Tanzania WT/TPR/S/66
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
(1) INSTITUTIONAL FRAMEWORK
1. Tanzania has been an independent republic since it gained its independence in 1961.  In 1964,
the United Republic of Tanzania was formed by the union of Tanganyika and Zanzibar.  The
Constitution of the United Republic of Tanzania was adopted in 1977 and amendments were passed in
1984 and 1992;  in 1984, human rights were incorporated as were religious freedoms and freedoms ofassociation.  In 1992, a multiparty system was introduced.
2. The Constitution calls for a parliamentary form  of government with a separation of powers
among the executive, legislative, and judicial branches.  The Parliament consists of the President and
the National Assembly.
3. Zanzibar is part of the United Republic of Tanzania and comprises two main islands, Unguja
(also called Zanzibar) and Pemba, as well as about 50 smaller islets.
4. Tanzania's President, Vice-president, and National Assembly members are elected
concurrently by direct popular vote for five-year terms.  The President serves as the Head of State and
is limited to two terms (ten years).
5. The President appoints a Prime Minister who serves as the Government's leader in the
National Assembly.  The National Assembly must approve the selection of the Prime Minister and he
may also be impeached by the body.  The Prime Minister is responsible for the day-to-day functioning
and operations of the Government of the Tanzania.  The Prime Minister is also the leader of
government business in the National Assembly.  The President selects his Cabinet from among
National Assembly members and sits as chairman of the Cabinet.
6. The unicameral National Assembly has 275 members, of which 232 are elected from the
mainland and Zanzibar.  There are 37 appointed seats for women, and each political party receives aproportion of appointed seats commensurate with the number of constituency seats won.  Also, five
members are elected by the Zanzibar House of Representatives to participate in the National
Assembly.  At present, the ruling Chama Cha Mapinduzi (CCM) party holds about 80% of the seats in
the Assembly.  Laws passed by the National Assembly are valid for Zanzibar only in specifically
designated Union matters.
7. Zanzibar's own House of Representatives has jurisdiction over all non-Union matters.  There
are currently 76 members in the House of Representatives in Zanzibar, including 50 elected by the
people;  ten appointed by the President of Zanzibar;  five ex-officio members;  ten women, appointed
by political parties commensurate with constituency seats won; and an attorney general appointed by
the President.  The CCM party forms the Zanzabari Government as it does on the mainland.Zanzibar's House of Representatives can make laws for Zanzibar without the approval of the Union
Government.  The terms of office for Zanzibar's President and House of Representatives are also five
years.
8. Tanzania has a five-level judiciary combining the jurisdictions of tribal, Islamic, and British
common law.  Appeal is from the primary courts through the district courts, resident magistratecourts, to the high courts, and Court of Appeals.  Judges are appointed by the Chief Justice, except
those for the Court of Appeals and the High Court wh o are appointed by the President.  The Zanzibari
court system parallels the legal system of the Union, and all cases tried in Zanzibari courts, except forWT/TPR/S/66 Trade Policy Review
Page 12
those involving constitutional issues and Islamic law,  can be appealed to the Court of Appeals of the
Union.
9. For administrative purposes, Tanzania is divided into 25 regions, 20 on the mainland, three on
Zanzibar, and two on Pemba.  Since 1972, a decentralization programme on the mainland has worked
to increase the authority of the regions.  On 1 July 1983, the Government reinstated 99 district
councils to further increase local authority.  Of the 99 councils operating in 86 districts, 19 are urbanand 80 are rural.  The 19 urban units are classified fu rther as city (Dar es Salaam), municipal (Arusha,
Dodoma, Tanga), and town councils (the remaining 15 communities).
(2) F
ORMULATION AND IMPLEMENTATION OF POLICIES
10. The Cabinet, as Government's highest executive body, is responsible for government policy
planning and formulation.  The Cabinet's role is to aid and advise the President.  Executive decisionsby the Cabinet are based on submissions prepared by relevant ministries and the decision-making
process by Cabinet implies consultations and coordination between relevant ministries.
11. The agencies in charge of trade policy formulation include the Ministries of Industry and
Trade, Finance, Agriculture and Cooperative Development, Natural Resources and Tourism, Minerals
and Energy, Communications and Transport, and the Bank of Tanzania.
12. There are no formal coordinating bodies for the formulation and implementation of trade
policy, although ad hoc bodies can be created, as needed.  One ongoing committee is the
Inter-Institutional and Technical Committee on the WTO, which meets annually to review issues
pertaining to Tanzania’s responsibilities vis-à-vis the WTO.  The Committee has held a series of
meetings, but does not yet have specific terms of reference, nor a work plan.  It has no mode of
operation, and its composition has not yet been made official.  It consists of 18 members under the
chairmanship of the Ministry of Industry and Commerce and includes four members representing theprivate sector.
13. The private sector provides input into trade policy formulation primarily through trade
associations such as the Confederation of Tanzanian Industries (CTI), and through the Tanzanian
Chamber of Commerce, Industry and Agriculture (TCCI A).  The process is largely informal but these
organizations have played a role on issues such as taxation policy and the development of a NationalBusiness Policy.  The consultative process with the private sector is usually by invitation to
roundtables.
14. The legislative process calls for bills to be introduced by the Executive Branch.  Committees
with jurisdiction review proposed legislation prior to its tabling.  Legislation goes through three
readings in Parliament.  Once a bill is passed, Pres idential assent is required for enactment.  The
President can withhold assent, but if the Parliament resubmits the bill for Presidential assent after a six
month waiting period, the President must either grant assent or dissolve Parliament and call for new
elections.  When assent is given, legislation is gazetted and implemented by the relevant ministerial
authorities.
15. The Tanzanian legal system is based on English common law.  In the hierarchy of Tanzanian
legal instruments the Tanzanian Constitution is supreme.  In descending order of importance are:
Acts of the National Assembly, subsidiary legislation, ministerial orders, regulations, and finally,
rules promulgated under specific laws.Tanzania WT/TPR/S/66
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16. WTO Agreements do not have the force of law, but rather are implemented through the
normal national legislative process.  The National Assembly (including the President) ratifies
international treaties.
17. There are no independent bodies with a formal mandate to carry out public review or
assessments of the Government’s trade policy.
18. Trade policy implementation is primarily the responsibility of the Ministry of Industry and
Trade, which is responsible for regulating imports, pr omoting exports, ensuring fair trade, protecting
intellectual property rights, and setting and enforcing standards.  The Ministry also has responsibility
for regional initiatives such as COMESA, SADC, and the EAC as well as the WTO and other
multilateral economic issues.  The Ministry of Finance is responsible for the collection of taxes and
import duties through the Tanzanian Revenue Authority (TRA), which acts as the Government'scollection agency.
(3) P
OLICY OBJECTIVES
19. Since the mid 1980s, the Tanzanian Government has taken significant steps to reform and
liberalize its economy and to encourage domestic and foreign investment.  The relatively poor
performance of the Tanzanian economy that became evident in the mid 1970s accelerated in the early1980s.  Ultimately, after continued economic decline, the Tanzanian Government, with support from
international institutions, reversed the centralized economic model that it had been following since its
independence.  The process of economic renewal that has been under way for a decade continues to
date.
20. Tanzania does not have any formally enunciated overall trade policy objectives, but
government policy-makers focus on the promotion of Tanzanian exports and the maintenance of open
markets abroad, with particular emphasis on those areas where Tanzania has export capacities such asin agricultural.  In 1996, the Government drafted its "Sustainable Industrial Development Policy"
(SIDP) for the period 1996-2020.  The statement presents the framework for Tanzania's industrial
development policy and indicates that a new trade policy will be formulated to take into consideration
"the market economy conditions".  In particular, it outlines some objectives, including the
streamlining of "mechanisms regarding export deve lopment strategy, transit trade, border trade,
importation management, internal marketing and distribution, fair trade practices, business licensing,
and related institutional framework".
1
21. Tanzanian trade policy is guided by adherence to WTO rights and obligations;  accordingly
all trading partners are granted at least most-favoured-nation (MFN) treatment.  However, the
Government also views tariff policy as a means of protecting domestic industry from foreigncompetition.  Government policy states that "selective protection within the World Trade
Organization Agreements will be applied".
2
22. Tanzania is committed to the process of regional integration, and is pursuing closer ties with
neighbouring African nations.  Nevertheless, the Government has announced its intention to withdraw
its membership in COMESA, which has engendere d a growing domestic debate on where Tanzania's
regional efforts should be focused.
                                                     
1 Ministry of Industry and Trade (1996).
2 Ministry of Industry and Trade (1996).WT/TPR/S/66 Trade Policy Review
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(4) LAWS AND REGULATIONS
(i) Trade legislation
23. Tanzanian legislation relating to international trade is contained in a variety of statutes.  The
most important is the Customs Tariff Act of 1976, as amended by the Finance Act of 1999, which
regulates import procedures, the computation of duties, and exemptions and remission of duties.  The
Finance Act contains the newly enacted tariff sche dule for Tanzania (Harmonized System, eight-digit
level), it also contains amendments to the Business Licensing Act and the Excise Tariff Ordinance.
24. While Zanzibar's Government is responsible for non-Union matters, the mainland and
Zanzibar operate under a common external tariff, which is considered a Union matter and therefore
comes under the authority of the Tanzanian Government.  The same is true for issues related to import
and export regulations and taxation matters.  Only foreign investment is considered a non-Unionmatter and therefore falls under the prerogative of the Zanzibar Government.
25. Other laws that have an impact on trade are shown in Table II.1.
Table II.1
Tanzania's trade-related laws
Law Area
Customs Tariff Act, 1976 Customs
Finance Act, 1999
Business Licensing Act, 1972 Licensing of Businesses
Companies Ordinance
Import Control Ordinance Import/Export Control
Export Control Act
Foreign Exchange Act, 1992
Investment Act, 1997 Foreign investment
Mining Act,1998 Mining and Foreign Investment
Petroleum Exploration and Production Act, 1980 Petroleum
Zanzibar Investment Act, 1986
Zanzibar Free Economic Zones Acts, 1992 (amended in April 1997) Foreign investment
Export promotion
Financial Laws Act Financial services
Banking and Financial Institutions Act, 1991
Insurance Act, 1996 Insurance regulation
Fair Trade Practices Act, 1994 Competition
Value Added Tax Act, 1997 Taxation
Source : WTO Secretariat, based on information provided by the Tanzanian authorities.
(ii) Investment code
(a) Mainland Tanzania
26. Tanzania has undertaken significant efforts to encourage direct foreign investment in the
Tanzanian economy.  Beginning in 1986, the Government embarked on a process of economic reform
and privatization with the intention of creating an investment climate attractive to foreign investors.With a few exceptions, 100% foreign ownership is permitted in most sectors, including commercial
banking.  Foreign direct investment receives national treatment.  Ownership of land is still subject toTanzania WT/TPR/S/66
Page 15
restrictions, but a Land Act that will allow for foreign ownership in this area is currently being
implemented.
27. Private foreign investment in Tanzania is governed by the Tanzania Investment Act, No. 26
of 1997.  The agency responsible for administering the Act is the Tanzanian Investment Centre (TIC),
which grants Certificates of Incentives under authority conferred upon it by Part III, Section 17 (1-8)
of the Act.  The Act does not apply to business ente rprises in the mining or petroleum sectors, or those
engaged in the marketing or distribution of hazardous chemicals, armaments, or any type of
explosives.
28. The TIC was established in 1997 as a one-stop centre to deal with both foreign and local
investment.  The threshold for TIC involvement is US$300,000 for foreign investment and
US$100,000 for local investors.  The TIC has no legal authority to deny investment, but no benefitsare granted under the Investment Act unless the investment is above the threshold.  Nonetheless,
customs duty remissions may be granted on a discretionary basis.
29. An entity needs to be legally established and registered as a Tanzanian business with the
Registrar of Companies and the Tanzanian Revenue Authority before the TIC can issue certificates of
investment.
30. Enterprises engaging or intending to engage in the mining sector are required to follow the
approval process contained in the Mining Act of 1998.  Petroleum exploration and development is
governed by the Petroleum Exploration and Production Act of 1980.  However, upon request, the TIC
will assist all investors to obtain permits and authorizations required by other laws, to set up and
operate investments in Tanzania.
31. The Investment Act identifies two particular categories of businesses in which special
benefits are granted.  Businesses in the leading sectors can import capital goods associated with theinvestment at 0% duty.  The lead sectors identified by the Act are:
- economic infrastructure (including construction of roads, bridges, railways, airports,
and installation of electricity, telecommunications, water services);
- export processing zones.
32. Businesses that are identified as priority sectors may import capital goods at the rate of 5%.
The 12 priority sectors for the purposes of investment promotion are:
- agriculture, including livestock;
- air aviation;
- commercial buildings;
- commercial, development, and micro-finance banks;
- export oriented projects;
- geographical special development areas;
- human resources development;WT/TPR/S/66 Trade Policy Review
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- manufacturing;
- natural resources, including fisheries;
- rehabilitation and expansion;
- tourism and tour operators;  and
- radio and television broadcasting.
33. Both the lead and priority sectors also benefit from deferment of value-added taxes until the
investment commences operations.  Additionally, a tax holiday is granted for the first five years;  and
a capital allowance deduction in the years of income of 100% is also granted.
34. The Investment Act also allows for enhanced incentives for investments that are considered to
be strategic to the economy.  These additional incentives are at the discretion of the responsible
minister.  The Act does not define the term "strategic investment", but currently, investment in thesugar sector would fall under this provision.
35. Table II.2 provides detailed information on the activities of the Tanzanian Investment Centre.
Table II.2
Summary of sectoral distribution of registered projects between July 1997 and June 1999
Type of project
SectorTotal No.
approvedNewExp./
Rehabilitation.Local ForeignJoint
ventureTotal
employmentTotal
investment
T Sh million
Agricultural
livestock
development23 14 9 4 17 2 19,059 157,119
Natural resources 20 16 4 9 7 4 8,358 130,147
Tourism 62 43 19 35 17 10 5,872 54,248
Manufacturing 197 151 46 116 50 31 27,036 344,142
Petroleum &
mining28 27 1 14 11 3 3,670 253,842
Construction 28 25 3 14 12 2 3,975 77,988
Transport 24 16 8 14 6 4 990 35,435
Services 35 28 7 19 11 6 2,335 50,966
Computer .. .. .. .. .. .. .. ..
Telecom 5 5 .. 4 1 .. 186 29,238
Human resources
development8 6 2 5 2 .. 240 75,103
Financial 11 10 1 3 2 6 256 11,246
Energy .. .. .. .. .. ..
Total 441 341 100 237 136 68 71,977 1,219,474
.. Not available.
Source : Tanzanian Investment Centre.Tanzania WT/TPR/S/66
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(b) Zanzibar
36. The islands of Zanzibar have their own investment provisions;  these are governed by the
Investment Act of 1986, which provides for transparent and streamlined investment procedures and
offers incentives to investors.  Zanzibar's high est priority in promoting foreign investment is to
strengthen its balance of payments.  Accordingly, en terprises that are net foreign exchange earners are
given the highest priority.
37. The Zanzibar Investment Promotion Agency (Z IPA) provides a focal point for prospective
investors and a necessary link to government.  ZIPA acts as a one-stop facilitator for investors.
38. The Zanzibar Government also created the Zanzibar Free Trade Economic Zones Authority
(ZAFREZA) through the enactment of the Free Economic Zones Acts Nos. 16 and 17 of 1992, as
amended in April 1997.  These Acts provide a variety of infrastructure services to investors includingthe leasing of serviced land and factory facilities.
39. Although 100% foreign ownership is permitted in most sectors, Zanzibar maintains some
restrictions in small retail and small tourist operations and in small-scale fishing.  Investments in
Zanzibar must be approved by either ZIPA or ZAFREZA.  The minimum foreign direct investment
necessary to benefit from incentives ranges from US$150,000 to $4 million (for hotels).  Table II.3contains the minimum investment capital required by the Government of Zanzibar for coverage under
the Investment Act.  All capital goods brought in during the start-up of an investment are assessed a
zero rate of duty, but a service charge of 5% of the duty payable is levied.  The Minister responsible
for investment has the discretion to grant tax holidays of between one and five years.  Zanzibari
government officials indicate that there is likely to be a complete harmonization of the investment
incentive programmes with mainland Tanzania as further integration under the East African
Cooperation (EAC) becomes a reality.
Table II.3
Minimum investment levels for Zanzibar(US$ '000 and T Sh)
Proposed capital
Project sector Foreigners (US$ '000) Citizens (T Sh '000)
Hotel a4,000 300,000
Tour operator & related services 100 14,500
Agriculture 200 29,000
Fisheries 1,000 12,000
Industries 400 50,000
General business ventures & trading 350 50,000
Services 150 22,000
a Quality hotel projects of up to ten bedrooms are also encouraged.  An average investment of US$30,000 per room is required and
will be considered as minimum investment for such projects.
Source : Zanzibar Investment Promotion Agency.
40. The Zanzibari Government has identified the following sectors as deserving of particular
attention, although, unlike mainland Tanzania, these sectors do not benefit from any special
incentives.  They are:
- agriculture (food crops, tropical fruit, spices, rubber, tobacco, sugar);WT/TPR/S/66 Trade Policy Review
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- livestock and animal husbandry;
- fisheries (fish farming, canning, deep sea fishing);
- tourism;
- agri-related industries;
- manufacturing industries;
- construction (industrial and commercial buildings);
- transport and communications;
- service sector (mechanical repair, crop protection, machinery hire);  and
- general import/export trade.
(iii) Mining
41. As with other sectors of the economy, the Tanzanian Government has undertaken significant
reforms in the mining sector to encourage foreign investment.  In 1997, Tanzania formulated a
mineral sector policy that calls for the development of a private-sector-led industry.3  Subsequently,
the Mining Act of 1998 was enacted to stimulate ne w investment in the mining sector.  The Act
enumerates the special incentives provided for investment in the mining sector.  Ownership of
minerals is vested in the State and mining activities are subject to licensing requirements.4
42. There is no requirement for local participation or equity ownership in a foreign investment.  A
depreciation allowance of 100% is available on all mining capital expenditure.  Import duties are
exempted for up to one year after the start of production for any mining equipment and supplies that
are directly related to the operation of the project.  Thereafter, a cap limit of 5% import duty and 5%
sales tax is applicable.  There is also a full sales tax exemption for purchases of inputs and supplies
when the product is exported.  Royalties in the mining sector are assessed at 3% of the U.S. netback
sales value, except for diamonds on which a 5% royalty is in effect.  No export duties are assessed.
43. The responsible minister has discretionary authority to designate any vacant area as an area
exclusively reserved for prospecting and mining operations by persons holding primary mining
licences.  Primary licences are reserved exclusively for Tanzanians.5
(iv) Petroleum
44. The Petroleum Act of 1980 vests title to petroleum deposits within Tanzania in the State, and
is designed to create a favourable legal environment for exploration by oil companies.  The Act
permits the Government to enter into a petrol eum agreement under which an oil company may be
granted exclusive rights to explore for and produce petroleum.
                                                     
3 Ministry of Energy & Minerals (1997).
4 Mineral rights available under the Mining Act include:  Prospecting Licence, Retention Licence,
Special Mining Licence, Mining Licence, Gemstone Mining Licence, Primary Prospecting, and Primary Mining
Licence.  In addition, the Act provides for the granting of licences for dealers of raw gold and gemstones.
5 The Mining Act, 1998, Section 14.Tanzania WT/TPR/S/66
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45. Under the Model Production Sharing Agreement of 1995, the Ministry of Energy and
Minerals, operating through the Tanzania Petroleum Development Corporation (TPDC), enters into a
production sharing agreements (PSAs) with oil co mpanies.  Oil companies entering into such
agreements are exempt from import duties on exploration equipment, material, and goods.  No
royalties are imposed on an oil company.  All royal ties and income tax are paid by the TPDC through
its share as part of the PSA.6
(v) Free zones
46. There are no free zones on the mainland of Tanzania.  However, on Zanzibar, ZAFREZA
owns and operates three export processing zones (EPZs), one of which is currently operational.
47. Enterprises that export 80% or more of their output are eligible to operate in the EPZs.
Entities operating in EPZs are permitted to sell 20% of their production into the local market, but dutyis levied on those sales.  Incentives under the EPZs include:
- corporate tax holiday of up to ten years;
- exemptions from customs duties and other taxes on imports of plant and equipment,
raw material, and consumables, and from withholding and secondary taxes on
dividends and/or net earnings
7;
- exemption from withholding and income tax on dividend interests;
- free repatriation of profits;  and
- 100% foreign ownership.
48. Investment in the EPZ is currently about US$400 million, most of which comes from the Gulf
States.  Businesses currently operating in the EPZ include video and audio cassette manufacturing,
garments, and fish processing.  Products are primarily exported to the EU, the United States, and
Hong Kong, China.  Transit trade is also permitted within the EPZ.
49. Zanzibar also passed legislation in 1998 establishing a Free Port Authority.  The Authority is
seeking to establish Zanzibar as a regional distribution centre, with packaging and minimal processing
facilities.  The authority has sheds for lease, as well as land for lease on which to build such sheds.
Plans call for a "bonded warehouse" operation:  at least 80% would be for the export market with the
remaining 20% permitted onto the local market, subject to local tariffs.  Investment incentives for this
free port operation are essentially identical as for the EPZs, except that such operations are eligible for
a 20-year tax holiday.
(5) TRADE AND INVESTMENT AGREEMENTS AND ARRANGEMENTS
(i) Multilateral agreements
50. Tanzania 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
                                                     
6 Tanzania Petroleum Development Corporation (1999).
7 A service charge of 2% of duty payable is levied.WT/TPR/S/66 Trade Policy Review
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1 January 1995.8  Under the Single Undertaking, all WTO Multilateral Agreements became binding
on Tanzania.
51. As a developing country, Tanzania benefits from a transition period to implement a number of
its commitments under various WTO Agreements;  Tanzania notified the delayed application of the
Agreements on Customs Valuation and Import Licensing Procedures.9
52. Table II.4 shows Tanzania's notifications to the WTO as of July 1999.  Tanzanian officials
have indicated that some notification requirements have been particularly burdensome and have
requested technical assistance in this area.
Table II.4
Selected notifications by Tanzania pursuant to the WTO provisions
AgreementArticle/instrument
imposing obligationsWTO document dateaRequirement
Sanitary and Phytosanitary
Measures (Agreement on the
Application of)Art. 7, Annex B G/SPS/N/TZA/1, 8 January 1999
+ Corr.1, 20 April 1999Transparency of Regulations
– Regarding Harmonized
   East African Standards
Art. 7, Annex B (para 3) G/SPS/ENQ/7/Add.2, 4 March 1999 National Enquiry Point
Agreement on Technical
Barriers to TradeAnnex 3 (c) G/TBT/CS/N/78, 2 September 1997 Acceptance of Code of Good
Practice on Voluntary
Standards
Art. 10.7 G/TBT/10/7/N/19, 27 January 1999 Agreement with another
country related to TBT
Arts 10.1 and 10.3 G/TBT/ENQ/14, 22 March 1999 National Enquiry Point
Agreement on Subsidies and
Countervailing MeasuresArt. 25.11 G/SCM/N/7/Add.1/Rev.8, 21 April 1999 Semi-annual report on
countervailing actions
Anti-dumping Art. 16.4 G/ADP/N/22/Add.1/Rev.4, 20 April 1999 Semi-annual report on
anti dumping actions
Implementation of Article
VII of GATT 1994Art. 20.1 WT/LET/120, 13 November 1996 Deferred application
General Agreement on
Tariffs and Trade (GATT
1947)Art. XXIV, (para 7) WT/COMTD/N/3, 29 June 1995 Treaty establishing the
Common Market for Eastern
and Southern Africa
a Latest document if notification is periodic.
Source : WTO Secretariat.
53. As noted, Tanzania grants at least MFN treatment to all its trading partners.
54. Tanzania has been very active in the WTO, representing its own interests and those of other
LDCs.  Nonetheless, awareness and understanding of  the WTO Agreements remains very weak within
the Tanzanian public and private sectors.
55. Tanzanian authorities have expressed concern about the minimal benefits that are believed to
come from WTO Membership.  Officials continue the process of preparing legislation and regulations
consistent with various WTO obligations, but the implementation of these obligations is difficult andtime consuming, and the provision of technical assistance is viewed by the authorities to be essential
for Tanzania to come into full compliance.
                                                     
8 Tanzania deposited its instruments of ratification with the GATT Secretariat on 6 September 1994.
9 WTO document WT/LET/120, 13 November 1996.Tanzania WT/TPR/S/66
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(ii) Trade-related assistance
56. As a least developed country, Tanzania faces many challenges and obstacles in its trade
development and, more generally, its economic development.  In its efforts to overcome these and
achieve its policy objectives, Tanzania is being assisted by many of its development partners, among
them the WTO.  While many countries are able to capitalize on the global trade liberalization
resulting from the Uruguay Round negotiations, and are able to benefit from an export-led growth,
there are countries that have difficulty doing so, in particular the least-developed countries.  WTO
Members recognize this and therefore, at their first Ministerial Conference in 1996, committed
themselves to address this problem in a tangible way, and adopted the Comprehensive and Integrated
WTO Plan of Action for Least-Developed Countries.  In pursuit of the Plan of Action, a High Level
Meeting on Integrated Initiatives for Least-Developed Countries' Trade Development was held atWTO in October 1997, organized by the WTO, the International Trade Center, UNCTAD, and
UNDP, in close collaboration with the IMF and the World Bank.
57. At the High Level Meeting, a number of WTO Members announced steps they would be
taking on an autonomous basis to enhance market access for imports from least-developed countries.
In order to create the enabling environment in the LDCs to benefit from such increased market access,the High Level Meeting furthermore endorsed the Integrated Framework for Trade-Related Technical
Assistance to Least-Developed Countries (IF).  This Framework is aimed at making such assistance in
least developed countries more effective and efficient by laying down a mechanism for closer
coordination of trade-related technical assistance activities.  The mechanism applies in the first
instance to the trade-related assistance activities of the IMF, ITC, UNCTAD, UNDP, the World Bank,
and WTO in all 48 least-developed countries (LDCs) and is based on these countries' requests for
such assistance and on their full ownership of the process.
58. In pursuance of the IF, Tanzania is among the forty LDCs that prepared an assessment of their
needs for trade-related assistance.
10  Taking this assessment as a basis, the six IF core agencies
formulated a coordinated response of trade-related assistance activities, which each organization
individually or jointly, and in coordination with the other five, has committed to provide in line with
its own expertise, comparative advantage and available resources.
59. Tanzania is one of the twelve LDCs that held  a so-called "show case roundtable meeting" at
the High Level Meeting of October 1997, where it had the occasion to present its needs assessment
and where the development partners of its choice described their assistance to Tanzania.11
60. In the needs assessment, the Tanzanian authorities drew attention to their fundamental
economic problems, such as the narrow industrial base with heavy dependence on traditionalcommodity exports.  They also noted that the significant policy change in support of private-led
development over the last several years had begun to show positive results.  They pointed out that the
fundamental aim of the country's policy reform effort is to accelerate the development process
through improved international competitiveness, im proved efficiency in the allocation of resource
stimulating domestic savings and investment, and strengthening technological capabilities.  Tanzania'sefforts in trade development are faced with various obstacles such as poor physical infrastructure,
expensive factors of production such as high energy costs, inadequate capacity in production and
export management, insufficient direct business contacts, and inadequate knowledge of the markets
rules and requirements that keep changing.  Tanzania faces various challenges, such as a review of its
legislation to make it consistent with WTO commitments, and the notification process, which is a
                                                     
10 WTO document WT/LDC/HL/12/Add.9, 27 October 1997.
11 WTO document WT/LDC/HL/M/1/Add.1, 18 December 1997.WT/TPR/S/66 Trade Policy Review
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heavy burden, all of which requires enhancement of institutional and human resource capacities in the
trade-related sector.  Improvement of Tanzania's exports and of its share in global trade has been a
focus of Tanzania's trade policy.
61. In the light of such challenges, Tanzania has identified a number of areas where it requires
trade-related assistance.  These include:
- assistance in the review of Tanzania's regulatory system to align it with WTO rules,
such as in the area of customs valuation;
- assistance to improve Tanzania's capacity to participate in the next WTO
negotiations, not in the least in the area of services, an area which holds considerable
potential for the country's economic development (tourism, financial services,
telecommunications).  In this context it is noteworthy that the authorities of Zanzibar
have pointed in particular to the need for legal training of its officials to build
capacity to align its legislation with WTO rules and regulations, build negotiating
skills to prepare for the next negotiations, and to increase capacities to negotiate
investment contracts;
- assistance in solving its supply capacity constraints, including building capacities for
enhanced productivity, product development, enhanced quality control, and
diversification through improved research activities;
- development of infrastructure linking production areas with export outlets, and
provisions of reliable energy for industrial production at competitive prices;
- improving telecommunication and transport systems through privatization;
- assistance in trade policy formulation;
- human and institutional capacity building, in particular for the various Ministerial
Departments and other governmental as well as private-sector institutions, such as
chambers of commerce (both on the mainland and in Zanzibar);
- assistance to help the Government in its efforts to increase coordination at the
national level for a better interaction among the various Ministries, technical and
private-sector institutions to enable them to become active in trade policyformulation, review and implementation;
- assistance in the rationalization of the tariff system and in securing improvements in
the duty-drawback system;
- assistance to overcome difficulties in accessing foreign markets due to quality and
health requirements (for example for fisheries);
- resources and technical assistance to establish efficient information systems to
identify market access constraints in the area of finance and credit facilities and to
facilitate market development and adaptation programmes;  and
- studies in product design, quality packaging and standardization.Tanzania WT/TPR/S/66
Page 23
62. Part of the assistance being provided by the six core agencies on an on-going basis under the
Integrated Framework has already borne fruit.  By way of example, assistance is successfully being
provided to bring Tanzanian trade legislation into conformity with WTO obligations.  A new
Investment Act has been published.  Tanzania is in the process of  establishing a Business Council,
and the Tanzania Investment Centre is up and running;  it is finalizing  the establishment of a one-stop
shop organization for the purpose of facilitating new and current investment.  The Tanzania tariff hasbeen rationalized and further tariff reform is on-going.  The privatization of the parastatals is moving
into its second phase.  In addition, foreign capital assistance is being provided in the energy and road
sectors.  Part of the Integrated Framework assistance is provided under the Joint Integrated
Programme for Tanzania developed by ITC, UNCTAD and WTO with Tanzanian officials ("JITAP").
JITAP's main objectives are to build a national capacity for understanding the changing multilateraltrading system and implications for Tanzania's trade;  to help conform Tanzania's policy and
regulatory framework to seek maximum advantages from the multilateral trading system;  and to
enhance Tanzania's export readiness in selected key areas.  A considerable number of activities have
already been carried out under JITAP or are being planned, in terms of ensuring conformity of
Tanzania's trade legislation to the WTO rules and regulations, in the area of export promotion andinstitutional capacity building.
63. The current review of Tanzania's trade policy seems to indicate that priority areas for WTO's
technical assistance are customs, services and Tanzania's participation in further negotiations in the
financial services, telecommunication and the tourism sectors, as well as in the area of standards.
64. The Integrated Framework exercise aims for the endorsement of a multi-year programme of
trade-related assistance.  In order to achieve this, the LDC concerned is to call a trade related meeting
(TRM) to which it will invite the development part ners of its choice (multilateral, regional, and
bilateral).  This meeting allows for broadening the exercise so that least developed countries can seek
support that goes beyond what the six agencies can make available to meet its needs for trade-related
assistance.  In preparation for this meeting, each  LDC, along with its development partners, is to
review its needs assessment and prepare a concrete multi-year programme of trade-related assistance
to meet those needs, including a portfolio of priority project profiles, taking into account theassistance already provided:  bilateral as well as multilateral assistance, and both technical and capital
assistance in the area of trade.  On the occasion of its Consultative Group Meeting, held in Paris in
May 1999, Tanzania announced its intention to produce the multi-year programme and organize the
TRM.  The former was presented at a pre-TRM in Dar es Salaam on 14 October 1999.  The final
TRM is scheduled as part of the Consultative Group meeting in May 2000.
(iii) Regional agreements
65. At the regional level, Tanzania's economic cooperation arrangements currently revolve
around the African region, the Southern African Development Community (SADC), the Common
Market for Eastern and Southern Africa (COMESA), and the East African Co-operation (EAC).  The
recently signed trade agreement between South Africa and the European Union is viewed as a causefor some concern, principally that trade diversion may be a consequence of that accord.
(a) Common Market for Eastern and Southern Africa
66. Tanzania is a signatory of the Treaty of the Common Market for Eastern and Southern Africa
(COMESA), however, on 27 July 1999, it announced it s intention to withdraw from COMESA.  This
started a one-year notification period for actual withdrawal.  According to the authorities, Tanzania's
decision is based on an assessment that Tanzania's regional integration efforts are better served by itsWT/TPR/S/66 Trade Policy Review
Page 24
membership in SADC.  However, concerns about revenue losses as a result of ongoing COMESA
tariff liberalization are also believed to have contributed to the decision.
67. The current members of COMESA are Angola, Burundi, Comoros Islands, Democratic
Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius,
Mozambique, Namibia, Rwanda, Seychelles, Somalia, Sudan, Swaziland, Uganda, Zambia and
Zimbabwe.  The COMESA Treaty superseded the Preferential Trade Area for Eastern andSouthern African States (PTA).
12  The COMESA 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 within COMESA;  a common set of standards and technical regulations, quality controlprocedures, 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.
13
68. COMESA members resolved to create a free-trade area (FTA) by 31 October 2000.14   All
members were to have reduced tariffs by 80% as at October 1996.  However, only five countries
(Comoros Islands, Eritrea, Sudan, Uganda, and Zi mbabwe) have reached this level.  COMESA has
also agreed to implement a Common External Tariff by the year 2004;  the CET will be 0%, 5%,
15%, and 30% on capital goods, raw materials, intermediate goods, and final goods, respectively.15
69. In order to facilitate trade within the region COMESA, members have agreed to implement
the Automated System for Customs Data and Management (ASYCUDA) and EUROTRACE.16  The
objective of ASYCUDA/EUROTRACE is to assist the business community to clear goods faster fromcustoms areas, make available up-to-date and accurate international trade statistics, modernize
customs administrations and, through improved efficiencies, increase revenues.
70. COMESA rules of origin stipulate that goods mu st be wholly produced;  or contain imported
content of not more than 60% of the c.i.f. value of the total cost of materials used in production;  or
contain not less than 45% ex-factory value added;  or contain not less than 25% value added if thefinal product is considered to be of particular importance to the economic development of member
States.  All goods eligible for preferential ta riff treatment must be accompanied by a COMESA
Certificate of Origin, duly completed, stamped and au thenticated by the authorized signatories in the
country of origin.
17
71. The Monetary Harmonization Programme is to be implemented in four phases, from 1991 to
2025, with the final phase culminating in full monetary union.  This will imply the use of irrevocable
fixed exchange rates, a single currency or parallel currencies;  full harmonization of economic, fiscal,
                                                     
12 WTO document WT/COMTD/N/3, 29 June 1995.
13 COMESA (1999a).
14 Kyodo News International, Inc. , 31 May 1999;  and Financial Times , 27 May 1999.
15 COMESA (1999b).
16 The ASYCUDA system is a computerized customs management system which also covers foreign
trade procedures.  It handles manifests and custom s declarations, accounting procedures, warehousing and
import and export licences. It also generates trade data.  The EUROTRACE system is able to take the datagenerated by ASYCUDA and integrate it into a database for the production of external trade statistics.
COMESA (1999c).
17 COMESA (1999d).Tanzania WT/TPR/S/66
Page 25
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.18
72. 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.19  The PTA Bank provides trade and project financing to public and
private investors domiciled in member States .  At present, the Bank has 15 members.
73. 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 the
clearing-house has diminished as most of the CO MESA countries have liberalized their foreign
exchange markets.20  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 promotin g the growth of national, sub-regional, and
regional underwriting and retention capacity.21
(b) East African Co-Operation
74. In March 1996, Tanzania, Kenya, and Uganda established the Tripartite Commission for East
African Co-operation (EAC), with its Secretariat in Arusha, Tanzania.  Members are aiming to
upgrade the agreement establishing the Commission into a Treaty.  The EAC's objectives include
harmonizing tariffs and customs regimes, free movement of people, and improving regional
infrastructure by the year 2000.22  A preferential tariff is intended to prevail within the EAC and a
common external tariff (CET) is envisaged for 2004.
75. Since the cooperation agreement was signed, Tanzania, Kenya, and Uganda have tried to
harmonize their fiscal and monetary policies;  they have signed a double taxation arrangement, whichalso provides for joint measures to prevent tax evasion.  Other achievements include pre- and post-
budget consultations between the finance ministers, synchronization of the announcement of the
budget (budget day) in the three countries, regular consultations between the central banks, the full
convertibility of the three currencies, cooperation in capital and securities regulation, and the creation
of common internal passports.  To promote trade and investment, the East African Business Councilhas been established, drawing on national private-sector organizations in the region.  Lawyers have
also formed their own forum, the East African Law Society.
23
76. The EAC members are undertaking joint projects in infrastructure, including a digital
transmission system financed by the telecommunications authorities of the three countries, together
with the European Investment Bank (EIB) and the East African Development Bank.  A regional road
network has also been planned.24
77. In April 1998, a new treaty set out the steps to political federation, based on the report from a
meeting held in November 1997.  It will confer recognition as a legal entity on EAC acting in the
                                                     
18 COMESA (1999e).
19 COMESA (1999f).
20 COMESA (1999g).
21 COMESA (1999h).
22 Dun & Bradstreet (1998).
23 EIU (1998).
24 EIU (1998).WT/TPR/S/66 Trade Policy Review
Page 26
common interest of member States.  Discussions on broadening the membership base, perhaps to
include Rwanda, Burundi and, perhaps, the Democratic  Republic of Congo (formerly Zaire), will also
continue, as will discussions among leaders about the relationship of the EAC with the existing
COMESA and the Southern Africa  Development Community (SADC).25
(c) Southern African Development Community
78. The Southern African Development Community (SADC) Treaty is aimed at building a
community of nations that, together, can compete politically and economically in the world
marketplace.  The cornerstone of SADC is the vision of a shared future:  a future within the regional
family.  Through regional cooperation and integration, the Community aims to provide balanced
economic growth and development, political stability, and security, for all its member States.26
79. The SADC Treaty is a legally binding and all-encompassing framework by which countries of
the region coordinate, harmonize and rationalize their policies and develop strategies for sustainable
development in all areas of human behaviour.  The Treaty commits member States to fundamental
principles of:
- sovereign equality of member States;
- solidarity, peace, and security;
- human rights, democracy, and rule of law;  and
- equity, balance, and mutual benefit.
80. Member States are expected to demonstrate their commitment to act in accordance with these
principles, as set out in Article 4 of the Treaty.  The Treaty directly affects the lives of individual
citizens as it assumed the force of national law upon ratification by the member States in
September 1993.  The Treaty also commits SADC a nd the governments of member States to fully
involve the people of the region, and non-governmental organizations in the process of regionalintegration.
81. Decisions, policies and agreements entered into under the auspices of SADC are legally
binding, and the organization will have the necessary legal instruments to enforce such decisions,
policies and/or agreements.  The Treaty provides  for protocols that set out the principles and
procedures under which member States will conduct their cooperation in specific areas. 
27
82. SADC members have negotiated a Trade Protocol, which was signed in August 1996 by the
Heads of State or Government.  So far the Protocol has been ratified by four member States, including
Tanzania in 1996, and others are at various stages of ratification.  The Protocol must be ratified by
two thirds of the member States for it to enter into force.  The ultimate objective of the Trade Protocol
is the establishment of a SADC free-trade area.  Already, substantial progress has been made towardsthe harmonization of customs and trade documentation.
28  Negotiations on a SADC tariff schedule for
member countries is still ongoing, but expectations are that it will be concluded soon.
                                                     
25 EIU (1998).
26 Information available at:  http://www.sadc.int/overview/vision.htm.
27 Information available at:  http://www.sadc.int/overview/treaty.htm.
28 Information available at:  http://www.sadc.int/industry.htm.Tanzania WT/TPR/S/66
Page 27
(iv) Other trade agreements or arrangements
83. Tanzania is a signatory to the Lomé Convention, which affords a group of 70 African,
Caribbean and Pacific (ACP) countries preferential trade and aid links with the European Union (EU).
The fourth and current convention (Lomé IV), signed in 1989, which replaced the agreements signed
in Lomé in 1975, 1979, and 1984, is to expire in 2000.29  Negotiations between the EU and the ACP
countries on renewing the convention started in September 1998.
84. One of the instruments of ACP-EU cooperatio n concerns non-reciprocal trade preferences
granted by the EU to imports of industrial and pr ocessed agricultural products originating in the ACP
countries (but not unprocessed agricultural products ), and market access under "commodity protocols"
(bananas, rum, beef and veal, and sugar).30   The convention offers two other schemes:  (a) the Stabex,
set up to cover losses of earnings caused by a fall in prices or a decline in production of the main ACPagricultural exports (a total of 50 products are on the Stabex List);  and (b) SYSMIN, a special
financing facility for countries reliant on the export of minerals.
85. Tanzania also benefits from preferential tariff treatment under the Generalized System of
Preferences (GSP) and Global System of Trade Preferences (GSTP), receiving benefits from the EU,
the United States, Japan, Canada, Australia, New Zealand, India, and Turkey.
31
86. In 1986, the Nordic countries, comprising Denm ark, Finland, Norway, and Sweden, signed an
economic cooperation accord with SADC, known as  the Nordic/SADC Accord, aimed at providing
market opportunities to SADC-made products on highly concessionary terms.
(v) Trade disputes and consultations
87. Tanzania is not currently involved, either as a complainant or defendant, in any trade dispute,
either at the WTO or with any members of either COMESA or SADC.
88. Tanzania's current membership in the Common Market for Eastern and Southern Africa
affords it access to COMESA's Cour t of Justice.  The Court's 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 the
Treaty.32 The Court of Justice of COMESA is establ ished under Article 7 of the COMESA Treaty as
one of the organs of COMESA.  The Court became operational in 1998.33
89. As a member of SADC Tanzania will have access to a regional dispute process but, as yet, it
has not been codified.  SADC plans to create a Tribunal, which will ensure adherence to, and proper
interpretation, of the provisions of the SADC Treaty and subsidiary instruments.  The Tribunal will
also adjudicate disputes referred to it.  The composition, powers, functions, procedures, and other
                                                     
29 The European Union's waiver to apply non-recipr ocal trade preferences to imports from the ACP
countries granted by the WTO expires on 29 February 2000 (WT/L/186).
30 Titles I and II of Part III of the Fourth ACP-EEC Convention, OJ L229, Vol. 34 of 17 August 1991,
as amended at Mauritius on 4 November 1995 (EU TPR forthcoming in 2000).
31 India grants preferential access to Tanzania under the Global System of Trade Preferences (WTO
document WT/LDC/HL/20, 23 October 1997);  Turkey indicated its intention to grant preferential tariff rates inWTO document WT/COMTD/W/39, 30 March 1998.
32 Information available at:  http://www.comesa.int/court/courjuri.htm.
33 COMESA (1999i).WT/TPR/S/66 Trade Policy Review
Page 28
related matters governing the Tribunal will be prescribed in a future Protocol.  Decisions of the
Tribunal will be final and binding.34
(vi) Investment agreements or arrangements
90. Tanzania is a signatory of the Convention Establishing the Multilateral Investment Guarantee
Agency (MIGA).35  Tanzania is a member of the International Centre for the Settlement of Investment
Disputes.
91. The Lomé Convention between the ACP States and the European Union embodies principles
for protecting European investments in the ACP countries (Articles 260, 261, and 262 of the
Convention.)
92. Tanzania has bilateral treaties for the promotion and protection of foreign direct investment
with:  Germany, signed on 30 January 1965 and entered into force on 12 July 1968;  Netherlands,signed on 14 April 1970 and entered into force on 28 June 1972;  Switzerland, signed on 3 May 1965
and entered into force on 16 September 1965;  and the United Kingdom, signed on 7 January 1994 but
not in force.  Tanzania also has bilateral investment treaties for the avoidance of double taxation with
Denmark, India, Italy, Norway, Sweden, and Zambia.
36
                                                     
34 Information available at:  http://www.sadc.int/overview/works.htm.
35 Information available at:  http://www.miga.org.
36 Tanzania Investment Centre (1998).