taken into account.  Unfortunately, important deadlines
had been missed, in particular as regards the question of TRIPS and public health, special and
differential treatment, and agriculture.  With regard to agriculture, he noted the adverse effects of
agricultural subsidies on the trade potential of countries such as Burundi.  Although emphasis hadbeen placed on the reforms which Burundi needed to undertake, the developed countries should also
agree to make an effort.
26. The representative of Canada stressed the need for further integration of the trade policy
reforms into the priorities of the Economic Growth and Poverty Reduction Strategy Paper and noted
that this would be facilitated by Burundi's participation in the Integrated Framework.  Burundi seemedto be taking full advantage of the possibilities offered by the regional trade organizations, such as the
Common Market for Eastern and Southern, whic h could enhance and extend the advantages of
belonging to the WTO.  Burundi had also met the requ irements for all its exports to be able to enter
the Canadian market duty-free and off-quota under the Canadian initiative on market access for
LDCs, which came into effect on 1 January 2003.  Canada also approved the various liberalizationWT/TPR/M/113
Page 9
measures taken by Burundi and was encouraging both the international organizations and their
members to facilitate the provision of the trade-related technical assistance that Burundi needed.
Pursuit of the trade reforms would enable Burundi to  attract more direct foreign investment.  Canada
had submitted questions in writing.
27. The representative of Switzerland recognized that Burundi was in a difficult socio-political
situation but also noted the encouraging developmen ts that had followed the signature of the Arusha
Declaration and the implementation by the authoritie s of economic reforms, in particular the tariff
reforms and the liberalization of subsectors such as mobile telephony.  Burundi's dependence on
coffee and tea exports made it vulnerable to external shocks; its export and production structure
needed to be diversified.  However, this diversification was being impeded by certain trends in trade
policy which were having the effect of introducing contradictory incentives.  Burundi should also
comply with the principle of national treatment in its application of certain internal taxes.  Its maintechnical assistance requirements were in the areas of standards, intellectual property protection, and
customs valuation.  Burundi's participation in th e Integrated Framework should make it possible to
satisfy these requirements.  Burundi had certain advantages which needed to be exploited, in
particular its geographical situation in the sub-region, its mineral resources and the fertility of its soil.
Burundi also needed stable access to the principal markets.
28. The representative of Zambia said he was disappointed at the low participation, in the meeting
on Burundi, of delegations from the least developed countries.  This was because a session of the
committee on trade negotiations was being held at the same time.  He noted that Burundi had
undertaken important reforms under its structural adjustment programmes and pointed out that
Zambia was one of Burundi's trading partners.  The negotiations on agriculture could have afavourable impact on Burundi's trade potential, provided that the interests of the least developed
countries were taken into account.  In this connection, he noted that the least developed countries had
asked to be exempted from commitments within  the context of these negotiations.  As the
representative of Brazil had pointed out, the subsidies granted to the agricultural sector by the
developed countries were harming the LDCs.  He also stressed the need for Burundi's export structureto be diversified; this would be facilitated by measures to improve market access for Burundian
products, the simplification of the rules of origin, the relaxation of sanitary and technical standards,
and the elimination of the escalation of customs duties on exports to developed markets.  There should
also be a concerted effort on the part of the in ternational community to relieve the supply-side
bottlenecks affecting LDCs such as Burundi.
29. The representative of the Republic of Korea noted that the recent reforms undertaken by
Burundi had contributed to a budding recovery in economic growth, but that the country's political
situation continued to pose serious obstacles to its development.  The high level of tariffs was
perpetuating inefficiency and discouraging exports.  He asked whether there was a programme to
eliminate tariff exemptions, given the distortions that they were creating.  The Republic of Korea had
sent Burundi questions in writing and would welcome its replies.
30. Representative of Uganda said that he fu lly shared the sentiments expressed by the
representative of Zambia.  He hoped that the trad e policy review mechanism would help to identify
technical assistance needs.  Burundi had certain features typical of the least advanced countries, in
particular, an underdeveloped manufacturing sector and a heavy dependence on agriculture for
employment and foreign exchange.  It was necessary to improve market access opportunities and
developed trading partners should avoid applying unnecessarily stringent sanitary, phytosanitary andtechnical standards.  It was also important that in the trade negotiations consideration be given to the
possible effect of tariff reductions on tax revenue and poverty reduction programmes.
31. The representative of Nigeria said he was encouraged by the reforms introduced by Burundi
which were helping to produce the first signs of economic recovery.  Poverty reduction was beingWT/TPR/M/113
Page 10
impeded by political instability which was resulting in increased military expenditure, often at the
expense of public investment in the social sectors.  The monetization of deficits had contributed to the
high rates of inflation.  He noted, however, that  Burundi had taken steps to control expenditure,
exemptions and indebtedness.  As Burundi's impor ts consisted mainly of manufactured and semi-
manufactured goods, whereas its exports consisted mainly of primary commodities such as coffee andtea, Burundi would continue to suffer from the terms of trade unless some means of stemming the
collapse in the prices of raw materials and primary commodities was found.  Burundi's principal trade
policy tool, like that of most African countries, was the customs tariff.  In making arrangements for
tariff reductions within the framework of the trade negotiations care should be taken to avoid
impairing the capacity of the developing countries to generate tax income.
32. The representative noted that Burundi's WTO tariff bindings represented a considerable
effort.  He nevertheless expected Burundi to increase the scope of its WTO bindings in the currentnegotiations, even though, like other least advanced countries, it was not obliged to make
commitments that went beyond its capacity for implementation.  He also considered that it was
necessary to dwell more on the reforms that Burundi had made than on what remained to be done.
Given these efforts, the WTO and Burundi's principal donors should provide the country with
increased technical assistance.  The various regional agreements had helped to regenerate Burundi'straumatized economy.
33. The Director of the Trade Policy Review Division noted that the Secretariat report contained
many recommendations; this reflected the close collaboration between the Secretariat and the
Government of Burundi.  The aim was to ensure that the report made a full contribution to the
diagnostic study being prepared in connection with Burundi's participation in the IntegratedFramework and hence to the drafting of a technical assistance strategy for Burundi, which would form
an integral part of its anti-poverty strategy.
34. The representative of the World Bank said that the Secretariat and Government reports would
be very useful in preparing the diagnostic study in connection with Burundi's participation in the
Integrated Framework.  The diagnostic study w ould not reproduce the work already done but would
use it as a basis for further exploration of the linkages between trade and poverty reduction.  The
diagnostic study would help to establish a follow-up process that would enable assistance needs to be
met.  The incidence of rural poverty in Burundi had increased by 88 per cent since 1993, while urban
poverty had doubled; per capita income had fallen from 150 dollars in 1995 to 110 dollars in 2000.
One of the themes which the diagnostic study would develop was that of the linkages between priority
trade policy actions and anti-poverty strategies.  The diagnostic study would endeavour to identify the
constraints on households involved in agricultural production and the potential beneficiaries of anexpansion of employment in the industrial sector.
35. The consultant appointed by the World Bank to prepare the diagnostic study said that his team
had just ended its main three-week mission in Burundi and had submitted its first conclusions to
Burundi's Minister of Trade.  The team consisted of World Bank economists, experts in the areas of
customs and trade facilitation, export promotion strategies and coffee sector development strategies,and eight national consultants.  It was a question of building on the work done by the WTO, which
gave a very clear picture of Burundi's trade policies, with a view to identifying technical assistance
priorities.  The principal technical assistance needs were those described in the WTO Secretariat
report; they concerned the coffee sector, export promotion, customs reform, and capacity-building in
the Ministry of Trade and Industry.
36. The Chairperson thanked the Government of Burundi, the discussant and the various speakers
who had all contributed to a wide-ranging and instructive debate.  She thanked the World Bank for
undertaking to coordinate the report on Burundi's trade policies with the diagnostic study for the
Integrated Framework.WT/TPR/M/113
Page 11
V. REPLIES FROM THE REPRESENTATIVE OF BURUNDI AND ADDITIONAL
COMMENTS
37. The Chairperson invited the representative of Burundi to group his replies under three main
headings:  (i) economic and institutional environment;  (ii) trade policies;  and (iii) sectoral policies.
38. After thanking Members for the interest they had shown, the representative of Burundi said
that written replies to all the questions posed by Members had been transmitted to the Secretariat.
(i) Economic and institutional environment
39. The representative of Burundi said that the restoration of peace was a fundamental
precondition for his country's development and gave details of the progress made since the signature
of the Arusha Declaration, in particular, the conclusion of a cease-fire agreement between the
Government and certain rebel factions and the arrival of an African peace-keeping force.  He noted
the generally favourable development of the economy since the signing of the Arusha peaceagreement, but also its fragility due to political inst ability and the fact that two thirds of the population
was living below the poverty threshold.  At macroeconomic level, the reforms had focused on the
implementation of the programme contained in the Poverty Reduction Strategy Paper, the main axes
of which were as follows:
- an economic policy based on the maintenance of macroeconomic balances, promotion
of the private sector, development of exports, and the maximization of employment
opportunities;
- a diversified agricultural policy which concentrated on increasing productivity and
reducing the pressure on the land;
- an industrial policy aimed at creating a network of small and medium-sized
enterprises equally active in the capital and provincial centres and oriented towards
satisfying the domestic demand for staples and the exportation of agricultural, mining
and manufactured products;
- the rehabilitation of the infrastructure destroyed by war.
40. With regard to the diversification of exports, the Government had taken measures to promote
non-traditional exports such as flowers, fruit and vegetables.  To this end, it had created a number of
specialized funds which were mentioned in the Secretariat and Government reports.  A Policy
Coordination Unit (CCP) and an Agency for the Pr omotion of Investment and Exports (APIE) had
been set up.  In connection with the privatization programme, a Ministry of Good Governance and
Privatization had been established and in September 2002 an amended law on the privatization of
public enterprises had been promulgated.
41. The discussant pointed out that the fairly high inflation rate, which was averaging 18 per cent
per year, was creating uncertainty for investors.  With regard to the promotion of non-traditional
crops, he wanted to know if the proposed instruments were sufficient, if the incentives granted to the
traditional sectors were being taken into account, and if there was a possibility of transferring
incentives from the traditional to the non-traditional sectors.  The export of non-traditional products
also depended on the development of the storage and transport infrastructure.  Concerning
privatization, it was important to make clear th at replacing a public monopoly by a private monopoly
did not necessarily encourage efficiency and that it was important to develop public supervision, in
particular surveillance and support mechanisms, and a competition policy.WT/TPR/M/113
Page 12
42. The representative of Burundi said that much of the infrastructure had been destroyed during
the crisis and that, consequently, the development of non-traditional sectors was being held back, in
particular by the lack of means of transport.  The construction of cold storage facilities, with the
support of donors and foreign investors, was being studied.  The eruption of the crisis and the dryingup of foreign aid had helped to accelerate inflation by throwing the budget out of balance.  However,
since the signing of the Arusha Declaration, a post-conflict stabilization programme and a poverty
reduction strategy had been drawn up; these were aimed at improving macroeconomic management.
The resumption of external aid and the reduction in military expenditure associated with the
restoration of internal stability should also facilitate budgetary reform.
43. With regard to incentives, Burundi wanted to reform its investment code, set up a single
window for investors and simplify the commercial c ode to facilitate company formation.  Tariff
policy also needed to be reviewed in order to attract investors.  The transfer of incentives from
traditional to non-traditional sectors was being studied.
44. A law on competition was being studied with a view to preventing the privatization of public
enterprises from giving rise to private monopolies.  The service responsible for public enterprises was
the principal agency for monitoring and supporting the privatization process; it had the analyticaltools necessary to evaluate enterprises and managers.
45. The representative of Djibouti noted Burundi's intention to apply economic reforms, as well
as the severe constraints, in particular political instability and a landlocked situation, with which it
was confronted.  In these circumstances, the international organizations and donors should focus on
the technical assistance measures that could facilitate Burundi's integration into international trade.
46. The representative of Rwanda stressed the reform efforts being made by Burundi and the need
for increased and targeted assistance to enable Bur undi to become more closely integrated into the
international trading system.
(ii) Trade policies
47. The representative of Burundi said that the trade policy reforms were part of the regional
integration programme and were aimed at improving the business environment so as to make
Burundian products more competitive and attract foreign investment.  He outlined the tariff reforms
applied in January 2003, noting, however, that these reforms had excluded certain rates established to
protect local products.  Burundi intended to limit tax and customs exemptions in exchange for reduced
rates of taxation, so as to compensate for any revenue lost as a result of customs tariff reductions
associated with the application of the COMESA common external tariff.
48. Burundi also intended to reform the administrative procedures relating to imports and exports.
In the area of customs valuation, the transaction value was to be applied from January 2004.  These
reforms and those associated with customs duties were to have a privileged place in the preparation of
the Poverty Reduction Strategy Paper and the diagnostic study on the integration of trade and
competitiveness.  By facilitating technical assistance, the Integrated Framework would play an
important role in the implementation of these reforms.
49. With regard to rules of origin, the 35 per cent value added criterion was a consequence of
belonging to the COMESA free trade area.  Consideration was given not to the origin of the raw
materials but rather to the degree of processing needed to achieve that value.  As for measures directly
affecting exports, export taxes were in the process of being abolished, in accordance with the Finance
Law adopted by Parliament for the year 2003.WT/TPR/M/113
Page 13
50. With regard to government procurement, the legislation in force had gaps at the level of the
tender and analysis procedures and was being reviewed in order to improve transparency in the
awarding of contracts.  The procedures for awarding contracts were the same as those used for
government contracts awarded by the Central Government Procurement Commission.  Authority togrant contracts was vested in the board of directors of the enterprises concerned.  Invitations to tender
were broadcast or published in official gazettes, and foreigners were notified through consular offices
and international newspapers.  Successful bidders were notified through the same channels as used for
publishing invitations to tender.  The bid selection criteria were focused on a technical and financial
evaluation.  The Central Government Procurement Commission had overriding responsibility for
awarding the contract to the technically and financially best qualified bidder.  There was no
preferential treatment in the awarding of contracts.
51. The discussant asked the representative of Burundi whether the prospect of an erosion of
preferences following from a reduction of MFN tariffs was a source of concern.
52. The representative of Burundi said that the COMESA countries were going to negotiate as a
bloc in order better to defend their interests.
(iii) Sectoral policies
53. The representative of Burundi drew attention to the predominance of agriculture in Burundi's
economy and said that the Government's policy was to transform a subsistence agriculture into a
market agriculture, develop an agri-food industry based on SMEs/SMIs, create agricultural product
processing and preservation industries, establish a rural micro-credit bank to provide easier access to
credit in rural areas, develop non-traditional export crops (fruit, vegetables and flowers), reformulate
the policy on traditional cash crops (coffee, cotton and tea), and facilitate access to rural credit.
54. In the secondary sector, policy was oriented towards the development of small and medium-
sized industries, in particular the agro-industry.  An institutional support policy was being drawn up.
The Government was going to promote the establishment of a system for providing loans on easy
terms and to encourage joint ventures.
55. With respect to services, the Government was planning to liberalize telecommunications by
privatizing the National Telecommunications Office.  The National Postal Authority had just been
transformed into a national board to ensure greater managerial autonomy.  In the transport sector, the
priorities were the liberalization of transport services (begun in 1989), the facilitation of the
movement of goods in the North corridor, and the elimination of tariff and non-tariff barriers.  Under
Burundi's energy policy, priority was being given to the privatization of the management of certain
sectors of REGIDESO, the liberalization of th e public water supply and electricity sector,
participatory management with local communities to  encourage co-responsibility, and diversification
of suppliers.  The progressive privatization of the banking sector was one of the Government's
priorities and this would find concrete expression in interest rate liberalization and currency auctions.
An insurance law had just been promulgated to regulate the liberalization of the insurance sector.
Burundi was a member of the Multilateral Investment Guarantee Agency (MIGA), the African TradeInsurance Agency (ATIA) and COMESA’s PTA-Reinsurance Company (ZEP-RE).
56. The discussant asked whether the electricity pricing system, which appeared to be subsidizing
households at the expense of commercial operators, was having a harmful effect on SMEs and
whether tariff restructuring and liberalization of the electricity sector could be envisaged.
57. The representative of Burundi said that the Government's main concern was to provide
electricity for the greatest possible number of people.  REGIDESO was very expensive to run and itWT/TPR/M/113
Page 14
was planned to separate the infrastructure from the management and privatize the latter.  This would
enable the Government to take care of the poorest sections of the population.
58. The representative of Canada noted that the importance of foreign investment had been
repeatedly stressed and that in this connection the simplification of the investment code was an
encouraging sign.  It would also be advisable to consolidate the four main regimes of the investmentcode.  The efforts to simplify the customs tari ff undertaken within the COMESA framework could
also be transposed to the WTO.  As regards the GATS, the representative of Canada recognized the
difficulties that were hindering Burundi's participation in the negotiations on services but wanted to
know whether the Burundian Government intended to  submit an offer within the framework of the
negotiations and whether Burundi intended to bind its autonomous liberalization within the WTO.  He
stressed the potential advantages, in particular in  relation to infrastructure investment, which could
follow from such binding under the GATS.
59. The representative of Burundi said that its position on the GATS would be decided in
consultation with its COMESA trading partners.
60. The representative of Hong Kong, China thanked the delegation of Burundi for its replies.  He
noted that the document distributed by the delegation of Burundi containing the replies to questions
referred to China rather than Hong Kong, China, and requested that this error be corrected.WT/TPR/M/113
Page 15
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
61. The meeting has allowed Members to come to a far better understanding of Burundi's trade
and economic policies and of the very real challenges it faces.  In this we have been very much
assisted by the Burundi delegation, led by Minister Charles Karikurubu.  I would like to thank
Minister Karikurubu for the open and very committed approach to this TPR.  As a result, we havecome to a better appreciation of the reform agenda facing Burundi and I think we all appreciate the
willingness of the Burundi Government to pursu e such reforms, notwithstanding the enormous
difficulties arising out of the prolonged crisis that has confronted Burundi.  This had been evidenced
by recent steps taken to improve macroeconomic management and liberalize trade.  Members
welcomed the reactivation of Burundi's inter-ministerial coordination committee on the WTO as a
way of enhancing its participation in the organization.
62. Members noted the extreme dependence of Burundi on exports of coffee, and, to a lesser
degree, tea.  A number of policy-related factors have hindered export diversification, and Burundi's
ability to derive development benefits from its participation in international trade.  High protection for
"traditional" sectors has discouraged investment in non-traditional agricultural exports, while the
mixed nature of tariff escalation has not encouraged investment in certain processing activities.
Extensive state intervention crowds out private sector activity.  The high cost of certain services, anunderdeveloped financial sector, and high transport costs related to Burundi's landlocked situation
have also contributed to supply-side bottlenecks.
63. Members stressed that improvements to Burundi's business environment could be made
through reforms to the investment code aiming at eliminating its bias toward import substitution, and
establishing simple and transparent procedures.  Further tariff reductions would reduce currentreliance on a myriad overlapping incentive schemes; fewer exemptions could in turn mitigate the
fiscal impact of tariff reforms.  Members also  emphasized the importance of proceeding with the
privatization programme, and, in parallel to this, of developing adequate regulatory frameworks and
competition policy.  They recognized that reforms needed to be accompanied by the provision of
adequate technical assistance, including in capac ity building.  Members said that the Integrated
Framework, in which Burundi participates, could help to meet priority technical assistance needs, and
integrate trade reforms into its overall strategy for poverty reduction.
64. Members noted Burundi's participation in COMESA, and the efforts undertaken to fully
integrate into the COMESA customs union by 2005.  Th ey also noted the gains that could potentially
accrue to Burundi from improvements in market access that would arise from a completion of
negotiations under the Doha Development Agenda, while acknowledging that Burundi would need
specific assistance to help it meet sanitary, phytosanitary, and technical requirements in exportmarkets.  They stressed that the stability and pr edictability of Burundi's trade regime could be
enhanced by increasing the scope of bindings on non- agricultural products, lowering ceiling bindings
on agricultural products, transposing pre-Uruguay Round tariff concessions into the HS nomenclature,
and undertaking a greater level of commitments under the GATS.  They also urged Burundi to adopt
WTO-consistent customs valuation procedures as part of the wider process of customs reforms, and torespect the principle of national treatment in the application of certain domestic taxes.
65. Some clarification was sought regarding procurement procedures and domestic preferential
margins under the existing regime.  On intellectual property rights, Members sought further
information on existing legislation.  Clarification was also sought on the following issues:
- measures taken to promote sustainable development;
- trade facilitation, pre-shipment inspection;WT/TPR/M/113
Page 16
- import licensing procedures;
- incentives for production and exports, including export processing zones;- contingency trade remedies;- technical assistance needs, "mainstreaming" trade into the Poverty Reduction Strategy
Paper;  and
- the regulatory framework for telecommunications.
66. Members appreciated the responses provided by the Burundi delegation, and looked forward
to further replies.
67. I believe that this meeting of the TPRB has allowed an in-depth reflection on how it may be
possible to develop a blueprint for policy action that  would place Burundi on a higher growth path.  It
has drawn attention both to Burundi's determination to pursue its reform agenda and to areas in which
policy reforms could enhance transparency and predictability in Burundi's trade regime, andcontribute to its further integration into the multilateral trading system.  I trust that the main
considerations of this meeting will be incorporated into the Integrated Framework process in order to
strengthen the linkages between trade and poverty reduction.  I urge all Members to support Burundi
in its efforts to take up its challenges, and to pay particular attention to its request for technical
assistance.
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