WORLD  TRADE  
ORGANIZATION  WT/TPR/S/209/Rev.1 
30 June 2009  
 
(09-3149) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
MOZAMBIQUE 
 
Revision 
 
 
 
 
This report, prepared for the second Tr ade Policy Review of Mozambique, has 
been drawn up by the WTO Secretaria t on its own responsibility.  The 
Secretariat has, as required by the Agreement establishing the Trade Policy 
Review Mechanism (Annex 3 of the Ma rrakesh Agreement Establishing the 
World Trade Organization), sought clarification from Mozambique on its trade 
policies and practices. 
 
Any technical questions arising from this report may be addressed to  
Mrs. Eugenia Lizano (tel:  022 739 6578). 
 
Document WT/TPR/G/209 contains the policy statement submitted by 
Mozambique. 
 
  Mozambique WT/TPR/S/209/Rev.1 
 Page iii 
 
 
CONTENTS 
 
  Page 
SUMMARY OBSERVATIONS vii 
  (1) E
CONOMIC ENVIRONMENT  vii 
 (2) T RADE AND INVESTMENT REGIMES  viii 
 (3) T RADE POLICY INSTRUMENTS  viii 
 (4) T RADE POLICIES BY SECTOR  ix 
 (5) T RADE POLICY AND TRADING PARTNERS  x 
I. ECONOMIC ENVIRONMENT 1 
 (1) M AIN FEATURES OF THE ECONOMY  1 
 (2) R ECENT ECONOMIC DEVELOPMENTS  4 
 (3) T RADE AND INVESTMENT  6 
 (i) Trade in goods and services 6 
 (ii) Foreign direct investment 10 
  (4) O UTLOOK  10 
II. TRADE AND INVESTMENT REGIMES      11 
 (1) G ENERAL FRAMEWORK  11 
 (2) P OLICY OBJECTIVES  13 
 (3) T RADE AGREEMENTS AND ARRANGEMENTS  15 
 (i) WTO 15  (ii) Regional trade agreements 16 
 (4) I
NVESTMENT REGIME  20 
 (i) Overview 20  (ii) Institutional and legal framework 20 
 (iii) Investment incentives  22 
 (iv) Bilateral agreements on investment promotion and protection 24 
A
NNEX II.1:   TRADE -RELATED TECHNICAL ASSISTANCE  25 
III. TRADE POLICIES AND PRACTICES BY MEASURE 28 
 (1) I NTRODUCTION  28 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  29 
 (i) Registration 29 
 (ii) Customs procedures and valuation 29  (iii) Rules of origin 31 
 (iv) Customs duties 31 
 (v) Prohibitions, quantitative restrictions, and licences 38  (vi) Standardization, accre ditation, and certification 39 
 (vii) Sanitary and phytosanitary (SPS) measures 39 
 (viii) Packaging, marking, and labelling 40 
 (ix) Contingency measures 40 
 (x) Other measures 40 
 WT/TPR/S/209/Rev.1 Trade Policy Review 
Page iv 
 
 
    Page 
 (3) M EASURES DIRECTLY AFFECTING EXPORTS  40 
 (i) Registration 40 
 (ii) Customs procedures 40  (iii) Export duties and taxes 41 
 (iv) Prohibitions, quantitative restrictions, and licences 41 
 (v) Export subsidies, assistance, and promotion 41  (vi) Industrial free-zone (IFZ) regime 42 
 (4) M
EASURES AFFECTING PRODUCTION AND TRADE  43 
 (i) Incentives 43  (ii) Competition and price controls 43 
 (iii) State trading, state-owned enterprises, and privatization 43 
 (iv) Government procurement 45  (v) Protection of intellectual property rights (IPRs) 46 
IV. TRADE POLICIES AND PRACTICES BY SECTOR 49 
 (1) I
NTRODUCTION  49 
 (2) A GRICULTURE AND RELATED ACTIVITIES  50 
 (i) Overview 50 
 (ii) Agricultural policy 51 
 (iii) Policy by subsector 53 
 (iv) Fisheries and aquaculture 56  (v) Forestry 58 
 (3) M
INING , ENERGY , AND WATER  59 
 (i) Mining, petroleum, and natural gas 59  (ii) Electricity and water 62 
 (4) M
ANUFACTURING  63 
 (5) S ERVICES  65 
 (i) Financial services 65 
 (ii) Telecommunications and postal services 68 
 (iii) Transport 70  (iv) Tourism 73 
REFERENCES   77 
APPENDIX TABLES
  83Mozambique WT/TPR/S/209/Rev.1 
 Page v 
 
 
CHARTS 
 
    Page 
 I. ECONOMIC ENVIRONMENT 
 
I.1 Structure of merchandise trade, 2001-07 8 I.2 Direction of merchandise trade, 2001-07 9 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
III.1 Breakdown of applied MFN tariff rates, 2008      33 
III.2 Tariff escalation by ISIC 2-digit industry, 2008    35  
IV. TRADE POLICIES AND PRACTICES BY SECTOR 
 IV.1 Industrial production, with and without Mozal 2000-06      64 
 
 
TABLES 
 
I. ECONOMIC ENVIRONMENT 
 
I.1  Selected macroecono mic indicators, 2001-08 1 
I.2  Balance of payments, 2001-07 6 
I.3  Foreign direct investment, 2003-07 10  
II. TRADE AND INVESTMENT REGIMES 
 
II.1  Mozambique's principal trade-related laws and regulations, April 2008 12 
II.2 Investment incentives, 2008 23 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
III.1 Itemized customs revenue from imports, 2001-07 32 III.2  Structure of MFN tariffs in Mozambique, 2008 33 
III.3  Summary analysis of the MFN tariff, 2008 34 
III.4  Regimes, procedures, and scope of application of the procurement regulations, 2008 46 III.5  Use of tendering procedures in contracts, 2007 46 
 
IV. TRADE POLICIES AND PRACTICES BY SECTOR  
IV.1 Production of basic food crops, 2002-07 51 
IV.2 Production of cash crops, 2002-06 51 IV.3 Sugar exports under preferential regimes, 2001-07 54 
IV.4 Exports of fishery products, 2002-07 57 
IV.5 Production of leading exported mining products, 2002-07 59 IV.6 Banking sector indicators, 2006 66 
IV.7 Insurance market shares, 2004-07 68 
IV.8 Telecommunications service indicators, 2001-07 68 
IV.9 Port traffic, 2001-06 70 
IV.10  Tourism indicators, 2002-07 74  
 WT/TPR/S/209/Rev.1 Trade Policy Review 
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APPENDIX TABLES 
 
 
I. ECONOMIC ENVIRONMENT 
 
AI.1 Export structure, 2001-07 85 
AI.2 Destination of exports, 2001-07 87 
AI.3 Import structure, 2001-07 88 AI.4 Origin of imports, 2001-07 90 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
AIII.1  Applied MFN tariff averages by HS2, 2008 91  
IV. TRADE POLICIES AND PRACTICES BY SECTOR 
 AIV.1 Applied MFN tariffs by ISIC Rev.2 category, 2008 94Mozambique WT/TPR/S/209/Rev.1 
 Page vii 
 
 
SUMMARY OBSERVATIONS 
(1) E CONOMIC ENVIRONMENT  
1. The reforms pursued by Mozambique 
since its first Trade Policy Review in 2001 have contributed to hi gh economic growth of 
8.7% on average per year during 2001-07, driven mainly by megaprojects financed by foreign direct investment and public spending 
largely financed by foreign aid.  Mozambique 
remains committed to pursuing prudent fiscal and monetary policies.  It has made efforts to reduce its public deficit (after arrears clearance and on cash basis) from 6.17% of GDP in 
2001 to 3.9% in 2007, through improved 
expenditure management and tax administration and collection.  Since its 2006 reform, which introduced the New Metical as the national currency, the Bank of 
Mozambique has maintained a restrictive 
monetary policy, with "price stability" as the major goal since 2007.  Nevertheless, the rising oil and cereal prices on international markets have adversely affected Mozambique’s attempt to keep inflation at 
around 6-6.5%;  the Consumer Price Index 
(CPI) for the capital city of Maputo recorded an annual rate of increase of 10.26% in December 2007.   
2. Despite continuous growth, 
Mozambique remains among the poorest least developed countries (LDCs), with GDP per capita of US$398.20 (at constant prices) in 2007.  Mozambique's economic potential 
remains largely untapped, due mainly to 
supply-side constraints including poor access to and high costs of utilities, e.g. water, electricity, transport, telecommunication, and financial services.  Furthermore, 
administrative hurdles have inhibited the 
business environment.  The ongoing reforms are aimed at addressing these constraints.  The functioning of the public sector and the business environment are to be improved with a view to enhancing the development of the 
private sector.  The Government’s Action Plan 
for the Reduction of Absolute Poverty (PARPA II), adopted in 2006, is aimed at reducing the incidence of poverty from 54% in 2003 to 45% in 2009.   3. Services remain the leading sector of 
the economy (accounting for approximately 55% of GDP in 2007), followed by agriculture, including fisheries, livestock, and 
forestry (23%), and manufacturing (13%).  
The agriculture sector, however, employs about three quarters of the labour force, mostly engaged in subsistence farming on an informal basis.  Hence agriculture plays a central role in 
achieving the poverty-reduction objectives set 
out in the PARPA II.  Mozambique has considerable mining resources, which are not yet fully exploited.  As a result, the contribution of the sector to GDP remains low, at 1.3% in 2007.  Production in new mining 
projects is scheduled to start in the near future.  
Mozambique anticipates that FDI flows to megaprojects in the mining sector will continue to grow;  a central government objective is to improve the management of 
natural resources and to increase the net 
contribution of these projects to the national economy.   
4. Since the first TPR of Mozambique in 
2001, trade has become more important to its 
economy.  The ratio of trade in goods and non-factor services to GDP increased from 54.1% in 2001 to 64.4% in 2007.  Production by megaprojects, which benefit from incentives 
under the Industrial Free Zone (IFZs) regime, 
has contributed to the sharp increase in exports (up by 230%) and imports (up by 180%) from 2001 to 2007.  Mozambique's export structure has not changed since 2001;  its major export is aluminium (almost two thirds of total 
exports in 2007) produced from imported 
alumina originating in Australia, and exported to the European Communities (EC), where it benefits from preferential access.  Mozambique also exports electricity to South 
Africa, the leading export destination in the 
region.  Exports of cashews, cotton, refined sugar, tobacco, and fishery products, though low in terms of relative contribution to the total value of exports, are significant in terms 
of their contribution to rural incomes.  In 
addition to alumina, other major imports are oil (10% of imports in 2007), followed by food and chemicals.  Imports originate mainly in WT/TPR/S/209/Rev.1 Trade Policy Review 
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Australia and South Africa.  Mozambique is a 
net importer of services. 
(2) T RADE AND INVESTMENT REGIMES  
5. Mozambique’s Constitution was 
modified in 2004 to decentralize decision making powers and improve the functioning of 
the judicial system.  Mozambique’s Assembly 
of the Republic adopts laws and ratifies treaties.  The Council of Ministers formulates and implements public policies, and responsibility for trade and investment matters 
is vested in the Ministry of Industry and 
Commerce (MIC), assisted by inter-ministerial committees.  Public/private sector dialogue is maintained primarily through the Confederation of Economic Associations (CTA), which has been active in improving the 
business and investment environment. 
6. The Investment Code, already in force 
in 2001, is unchanged, but the investment 
regime has been improved by the adoption of a 
new Commercial Code, a consolidated Code of Fiscal Benefits (with mining and petroleum being regulated separately since 2007), and a new Labour Law providing for greater flexibility in the labour market.  However, two 
major bureaucratic obsta cles to investment 
remain in place:  the comprehensive licensing system, and the inspection of premises.  Despite these and other supply-side constraints, Mozambique has attracted 
substantial foreign direct investment inflows 
since its first TPR, partly due to tax incentives, under the IFZs regime.  Incentives were curtailed in 2002 and are presently under review. 
7. Mozambique is an original member of 
the WTO and grants at least MFN treatment to all its trading partners.  It generally supports the positions of the LDCs, the African Group, 
the ACP countries, and the Group of 77 
Developing Countries on issues  related to multilateral obligations and technical assistance.  Cotton and sugar subsidies, as well as food security, are of particular concern to it.  
Mozambique has made some progress on the 
implementation of WTO rules since its first TPR, notably with respect to customs valuation and the protection of intellectual 
property rights.  In contrast, notifications remain a persistent difficulty, and Mozambique’s participation in the multilateral 
trading system remains modest, despite the 
increasing importance of trade to its economy.  Mozambique has benefited from a large number of WTO activities to support the development of its international trade, 
including the Integrated Framework and the 
Joint Integrated Technical Assistance Programme II, but further capacity-building is needed. 
8. Mozambique is a member of the 
Southern African Development Community (SADC).  Since its first TPR, Mozambique has concluded preferential trade agreements with Malawi and Zimbabwe to supersede former 
trade arrangements.  At the end of 2007, 
Mozambique initialled an Interim Agreement with the EC to conclude an economic partnership agreement by the end of 2008 and replace the long-standing preferential access granted by the EC under the Cotonou 
Agreement.  With the United States, 
Mozambique benefits from preferential access under the African Growth and Opportunity Act, signed a trade and investment framework agreement (TIFA) in 2005, and is negotiating a 
Millenium Challenge Account (MCA).  Other 
WTO trading partners also offer Mozambique preferential access arrangements under their GSP schemes or other arrangements. 
(3) T
RADE POLICY INSTRUMENTS  
9. During the period under review, 
Mozambique lowered its tariff in two 
instances.  It reduced the maximum tariff from 
30% to 25% in 2002, and from 25% to 20% in 2007.  Its 2008 MFN applied tariff comprises rates of zero, 2.5%, 5%, 7.5%, and 20%;  all tariffs continue to be ad valorem.  As a result of the reductions, the simple average applied 
MFN tariff rate declined from 13.8% in 2001 
to 10.1% in 2008.  However, the tariff structure remains unchanged, with higher protection on agricultural products (13.5%) than on non-agricultural products (9.5%) 
(WTO definitions, excluding petroleum 
products).  Reductions in the applied tariff Mozambique WT/TPR/S/209/Rev.1 
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rates have increased the gap between applied 
and bound rates.  Under its Uruguay Round commitments, Mozambique bound tariffs on all agricultural products at a ceiling rate of 
100%, while bindings on non-agricultural 
products are very limited;  only 19 tariff lines at the 1996 HS  eight-digit level were bound at either 5% or 15%. Extension of the scope of tariff binding on non-agricultural products 
would increase the predictability of the 
regime.  "Other duties and charges" on all bound items were bound at 100%.  Mozambique continues to apply surtaxes on sugar, cement, and galvanized steel products, also in place at the time of its first TPR.  
Mozambique levies a VAT of 17%, along with 
excise taxes;  certain necessities are exempt from VAT as a poverty-relief measure. 
10. In 2002, Mozambique implemented 
the WTO Customs Valuation Agreement.  The requirements for pre-declaration and pre-payment of customs duties and taxes were eliminated in 2003.  Pre-shipment inspection applies to a positive list of products, which is 
being narrowed, with fees assumed by the 
Government.  The full operation of the Customs Service was returned to domestic control in 2005;  the proper management of Customs however remains a challenge.  
Computerization is incipient.  Under the 
foreign exchange regime, all operations, including imports and exports, require registration and authorization.  The import and export licensing regime appears largely unchanged since 2001, with restrictions in 
place to protect consumers, animal and plant 
health, as well as the environment.  Mozambique’s standards regime and its accreditation and certification procedures have not been modified since its first TPR in 2001.  
In general Mozambique uses international 
standards and adapts them only when it is necessary to suit domestic circumstances.  Mozambique’s sanitary and phytosanitary regime has not been revised substantially since 
2001.  SPS measures on imports are based on 
international standards drawn up by the World Organization for Animal Health (OIE), the International Plant Protection Convention (IPPC), and the Codex Alimentarius.  Certain imported products (pla nts and plant products, 
and the products of apiculture) require a Phytosanitary Licence of Importation and are subject to inspection and control.  Imports of 
animals and products of animal origin must 
obtain a Sanitary Licence of Importation.  Export taxes are still used to encourage processing;  for instance, exports of raw cashew nuts are subject to an 18% tax.  
Mozambique does not have legislation on 
contingency trade measures. 
11. In 2007, Mozambique issued a general 
policy on competition, and a regulatory 
framework is to be adopted.  The State 
remains a main economic operator;  the supply of, inter alia , fixed-line telephony, electricity, 
and water, continues to be the preserve of state enterprises, contributing to Mozambique’s 
supply-side constraints.  The new government 
procurement legislation, adopted in 2005, is aimed at improving the transparency of contracts and their award procedures, and should contribute to the improved use of public resources.   
12. Since its first TPR, Mozambique has 
revised its regime on intellectual property protection and enacted new laws to bring it 
into closer conformity with WTO rules.  
Procedures to obtain intellectual property rights have been streamlined.  Efforts to ensure respect for intellectual property rights, and in particular to combat piracy and counterfeiting, are continuing.  In 2006, Mozambique 
introduced fines for the first time to deter 
infringement of industrial property rights (including through counterfeiting). 
(4) T
RADE POLICIES BY SECTOR  
13. Agriculture is the major employer in 
Mozambique, absorbing some three quarters of the labour force, mostly engaged in 
subsistence farming on an informal basis.  
Productivity has remained low.  Therefore, a key policy objective is to raise productivity in the sector, as this would contribute to poverty alleviation and food security.  Agriculture has 
remained the most protected sector with an 
average tariff of 12.4%, compared with an overall MFN average of 10.1%.  WT/TPR/S/209/Rev.1 Trade Policy Review 
Page x 
 
 
Mozambique's major agricultural exports 
include cashews, cotton, sugar, tobacco, and fishery and forestry products, and government intervention in these subsectors remains 
significant.   
14. Manufacturing activities in 
Mozambique are limited, consisting either of import-competing agri-industries or export-
oriented megaprojects.  Foreign direct 
investment has been instrumental in the 
expansion of aluminium production, and the exploitation of mineral sands, coal, and natural gas, as well as electricity generation.  Such 
investments have been fostered by tax 
incentives, as well as low (subsidized) electricity tariffs for aluminium production.  Import-competing enterprises are protected from imports by relatively high tariffs as well 
as, in some instances, through VAT 
exemptions.  In particular, the sugar companies operate under a guaranteed minimum domestic price system, enforced through a variable import surtax and distribution controls at the retail level.  
Mozambique also exports sugar under 
preferential quota access to the EC and U.S. markets. 
15. Mozambique is a net oil importer.  
Downstream petroleum activities at retail level have been liberalized, but the importation of fuel products remains reserved to the state-owned enterprise IMOPETRO.  Domestic fuel prices are regulated; they are adjusted on a 
monthly basis to account for world market 
price developments. 
16. Further development of the services 
sector, with improved and efficient supply of 
services, is necessary for Mozambique to overcome some of its supply-side constraints. Banking services remain underdeveloped with substantial concentration, while insurance services have been somewhat liberalized.  
Tele-density has increased substantially as a 
result of the rapid penetration of mobile communication services, but access to Internet services remains low;  privatization of the incumbent fixed-line operator, foreseen for 
some time, has been postponed indefinitely.   Mozambique has developed a multimodal 
transport infrastructure, through the rehabilitation of ports, roads, and railroads, allowing its integration with that of major 
trading partners, in particular South Africa and 
its land-locked neighbours, for which Mozambique's ports are an important gateway.  The rehabilitation of infrastructure and transport services has been instrumental in 
developing Mozambique’s tourism.  However, 
further development is required since inadequate and costly air transport services remain an impediment to growth of the tourism subsector.  Mozambique made limited commitments under GATS;  widening the 
scope of these commitments would support its 
efforts to overcome the existing bottlenecks and help attract national and foreign investment. 
(5) T
RADE POLICY AND TRADING 
PARTNERS  
17. Since its 2001 Review, Mozambique 
has taken steps to liberalize its trade regime on 
a unilateral basis.  It has, inter alia , lowered its 
maximum tariff rates, and improved its investment regime.  Nonetheless, structural problems, including the high price and 
inefficient supply of utilities by state-owned 
companies operating under monopoly, as well as administrative hurdles, still inhibit the business environment and competitiveness.  Therefore, continuation of the reforms remains necessary. 
18. Mozambique is yet to meet its 
notification obligations.  Its multilateral commitments on goods and services do not 
reflect its actual regimes.  Therefore, 
continued reforms, improvement of multilateral commitments through extension of their scope, and reduction of bound rates, as well as efforts to meet notification requirements, would help to enhance the 
transparency and predictability of 
Mozambique's trade regime.  Trading partners could help by ensuring that their markets are fully open to goods and services of interest to Mozambique, and by providing more technical 
assistance.