RESTRICTED  
  
WT/ACC/TLS/1  
 
8 November 2016  
(16-6129) Page: 1/14 
 Original: English  
 
ACCESSION OF THE DEM OCRATIC REPUBLIC OF TIMOR -LESTE  
REQUEST FOR ACCESSIO N PURSUANT TO ARTICL E XII 
 The Director -General received the following communication, dated 7 April 2015, from the 
Minister of Commerce, Industry and Environment of the Democratic Repu blic of Timor -Leste.   
Attached to this app lication is a short statement on  the Foreig n Trade Regime of Timor -Leste, 
submitted by the Delegation of Timor -Leste on 8 November 2016 .  
_______________  
 I have the honour to inform you that the Government of the  Democratic Republic of 
Timor -Leste has decided to apply for accession to the World Trade Organization under Article XII of 
the Marrakesh Agreement Establishing the World Trade Organization.   
 The Government of Timor -Leste remains at the disposal of the W TO Secretariat and at the 
disposal of WTO Member Governments for any information that may be useful concerning the 
application for accession.  
 I would appreciate if you could submit this communication to the WTO Members and 
consider including it in the ag enda of the WTO General Council.  
_______________  WT/ACC/TLS/1  
 
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  OVERVIEW OF TIMOR -LESTE 'S ECONOMIC POLICY  
AND FOREIGN TRADE RE GIME  
I. INTRODUCTION  
1. This statement accompanies the application from the Democratic Republic of Timor -Leste 
(DRTL) for accession pursuant to Ar ticle XII of the Marrakesh Agreement Establishing the World 
Trade Organization.  
2. The purpose of this statement is to provide a brief description of the current economic and 
trade policies of Timor -Leste and also clearly signal the path of future reforms. De tails of these 
policies will be elaborated in the Memorandum on the Foreign Trade Regime (MFTR) following the 
establishment of a Working Party on the Accession of Timor -Leste with standard Terms of 
Reference.  
II. THE COUNTRY  
1. Geography, History and Independ ence  
3. Timor -Leste  is a Least -developed country (LDC) which comprises the eastern half of the 
island of Timor, the nearby islands of Atauro and Jaco, and the enclave of Oe -Cusse Ambeno on 
the northwestern side of the island, surrounded by the Indonesian Prov ince of West Timor. 
The country 's size is 14,919 km2.  
 
4. After 24 years of resistance the Timorese people voted to be independent through a United 
Nations auspice referendum.  
5. Timor -Leste became the first new sovereign state of the 21st century, on 20 May 2 002, when 
independence was restored and the country was faced with the daunting task of rebuilding its 
institutions and basic infrastructure from the ground up.  
6. Following further unrest and displacement in 2006, and a sustained state building and 
capacity development process, Timor -Leste has built a more inclusive political coalition and 
increased tangible services to its people. The resulting political stability – and increased confidence 
in the state – provides a strong foundation for growing the economy,  creating jobs, and raising 
incomes.  
2. Population  
7. According to the 2015 National Census, the population of Timor -Leste was 1,167,242. 
Approximately  71.88% lived in rural areas and rely on farming for survival. There are about 
206,483 households of an average  5.7 inhabitants each.  WT/ACC/TLS/1  
 
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  8. The population is young, fast -growing and highly poor. Timor -Leste has completed three (3) 
living standards  surveys (2001, 2007 and 2014) and these surveys reveal that many Timorese are 
doing much better now according to the National  and the International poverty rate. The National 
poverty rate was 50% in 2007 and it has decreased to 41.8% in 2015. Internationally, comparable 
poverty lines also confirmed an improvement. In 2007 and 2014 it was 47.2% and 30.3% 
respectively. The fact th at the international poverty rate shows a bigger improvement, means that 
Timor -Leste is doing better in reducing its extreme poverty rate . However, this does not mean that 
poverty has ended. Much more needs to be done for all Timorese to ensure that all Ti morese live 
in prosperity and participate in the wealth of the nation. The government remains committed to 
working towards this important goals.  
9. Over 45% of the population is below 15 years of age. The country has a high fertility rate 
(5.3 births per wom an in 2012)  which means that an estimated 470,000 individuals are expected 
to enter the labor market by 2030.  
10. 70% of the population is under 30 years of age.  
11. Despite the country 's small size, it has more than 42 dialects and Tetum and Portuguese as 
official languages, and Indonesian and English as the working languages.  
3. Membership in International Organizations and Commitment to the United Nations 
 Charter and its Conventions  
12. Timor -Leste has been a member of the United Nations (UN) since 27 September 2002, 
having ratified the UN Charter by means of Resolution No. 1/2002, of the National Parliamen t, 
dated 20 May 2002. As a member of the UN, Timor-Leste is also a party to The International Court 
of Justice (ICJ), having filed a declaration for that purpose on  21 September 2012, under Article 
36(2) of the statute, acc epting the jurisdiction of the ICJ. The country is also a member of the 
World Customs Organization (WCO)  since 19 September 2003. 
13. As a member of the UN, Timor-Leste participates in the work of the organs of the UN and in 
some of the UN's economic programmes, namely : 
- The UN General Assembly (GA);  
- UN Commission on  International Trade Law (UNCITRAL); 
- United Nations Economic and Social Council (ECOSOC): Although Timor-Leste is not a 
member of the governing council of ECOSOC, it is a member of some  of ECOSOC's 
subsidiary bodies, in particular, the UN Economic and Social Commission for Asia and the 
Pacific (ESCAP) since 18  July 2003; 
- Timor-Leste has been a member of the World Health Organization (WHO) since 2002;  
- Timor-Leste has also been a member of the Food and Agriculture Organization of the 
United Nations (FAO) since 29 November  2003; and,  
- Timor-Leste is a member of the International Labour Organization (ILO). 
14. Annex to this Statement expresses Timor -Leste 's full commitment to the United Nations 
Charter and its Conventions, as well as to international cooperation for peace, prosperity, 
security, development and mutual coexistence. It shows a complete list of all treaties to which 
Timor -Leste is a party  to: Human Rights Conventions, International Labour Organization 
Conventions, Environmental Conventions, International Organizations and Tribunals, Association 
of Southeast Asian Nations ( ASEAN), Community of Portuguese Language Countries  (CPLP), 
Bilateral  Agreements and Bilateral Investments Treaties.  
15. Timor -Leste joined the Commun ity of Portuguese La nguage Countries (CPLP) on 
1 August 2002. In 2011, Timor -Leste formally requested membership status in the Association of 
Southeast Asian Nations (ASEAN)  and i s implementing the relevant legal and policy reforms 
needed  to meet the obligations for ASEA N membership, which GOTL considers as a great step 
towards also meeting WTO compliances. In addition, Timor -Leste is now a member of an array of WT/ACC/TLS/1  
 
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  international organ izations, including International Monetary Fund (IMF), and World Bank (WB) as 
well as ASEAN Regional Forum and Asia/Pacific Group on Money Laundering,  
4. Government Website and Other Relevant Information  
16. The GOTL has an official Website (http://timor -leste.g ov.tl) whereby relevant data and 
relevant information and links about the country are available, including the "Jornal da República, " 
the country 's official gazette, which regularly publishes normative acts of the Presidency, the 
Parliament, and the Govern ment. The Ministry of Finance has a transparency portal: 
www.mof.gov.tl , to daily report on the public finances.  
17. The Government is undergoing four (4) pillars of reform that will introduce portals for 
customs, tax and trade to facilitate access to information, transparency for good governance.  
III. CONSTITUTIONAL ORDER , DOMESTIC POLICIES AND FOREIGN RELATION S 
1. Constitution  
18. On 22 March 2002 a plenary sess ion of the members of the Constituent Assemb ly, acting as 
the legitimate representatives of the Timor-Leste people elected  on 30 August 2001, approved 
and dec reed the Constitution of the Democratic Republic of Timor-Leste ("Constitution").  Article 67 
of the Constitution estab lishes four organs of sovereignty: (i) the President of the Republic; (ii) the 
National Parliament; (iii) the Government; and, (iv) t he Courts. 
19. Under the Constitution, the President is the Head of State (Article 74.1) and the Prime 
Minister is the Head of the Government (Articles 10 5.2 and  106.2). 
20. Article 69 sets  forth the principle of separation of powers, as follows: "Organs of 
sovereignty, in their reciprocal relationship and exercise of their functions, shall observe the 
principle of separation and interdependen ce of powers established in the Constitution." 
2. Commitment to the Rule of Law, Transparency and Openness  
21. Timor -Leste has taken significant steps to ensure the rule of law in the country and has 
established institutions like the Office of the Ombudsman for Human Rights and Justice , and the 
creation of the Timor -Leste Anti -Corruption Commission  committed to strengthen human rights, 
accountability and combat corruption.  
3. Foreign Policy  
22. Timor -Leste 's foreign policy places high priority on its relationships with its closest neighbors 
Indonesia and Aus tralia, and most notably the Community of Portuguese Language Countries 
(CPLP) and member states of the Association of Southeast Asian Nations (ASEAN).  
23. Timor -Leste has also greatly benefitted from the support of many countries diplomatically 
and financial ly throughout its struggle for independence and after independence. Timor -Leste 
began its two -year presidency of the CPLP in 2014 by prioritizing economic integration between 
member states to facilitate trade. One of its top foreign policy objectives is to  join ASEAN and 
WTO.  
24. Timor -Leste applied for ASEAN membership in 2011, and it is under consideration by ASEAN 
members. To this end, Timor -Leste, with the assistance of the Asian Development Bank (ADB), 
prepared a memorandum on the Foreign Trade Regime of Timor -Leste, which will soon be 
submitted to the ASEAN Secretariat and will be a valuable use to the preparation of the WTO 
Memorandum of Trade Regime. The Government 's commitment to joining ASEAN has also led to a 
number of reforms in the area of customs and trade facilitation that will go towards meeting the 
GATT agreement.  WT/ACC/TLS/1  
 
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  4. Commitment to the Principles, Objectives and Rules of the World Trade 
 Organization (WTO)  
25. Timor -Leste is fully committed to abide by the principles, objectives and rules of the World 
Trade Organization (WTO), account being taken of its status as a Least -developed country (LDC). 
Specifically, the Government 's commitment to the objectives of WTO is reflected in practical terms 
through a resolution to establish the National Trade Facilita tion Committee, comprising of Senior 
Cabinet Members, Directors, and Technical Assistance provided by the ADB and the World Bank. 
This is complemented by the Customs Reform to restructure the customs organization, introduced 
the new customs code, adoption of the Arusha Declaration, establishment of the National Single 
window that will have the capacity to link ASEAN and CPLP countries, and implement the 
harmonized system code 2017.  
5. Commitment to the Market Economy  
26. The VI Constitutional Government (2015 – 2017) is undertaking a comprehensive reform of 
the private sector legal regime in order to create the enabling environment for a free market 
economy to diversify, grow and flourish. New policies and legislation are currently being prepared 
or revised, which will sustain a clear, transparent and modern legal framework to support the 
development of the economy, namely:  
- Competition Policy: Timor -Leste recognises the importance of competition for the 
strategic development of the economy both domestically and int ernationally and promote 
economic growth and development. The National Parliament has passed the Consumer 
Protection Law to enforce the law. Further discussions will continue to define the main 
areas to be regulated and Institutional arrangement is require d to ensure the 
enforcement of the law.  
- Insolvency Policy:  the competition policy now being prepared provides for the creation of 
a simple, efficient and modern insolvency system that provides business with the tool to 
restructure its debt, allocate resour ces, and preserve value, as well as enhance market 
certainty and promote economic stability and growth.  
- Investment Reform:  the new Private Investment Law submitted by the Government to 
the National Parliament adopts international best practices and standa rds in order to 
promote liberalization, facilitation, promotion and protection of investments and 
investors, and is aimed at opening the country to increase both foreign direct investment 
and national investment.  
- Trade Facilitation:  The Government conside rs trade facilitation as an important 
component of Timor -Leste 's strategy to grow its non -oil economy to promote the 
integration of the economy with the dynamic economies in the region, internationally and 
stimulate exports. A  wide range of initiates have been implemented, such as 
simplification of customs procedures, reforms in the legal and regulatory framework, and 
the creation of the National Trade Facilitation Committee.  
27. The above mentioned policy decisions and ongoing reforms express Timor -Leste 's full and 
proactive commitment to the market economy and readiness to undertake any additional policy 
measures deemed necessary towards that end.  
IV. THE ECONOMY  
1. Economic Policy  
28. Timor-Leste's vision, set out in the Timor-Leste Strategic Development Plan 2011-2030, is 
transformation from a low-income country to an u pper-middle-income country with a healthy, 
well-educated, and safe population by 2 030. The Timor-Leste Strategic Development Plan 
recognizes that achieving strong rates of economic growth over the medium and long term will 
require diversification of the economy away from petroleum production and government spending. 
There is an immediate need for Timor -Leste to grow its productive sector and strengthen its 
capacity to trade.  WT/ACC/TLS/1  
 
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  29. Some secto rs that the Government has highlighted to drive economic diversification, attract 
private investments and create sustainable jobs  are agriculture, fisheries, light manufacturing, 
tourism, downstream petroleum sectors and mining.  Timor-Leste has also identified private 
investment as a key to economic growth. While this will require major changes in the domestic 
economy, Timor-Leste recognizes that it will benefit from being open to the regional and global 
economy. 
2. Economic Development Status  
30. Timor -Leste is a Least-developed  country (LDC). I n the 14 years since independence, 
economic management and performance in Timor-Leste have improved substantially. 
The transformation has been driven by the discovery of offshore oil and gas, agreements to 
develop these resources, and prudent management of the resulting revenues through 
estab lishing the Petroleum Fund – a sovereign wealth fund that is aligned to the Santiago 
Principles on Sovereign Wealth Fund Management. Oil sector revenues grew from US$ 53 million 
in 2003 to US$ 2,221  million in 2006. Gross Domes tic Product (GDP) at constant prices increased 
by 134% in 2004, 53% in 2005, and 60% in 2006. The increased p etroleum receipts freed the 
government from dependence on development assistance, and in 2007 the government rapidly 
increased the size of the budget, with extra spending on transfers, social protection and small-
scale public works. The GOTL  also continued to maintain independent management of oil revenues 
as mandated by the 2005 Petroleum Fund Act. Gross n ational income per capita in the non-oil 
sector fluctuated  between 2000 and 2007, in US$ had in a US$ 500-800 range, increasing 
continuously after 2006; real non-oil GDP grew by 11.4% in 2007, 14.2% in 200 8, 13.0% in 
2009, 9.4% in 2010 and 9.5% in 2011.  (Data in Ti mor-Leste National Accounts 2000-2013) . 
31. Timor -Leste depended on Donor Assistance for nine ( 9) years after its independence. 
From 2008 onwards, Timor -Leste graduated from being a development assistance -dependent 
country. However, there is some fragility as the economy remains highly dependent on oil 
revenues and vulnerable to fluctuations in world oil prices. The strong growth in non-oil GDP since 
2006 has been prec ipitated by increased  public sector  expenditure financed by p etroleum 
revenues. Within non-oil GDP, construction, trade and tourism, and public services are the 
dominant sectors. The government contributes over half of non-oil GDP, and the small size of the 
non-government non-oil sector has led to the ratio of imports of goods and services to non-oil GDP 
exceeding 100%. Growth of non-oil GDP increased to 11% around 2010 and 2011 as Government 
increased budget allocation to infrastructure projects. GDP later s lowed to 6.4% in 2012 and 2.8% 
in 2013  as the fiscal stimulus eased. 
32. The majority of households in Timor-Leste are rural and agricultural (71.88%) . Most workers 
are in the agricultural sector, perhaps about two-thirds of the labour force in 2010. Given the 
low level of agricultural output, Timor-Leste has a large agricultural sector with low producti vity, 
operating at close to subsistence level. The sole significant export crop is coffee, which is 
grown in smallholdings and provides income for households including about a quarter of the 
population. 
33. In the short term public spending on social services can improve rural living standards, 
but the long-term development challenge for Timor-Leste is to increase agricultural produ ctivity, 
and to pro vide jobs for the people who will leave the agricultural sector. Increased trade will 
help to secure e xport market for agricultural products and create non -agricultural jobs. 
34. The GOTL, through the Ministry of Finance, has forecasted  the non-oil GDP growth in the 
range of 4.0–7.5% per annum in the medium term, with inflation below 4%  per annum. 
Multilateral institutions such as the Asian Development Bank (ADB), International Monetary Fund 
(IMF), and the World Bank (WB)  have made similar foreca sts. Longer-term projections depend 
crucially on the sustainability of oil and gas revenues. Although income levels are low and poverty 
remains a serious issue, Timor-Leste's economy has very little external d ebt and will likely continue 
to have a strong external balance as long as petroleum revenues continue to accru e. WT/ACC/TLS/1  
 
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  3. Membership and Partnership of Multilateral Institutions  
Timor-Leste is a member and partner to the following multilateral institutions : 
- Intern ational Monetary Fund (IMF): member as of  23 July 2002. The country has 
accepted the obligations set forth in Article VIII, Sections 2, 3, and 4 of the Articles 
of Agreement of the IMF.  Under these pro visions, Timor-Leste is bound not to place 
restrictions on the making of payments and transfers for current international 
transactions. 
- Intern ational Bank for Reconstruction and Development (IBRD) - World Bank: member  as 
of 23 July 2002. 
- Asian  Development Bank (ADB): member  as of 24 July 2002.  
- Intern ational Development Association (IDA): member as of 23 July 2002. The country is 
one of the IDA Borrowing Countries (categorized as  one of the IDA's blend countries 
because it is also regarded as creditworthy for some IBRD loans). 
- Intern ational Finance Corporation (IFC): member  as of 2 October 2004. 
- Multilateral Investment Guarantee Agency (MIGA): became a Party to the Convention 
Establishing the Multilateral Investment Guarantee Agency. Under the terms of MIGA, 
nationals of Timor-Leste are eligible for investment guarantee insurance in  respect of 
investments made by them. 
- Intern ational Centre for Settlement of Investment Disputes (ICSID): member of the 
ICSID upon signature of the Convention on the Settlement of Investment Disputes 
between States and Nationals of Other States, which ca me into force on  22 August 2002. 
Timor-Leste signed this Convention on 23 July 2002 and deposited the instrument of 
ratification on 23  July 2002. 
35. Timor-Leste is not a party to any custo ms union or free trade agreement, investment or 
intellectual prop erty apart from the following: 
 Agreement between the Democratic Republic of Timor -Leste and the Republic of Indonesia 
on Traditional Border  Crossings and Regulated Markets, signed in Jakarta on 
11 June 2003 . This Agreement allows trans-border movement of some goods and natural 
persons through  the border areas. 
 Cooperation Agreement between Member States of the Community of Portuguese 
Language  Count ries (CPLP) on Cinema and Audio-visuals, signed in Luanda, on 
14 May 2005. 
36. Timor-Leste is a member of the International Maritime Organization (IMO) since 2005 and 
of the World Tourism Organization. 
37. Timor-Leste is a member of the International Telecommunic ations Union, having acceded 
to the Convention on the International Telecommunication Union (Paris, 17 May 1865) on 
24 August 2010. 
38. Timor-Leste has started the process to become a member of World Intellectual 
Property Organization (WIPO), and will develop the necess ary legal framework in the field of 
intellectual property. T he following instruments will soon be considered : the Paris C onvention for 
the Protection of  Industrial Property; the Berne Convention for the Protection of Literary and 
Artistic Works; the  Madrid Agreement Concerning the International Registration of Marks, or to 
the Protocol Relating to the Madrid Agreeme nt Concerning the International Registration of Marks. 
39. Timor-Leste ben efits from some unilaterally granted preferential trade arrangements in a 
number of countries for its exports, namely: United States of America's Scheme of General System 
of Preferences; Europe an Union Generalised System of Preferences; Australia's General System of 
Preferences; and, New Zealand's General System of Preferences. Benefits under these schemes 
depend on unilateral decisions of those co untries as to whether Timor-Leste is eligible for the WT/ACC/TLS/1  
 
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  preference, which products  are eligible, and the rules of origin that apply to determine whether a 
produ ct is treated as originating from Timor-Leste. 
40. Timor -Leste is not only an active member of global multilateral organizations, such as the 
United Nations, but it is increasingly taking the lead in international efforts related to peace  
building and state building.  An expression of s uch engagement is its leadership in establishing and  
hosting the g7+ Secretariat. Established in 2010 in Dili, Timor -Leste, the g7+ is an 
intergovernmental organization, comprised of 20 Member States1 affected by conflict and fragility. 
Some of its members , like Timor -Leste, have overcome conflict and political instability and are 
focusing on strengthening national institutions in inclusive manners, aiming at becoming resilient 
nations. Others are struggling to end conflict and violence. The common challeng es faced by those 
nations engendered them to come together to look for innovative solutions for their plights.  
4. Foreign Trade Policy  
41. Timor-Leste's foreign trade  policies are liberal, with low tariffs and no tariff barriers to 
trade. However, non-oil exports are small, and economic infrastructure is being developed.  
WTO a ccession process will help to leverage on-going improvemen ts in infrastructure, human 
capital, and administrative capacity, to accelerate growth and econ omic diversification. 
42. Timor-Leste's balance of payments is dominated by revenues from the Bayu Undan oil 
exploration.  
43. Foreign trade has grown rapidly since 2006. In 2014 total goods exports amounted to 
US$ 3,809 million, of which minerals, primarily oil, and gas, accounted for US$ 3,792 milli on, and 
services exports amounted to US$ 62 million. Imports of goods and services in 2013 were 
US$ 2,397 million, with imports of construction services, government goods and services, and 
maintenance and repair services accounting for US$ 1,356 million . An essential facet of the 
economy since 2006 is that the oil revenues have permitted large surpluses in the current 
account of the balance of payments, although the surpluses sh rank in 2013  and, especially, in 
2014 (See Table  1). 
Table 1: E xports and Imports of Goods and Services, 2006-2014  
US$ million at current prices 
 2007  2008  2009  2010  2011  2012  2013  2014  
Exports of goods 2,826  4,263  3,103  3,948  5,462  6,466  5,240  3,809  
Exports of services 47 49 61 63 66 60 78 62 
Imports of goods 232 343 375 428 490 839 730 774 
Imports of services 880 979 1,377  1,615  1,763  1,704  1,536  1,623  
Source: GOTL, Ministry of Finance, Timor -Leste National Accounts 2000 -2014.  
44. The compos ition of both exports and imports is heavily concentrated in a few goods and 
services (See Table 2). Apart from the dominant oil and gas exports, almost all of the remaining 
goods exports are agricultural products (US$ 17 million),  mainly coffee. Travel (US$ 30 million) 
and government goods and ser vices (US$ 6 million) accounted for over half  of the 
US$ 61 million of service exports in 2014. Construction services (US$ 522 million), government 
goods and services (US$ 326 million), and maintena nce and repair services (US$ 508 million) 
accounted for over half of the US$ 2,397 million imports of goods and services in 2 014. 
Table 2: Co mposition of Exports and Imports of Goods and Services, 2010-2014 
US$ million at current prices 
 2010  2011  2012  2013  2014  
Exports 
Minerals, incl. oil & gas 3,920  5,428  6,402  5,217  3792 
Crops & vegetables 27 33 52 22 17 
Wood & wood products 0 1 12 0 0 
                                                
1 The g7+ Members are: Afghanistan, Burundi, Central African Republic, Chad, Comoros, Côte d'Ivoire, 
Democratic Republic of the Congo, Guinea, Guinea -Bissau, Haiti, Liberia, Papua New Guinea, São Tomé e 
Príncipe, Sierra Leone, Somalia, Solomon Island, South Suda n, Timor -Leste, Togo, Yemen.  WT/ACC/TLS/1  
 
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   2010  2011  2012  2013  2014  
All other goods 0 0 0 0 0 
Travel 30 32 25 43 30 
Government goods & services 27 26 26 15 6 
All other  services 7 8 8 19 25 
Imports 
Oil sect or 176 174 199 210 227 
Machinery/electrical 37 117 270 82 60 
Mineral products  40 51 111 162 172 
Vehicles & transport equipment  53 33 52 64 74 
Agricultural products & food 53 38 79 92 105 
All other goods 63 77 133 124 138 
Unrepor ted import of goods 
(estimated) 25 32 64 52 55 
Maintena nce & repair services 393 389 444 470 508 
Construction 534 655 520 599 522 
Government goods & services 505 490 454 191 326 
Transport 54 59 95 84 89 
Travel 44 38 56 57 63 
Other Services 86 131 135 135 114 
Source: GOTL, Ministry of Finance, Timor -Leste National Accounts 2000 -2014.  
45. As seen by the above data, Timor-Leste 's balance of international payments (BOP) is driven 
by petroleum income. These revenues allow the country to run a large deficit on non-oil trade, as 
well as building up the Petroleum Fund. Imports are primarily associated with the rapid upgrading 
of the co untry's infrastructure, as  well as providing most of the country's non-food consumer 
goods. Exports of non-oil goods and services are small, less than US$ 100 per capita. 
With rising incomes, private sector import demand will increase and, given the unpredictability of 
energy markets and longer-term revenue flows, it is essential to increase non-oil export earnings. 
46. At independence, imports came  primarily from Indonesia (US$ 43 million out of 
US$ 48 million total in 200 3). Since then, Indonesia, Singapore, Malaysia, Thailand and  Vietnam  
have cons istently been among Timor-Leste's top ten import suppliers, while imports from other  
ASEA N countries have been small, apart from a one-off peak of US$ 69 million in imports from 
Philippines in 2008 (in recent years the Philippines figure has been under one million dollars). 
There is, however, co nsiderable year-on-year change in trade partner rankings, primarily due to 
the small values involved. In 2010 Indonesia (US$ 96 million) was the number one source, with 
Singapore (US$ 45 million) second and Australia (US$ 25 million) third. In 2011, the top three 
import sources were Indonesia (US$ 98 million), Finland (US$ 69 million), and China 
(US$ 60 million). In 2012 the main import sources were Finland, Indonesia, and Malaysia. 
In 2013 Indonesia, Malaysia and Singapore were the main import sources.  Apart from the one-off 
surge in imports from Finland, the main suppliers outside ASEA N are China, Australia, Japan, 
Portugal and Hong Kong. 
47. With respect to exports, Si ngapore, Malaysia, and Indonesia are the main destinations within 
ASEA N for non-oil products, while mercha ndise exports outside ASEAN are d ominated by coffee 
exports, with Germany and the USA together accounting for over four-fifths of the total value of 
coffee exported in 2012 (US$ 7.9 and US$ 7.8 million respectively). With respect to exports, 
apart from oil and gas and coffee, the total amounts are small. 
5. Monetary, Currency and Financial Policies  
48. Increas ing oil revenues since the mid-2000s have lifted constraints on macroeconomic 
policymaking, and Timor-Leste currently pursues non-distortionary and fairly laisser-faire 
policies.  
49. Timor-Leste uses the US dollar and hence has no leverage on  monetary policy. Aggregate 
macroeconomic balance primarily depends on fiscal policy, and Government's expenditure is 
mainly funded from offshore petroleum produ ction; consequently, Timor-Leste has minimal 
government debt. WT/ACC/TLS/1  
 
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  50. The government has maintained macroeconomic stability since independence, with inflation 
briefly exceeding 10% in 2011 and 2012 but generally kept to single digits. The high inflation 
from 2010-2012 was due to expansionary fiscal p olicies that stimulated domestic demand and to 
poor infrastructure that kept trade costs high. Scaling back fiscal expansion in 2013 moderated 
inflationary press ures. The consumer price index increased  by 1.0% in 2014 and is forecast to 
increase by  1.8% in 2015. 
51. The tax system is based on  income, services, sales, import duties and excise taxes. 
The income tax is levied on individuals, compan ies, estates, trusts, partnerships, government 
enterprises, and cooperatives and similar organizations. A withholding tax is applied to 
royalties, rent, and income from construction and for government contracts . The service tax is 
applied to hotel, restaurant and bar services, and telecommunications services; h owever, personal 
income of less than US$ 500 is  exempt.  
52. In 2008 Timor-Leste adopted a uniform tariff of 2.5% on the customs value of imported 
goods. The import duty and a sales tax, also equal to 2.5% of the customs value of goods 
imported into Timor-Leste, are administered by the customs services. Current Government plans 
are to gradually replace these taxes by a value-added tax (VAT), which would make Timor -Leste a 
free trade z one for exports.  In addition, excise tax is applied to imports of goods with health 
implications and luxury items . 
53. Timor-Leste applies no restrictions or taxes to exported goods. Timor-Leste is granted most-
favoured  nation status by WTO members and enjoys preferential acc ess to most high-income 
countries' markets under their Generalized System of Preferences (GSP) schemes. 
6. Agricultural Policy  
54. The GOTL considers the agriculture sector as one of the pillars for economic diversification. 
The Ministry of Agricu lture and Fisheries has invested in 5 major program mes, namely: 
(i) Sustainable Increase in Production and Productivity ; (ii) Improving Market Access and Value 
Addition; (iii)  Improving the Enabling Environment for the Agricultural Sector; (iv) Organizatio nal 
Development; and , (v) Sustainable Resource Use.   
55. Investing in these 5 program mes will have an increase in production of various agricultural 
product, livestock, forestry and fisheries that contribute to securing food security for the country 
as well a s to provide potential production of agriculture goods for export.  
56. However, in order to facilitate the movement of agriculture goods in foreign trade, the 
GOTL considers it necessary to implement further measures to meet compliance with 
international stan dards and instruments, such as Sanitary and Phytosanitary (SPS), Technical 
Barriers to Trade (TBT) and others.  
57. In that context, and in r elation to important international organizations relating to sanitary 
and phytosanitary standards, the present legal status of Timor-Leste is as follows: (i) Timor-Leste 
is not yet a member of the Codex Alimentarius Commission, but is eligible to become a member 
by virtue of being a member of the WHO and the FAO; (ii) Timor-Leste became  a member of the 
Intern ational  Office  for  Epizootics  (IOE),  the  World  Organization  for  Animal  Health (OIE) on 
16 November  2010. And , (iii) Timor-Leste is not a party to the International Plant Protection 
Convention (IPPC) but has nominated a contact point at the Ministry of Agricultu re and Fisheries 
(MAF).  
58. As part of the Trade Facilitation initiatives, Timor -Leste 's quarantine laws and regulations 
are under review to meet international best practice and standards.  
7. Industrial Policy  
59. Timor -Leste is about to finalize an Investment Reform  Map (IRM), with support from the 
International Finance Corporation (IFC) of the World Bank Group. The IRM aims at the 
identification of existing binding constraints that currently hamper the country 's investment 
competitiveness. The IRM will help clarify opportunities for further reforms and concrete actions to 
create an investor -friendly business environment in the country. The findings will guide the GOTL WT/ACC/TLS/1  
 
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  in defining priorities in the ongoing reform agenda and better align reforms with the commitment 
to economic diversification and in reviewing current institutional arrangements, operational 
strategies, capacity development and organizational development of Timor -Leste 's Investment and 
Export Promotion Agency (TradeInvest) to provide effective promotion s ervices to attract Foreign 
Direct Investments. As a result, Timor -Leste will have a technically consistent reference to guide 
formulation of structural and operational recommendations for the country to be more attractive to 
Foreign Direct Investments.  
60. In the framework of the IRM, GOTL is also about to finalize an Industrial Policy, geared 
towards attracting private investments on the economic opportunities being promoted under the 
economic reform process (i.e. downstream oil and gas, agriculture, fisheries , tourism, light 
manufacturing and mining).  
V. FOREIGN TRADE AND IN VESTMENT REGIME  
1. Description  
61. The new private investment law in discussion in the National Parliament adopts the 
international best practices and standards in order to promote liberalization,  facilitation, promotion 
and protection of investments and investors, and is aimed at opening the country to increase both 
foreign direct investment and national investment.  
 Investment liberalization – it abolishes the need for investments to be pre author ized by the 
government and lower the entry and post -entry barriers. The new private investment law will 
allow for the government to establish a "negative list of investment ". The negative list of 
investment is currently being discussed and some restriction s may be approved, which might 
contain:  
o Restricted  sectors reserved for the State;   
o Restricted sectors reserved by domestic investors, such as traditional markets;  
o Sectors subje ct to a foreign equity celling.  
 Investment protection – the law establishes a series of guarantees for investors and 
investments and provides for the investors to be treated in a non -discriminatory and fair 
manner. The proposal provides the following protections: non -discrimination, fair and 
equitable treatment, prohibition against expropriations without compensation, protection and 
security and free transfer of funds, ensures dispute settlement mechanism both by using 
domestic courts and international arbitration, including International Centre for Settlement 
and Investment Disputes , as well as conciliation, mediation and mediation.  
 Facilitation and Promotion of investment – The Government has been restructuring the 
Investment promotion Agency and is currently being discussing and develop an Investment 
Reform Map in order to define the pathway to increase levels of investment by exploring the 
main sectors that can potentially play a key role in attacking FDI into the country and to 
promote the expansion of domestic investment.  
2. Private Sector  
62. The GOTL is working towards the developmen t of a vigorous private sector to grow and 
diversify the economy, and provide improved livelihoods for the citizens. To that end, several 
initiatives have been introduced to improve the investment climate, including establishing an open 
trade and investmen t regime, opening the telecommunications market to competition, and 
streamlining the business registration process.  WT/ACC/TLS/1  
 
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  ANNE X1 
Table 1: Relevant International conv entions ratified by Timor -Leste  
CONVENTION  DATE OF DOMESTIC RATI FICATION  
United Nations Charte r Parliament Resolution No. 1/2002, 20 May 2002  
HUMAN RIGHTS CONVENTIONS  
International Covenant on Civil and Political Rights  Parliament Resolution No. 3/2003, 25 May 2003  
International Covenant on Economic, Social and 
Cultural Rights  Parliam ent Resol ution No. 8/2003, 17  September  2003  
Convention against Torture and other Cruel, 
Inhuman or Degrading Treatment or Punishment  Parliam ent Resolution No. 9/2003, 17  September  2003 
International Convention on the Elimination of All 
Forms of Racial Discrimin ation Parliame nt Resolution No. 10/2003, 17  September  2003 
Convention on the Elimination of All Forms of 
Discrimination Against  Women  Parliame nt Resolution No. 11/2003, 17  September  2003 
Optional Protocol - Convention on the Elimination 
of All Forms of D iscrimination Against  Women  Parliamen t Resolution No. 12/2003, 17 September  2003 
Second Optional Protocol to the International 
Covenant on Civil and Political Rights – Abolition  of 
the Dead Penalty  Parliament Resolution  No. 13/2003, 17 September  2003 
Optional Protocol  to the International Covenant on 
Civil and Political Rights  Parliamen t Resolution No. 15/2003, 30 July 2003 
Convention on the Rights of the Child  Parliame nt Resolution No. 16/2003, 30  July 2003 
Optional Protocol to the Convention on the Rights 
of the Child o n the Sale of Children , Child 
Prostitution and Child Pornography  Parliament Resolution No. 17/2003, 17 September  2003 
Optional Protocol to the Convention on the Rights 
of the Child o n the Involvement  of Children  
in Armed Conflic t Parliament Resolution No. 18/2003, 17 September  2003 
The Refugee Convention and Protocol  Parliament Resolution No. 20/2003, 13 September  2003 
International Convention on the Protection of the 
Rights of All Migrant Workers and Members of Their 
Families  Parliament Resolution No. 23/2003, 26  September  2003 
ILO CONVENTIONS  
ILO Convention No . 29 - Forced Labour Convention  Parliam ent Resolution No. 10/2009, 8 April 2009 
ILO Convention No. 87 - Freedom of Association 
and Protection of the Right to Organize Conv ention  Parlia ment Resolution No. 7/2009, 8  April 2009 
ILO Convention No. 98 Right to Organize and 
Collective Bargaining Convention  Parliam ent Resolution No. 8/2009, 8 April 2009 
ILO Convention No. 182, Worst Forms of Child 
Labour Convention  Parliamen t Resolution No. 9/2009, 8 April 2009 
ILO Convention No. 100, Equal Remuneration 
Convention  Parliament Resolution No. 12/2015, 5 August 2015 
ILO Convention No. 111 Discrimination 
(Employ ment and Occupation) Convention  Parliament  Resolution No. 11/2015, 5 August  2015 
ILO Constitution  Parliament Resolution No. 5/2015, 13 May  2015 
ENVIRONMENTAL CONVENTIONS  
The United Nations Framework on Climate Change  Parliament Resolution No. 7/2006, 26 April  2006 
United Nations Convention to Combat 
Desertification  Parliament Resolution No. 8/2006, 26 April  2006 
Convention on Biological Diversity  Parliament Resolution No. 9/2006, 26 April  2006 
Kyoto Protocol  Parliam ent Resolution No. 6/2008, 07  May 2008 
The Vienna  Convention  for the Protection of 
the Ozone  Layer  Parliament Resolution No. 30/2009, 09 September  2009 
OTHER CONVENTIONS  
Anti-Personnel Mine Ban Convention  Parliament Resolution No. 16/2002, 09 September  2002 
Convention on the Prohibition  of Bacteriological 
and Toxin Weapons  Parliament Resolution No. 16/2002, 09 September  2002 
Treaty on the Non -Proliferation of Nuclear Weapons 
(NPT) – UNODA  Parliament Resolution No. 17/2002, 09 September  2002 
1949 Geneva Conventions  Parliament Resolution No. 18/2002, 09 Septem ber 2002 WT/ACC/TLS/1  
 
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  CONVENTION  DATE OF DOMESTIC RATI FICATION  
Convention on the Prohibition of the Development, 
Production and Stockpiling of Bacteriological 
(Biological) and Toxin Weapons and on Their 
Destruction  Parliament Resolution No. 19/2002, 09 September  2002 
Vienna convention on diplomatic relation s Parliament Resolution No. 24/2003, 22 October  2003 
Vienna Convention on the Law of the Treaties  Parliament Resolution No. 5/2004, 6 April  2004 
Framework Convention on Tobacco Control  Parliament Resolution No. 13/2004, 11 November  2004 
International Coffee Agreement  Parliament Resolution No. 23/2008, 22 October  2008 
The United Nations Conventions against Corruption  Parliament Resolution No. 25/2008, 10 December  2008 
Additional Protocol to the  Geneva Conventions  of 
12 August 1949, and relating to th e Adoption of 
an Additional Distinctive  Emblem  Parliament Resolution No. 22/2009, 10 June  2009 
Convention on Transnational Organized Crime  Parliament Resolution No. 26/2009, 09 September  2009 
Additional Protocol to the Convention on 
Transnational Organized Crime  against  the 
Smuggling of Migrants by Land, Sea and Air  Parliament Resolution No. 27/2009, 09 September  2009 
Hague  The Hague Convention on the Protection 
of Children  and Co -operation in Respect of 
Intercountry Adoption  Parliament Resolution No. 28/2009, 09 September  2009 
Additional Protocol to the Convention on 
Transnational Organized Crime  to Prevent, 
Suppress and Punish Trafficking in Persons, 
especially Women and Children  Parliament Resolution No. 29/2009, 09 September  2009 
The United Nations Conference  for the Adoption of 
a Convention against Illicit Traffic king of 
Narcotic  Drugs  and Psychotropic Substances  Parliament Resolution No. 2/2014, 08 January  2014 
International  Convention  for the Suppression of 
the Financing  of Terrorism  Parliament Resolution No. 3/2014, 29 January  2014 
United Nations Convention on the Law of the Sea  Parliament Resolution No. 17/2012, 27 December  2012 
 
INTERNATIONAL ORGANIZATIONS AND COURTS  
International Criminal Court Statute  Parliament Res olution No. 13/2002, 13 August  2002 
Admission to International Monetary Fund  Parliament Resolution No. 11/2002, 15 July  2002 
Admission to The International Bank for 
Reconstruction and Development   Parliament Resolution No. 11/2002, 15 July  2002 
Admissio n to the International Finance Corporation  Parliament Resolution No. 11/2002, 15 July  2002 
Admission to the International Development 
Association  Parliament Resolution No. 11/2002, 15 July  2002 
Multilateral Investment Guarantee Agency  Parliament Resol ution No. 11/2002, 15 July  2002 
Admission to the Asian Development Bank  Parliament Resolution No. 11/2002, 15 July  2002 
International Maritime Organization  Parliament Resolution No. 10/2004, 11 November  2004 
World Tourism organization  Parliament Resol ution No. 11/2004, 11 November  2004 
International Civil Aviation  Parliament Resolution No. 12/2004, 11 November  2004 
World Meteorological Organization  Parliament Resolution No. 5/2009, 11 March  2009 
International Telecommunications Union  Parliament Re solution No. 5/2009, 25 March  2009 
UNESCO Convention for the Safeguarding of the 
Intangible Cultural   Parliament Resolution No. 6/2016, 18 May  2016 
UNESCO Convention  Concerning the  Protection of 
the World Cultural and Natural Heritage  Parliament Resoluti on No. 7/2016, 18 May  2016 
UNESCO Convention  on 
the Protection  and Promotion  of the Diversity  Parliament Resolution No. 8/2016, 18 May  2016 
International Centre for Settlement of Investment 
Disputes  Parliament Resolution No. 14/2016, 31 August  2016 
 WT/ACC/TLS/1  
 
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  Table 2: R egional organizations  
ASEAN  
The Treaty  of Amity  & Cooperation in Southeast Asia, 
and its amendments  Parliament Resolution No. 4/2012, 15 February  2012 
EU 
Agreement between the European Union and the 
Democratic Republic of Timor -Leste on the short -stay 
visa waiver  Parliament Resolution No. 10/2015, 5 August  2015 
Table 3: Bilateral agreements  
General Agreement between the Democratic Republic 
of Timor -Leste and the  Holy Sea  Parliament Resolution No. 18/2015, 11 November 
2015 
Portugal – Framework Cooperat ion Agreement  Government Resolution No. 3/2004, 28 of January 
2004 
Portugal – to Create the Portuguese Scholl  Parliament Resolution No. 09/2015, 05 August  2015 
Germany – Cooperation Agreement  Parliament Resolution No. 5/2008, 07 May  2008 
Indonesia – Visa Exemption for Diplomatic Passports  Parliament Resolution No. 6/2014, 18 June  2014 
Indonesia -  Traditional Border Crossing and Regulated 
Markets  Parliament Resolution No. 21/2009, 28 May  2009 
Japan – Cooperation Agreement on Training  and 
Formation  Parliament Resolution No. 5/2014, 26 March  2014 
Spain – Cooperation Agreement   Parliament Resolution No. 19/2010, 14 July  2010 
Australia – Certain Maritime Arrangements  Parliament Resolution No. 4/2007, 08 March  2007 
Australia – Unitization Agreement  Parliament Resolution No. 5/2007, 08 March  2007 
Australia – Timor Sea  Parliament Resolution No. 5/2007, 08 March  2007 
Brazil – Cooperation Agreement  Parliament Resolution No. 9/2004, 11 November  2004 
USA – Cooperation Agreement  Parliament Resolution No. 2 /2003, 03 January 2003  
China - Memorandum of Understanding between the 
Government of the Democratic Republic of Timor -
Leste and the Government of the People's Republic of 
China on the establishment of a Joint Committee on 
Bilateral Trade and Economic Coop eration  Entered into force on 18 March 2016  
 
Table 4: Bilateral investment treaties  
Portugal  Entered into force on 07 April 2004 
Qatar  Signed on  21 January 2012, (not in force)  
Germany  Signed on 10 August 2005, (not in force)  
 
__________  
 
 
 
 
 
 
                                                
1 This list is not exhaustive and there may be additional treaties not included in this list.