WORLD TRADE
ORGANIZATIONWT/TPR/M/66/Add.1
6 September 2000
(00-3460)
Trade Policy Review Body
2 and 3 March 2000
TRADE POLICY REVIEW
TANZANIA
Minutes of Meeting
Addendum
Outstanding Reponses to Questions
The following communication, dated 30 August 2000, was received from the Permanent
Mission of the United Republic of Tanzania with the request that it be circulated to Members.
_______________WT/TPR/M/66/Add.1
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ANSWERS TO THE QUESTIONS RAISED DURING
THE TRADE POLICY REVIEW OF TANZANIA
Does the Agricultural Input Trust Fund (AITF) cover its costs?  If not, what replenishment rate is
necessary, or predicted to be necessary, to keep this institution afloat?  What is the spread between
AITF's concessionary lending rates and commercial lending rates?
The Agricultural Inputs and Trust Fund was established in 1994 with the main objective of
implementing government policy to make available loans on soft terms and conditions for
procurement and distribution of farm inputs to farmers.
The Fund is also responsible for financing studies and consultations aiming at improving or
facilitating the availability of agricultural inputs to farmers, as well as its operations.
Given the high cost of farm inputs in the local and international markets, the Fund was
initially supposed to start to operate with a capital of 20 billion shillings.
So far, the Government, being the only AGITF source of funding (through the treasury), has
not been able to provide the 20 billion shillings at once as proposed.  It has been providing small
amounts ranging from 500 million to 1 billion shillings starting the financial year 1994/95 to 1998/99,
and in most cases off-season.
Loans amounting to over 5 billion shillings have been issued to stockist and farmers during
the 1995/96 to 1998/99 seasons.  But, since the funds are released in small amounts and in differenttimes within a season, they are not sufficient to fully cover the inputs requirements submitted by
applicants.  This trend severely affected the operations of the Fund.
Had the Fund been funded substantially as initially planned, it could have implemented its
operations effectively and used the accrued interest on loans issued to cover fully its operational costs.
Currently the Fund has embarked on an exercise of debt recovery so that it can resume its
operations, which have been suspended due to depletion of capital funds.
To revive normal operations of the Fund, it is requested that new capital fund be injected in
the tune of about 2 billion shillings in one instal ment, otherwise available funds will continue to be
inadequate to meet operational costs.
The Fund has always been offering lending rates lower than those of commercial institutions
to reflect the main objective of its existence of offering loans on soft terms and conditions to farmers.Interest charged on the Fund loans was 20% from 1994/95 to 1998/99 season.  When it was revised to
15% as against 30% in the past and 19% to 25% charged recently.
The lower lending rates offered by the Fund has the intention of reducing the financial burden
to the farmers as stipulated in the objective of the establishment of the Fund.
It would appear that Tanzania is well along the way to having a diversified agricultural sector.
Greater investment in commercial agriculture could strengthen this diversity and stimulate the whole
sector, including small holder agriculture.  W hat are Tanzania's plans to promote commercial
agriculture investments?WT/TPR/M/66/Add.1
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The ultimate goal of Agriculture Policy is the improvement of the well-being of the people
whose principal occupation and way of life is based on agriculture.  The focus of the policy istherefore to commercialize agriculture so as to increase income levels.
The salient features of the policy include:  liberalization of agricultural markets and removal
of state monopolies in export and import of agricu ltural products and inputs;  withdrawal of
government from actual agricultural production, marketing and processing;  promotion of privatesector involvement (investment) in primary prod uction, marketing and processing.  The Government
will continue to provide basic social services such as policy formulation, research, extension, training,
agricultural information, and provision of a legal and regulatory framework and economic
infrastructure.  Most of these policy guidelines are under implementation.
Furthermore, in addition to the action taken so far, the Ministry in collaboration with sector
stakeholders is in the process of designing an agricultural development strategy which will be the
principle guide for the development of the sector.  Some issues to be addressed in the strategy include
the provision of an appropriate legal framework, land tenure and taxation policy.  The existing legal
framework for agricultural development is out dated a nd difficult to enforce.  Most of the legislation
governing the agricultural development, particul arly with regard to regulatory services, was
formulated prior to the liberalization policy, hence most of them are not suitable for the prevailing
economic environment.  In addition to the above, there are still some drawbacks as far as the land
tenure system is concerned.
The Government has adopted a new land policy.  It provides for land markets (sale of land
property), creates customary land tenure law that is applicable national wide, considers land as aresource  both owned and due to all and it recognizes the village as a legal institution that has control
over land tenure administration at the grassroots.  The Government has also enacted two acts, the
Land Act and the Village Land Act, which are the main instruments for the implementation of the
new land policy.  However, the administration of the new acts is still pending.
The taxation issues:  recent studies indicate that Tanzania's agriculture is heavily taxed
compared to neighbouring countries.  Furthermore there are multiplicity of taxes and levies.  The
strategy will recommend rationalization of taxes and levies so as to encourage private sector
investment in agriculture.
Other areas, which will be addressed by the strategy, include:  rural infrastructure, rural
finance and resource allocation to strengthen support services.
Levy on cotton exports:  The Cotton Board, one of the Industry crop boards, charges a 2% levy on
exports.  This fee seems quite high.  Is it compulsory?  If so, is the sector exceeding 2% averageannual export growth as a result?
The Tanzania Cotton Lint and Seed Board charges 1% (as mandatory) of the FOB value to
finance the Board's regulatory functions and not 2% as indicated.
The report suggests that a significant disincentive for further reform in the dairy sector is that the
industry is being undermined by imports of subsidized  production from other countries.  What is the
estimated damage to local industry of subsidized imports?  From where do these subsidized dairy
imports originate?
Prior to the year 1986, Tanzania used to get 9,465 metric tons of dried skim milk powder and
2,000 metric tons of butter oil for reconstitution.  This milk was supplied through the World FoodWT/TPR/M/66/Add.1
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Programme (WFP) as food-aid, mostly from EU countries.  During those days local milk production
was below demand.
After trade liberalization, some milk is being imported in Tanzania for the weather group
(subjected to customs tariffs) and it is more expensive than locally-produced milk.  The other milk,
which is coming into the country, comes as aid to various institutions and special groups like orphans,
disabled people and refugees.
The quantity of milk imported into Tanzania is about 2% of locally-produced milk.  There is
very little damage to the local dairy industry.
However, it is worth noting that the per capita milk consumption in Tanzania is less than
30 litres (very low) per annum.  This means, the country is producing 814 million litres annually.  If
per capita consumption increases, there will be a demand gap, which will have to be filled through
importation.
PART III
INVESTMENT INCENTIVES AND REPATRIATION OF CAPITAL AND DIVIDENDS
Customs duties
During the construction phase of an approved enterprise or approved domestic enterprise, the
enterprise shall be exempted from customs and import duties and other similar taxes on machinery
equipment, raw materials, valueless and other goods necessary and exclusively required for theconstruction of this project.
Raw materials for the trial operations of an approved enterprise or approved domestic
enterprise shall be exempted from import duties.
Goods imported for the necessary use of the expatriate employee of an approved enterprise or
approved domestic enterprise shall be exempted from import duties during a period of six months
commencing from the date of their first arrival in Zanzibar.
Finished products of an approved enterprise or an approved domestic enterprise which are to
be exported shall be exempted from export duties and other similar taxes.
Tax exemption for investment
Where an investor makes a declaration of his intention to reinvest in Zanzibar the profit
earned during a period of three years from his approved enterprise or approved domestic enterprise,
the amount of such profit actually reinvested in that approved domestic enterprise shall be exempted
from income tax.
Transfer of funds outside Zanzibar
Not withstanding the provisions of any other law for the time being in force, the holder of a
certificate issued under 3 (of this act) shall ordinari ly, in respect of the approved enterprise to which
the certificate relates, be granted permission to transfer out of Zanzibar in the approved foreign
currency at the prevailing official rate of exchange:WT/TPR/M/66/Add.1
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(a) The dividends after taxation, arising from or out of his investment of foreign assets, provided
that any increase in the capital value of the invest ment arising out of all or any part of the capital
assets of the enterprise shall not be a profit from the investment for the purpose of this Act.
(b) The capital specified in the certificate as representing and being deemed to be a fixed amount
of the equity of the holder of the certificate in the investment for the purpose of the Act:
(i) Where any amendment or variation made in the amount of the capital under the
provisions of section 5 of the Investment Act, the amended or varied amount shall be
substituted for the original amount, and
(ii) No additional amount or sum shall be added to the capital specified in the capital
value of the investment after the issue of the certificate or after the last amendment or
variation of the certificate made pursuant to section 5 of the Investment Act.
(c) The principal and interest of any loan specified in the certificate.
Subject to complying with the relevant prevailing foreign exchange control procedures, an
approved enterprise or approved domestic enterprise shall ordinarily be granted permission to transfer
out of Zanzibar in the approved foreign currency and at the prevailing official rate of exchange:
(a) Money for the purchase of raw materials and spare parts which are not available in Tanzania.(b) Money for purchase of necessary consumables not available in Tanzania.(c) Money for necessary management fees.(d) Money for necessary business travel.
(e) Part of expatriates' salaries.
(f) Money for overseas training expenses of the local staff.(g) Any other item of foreign expenditure that may be approved from time to time.
PART VI
M
ISCELLANEOUS
Investment allowance
For the purpose of determining the income of any approved enterprise or any approved
domestic enterprise upon which tax is chargeable under the Income Tax Act.  There shall be deducted
a special allowance to be known as an investment al lowance, provided that the said special allowance
shall be deducted only once.
The investment allowance referred to above shall be charged at the rate of twenty-five
per cent (25%) of accumulated expenditure of a capit al nature incurred by the said enterprise up to
and including the year of assessment, in which the investment allowance is claimed.
Please explain why the Tanzanian Government uses the term "compulsory standards".  Does the term
"compulsory standards" have the same meaning as "technical regulations" used in theWT/TPR/M/66/Add.1
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TBT Agreement?  If so, is it not more appropriate to use the term "technical regulations" in order to
avoid possible confusion?
The term "compulsory standards" originates from the Act establishing the Tanzania Bureau of
Standards, but it has the same meaning as "mandatory standards", which means "technical
regulations" as well.  However, the Act is now under review and it is hoped that such terms will be
standardized to avoid possible confusion.
What plans are there to harmonize labelling and packaging requirements in Tanzania?  Do the
different institutions setting requirements in this  area have the same criteria for their decisions,
e.g. risk assessment?
At the moment, specification standards in Tanzania covering most products have a clause
giving the labelling and/or packaging requirements.  However, there are nine generic standards
i.e. TZS 512-TZS 520 with the following titles:
TZS 512: 1992 Packaging – Complete, filled transport packages – Identification of parts when
testing;
TZS 513: 1992 Packaging – Complete, filled transport packages – Conditioning for testing;TZS 514: 1992 Packaging – Complete, filled transport packages – Stacking tests using static
load;
TZS 515: 1992 Packaging – Complete, filled transport packages – Horizontal impact tests
(horizontal or inclined plane test;  pendulum test);
TZS 516: 1992 Packaging – Complete, filled transport packages – Vibration test at fixed low
frequency;
TZS 517: 1992 Packaging – Complete, filled transport packages – Vertical impact test by
dropping;
TZS 518: 1992 Packaging – Complete, filled transport packages – Compression test;TZS 519: 1992 Packaging – Complete, filled transport packages – Stacking test using
compression tester;  and
TZS 520: 1992 Packaging – Complete, filled transport packages – Water spray test.
Other plans are to have sectorally harmonized requirements for labelling, packing and
packaging.  Thus, Technical Committees have already been formed and are currently working on the
requirements for the following sectors:  (i) food and agriculture, (ii) textiles, and (iii) pharmaceuticals.
Are there any standards currently under consideration which will be notified soon under the
TBT Agreement?
Yes, a number of recently published or revised standards have been categorized as
compulsory standards, and hence notification will be served accordingly.  However, notification will
not cover some of these because they were adopted from internationally-recognized standards.  TheWT/TPR/M/66/Add.1
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reasons behind declaring them compulsory include safety requirements, health (e.g. limit for
permissible heavy metals in foods) etc.  The standards include those listed in the table below.
S/N TZS No. Title of specification standard
1 100 Plantation white sugar
2 101 Refined white sugar
3 115 Permissible food additives
4 164 (Revised) Kitenge
5 165 (Revised) Khanga
6 187 Infant formular
73 1 3 S k i n  c r e a m s
8 138 Petroleum jelly
9 573 Natural mineral water
10 574 Bottled drinking water
11 588 Portland pozzolana cement
12 615 Macaroni, spaghetti and vermicelli
13 616 Durum wheat semolina
14 617 Pneumatic tyres for trucks and buses
15 618 Pneumatic tyres for passenger cars
Why has the Government not solved the problem in  the drawing up and implementation of technical
regulations by the Tanzania Bureau of Standards, especially on the importation of khanga and
Kitenge from India?
The Tanzanian Government through Government Notice No. 672 of 25 December 1998 has
enacted import regulations which empowers the Tanzania Bureau of Standards (TBS) to check thequality of all imported products covered by compulsory standards prior to their entry into the
Tanzania market.  These import regulations became effective on 28 June 1999 and TBS is now
checking the quality of all imports covered by compulsory standards which include khanga and
kitenge.
CANADA - Trade Policy Regime:  Framework and objectives
Please explain the progress achieved under COMESA a nd EAC in attaining the liberalization of trade
via the free movement of people.
A. Achievements under EAC
(i) The currencies from Kenya, Uganda and Tanzania are fully convertible and other
supporting measures are to come in respect of fiscal and monetary policies.
(ii) A preferential customs tariff is intended to prevail within EAC.(iii) The Nairobi Stock Exchange is open to investment from the other two cooperating
countries where businessmen can buy shares in Kenyan companies.
(iv) EAC passport for easier movement.WT/TPR/M/66/Add.1
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B. Achievements under COMESA
(i) Implementation of tariff reduction for intra-COMESA trade leading to a Free Trade
Area in October 2000.  At the moment most countries offer a rate of preference of
between 60 to 80% discount of the MFN tariffs.
(ii) Removal of some non-tariff barriers.(iii) Implementation of the Automated System of Customs Data (ASYCUDA) by most
member states' customs administrations to facilitate trade.
(iv) Formulation and adoption of single COMESA Customs Documents, the
COMESA - CD.
(v) Putting in place effective measures for transit traffic to facilitate the movement of
goods;  this also includes the implementation of a regional motor insurance scheme –
the yellow cards.
(vi) The establishment of independent institutions such as the Regional Trade
Development Bank, the PTA Bank, ZE-PRE and the Clearing House to support
private sector activities.
CANADA – Trade Policy Features:  Policies by sector
Please explain whether Tanzania intends to make specific bindings in other GATS-related sectorswhere liberalization is currently under way, e.g. financial services.
The answer is yes;  Tanzania intends to make specific bindings in other related sectors where
currently liberalization is under way.  The specific bindings should be made as appropriate bearing in
mind the specific needs and requirements of the nation as an LDC.
UNITED STATES – Transportation
Please indicate the timetable for the privatization of other transportation services:  rail, air, airport,
and portions of the THA.
(i) Tanzania Harbours Authority
The Lease Agreement for leasing the Tanzania Harbours Authority Container Terminal for a
period of ten years was signed with a Consortium comprising the International Container Terminal
Services Incorporation (ICTS) of Philippines and Tanzania International Container Terminal ServicesLimited on 5 May 2000.
Dar es Salaam International Airport
(ii) Dar es Salaam Handling Company Limited (DAHACO).
The sale of Shares Agreement was signed with Swissport International Limited on
30 May 2000 for the divestiture of 51% equity in DAHACO.  The Government of Tanzania will now
remain with the balance of 49%.
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