WORLD  TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/S/131 
24 May 2004  
 
(04-2120) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Benin 
 
Report by the Secretariat 
 
  
 
This report, prepared for the  Trade Po licy Review of Benin, has been drawn up 
by the WTO Secretariat on its own res ponsibility.  The Secretariat has, as 
required by the Agreement establishing  the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from the Government of Benin on its trade 
policies and practices. 
 
Any technical questions arising from this report may be addressed to Mr Sergios 
Stamnas (022.739.5382) and Mr Carlos Perez del Castillo (022.739.5336). 
 
Document WT/TPR/G/131 contains the policy statement submitted by the 
Government of Benin. 
 
 
 
Note: This report is subject to restricted circul ation and press embargo until the end of the meeting 
of the Trade Policy Review Body on Benin. Benin WT/TPR/S/131 
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CONTENTS 
 
 
 
 Page 
 SUMMARY OBSERVATIONS vii 
 (1) E
CONOMIC ENVIRONMENT  vii 
 (2) T RADE POLICY FRAMEWORK  viii 
 (3) T RADE POLICY DEVELOPMENTS  ix 
 (4) S ECTORAL POLICY DEVELOPMENTS  x 
 (5) O UTLOOK  xi 
I. ECONOMIC ENVIRONMENT 1  
 (1) O VERVIEW  1 
 (2) R ECENT ECONOMIC PERFORMANCE  1 
 (i) Growth, employment and poverty 1 
 (ii) Inflation 3  (iii) Monetary and exchange policy 3 
 (iv) Budget policy 5 
 (v) Transparency and governance 6 
 (3) T
RENDS IN TRADE  7 
 (4) O UTLOOK  10 
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 11  
 (1) O VERVIEW  11 
 (2) G ENERAL CONSTITUTIONAL AND INSTITUTIONAL FRAMEWORK  11 
 (3) S TRUCTURE OF TRADE POLICY FORMULATION  13 
 (i) Executive 13 
 (ii) Advisory bodies 13 
 (4) T RADE AND INVESTMENT POLICY  13 
 (i) Main features 13 
 (ii) Participation in the WTO 14 
 (5) T RADE LAWS AND REGULATIONS  14 
 (6) T RADE AGREEMENTS AND ARRANGEMENTS  15 
 (i) WTO 15  (ii) Regional economic agreements 16 
 (7) F
OREIGN INVESTMENT REGIME  19 
 (i) Overview 19  (ii) Investment Code 20 
 (8) I
NDUSTRIAL FREE ZONE REGIME  24 
  ANNEX II.1 TRADE-RELATED  TECHNICAL ASSISTANCE 26 
 
 WT/TPR/S/131 Trade Policy Review 
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 Page 
 
III. TRADE POLICY BY MEASURE 29 
 (1) O VERVIEW  29 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  30 
 (i) Customs formalities 30 
 (ii) Preshipment inspection, customs valuation and rules of origin 31  (iii) Tariff regime and other taxes affecting imports 34 
 (iv) Licences, prohibitions and other import controls 42 
 (v) Technical standards and accreditation procedures 43  
 (vi) Sanitary and phytosanitary measures 43  
 (vii) Contingency measures 45 
 (viii) State trading 45  (ix) Government procurement 48 
 (x) National content requirements 49 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  49 
 (i) Official transit regime 49 
 (ii) Duties and taxes 50 
 (iii) Export prohibitions and controls 51 
 (iv) Export subsidies and promotion 51 
 (4) M EASURES AFFECTING PRODUCTION AND TRADE  52 
 (i) Production support 52 
 (ii) Competition policy 53 
 (iii) Protection of intellectual property rights 54 
IV. TRADE POLICY BY SECTOR 56 
 (1) I NTRODUCTION  56 
 (2) A GRICULTURE , LIVESTOCK AND FORESTRY  57 
 (i) Overview 57 
 (ii) Agricultural policy 58 
 (iii) Measures affecti ng certain products 62 
 (iv) Forestry and wood products 65 
 (3) M INING AND QUARRYING AND ENERGY  65 
 (i) Mining and quarrying 65  (ii) Energy 68 
 (4) M
ANUFACTURING  70 
 (5) S ERVICES  71 
 (i) Financial services 71 
 (ii) Telecommunications 72 
 (iii) Transport 73 
 (iv) Tourism 75 
REFERENCES 77 
APPENDIX – TABLES 81 
   Benin WT/TPR/S/131 
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CHARTS 
 Page 
I. ECONOMIC ENVIRONMENT  
 I.1 Breakdown of trade in goods, 1998-2002 8 
I.2 Destination and origin of trade in goods, 1998 and 200 9 
I.3 Trend in intra-WAEMU exports, 1999 and 2001 10  
III. TRADE POLICY BY MEASURE  
 
III.1 Share of customs duties and other levies in the value of imports 
 and in total income, 1998-2002 36 III.2 Breakdown of customs duties, 1997 and 2003 (October) 37 
III.3 Escalation of duties actually applied, 1997 and 2003 (October) 39 
 IV. TRADE POLICY BY SECTOR  
 
IV.1 Simple average of the tariff actually applie d by HS section, 1997 and 2003 (October)  61 
 
 
TABLES 
 
I. ECONOMIC ENVIRONMENT  
 
I.1 Basic economic indicators for Benin, 1997-2004 2 I.2 WAEMU convergence criteria, 1997-2003 3 
I.3 Balance of payments, 1997-2004 6 
 
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES  
 II.1 Status of notifications to the WTO, April 2004 15 
II.2 Criteria and benefits under the Investment Code 22 
II.3 Definition of zones and term of the period of operations 22 II.4 Tax concessions under the Industrial Free Zone regime in Benin 25 
 
III. TRADE POLICY BY MEASURE   
III.1 Breakdown of customs duties, rates actually applied and Benin’s 
 final bound rates, 1997 and 2003 (October) 34 III.2 State intervention in the economy, 2004 46 
III.3 Procedures for awarding government procurement contracts 49 
III.4 Summary of taxes on exports, re-exports and goods in transit, 2004 50 III.5 Subjects and terms of protection under the revised Bangui Agreement (1999) 55 
 
IV. TRADE POLICY BY SECTOR   
IV.1 Production of food crops and principal crops, 1997-2003 58 
IV.2 Buffer stock of food crops, 1998-2003 58 
IV.3 Producer purchase price (CFAF/kg) and international prices, 1997-2001 62 
IV.4 Ginning of seed cotton, 1998-2003 63 IV.5 Types and characteristics of mining permits 67 
IV.6 Price of electricity, July 2000 69 WT/TPR/S/131 Trade Policy Review 
Page vi 
  
 
 
APPENDIX TABLES 
 Page 
III. TRADE POLICY BY MEASURE  
 
AIII.1 Applied MFN tariff rates (customs duties plus main import taxes 83  and surcharges), by HS Chapter, October 2003 
AIII.2 Tariff lines the applied MFN rate of which is higher than the bound level 88 
 for customs duties (excluding other duties and levies), (October 2003)  
 Benin WT/TPR/S/131 
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SUMMARY OBSERVATIONS  
 1. Since the first review of its trade policy 
in 1997, Benin, one of the poorest of the "least 
developed countries (LDCs)", has continued 
with its programme of commercial, structural and macroeconomic reform with support from various sectors of the international community. 
The reaffirmation of commitments on 
subregional economic integration within the 
West African Economic and Monetary Union (WAEMU), of which Benin is a founding member, together with the reform and action undertaken in the cotton subsector, a key activity in Benin’s economy, are some of the 
most notable features of the period under 
review. Problems of competitiveness caused by the cost of inputs such as energy, financing instruments, communications and transport, together with the tax burden, persist even 
though efforts are being made to encourage 
participation by the private sector and to enhance governance. Benin’s economic outlook still largely depends on performance in the cotton subsector and political and economic developments in neighbouring 
countries.  
 
(1) E
CONOMIC ENVIRONMENT  
2. Difficulties caused, inter alia , by 
macroeconomic imbalances and deep-rooted 
structural weaknesses, together with the 
decline and fluctuations in international prices for cotton, have meant that during the period under review Benin’s economy has moved ahead by fits and starts with real rates of GDP 
growth ranging between 4.6 and 6.7 per cent. 
Nevertheless, since 1995, in the context of monetary and foreign exchange stability in the WAEMU subregion (the CFA franc has been anchored to the euro since 1999), consumer price inflation has fallen sharply to controlled 
levels and since 2002 it has been below 3 per 
cent, one of the convergence criteria laid down by the WAEMU.  
 
3. Although there was a slight fall in its 
share during the period under review, the 
primary sector accounts for over 33 per cent of GDP and more than 95 per cent of export earnings, a performance that is mainly due to 
cotton. The secondary sector is not very developed and represents less than 14 per cent of GDP, while the tertiary sector, with a 
contribution of around 45 per cent, only 
employs one third of the working population.  
 
4. Benin adopted a national poverty 
reduction strategy in 2002, with the focus on its 
macroeconomic stabilization programme and 
structural reform, and this is supported through the Poverty Reduction and Growth Facility (PRGF) from the IMF. Its objectives include the control of government finance and more rapid structural reform (cotton subsector 
and public sector). In order to enhance 
governance, a new strategy to combat corruption was adopted in 2002 and the United Nations Convention against Corruption was signed in 2003. Under the Heavily Indebted 
Poor Countries Initiative (HIPC), since 2003 
Benin has been given a reduction in its external debt. Since early 2004, the World Bank has been preparing a Diagnostic Trade Integration Study with the aim of making trade an integral part of Benin’s development strategy.  
 
5. Since the first review in 1997, 
budgetary deficits have increased despite the rise in revenue from import duty as a result, 
inter alia , of stronger tariff protection caused 
by the introduction of the Common External Tariff (CET) of the WAEMU. During the period under review, the deficit in the current balance was between 3 and 5 per cent of GDP. The chronic deficit in the balance of goods and 
services has increased, mainly due to the 
decline in global cotton prices, the deterioration in the terms of trade and the increase in the value of imports (petroleum products, intermediate goods, capital goods, services); the obsolescence and low level of 
diversification in producti on, together with the 
practice whereby goods are imported with a view to re-export that is not properly recorded, have also been contributory factors.  
 
6. Benin’s exports are still as little 
diversified as at the time of the first review and the share of value-added products remains minimal; Benin depends on exports of cotton WT/TPR/S/131 Trade Policy Review 
Page viii 
  
and primary products. On the other hand, the 
structure and destination of Benin’s products has changed with Africa and Asia (especially India) becoming the leading export markets, 
followed by the European Union (EU); trade 
with partners in the WAEMU and the Economic Community of West African States (ECOWAS) is moving ahead slowly. Benin depends on imports of manufactures and 
hydrocarbons and on the re-export trade. 
Nigeria is still an important partner as it is the destination for many products arriving in the port of Cotonou, even though the majority of bilateral trade is not officially recorded.  
 
7. The Investment Code remains 
unchanged.  It gives tax concessions under certain conditions relating to content and ensures equal treatment for investors of any origin in the sectors covered; an Industrial 
Free Zone regime is being introduced. 
Nevertheless, foreign inves tment remains fairly 
modest. The State is continuing to withdraw from economic activity, in particular, through 
the privatization process in some sectors (for example, cotton, hydrocarbons, insurance, port 
of Cotonou and telecommunications), one of 
the objectives being to extend the scope of private investment.  
 (2) T
RADE POLICY FRAMEWORK  
8. Benin was a contracting party to the 
GATT (as of 12 September 1963) and became a WTO Member on 22 February 1996. It grants at least MFN treatment to all WTO Members and benefits from the "special and differential 
treatment" provided in the WTO Agreements. 
As part of its participation in the work of the WTO, Benin is one of the countries promoting the sectoral initiative in favour of cotton, which advocates the phasing out of domestic support for production, export subsidies for cotton, and 
the introduction of a financial mechanism to 
offset the losses suffered.  
 
9. Benin’s trade policy is part of the more 
general framework of the poverty reduction 
strategy, its commitments as a member of the 
WAEMU and the introduction of a common trade policy within the latter, while at the same time Benin remains attach ed to the multilateral 
trading system. Since 2001, the Ministry of Industry, Trade and Employment Promotion has been responsible for formulating trade 
policy.  
 
10. Since 1996, the WAEMU has gradually 
liberalized intra-community trade and has adopted a common trade policy; for some time 
the WAEMU has been examining the 
coordination of sectoral policies (for example, the Union’s agricultural policy). The WAEMU Commission has responsibility for negotiating trade agreements; a non-preferential agreement on the development of trade and 
investment relations between the member 
States of the WAEMU and the United States of America was signed in 2002 and other agreements with third countries are being drawn up. Benin is also a member of the 
ECOWAS, whose members have given 
preferential treatment for the same products as those in the WAEMU since 1 January 2004 and the creation of a customs union is planned for 2007. As an ACP country, Benin is actively pursuing the conclusion of an Economic 
Partnership Agreement (EPA) with the EU. It 
is also eligible for the trade preferences granted by the United States under the AGOA (African Growth and Opportunity Act) and the EU“Everything but Arms” initiative.  
 
11. Benin benefits from the JITAP (Joint 
Integrated Technical Assistance Programme/Programme Intégré Conjoint d'Assistance Technique), and more recently 
from the Integrated Framework. This has 
allowed Benin to receive trade-related technical assistance on several occasions since the last review, but its integration into the multilateral trading system is not complete (for example, problems in updating notifications).  
 
12. The action planned and that could be 
envisaged by the WTO for Benin consists of trade policy courses in Geneva, regional trade policy courses, short trade policy courses on 
the Doha Development Agenda; workshops or 
seminars at the regional or subregional level on a number of issues, and negotiating techniques; meetings to promote awareness Benin WT/TPR/S/131 
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among parliamentarians; and various activities 
at WTO headquarters. They will deal, inter 
alia, with issues identified by the authorities 
such as notifications, the implementation of the 
WTO Agreements and the Doha Development 
Agenda.  
 (3) T
RADE POLICY DEVELOPMENTS  
13. The customs tariff has become Benin’s 
principal trade policy instrument, as well as 
the main revenue earner for the State. Following the introduction of the WAEMU’s CET in 2000, products have been grouped into four major categories for the purposes of customs duties: 0, 5, 10 and 20 per cent. In 
Benin, the average MFN rate actually applied 
(i.e. MFN rate plus other duties/taxes) has increased slightly from 13.7 per cent (1997) to 14.6 per cent (tariff of October 2003). Over 40 per cent of tariff lines have been bound 
(tariff bindings made by France on behalf of 
French West Africa in cluded); for 55 per cent 
of the lines (fish, milk, soap, plastics, cotton, synthetic fibres, clothing, footwear, and electrical machinery and equipment) the level of MFN duty actually applied exceeds that of 
the bound tariff (excluding the binding of other 
duties and levies at 19 per cent). The average customs duty on WTO definition agricultural products (14.4 per cent) is noticeably higher than the average duty on industrial products 
(11.7 per cent). All the rates applied are ad 
valorem , which means that the tariff is quite 
transparent. The CET has lessened the 
dispersion of customs duties and has led to marked escalation for several categories of 
finished products, which is a reversal of 
previous national practice and is intended to reflect the new priorities of economic development policy at the subregional level.  
 
14. In addition to the CET, as a member of 
the WAEMU and the ECOWAS, Benin applies ad valorem  duties and taxes to imports of 
products from outside th e zone, for example, 
the statistical fee (WAEMU), the community solidarity levy (WAEMU) and the community 
levy (ECOWAS). Nevertheless, unlike other 
members of the WAEMU, Benin does not apply the special import tax nor the degressive protection tax. The levy on imports by the 
National Dockers’ Council is 33 per cent higher than the levy on exports.  
 
15. Benin gave effect to the WTO 
Agreement on Customs Valuation as of 1 January 2003, in other words, two years after the expiry of the transitional period allowing application of the WTO Customs Valuation 
Agreement to be deferred. It uses the 
transaction value and does not apply the reference values authorized within the WAEMU. Although customs clearance procedures have been computerized and the modernization of the customs has been under 
way since 2001, it appears that some 
difficulties remain con cerning the time taken 
and the cost of customs formalities.  
 
16. Some goods (cement, pharmaceuticals 
and brand-name drugs, fertilizers) may only be 
imported by authorized importers (public or private) because of their special and/or strategic nature in order to ensure adequate supplies on the domestic market and guarantee the level of quality. In 2000, the Benin 
Standardization and Qua lity Control Centre 
started operations; the majo rity of standards in 
effect are for referen ce purposes and are based 
on international standards and/or those of countries in the subregion. For health reasons, 
there has been a ban on the import of turkey 
rumps and meat of bovine animals since 2000; similar measures applicable to poultry were being prepared in March 2004, The WAEMU has adopted a Community Anti-dumping Code 
applicable as of 1 July 2004.  
 
17. The export of seed cotton, teak in the 
rough and charcoal has been prohibited since the first review; the ban on export of food crop products (for food security reasons) appears to 
have been lifted. Despite the elimination of 
export duties in 1993, a fiscal export levy on cocoa beans, crude petroleum and precious metals still appears to exist. In addition, certain taxes (statistical, road, stamp duty, etc.) 
are levied on an ad valorem  basis (cumulative 
rates ranging from 0.85 per cent (local 
products) to 18.1 per cent (re-exports)) on WT/TPR/S/131 Trade Policy Review 
Page x 
  
goods exported, re-exported or in transit, 
providing some 20 per cent of customs revenue.  
 
18. A value-added tax (VAT) of 18 per cent 
is imposed on trade in the majority of goods 
and services, together with excise duty on local consumption (rates of 1 to 20 per cent) on some specific items. Benin grants tax concessions for production under the 
Investment Code and following the 
introduction of the Industrial Free Zone regime; there are requirements on using products of national origin or from national sources and on priority to be given to Benin nationals for permanent jobs. Moreover, the 
WAEMU authorizes the non-application of the 
CET to imports of inputs taxed at a higher rate than certain finished products (many of a social nature). In order to protect consumers, the authorities have retained price controls for 
some sensitive products such as bread, school 
supplies, cement and petroleum products, as well as certain essential public services such as electricity and water.  
 
19. The State still participates in some 
strategic activities (for example, cotton fibre, 
wood, weaving, textiles, beverages, cement, electricity, telecommunications, transport infrastructure, and hotels). The legal framework for government procurement, given 
new implementing texts on various institutional 
and operational aspects in 1999, does not contain any preferences for enterprises under Beninese law.  
 
20. Draft legislation on competition policy 
and consumer protection is being prepared; within the WAEMU, a community policy on competition was adopted on 1 January 2003 but is not yet applied. Benin, a member of the African Intellectual Property Organization 
(OAPI), has strengthened its legal framework 
for the protection of intellectual property rights by ratifying the revised version of the Bangui Agreement (1999) in 2003, two years after its entry into force.  
 
(4) S
ECTORAL POLICY DEVELOPMENTS  
21. In the agricultural, livestock and 
forestry sector, efforts have been made to give the State a role in providing support and 
facilitating the entry of other operators, but constraints on private sector involvement remain. The introduction of the CET has 
increased tariff protection for agricultural 
products to a greater degree than for non-agricultural products, resulting in tariff increases (MFN rate actually applied) of around 34 per cent. The rates of customs duty 
on animal products (bovine animals, sheep, 
poultry, pigs, milk and eggs), fruit (mangoes, pineapples), coffee, cassava and cowpeas have increased while a customs duty of 5 per cent has been introduced for rice, which was exempt from customs duty at the time of the first 
review. The State has a buffer stock of food 
crops and receives gifts of rice from Japan under its food aid programme. Currently, the indicative price of cashew nuts is determined by those involved in the subsector with 
arbitration by the authorities; the price of 
cotton, palm nuts and inputs are the subject of consultations within the profession before they are approved by the State.  
 
22. The cotton subsector is still the 
dominant activity and alone accounts for 
13 per cent of GDP and 77 per cent of total exports; this explains the timid progress made in diversification. The far-reaching reforms 
undertaken in the subsector have, inter alia , led 
to liberalization of the marketing of seed cotton and cotton ginning and the abolition of the practice of fixing cotton prices for producers (until the 2001-2002 seas on); preparations are 
under way for the privatization of the State-
owned National Agricultural Promotion 
Company (SONAPRA). As a result of the problems caused to global production by the support granted to cotton producers in certain countries involved in global cotton production, as is Benin, the WTO organized a regional 
workshop on cotton in Cotonou in March 2004 
to discuss the possibilities for financial and technical assistance to the countries concerned.  
 
23. Benin still depends on energy from 
abroad and this is a major constraint on the country’s development, as well as being a heavy burden on government finance; biomass Benin WT/TPR/S/131 
 Page xi 
 
 
is by far the most widely consumed energy. The 
State monopoly, belonging to the Benin Water and Electricity Company (SBEE), supplies cement works and breweries with electricity at 
rates that are considerably lower than those 
for other categories of consumer. Operators in the hydrocarbons sector are facing competition from illegal imports from Nigeria at much lower prices. Benin has considerable 
unexploited potential in mineral resources; in 
order to encourage investment in this sector, Benin has started to reform its mining legislation by drawi ng up a new Mining Code, 
although it is not yet in force.  
 
24. The cost of production factors and the 
market situation mean that manufacturing still mainly focuses on activities such as cotton processing and the cement industry, which are subject to special regulations, while small-
scale activities, many of them in the informal 
sector, employ a high percentage of the population. Since 1997, in contrast to escalation, the level of tariff protection in the manufacturing sector has changed little and remains noticeably below the level granted in 
the agricultural sector; no other instrument to 
protect or support production appears to have been introduced.  
 
25. Since the last review, targeted efforts 
have been made to achieve the opening up of 
the services sector. The banking sector does not appear to have sufficient financing instruments wholly adapt ed to investors’ needs 
but continues to show signs of recovery and to 
confirm its generally healthy situation by a 
marked improvement in observance of prudential standards. The insurance sector appears to be open to competition; the obligation to insure imported goods with the State-owned National Insurance and 
Reinsurance Company (SONAR) was abolished 
when this company was liquidated. A new organizational and regulatory framework was drawn up in 2002 to enhance competitiveness 
in the telecommunications sector; the 
involvement of privat e operators has increased 
services in the mobile network, which appears to have lowered tariffs by between 20 and 40 per cent; the State monopoly of the fixed network should be abolished by the end of 
2005. Port handling was liberalized in 1997, but the port of Cotonou has not yet been able to overcome the malfunctioning that has so far 
affected it and consequently has not been able 
to take advantage of the crisis in Côte d’Ivoire. As regards shipping, it appears that the market has been liberalized following restructuring of the activities of the Benin Maritime Navigation 
Company (COBENAM). Since 1999, Benin has 
taken part in the Yamoussoukro Initiative for the application of an “open skies” agreement by stages in order to liberalize air transport of passengers and cargo.  
 
26. Benin only bound commitments for a 
limited number of sectors under the General Agreement on Trade in Services (GATS) and did not take part in the negotiations on basic telecommunications or financial services.  
 
(5) O
UTLOOK  
27. Benin’s economic performance since 
the last review of its trade policy, together with the authorities’ commitment to pursue structural reform without delay, raises hopes 
that, despite the problems in the cotton 
subsector, these efforts will help to alleviate poverty and achieve sustainable growth. The national economy has been opened up not only to new economic operators from Benin in 
certain activities but also to regional trade, 
thus boosting competiti on. As an LDC, Benin 
can continue to receive technical assistance from its development partners. It has in fact received considerable assistance from the 
WTO since the first review, although this has 
not always resulted in a satisfactory level of participation in the multilateral system. The negotiations under way in the WTO could make a major contribution to the efforts of cotton-producing LDCs, including Benin. 
Nevertheless, the benefits which Benin could 
derive from access to markets at both regional and multilateral level, will not be fully realized until its economy is able to respond competitively to external demand.