RESTRICTED
WORLD TRADE WT/TPR/S/27
6August 1997
ORGANIZATION(97-3184)
TRADE POLICY REVIEW MECHANISM
REPUBLIC OFBENIN
Report bytheSecretariat
Thisreport, prepared forthefirstreview ofBenin 'strade policy, hasbeendrawn upbythe
Secretariat onitsownresponsibility. Asprescribed intheAgreement Establishing theTrade Policy
Review Mechanism (Annex 3totheMarrakesh Agreement Establishing theWorld Trade Organization),
theSecretariat sought clarification fromtheGovernment ofBenin ofitstrade policies andpractices.
Document WT/TPR/G/27 contains thegeneral policy declaration submitted bytheGovernment
ofBenin.
Note: Thisreport haslimited distribution andissubject toapress embargo untiltheendofthemeeting
oftheTrade Policy Review Body dealing withBenin.Republic ofBenin WT/TPR/S/27
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS ix
(1) Economic andtrade flows ix
(2) Institutional framework x
(3) Trade andinvestment policy features andtrends x
(i) Recent evolution x
(ii) Type andincidence oftrade andinvestment
policy instruments xi
(iii) Sectoral policies xi
(4) Trade policies andforeign trading partners xii
I. THE ECONOMIC ENVIRONMENT 1
(1) Major features oftheeconomy 1
(2) Economic developments 4
(i) Marxist-Leninist period 4
(ii) Stabilization andadjustment 4
(3) Trade performance 9
(i) Commodity pattern oftrade 10
(ii) Regional pattern oftrade 12
(iii) Trade inservices, netflows ofresources andlong-term
debt 14
(4) Outlook 15
Annex I:1 Exchange regulations 16
II. TRADE POLICY AND INVESTMENT POLICY 18
(1) Constitutional framework 18
(2) Formulation andimplementation oftrade policy andinvestment
policy 18
(3) Trade andinvestment policy objectives 19
(4) Trade andinvestment lawsandregulations 20
(i) Trade legislation 20
(ii) Investment Code 21WT/TPR/S/27 Trade Policy Review
Page iv
Page
(5) Trade andinvestment agreements andarrangements 22
(i) Multilateral agreements 22
(ii) Bilateral andregional agreements 23
(iii) Other trade agreements orarrangements 24
(iv) Trade disputes andconsultations 24
(v) Investment agreements orarrangements 25
III. ANALYSIS OFTRADE POLICY INSTRUMENTS 26
(1) Introduction 26
(2) Measures directly affecting imports 26
(i) Customs formalities 26
(ii) Import duties 28
(iii) Anti-dumping, countervailing andsafeguard measures 35
(iv) Prohibitions, quantitative import restrictions andimport
licensing 36
(v) Standards andecological andother technical requirements 36
(vi) Government procurement 38
(vii) Local content requirements 39
(viii) Counter-trade 39
(ix) Balance-of-payments measures 39
(3) Measures directly affecting exports 39
(i) Regulations 40
(ii) Export duties andtaxes 40
(iii) Export licensing, prohibitions andother measures
restricting exports 41
(iv) Export subsidies 42
(v) Export promotion 42
(vi) Measures implemented inimporting countries 42
(4) Other measures affecting production andtrade 42
(i) State trading, stateenterprises andprivatization 42
(ii) Subsidies andother forms ofproduction assistance 45
(iii) Price regulation andcompetition policy 45
(iv) Regional promotion measures 47
(v) Measures fortheprotection ofintellectual property rights 47
IV. TRADE POLICIES AND PRACTICES BYSECTOR 50
(1) Introduction 50
(2) Agriculture, fisheries, forestry andrelated industries 51Republic ofBenin WT/TPR/S/27
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Page
(i) Agriculture andagro-industry 51
(ii) Livestock production 59
(iii) Fisheries 59
(iv) Forestry andwood products 59
(3) Energy andmining sectors 60
(i) Crude oilandproducts thereof 60
(ii) Electricity 62
(iii) Natural gas 62
(iv) Other mineral products 63
(4) Manufacturing sector 63
(i) Textiles andclothing 63
(ii) Other products 64
(5) Services 65
(i) Transport services 67
(ii) Financial services 71
(iii) Tourism, hotel andrestaurant services 73
(iv) Telecommunications andbroadcasting 74
REFERENCES 76WT/TPR/S/27 Trade Policy Review
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CHARTS
Page
I. THE ECONOMIC ENVIRONMENT 1
I.1 MapofBenin 1
I.2 Gross domestic product ofBenin, 1973-1997 5
I.3 Realexchange ratewiththeNigerian currency, 1980-1995 8
I.4 Exports ofBenin, 1990-1997 10
I.5 Foreign trade indicators, 1990-1995 11
III. ANALYSIS OFTRADE POLICY INSTRUMENTS 26
III.1 Average import duties bysector, 1997 30
III.2 Trade protection incertain WAEMU countries, 1995 34
IV. TRADE POLICIES AND PRACTICES BYSECTOR 50
IV.1 Structure ofGDP atcurrent prices, 1996,
andannual growth rateat1992 prices 50
IV.2 Cotton prices, 1985-96 55Republic ofBenin WT/TPR/S/27
Page vii
TABLES
Page
I. THE ECONOMIC ENVIRONMENT 1
I.1 Basic social data, 1970-1995 2
I.2 Basic economic indicators, 1990-1996 6
I.3 Fixed investment andportfolio investment, 1982-1996 9
I.4 Exports, 1992 and1996 11
I.5 Imports bymain product groups, 1992 and1996 12
I.6 Exports bydestination, 1992 and1996 13
I.7 Imports bysource, 1992 and1996 14
I.8 Balance-of-payments developments, 1992-1997 15
II. TRADE POLICY AND INVESTMENT POLICY 18
II.1 Major notifications, commitments andconcessions within the
framework ofimplementation oftheWTO Agreements, April 1997 22
III. ANALYSIS OFTRADE POLICY INSTRUMENTS 26
III.1 Summary ofcharges made onimports clearing customs inthe
autonomous portofCotonou, 1997 31
III.2 Schedule ofGeneva tariff concessions (1964) andimport
duties imposed in1997 33
III.3 Summary ofexport taxes, 1997 41
III.4 Reorganization ofthemajor stateandsemi-state enterprises,
February 1997 44
IV. TRADE POLICIES AND PRACTICES BYSECTOR 50
IV.1 Production offoodcrops andmajor cashcrops, 1989-1996 52
IV.2 Producer price forthemajor cashcrops, 1989-1996 53
IV.3 Production, import andconsumption ofenergy, 1990-1995 60
IV.4 Trade intextiles andnewandusedclothing, 1992-1996 64
IV.5 Schedule ofSpecific Commitments under theGeneral Agreement on
Trade inServices 66
IV.6 Traffic intheautonomous portofCotonou 68
IV.7 Telephone charges incertain countries, 1994 75WT/TPR/S/27 Trade Policy Review
Page viii
LIST OFABBREVIATIONS
ACP African, Caribbean andPacific States (ACP States)
AEC African Economic Community
BIC TaxonIndustrial andCommercial Profits
BIVAC Bureau Veritas (Preshipment Inspection Company)
BUBEDRA Beninese Copyright Office
CACEU Central African Customs andEconomic Union
CBCE Beninese Foreign Trade Centre
CCIB Chamber ofTrade andIndustry ofBenin
CNCB Conseil national dechargeurs duBénin
CNEX Conseil national pourl'exportation (National Export Council)
COBENAM Compagnie béninoise denavigation maritime
COTEB Complexe textile duBénin
DGDDI General Directorate ofCustoms andIndirect Taxes
ECOWAS Economic Community ofWest African States
GATS General Agreement onTrade inServices
GSP Generalized System ofPreferences
HS Harmonized Commodity Description andCoding System
INSAE Institut national delastatistique etdel'analyse économique (National Institute ofStatistics
andEconomic Analysis)
ITC International Trade Centre UNCTAD/WTO
MFA Multifibre Arrangement
MFN Most-favoured-nation
OAU Organization ofAfrican Unity
OCBN Organisation commune Bénin-Niger
ONAB Office national dubois
OPT Office despostes ettélécommunications
PCS Community solidarity levy
SA Société anonyme (Public limited company)
SARL Société àresponsabilité limitée (Limited liability company)
SBEE Société béninoise d'eauetd'electricité
SME Small andMedium Enterprises
SITEX Société industrielle detextiles
SOBEBRA Société béninoise debrasserie
SOBEMAP Société béninoise demanutention portuaire
SOBETA Société béninoise detabac
SOBETEX Société béninoise detextiles
SONACOP Société national decommercialisation desproduits pétroliers
SONAPRA Société nationale pourlapromotion agricole
SONICOG Société nationale pourl'industrie descorps gras
STABEX Stabilization ofExport Earnings
SYDONIA Système douanier automatisé (Automatic customs system)
TPC Preferential community tax
TPU Taxe professionelle unique (Single trade tax)
TRIPS Trade-Related Aspects ofIntellectual Property Rights
UNCTAD United Nations Conference onTrade andDevelopment
VAT Value-Added Tax
WAEMU West African Economic andMonetary Union
WIPO World Intellectual Property Organization
WTO World Trade OrganizationRepublic ofBenin WT/TPR/S/27
Page ix
SUMMARY OBSERVATIONS
1. Inthecourse ofthelast10years, Benin
hasbroken decisively away fromthecentralized
planned-economy system which hadplaced
serious obstacles inthewayoftrade andhas
establishedalargelyopenmarketeconomy.The
transition hasbeengradual andtheeconomy
continues tobeplagued byproblems inthe
health andeducation sectors which must be
solved before economic growth cantakeoff.
Although thetradelegislation isliberal, theway
inwhich itisbeing administered seems tobe
arbitrary andlacking intransparency. Benin
isparticularly exposed tochanges inthetrade
polices ofitsneighbours, notably Nigeria, and
itsexport sector isdependent onasingle basic
product, cotton.
(1) Economic andtrade flows
2. Despite apercapita income ofabout
US$370, which places itamong thecountries
thatareleastadvanced, Benin isoneofAfrica 's
principaltradecentres.Afteragriculture,which
generates more thanathirdofgross domestic
product andthebulkofexport earnings, port
services andcommercial andtransport services
form theprincipal sector ofactivity. A
considerable proportion ofthecountry 's
economic activities, including foreign trade, is
conducted onaninformal basis, i.e.outside the
national statistical system. Toaconsiderable
extent, Benin 'strade andrelated activities
depend ondevelopments associated withthe
various import restrictions imposed byNigeria,
which remains itsprincipal economic partner.
Other neighbouring countries, some ofwhich
areland-locked, usethePortofCotonou asan
outlet tothesea.
3. Confronted attheendofthe80swith
aserious economic and financial crisis,
characterizedamongotherthingsbyasharpfall
inpercapita income, in1990Benin abandoned
theMarxist-Leninist model inplace since1974.
Since then, thanks toseveral macroeconomic
stabilization programmes, ithasbeenableto
re-establish theviability ofitspublic finances
andbalance ofpayments, although thelatter
continues todepend onexternal grants. Thepublic enterprises, including thethree State
banks which wentbankrupt in1988, havebeen
restructured, privatized orwound up. The
State'sarrears ofpayment, domestic and
foreign, areintheprocess ofbeing absorbed.
Together withtheother members ofthefranc
zone, inJanuary 1994, Benin devalued its
national currency fromCFAF 50toitspresent
levelofCFAF 100totheFrench franc. The
enterprises which benefited most from this
devaluation were those producing forexport
using inputs purchased locally. Economic
growth hasstabilized atalevelslightly above
therateofpopulation increase, butremains at
themercy offluctuations inworld cotton prices.
4. Theavailable statistics indicate that
exports aregeographically diversified, which
reflects thestrong demand forBeninese cotton
onworldmarkets.Qualityginnedcottonexports
wereevaluated at$230million in1996, ormore
than3percentofworld exports. Thebiggest
customer isBrazil, followed byMorocco and
Portugal. Benin isaiming todouble cotton
exports between 1995 and2000. France isby
farBenin 'smain supplier, with18percentof
officially recorded imports, butthesources of
imports arealso very diversified. When
re-exportsofimportedproducts,whichrepresent
about 40percentofestimated totalexports, and
theinformal trade aretaken intoaccount,
Benin 'sprincipal trading partner isNigeria,
probably followed bytheNiger.
5. Apartfromcotton,exportsincludecrude
petroleum, fresh fruit, cashew nutsandpalm
oil.Theimports arerice,other cereals andnew
andused manufactured goods, allpartly
re-exported. Tothese must beadded the
petroleum products imported bytheSociété
nationale decommercialisation desproduits
pétroliers (SONACOP) and byindividual
informal-sector importers.
6. Benin hastaken hardly anyadvantage
ofcommitments totheGATT, nowtheWTO, to
confirm theopening upofitseconomy and
trade. Allitsimport duties onagricultural
products were bound inthecontext ofthe
Uruguay Round atceiling rates considerably
higher thanthetariffs applied. AtthesameWT/TPR/S/27 Trade Policy Review
Page x
time, only theduties applicable toafew
industrial products werebound; fortherest,
tariffbindings dating from1964remain inforce
andhave never been renegotiated despite
important changes inthenature andlevelofthe
duties, aswellasinthenomenclature. A
general binding would enable theauthorities to
confirm theopening upoftheimport regime and
would afford traders andinvestors greater
certainty.
(2) Institutional framework
7. Benin hasbeen anindependent and
sovereign republic since 1August 1960. The
President oftheRepublic istheheadofState;
astheholder ofexecutive power, hedetermines
andguides State policy, appoints themembers
oftheGovernment andassigns theirfunctions.
TheMinistry ofTrade, Handicrafts andTourism
isresponsibleforformulating,implementingand
administeringtradepolicy,incollaborationwith
theMinistry ofFinance. Asingle National
Assembly, whose deputies areelected bydirect
universal suffrage forfouryears, exercises
legislative power. Itvotes thelaws, including
thefinance billswhich determine theState's
revenue andexpenditure objectives.
8. Theinternationaltreatiesand
agreements, including theAgreement onthe
WTO, havetheforce oflawassoonasratified,
noimplementing regulations being required.
Under theConstitution, theytakeprecedence
overdomestic laws. Thus, inprinciple, the
provisions oftheWTO Agreement canbe
invoked inBenin courts. Foreign trade andthe
activities offoreign companies werethesubject
ofseveral lawsadopted in1990 following the
opening upoftheeconomy totheprivate sector.
Since then, theprincipal tariff reduction and
privatization and government procurement
measures havebeenadopted within thecontext
ofinternationalstructuraladjustment
agreements.
9. Within thefranc zone, Benin forms part
oftheWest African Economic andMonetary
Union (WAEMU) which also includes
Burkina Faso, Côte d'Ivoire, Guinea-Bissau,
Mali, Niger, Senegal andTogo andwhoseissuing authority istheCentral Bank ofWest
African States (BCEAO) which isresponsible
fortheUnion 'smonetary policy. Thetreaty
establishing theWAEMU provides forthe
creation, asfromJanuary 1998, ofacustoms
union withacommon external tariff which will
include several countries whose tariffandnon-
tariffprotection isconsiderably higher thanthat
ofBenin. Theauthorities areaware ofthe
danger which further barriers totrade would
represent fortheBeninese economy, theimport
andre-export trade constituting asignificant
proportion ofthecountry 'seconomic activity.
10. Benin isalsoafounder member ofthe
Economic Community ofWest African States
(ECOWAS), whose membership consists ofthe
members oftheWAEMU plusCape Verde,
Gambia, Ghana, Guinea, Liberia, Mauritania,
Nigeria andSierra Leone. TheECOWAS trade
liberalization programme includes, inprinciple,
theabolition, asfrom 1994, ofallnon-tariff
barriers toCommunity trade andthefree
circulation ofapproved products within the
Community, atthelatest by2000. About 6per
centofBenin 'sofficially recorded imports come
from ECOWAS. Benin benefits from
non-reciprocal trade preferences under the
developed countries 'General System of
Preferences andfrompreferential access tothe
European Union market under theLomé
Convention.
(3) Trade andinvestment policy features
andtrends
(i) Recent evolution
11. The last ten years have been
characterized bytheprogressive liberalization
oftrade barriers with theelimination of
quantitative import restrictions in1988, the
abolition ofimport licences in1991 andthe
elimination ofimport price lists. Thetariff
reformsof1991and1994resultedinthenumber
oftaxeslevied onimports being reduced totwo
andtherange ofdutyratescontracting from16
to5,while export taxes were almost entirely
eliminated. The Government introduced
value-added taxin1991 andlowered andRepublic ofBenin WT/TPR/S/27
Page xi
simplified direct taxes, while atthesame time
extending thetaxbase.
12. Since 1990, several newlawshavebeen
submitted totheNational Assembly tomake
trade andinvestment conditions more reliable
andattractive, inparticular adraftgovernment
procurement code, adraftlawoncompetition,
adraft customs code andadraft investment
code, noneofwhich hasyetbeenadopted. In
practice, theexistence ofalargeinformal sector
creates acompetitive climate.
(ii) Type and incidence oftrade and
investment policy instruments
13. Trade and investment policy and
practices havethedualaimofencouraging the
development oflocal enterprises without
increasing thecostofgoods andservices in
international trade, given theimportance of
foreign trade asasource ofincome. The
present level oftrade protection inBenin is
therefore among thelowest inAfrica. Tax
instruments, inparticular neartotalexemption
from direct andindirect taxes, arethechief
means ofproviding assistance forbusinesses.
14. Benin accords atleastMFN treatment
toimports, whatever theirorigin. Ithasnotyet
adoptedtheHarmonizedCommodityDescription
andCoding System (HS). Thecustoms tariff,
based ontheCustoms Cooperation Council
Nomenclature (CCCN), provides fortwoMFN
rates: fiscal duty,which varies from0to20per
cent,andthecommunity solidarity levyof1per
cent, which isintended tocompensate forthe
lossofcustoms revenue associated withthe
preferential agreements. These import taxes,
whicharesolelyadvalorem,amountonaverage
to13percent,buttheeffective collection rate
ismuch lower because ofnumerous exemptions.
Some products from themember countries of
ECOWAS and WAEMU qualify fortariff
reductions.
15. Value-added tax(VAT) wasintroduced
in1991 attherateof18percent. Three
quarters ofBenin 'sVATrevenue iscollected on
imports.Thisbordertaxation,favouredbecause
itisrelatively easytotaxgoods astheyenterthecountry, iscreating strains inthecustoms
system byencouraging operators tominimize
thevalue ofthegoods declared. Asystem of
preshipment inspection ofimports isinforcebut
isnotbeing applied togoods imported bythe
"occasional" importers who account fora
substantial proportion oftheimport trade.
16. There arenumerous exemptions from
customs duties andVATwhich create serious
administrative complications thatcould distort
trade and encourage irregularities. All
Government contracts andmostinvestment are
exempt from import duties andVAT. Most
imports ofinputs bylocal enterprises areduty
free. Considering thevitalcontribution tothe
revenue made bytheduties collected bycustoms
andtheimportance ofimports fortheeconomy,
Benin would certainly benefit from more
transparent customs andportregulations and
closer control andmonitoring ofimports tocurb
taxfraud. Thiswould bemuch facilitated by
theelimination ofthespecial import regimes.
17. Exports,ofindigenousproductsorgoods
intransit, aremainly free,except inthecase
offoodcropproducts, cotton andwood inthe
rough whose exportation isofficially prohibited.
Benin forbids theexportation ofproducts whose
importation isprohibited inthecountry of
destination, which could encourage those who
trade withthose countries toavoid thecustoms
posts.
(iii) Sectoral policies
18. Trade policy hasnotbeenliberalized
tothesame degree inevery sector ofactivity.
Some sectors, inparticular theagri-food
industry, have been broadly exposed to
internationalcompetition,whereasothersremain
protected bymonopolies, exclusive trade rights
andimport prohibitions, notably intheservice
sectors. The Government 'sobjective of
encouraginginvestmentandfoodproductexports
would necessitate arevision ofthelandtenure
andtrade legislation inforce inthese sectors,
inorder tofacilitate landpurchase andexports,
inparticular offoodcropproducts.WT/TPR/S/27 Trade Policy Review
Page xii
19. Inthecotton sector, Benin isapplying
ahighly interventionist policy intended to
increase production inorder togenerate tax
revenue. Thus, theStatehasamonopoly onthe
purchase oftheentire seedcotton output, while
providingtheinputsandadministeringproducer
prices. Thelevies onthissector represent one
fifthoftheState budget. Theenvironmental
authorities recognize that present cotton
production methods arenotecologically viable.
Theassistance granted tothecotton producers
hasdiverted resources from other crops; in
1994, against abackground oflocal food
shortages duetothedifficulties ofprovisioning
therural areas, theGovernment decided to
prohibit exports offoodcropproducts.
20. Ingeneral, theagricultural product
processing sectors (oils, beverages, food,
textiles), which aretoalarge extent exposed to
international competition, arerecording profits
and have received most ofthemodest
investments made inrecent years. Thecement
sector, protected fromimports byaban,was
liberalized inMay1997. Most oftheservice
sectors, inparticular telecommunications,
energy,non-lifeinsuranceandairtransport,are
organized aspublic monopolies and
handicapped bytheState'slimited capacity for
investment. Theresulting delay inadapting to
newtechnologies andmarket trends istaking
itstollinterms ofcosts andefficiency onthe
economy asawhole, which illustrates theneed
toapply tothese sectors thederegulation in
progress elsewhere intheeconomy.
(4) Trade policies andforeign trading
partners
21. Benin 'scommitment totheprinciple of
freetrade isensured byitsroleasacommercialhub.Despite belonging toaregional economic
area, thecountry trades withthewhole world,
largely onaMFN basis. Inorder tomanage
thechanges inthetrade policies ofitsprincipal
regional partners tobesteffect, itisinBenin 's
bestinterest tobinditspolicies totheprinciples
ofthemultilateral trading system. The
implementation ofthe Uruguay Round
Agreements willmakepossible ageneral review
ofthegoals ofitstrade, fiscal andsectoral
policies andfavour economic liberalization in
those sectors inwhich ithasnotyettaken place.
22. Therapid andexhaustive application
oftheprovisions oftheAgreement ontheWTO
wouldprovidetheeconomicoperators,domestic
andforeign, withastable andtransparent
framework within which todobusiness. Further
simplification ofthetrade regime would also
make asignificant contribution tothe
development ofsuch aframework, aswould
harmonization ofthelegislation withbusiness
measures andpractices. These efforts would
beencouraged bygreater support fromBenin 's
more developed economic partners. The
Government could signal itscommitment to
reform byopening upthenumerous sectors of
activitysofarinaccessibletoforeigninvestment,
such astelecommunications, airtransport,
energy and,toalargeextent, agriculture, which
would offer real possibilities interms of
employment, technological progress and
economic growth.