G/STR/N/13/CPV  
17 January 2014  
(14-0245)  Page: 1/11  
Working Party on State Trading Enterprises  Original: French  
 
  STATE TRADING 
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVII:4(A) OF THE GATT 1994 AND 
PARAGRAPH 1 OF THE UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XVII 
CABO VERDE 
The following communication, dated 6 January 2014, is being circulated at the request of the 
delegation of Cabo Verde. 
 
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QUESTIONNAIRE ON STATE TRADING 
SOCIEDADE CABOVERDIANA DE TABACOS, S.A. 
1  ENUMERATION OF STATE TRADING ENTERPRISES 
1.1  Identification of state trading enterprises 
- Sociedade Caboverdiana de Tabacos, S.A. 
 
1.2  Description of products affected (inclu ding tariff item number(s) encompassed 
in product description) 
- 2401.20.00.00 - Tobacco, partly or wholly stemmed/stripped 
- 2402.20.00.00 - Cigarettes containing tobacco - 2403.10.00.00 - Smoking tobacco, whether or not containing tobacco substitutes in any proportion  
2  REASON AND PURPOSE 
2.1  Reason or purpose for establishing and/ or maintaining state trading enterprise 
The Sociedade Caboverdiana de Tabacos, S.A. , a former government enterprise, was privatized 
in 2007 within the framework of the Government's economic policy on restructuring 
state enterprises.  
The exclusive import and wholesale marketing righ ts for tobacco and tobacco derivatives enjoyed 
by the Sociedade Caboverdiana de Tabacos, S.A.  have been maintained for the following reasons: 
firstly, to enable the Government, in the context of market opening, to regulate the tobacco industry in Cabo Verde, particularly in the areas of competition and prices, infant industry 
protection and public health protection; and secondly, to support the company's efforts 
to consolidate existing investments and make new investments, with a view to enhancing 
its competitiveness, protecting jobs and ensuring compliance with standards, particularly those 
relating to the environment. 
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  2.2  Summary of legal basis for granting the relevant exclusive or special 
rights or privileges, including legal pr ovisions and summary of statutory or 
constitutional powers 
The legal basis for granting exclusivity is as follows: 
 
 The "CONTRACT" between the Government of Cabo Verde (former Ministry of Economic 
Coordination) and the Sociedade Caboverdiana de Tabacos, S.A. , signed on 2 May 1997, 
valid for a renewable period of 15 years. The contract regulates the terms and conditions 
of production and importation, on an exclusive basis, by the Sociedade Caboverdiana 
de Tabacos, S.A . It also governs the company's obligations as regards the social welfare 
of employees, compliance with national and international rules and regulations, most notably 
in the area of environmental protection, and the safeguarding of public health, as well as the 
Government's obligations in terms of monitoring  and the adoption of measures to ensure the 
non-violation of exclusivity. 
 
 The "CONTRACT ON THE PURCHASING AND SALE OF SHARES". Following an invitation 
to tender, this contract was signed on 8 May 2007 by the Government of Cabo Verde 
and a group of four national enterprises. It most notably governs mechanisms for 
transferring government shares, the safeguarding of workers' rights, dispute settlement mechanisms, and the maintaining of the excl usivity arrangement until 31 December 2012. 
 
 Law No. 42/IV/92 of 6 July 1992, as amended by Law No. 41/V/97 of 17 November 1997, 
on the institutional and conceptual aspect s to be respected during the preparation 
and implementation of the privatization process in Cabo Verde. 
 
 Decree Law No. 76/2005 of 7 November 2005 authorizing the Government to sell 
state-owned shares in the Sociedade Caboverdiana de Tabacos, S.A.  
3  DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE 
3.1  Summary statement providing overview of op erations of the state trading enterprise 
The Sociedade Caboverdiana de Tabacos, S.A.  is involved in the production, importation 
and marketing of tobacco and tobacco derivatives, namely: 
 
 The production and marketing of three ciga rette brands, one of these under licence; 
 
 The importation and wholesale marketing of one cigarette brand. 
Tobacco cultivation in Cabo Verde is negligible and not for industrial purposes. 
 
3.2  Specification of exclusive or special rights or priv ileges enjoyed by the state 
trading enterprise 
The Sociedade Caboverdiana de Tabacos, S.A.  enjoys the following rights and privileges: 
 
 Exclusivity as regards the importation and wholesale marketing of tobacco and tobacco 
derivatives in national territory;  
 Tax concessions on the importation of equipment used to manufacture cigarettes.
1 
The company does not enjoy any other benefits, such as state subsidies, subsidies from state 
institutions or special funding. 
 
The state, through the General Inspectorate of Economic Activities (IGAE), is responsible for monitoring the company's activities.  
                                               
1 This benefit is enjoyed by all industrial enterprises. G/STR/N/13/CPV 
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  3.3  Type of entities other than the state trad ing enterprise that are allowed to engage 
in importation/exportation and conditions for participation 
Duty-free companies are allowed to import tobacco and tobacco derivatives and may sell them 
only in duty-free shops at international airports. 
 
3.4  How import/export levels are establis hed by the state trading enterprise 
The volume of products imported is determined according to a yearly plan, which is prepared 
and approved in advance by the company's Board of Directors on the basis of commercial 
considerations, in particular market consumption forecasts.  The Government has no involvement in the determination of the company's level of imports. 
 
3.5  How export prices are determined 
The Sociedade Caboverdiana de Tabacos, S.A.  does not export. 
 
3.6  How the resale prices of impo rted products are determined 
The resale price of products of the Sociedade Caboverdiana de Tabacos, S.A.  is determined 
as follows: 
 - Own production: on the basis of CIF import costs and internal charges (customs duties, 
clearance fees and other associated costs, banking charges, etc.) according to a price-
targeting strategy. 
 -  Marketing of the one cigarette brand imported by the company: on the basis of a contract 
with the exporter. 
 The selling price is fixed in both wholesale and retail trade. 
 
Revenue is used for company management an d modernization purposes and to support 
the Government in taking steps to safeguard public  health and protect the environment. It is also 
used to support institutions that work to combat tax fraud and tax evasion. 
 
3.7  Whether long-term contracts are negotiat ed by the state trading enterprise. 
Whether and how the state trading enterprise is used to fulfil contractual obligations 
entered into by the government 
The Sociedade Caboverdiana de Tabacos  S.A. has negotiated, with an international enterprise, 
the following three long-term contracts (four years, renewable) for technical assistance 
and input supply: 
  Two contracts in respect of the domestic  production of a brand of cigarettes 
by the Sociedade Caboverdiana de Tabacos S.A. : one for the supply of inputs and technical 
assistance, and the other relating to the use of a brand name for the manufactured product; 
 
 One contract for the exclusive importation and marketing within Cabo Verde of a brand 
of cigarettes. 
The above-mentioned contracts were renewed as of 1 July 2013. 
 
The company also negotiated an exclusivity contract with the Government, valid 
until 31 December 2012, within the cont ext of the company's privatization. 
 3.8  Brief description of market structure 
The domestic tobacco market is made up of the following: the Sociedade Caboverdiana 
de Tabacos, S.A.  which, as explained above, has the exclusive right to import and wholesale G/STR/N/13/CPV 
- 4 - 
  market tobacco products; wholesale middlemen and retailers; and duty-free sales companies. 
Retailers distribute the products to the end consumer.  4  STATISTICAL INFORMATION (S EE ATTACHED TABLES I-III) 
5  REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE (AS APPROPRIATE)  
The activities of the Sociedade Caboverdiana de Tabacos, S.A.  are aimed exclusively at supplying 
the domestic market, most notably due to supply constraints. 
6  ADDITIONAL INFORMATION (AS APPROPRIATE) 
The Sociedade Caboverdiana de Tabacos, S.A.  was privatized in 2007. The company was acquired, 
following a public call to tender, by a consortium of four domestic firms. The company is listed on the Cabo Verde stock exchange. 
 
The privatization of the company forms part of the Government's economic policy on restructuring and reorganizing former state enterprises, which seeks to promote a private sector-based market 
economy, strengthen company competitiveness, promote supply quality and employment, 
and diversify exports (the latter does not apply to  the Sociedade Caboverdiana de Tabacos, S.A. ). 
 
Tobacco is the only product manufactured in Cabo Verde that is subject to international trade 
restrictions. Tobacco production is, however, negligible and has no industrial purpose. All the raw materials used to produce cigarettes are imported.  
Discussions between the Government and the World Trade Organization within the framework 
of the Cabo Verde accession process established that the importation of tobacco products would be subject to "non-automatic licensing from 2012", which coincided with the end of the continuous 
exclusivity period enjoyed by the Sociedade Caboverdiana de Tabacos, S.A.  
 However, despite efforts made by the Government and certain improvements, particularly 
as regards the general business climate and private sector promotion, notably for infant industries, 
the Government has been unable to follow through on certain commitments made at the time of privatization, in particular in the areas of market and competition regulation (standardization, quality, effective measures to combat counterfeiting and tax fraud) and public health protection. 
 
In light of the international economic and financial crisis and its impact on the various sectors of the domestic economy, and beyond the need for more time to consolidate existing investments, 
further investment has been necessary with a view to enhancing and promoting the company's 
competitiveness, ensuring its expansion and relocation to an industrial zone
2 and, above all, 
safeguarding jobs.3 
 
In this context, and given the unfavourable national and international situation, the Government considers it necessary to maintain the Sociedade Caboverdiana de Tabacos, S.A.  as a state trading 
enterprise, and to extend, for a period of eight years, the exclusivity contract enjoyed 
by the Sociedade Caboverdiana de Tabacos, S.A. , with a view to preparing the country and the 
company for the subsequent opening up of the market.  
                                               
2 The company is located in the city centre. 
3 The company directly employs 47 people and pr ovides 34 indirect jobs, thereby benefiting 
some 79 families.   
  G/STR/N/13/CPV  
- 5 - TABLE I 
STATE TRADING: SOCIEDADE CABOVERDIANA DE TABACOS, S.A. 
STATISTICAL INFORMATION, IMPORTS 
YEAR 2008 
Description of product(s) 
(including HS number(s)) Total quantity 
imported1 
(net weight - kg) Quantity imported 
by state trading 
enterprise1 
(net weight - kg) Average import price 
(CVE) Average 
representative 
domestic sales price 
(CVE) Mark-up2 National production 
(cigarette units) 
1 2 3 4 5 6 7 
2401.20.00.00- Tobacco, partly or wholly stemmed/stripped 41,994 41,994
3 1,585.68 - - - 
2402.20.00.00- Cigarettes 
containing tobacco - - - 26,736.864 - 49,954,0005 
2402.20.00.00- Cigarettes 
containing tobacco 57,663 57,6636  1,905.54  74,096.687 - - 
Total 99,657 99,657 - - - 49,954,000 
Source: Imports: National Statistics Institute (INE); Production and sales: Sociedade Caboverdiana de Tabacos, S.A.  
Exchange rate: 1 USD = 78.082 CVE 
                                               
1 In cases where no imports have taken place under columns 2 or 3, provide an explanation under Section V of this questionnaire.  
2 Members may report either under co lumns 4 and 5 or under column 6. 
3 Inputs for cigarette production. 
4 Average national production price (three cigarette brands). Box of 5,000 cigarettes. 
5 1,457,000 units of one brand; 1,905,000 units of another; 46,592,000 units of the third brand. 
6 Cigarettes. 
7 Average import price. Box of 10,000 cigarettes.   
  G/STR/N/13/CPV  
- 6 - TABLE I 
STATE TRADING: SOCIEDADE CABOVERDIANA DE TABACOS, S.A.  
STATISTICAL INFORMATION, IMPORTS 
YEAR 2009 
Description of product(s) 
(including HS number(s)) Total quantity 
imported1 
(net weight - kg) Quantity imported 
by state trading 
enterprise1 
(net weight - kg) Average import price 
(CVE) Average 
representative 
domestic sales price 
(CVE) Mark-up2 National production 
(cigarette units) 
1 2 3 4 5 6 7 
2401.20.00.00- Tobacco, partly or wholly stemmed/stripped 41,136 36,648
3 1,513.84 - - - 
2402.20.00.00 - Cigarettes 
containing tobacco - - - 24,234.504 - 53,142,0005 
2402.20.00.00 - Cigarettes 
containing tobacco 46,483 46,4766 4,082.21 74,490.327 - - 
2403.10.00.00 -  Smoking tobacco, 
whether or not containing tobacco substitutes in any proportion 230 - - - - - 
Total 87,849 83,124 - - - 53,142,000 
Source: Imports: National Statistics Institute (INE); Production and sales: Sociedade Caboverdiana de Tabacos, S.A.  
Exchange rate: 1 USD = 76.951 CVE 
                                               
1 In cases where no imports have taken place under columns 2 or 3, provide an explanation under Section V of this questionnaire.  
2 Members may report either under co lumns 4 and 5 or under column 6. 
3 Inputs for cigarette production. 
4 Average national production price (three brands). Box of 5,000 cigarettes. 
5 988,000 units of one brand; 3,491,000 units of another; 48,663,000 units of the third brand. 
6 Cigarettes. 
7 Average import price. Box of 10,000 cigarettes.   
  G/STR/N/13/CPV  
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TABLE I 
STATE TRADING: SOCIEDADE CABOVERDIANA DE TABACOS, S.A.  
STATISTICAL INFORMATION, IMPORTS 
YEAR 2010 
Description of product(s) 
(including HS number(s)) Total quantity 
imported1 
(net weight - kg) Quantity imported 
by state trading 
enterprise1 
(net weight - kg) Average import 
price Average 
representative 
domestic sales price Mark-up2 National production 
(cigarette units) 
1 2 3 4 5 6 7 
2401.20.00.00- Tobacco, partly or wholly stemmed/stripped 34,056 34,056
3 1,699.25 - - - 
2402.20.00.00- Cigarettes 
containing tobacco - - - 22,798.744 - 55,304,0005 
2402.20.00.00- Cigarettes 
containing tobacco 50,964 50,9646 4,130.67 74,347.877 - - 
2403.99.00.00- Other manufactured 
tobacco products and manufactured tobacco substitutes 12 - - - - - 
Total 85,032 85,020 - - - 55,304,000 
Source: Imports: National Statistics Institute (INE); Production and sales: Sociedade Caboverdiana de Tabacos, S.A.  
Exchange rate used: 1 USD = 83.078 CVE 
                                               
1 In cases where no imports have taken place under columns 2 or 3, provide an explanation under Section V of this questionnaire.  
2 Members may report either under co lumns 4 and 5 or under column 6. 
3 Inputs for cigarette production. 
4 Average national production price (three cigarette brands). Box of 5,000 cigarettes. 
5 564,000 units of one brand; 5,742,000 units of another; 48,998,000 units of the third brand. 
6 Cigarettes. 
7 Average import price. Box of 10,000 cigarettes.   
  G/STR/N/13/CPV  
- 8 - TABLE II 
STATE TRADING: SOCIEDADE CABOVERDIANA DE TABACOS, S. A.  
STATISTICAL INFORMATION, EXPORTS (Cabo Verde does not export tobacco products) 
Description of product(s) 
(including HS number(s)) Total quantity 
exported1 Quantity exported by 
state trading 
enterprise1 Average procurement 
price2 Average 
representative 
domestic sales price Average export price National production 
1 2 3 4 5 6 7 
n/a n/a n/a n/a n/a n/a  
 
                                               
1 In cases where no exports have taken place under columns 2 or 3, provide an explanation under Section V of this questionnaire.  
2 In cases where the initial procurement price is augmented by other payments, additional paymen ts should also be reported.   
  G/STR/N/13/CPV  
- 9 - TABLE III 
STATE TRADING: SOCIEDADE CABOVERDIANA DE TABACOS, S.A. 
STATISTICAL INFORMATION, DOMESTIC ACTIVITIES 
YEAR 2008 
Description of product(s) 
(including HS number(s)) Domestic purchases by state 
trading enterprise National production 
(units) Domestic sales by state 
trading enterprise 
(units) National consumption 
1 2 3 4 5 
2401.20.00.00- Tobacco, partly 
or wholly stemmed/stripped - - - - 
2402.20.00.00- Cigarettes 
containing tobacco - 49,954,000 49,245,000 Not available 
2402.20.00.00- Cigarettes 
containing tobacco - - 53,350,000 Not available 
2403.99.00.00- Other manufactured 
tobacco products and manufactured tobacco substitutes - - - - 
Total - 49,954,000 102,595,000  
Source: Sociedade Caboverdiana de Tabacos, S.A.    
  G/STR/N/13/CPV  
- 10 -  
TABLE III 
STATE TRADING: SOCIEDADE CABOVERDIANA DE TABACOS, S.A.  
STATISTICAL INFORMATION, DOMESTIC ACTIVITIES 
YEAR 2009 
Description of product(s) 
(including HS number(s)) Domestic purchases by state 
trading enterprise National production 
(units) Domestic sales by state 
trading enterprise 
(units) National consumption 
1 2 3 4 5 
2401.20.00.00- Tobacco, partly 
or wholly stemmed/stripped - - - - 
2402.20.00.00-  Cigarettes 
containing tobacco - 53,142,000 52,180,000 Not available 
2402.20.00.00-  Cigarettes 
containing tobacco - - 52,180,000 Not available 
2403.99.00.00- Other manufactured 
tobacco products and manufactured tobacco substitutes - - - - 
Total - 53,142,000 104,360,000 - 
Source: Sociedade Caboverdiana de Tabacos, S.A.    
  G/STR/N/13/CPV  
- 11 - TABLE III 
STATE TRADING: SOCIEDADE CABOVERDIANA DE TABACOS, S.A. 
STATISTICAL INFORMATION, DOMESTIC ACTIVITIES 
YEAR 2010 
Description of product(s) 
(including HS number(s)) Domestic purchases by state 
trading enterprise National production 
(Units) Domestic sales by state 
trading enterprise 
(Units) National consumption 
1 2 3 4 5 
2401.20.00.00- Tobacco, partly  
or wholly stemmed/stripped - - - - 
2402.20.00.00- Cigarettes 
containing tobacco - 55,304,000 54,535,000 Not available 
2402.20.00.00- Cigarettes 
containing tobacco - - 55,740,000 Not available 
2403.99.00.00- Other manufactured 
tobacco products and manufactured tobacco substitutes - - - - 
Total - 55,304,000 110,275,000 - 
Source: Sociedade Caboverdiana de Tabacos, S.A.  
Annexes: 
1. Import/export statistics 2008 - 2010, National Statistics Institute (INE) 
2. Production/sales statistics, Sociedade Caboverdiana de Tabacos, S.A.  
 
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