RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/143 
7 January 2005  
 
(05-0017) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
SIERRA LEONE 
 
Report by the Secretariat 
 
  
 
This report, prepared for the first Trade Policy Review of Sierra Leone, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakech Agreement Establishing the World Trade 
Organization), sought clarification from Sierra Leone on its trade policies and 
practices. 
 
Any technical questions arising from this report may be addressed to Mr. Sergios 
Stamnas (022.739.5382) and Mr. Carlos Perez del Castillo (022.739.5336). 
 
Document WT/TPR/G/143 contains the policy statement submitted by Sierra 
Leone. 
 
 
 
Note: This report is subject to restricted circul ation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Sierra Leone.Sierra Leone WT/TPR/S/143 
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CONTENTS 
    Page 
SUMMARY OBSERVATIONS vii 
  (1) E
CONOMIC ENVIRONMENT  vii 
 (2) T RADE POLICY FRAMEWORK  viii 
 (3) T RADE POLICY DEVELOPMENTS  ix 
 (4) S ECTORAL POLICY DEVELOPMENTS  x 
 (5) O UTLOOK  xi 
I. ECONOMIC ENVIRONMENT 1 
 (1) O VERVIEW  1 
 (2) R ECENT ECONOMIC PERFORMANCE  2 
 (i) Growth, employment, and poverty 2  (ii) Price inflation 4 
 (3) M
AIN MACROECONOMIC POLICY DEVELOPMENTS  5 
 (i) Monetary and exchange rate policy 5  (ii) Fiscal policy 8 
 (4) M
AIN STRUCTURAL POLICY DEVELOPMENTS  8 
 (i) Tax reform 8 
 (ii) Privatization 9 
 (iii) Governance 9 
 (5) B ALANCE -OF-PAYMENTS DEVELOPMENTS  10 
 (i) Current and trade accounts 10 
 (ii) External liabilities/debt 11 
 (6) D EVELOPMENTS IN MERCHANDISE TRADE  11 
 (i) Composition of trade 11 
 (ii) Direction of trade 12 
 (7) O UTLOOK  15 
II. TRADE AND INVESTMENT POLICY REGIME: FRAMEWORK AND OBJECTIVES 16 
 (1) O VERVIEW  16 
 (2) G ENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK  16 
 (3) S TRUCTURE OF TRADE POLICY FORMULATION  18 
 (i) Executive branch es of government 18 
 (ii) Advisory bodies 19 
 (4) T RADE POLICY OBJECTIVES  19 
 (5) T RADE LAWS AND REGULATIONS  19 
 (6) T RADE AGREEMENTS AND ARRANGEMENTS  20 
 (i) Multilateral agreements 20 
 (ii) Regional economic agreements 21 
 (iii) Preferential tr ade arrangements and related initiatives 23 
 (iv) ACP-EU Partnership Agreement (Cotonou Agreement) 24 
 (7) F OREIGN INVESTMENT REGIME  25 
 WT/TPR/S/143 Trade Policy Review 
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    Page 
ANNEX II.1:  TRADE-RELATED TECHNICAL ASSISTANCE 30 
III. TRADE POLICIES AND PRACTICES BY MEASURE 32 
 (1) O VERVIEW  32 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  33 
 (i) Registration and documentation requirements 33  (ii) Preshipment inspection and customs valuation 33  (iii) Tariffs and other import duties and taxes  36 
 (iv) Other levies and charges 42 
 (v) Import prohibitions, restrictions, and licensing 42  (vi) State trading 43 
 (vii) Government procurement 44 
 (viii) Contingency measures 49  (ix) Standards and other technical requirements 49 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  50 
 (i) Registration and documentation 50  (ii) Export taxes, charges, and levies 51  (iii) Export prohibitions, re strictions, and licensing 52 
 (iv) Export-processing zones 52 
 (v) Export subsidies and promotion 52 
 (4) M
EASURES AFFECTING PRODUCTION AND TRADE  53 
 (i) Taxation 53  (ii) Production assistance 53 
 (iii) Competition policy 54 
 (iv) Intellectual property rights 54  (v) Environmental issues 56 
IV. TRADE POLICIES BY SECTOR 57 
 (1) O
VERVIEW  57 
 (2) A GRICULTURE , FORESTRY , AND FISHERIES  58 
 (i) Features 58 
 (ii) Main policy issues 59 
 (iii) Selected crops 61  (iv) Forestry 62 
 (v) Fisheries 62 
 (3) 
MINING AND ENERGY  63 
 (i) Mining 63 
 (ii) Energy 68 
 (4) M ANUFACTURING  70 
 (i) Features 70 
 (5) S ERVICES  71 
 (i) Features 71 
 (ii) Overall commitments under the General Agreement on  
 Trade in Services 71 
 (iii) Financial services 71 
 (iv) Telecommunications 73 
 (v) Transport 74 
REFERENCES   77 
APPENDIX TABLES  81 Sierra Leone WT/TPR/S/143 
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    Page 
CHARTS 
I.  ECONOMIC ENVIRONMENT  
I.1 Exchange rate developments, 1997-03 6 
I.2 Composition of merchandise trade, 2001 and 2003 13 
I.3 Merchandise trade by partner, 2000 and 2003 14 
III. TRADE POLICIES AND PRACTICES BY MEASURE  III.1 Distribution of MFN tariffs and effective applied MFN rates, 2004 38 
III.2 Average MFN rates, effective applied rates, and final bound tariff rates,  
 by HS section, 2004 40 III.3 Tariff escalation by 2-digit ISIC industry, 2004 41 
IV. TRADE POLICIES BY SECTOR  
IV.1 Tariff averages by 2-digit ISIC category, 2004 61 
IV.2 Nominal interest rates and spreads, 1997-03 73 
TABLES 
I.  ECONOMIC ENVIRONMENT  
I.1 Main social and economic indicators 1 
I.2 Economic performance, 2001-04 2
 
I.3 Sectoral shares in GDP, 1995-03 3  
I.4 West African Monetary Zone convergence crite ria, 2000-04 7 
I.5 Balance of payments 10 
II. TRADE AND INVESTMENT POLICY REGIME: FRAMEWORK AND OBJECTIVES  
II.1 Investment incentives, September 2004 27  
III. TRADE POLICIES AND PRACTICES BY MEASURE  III.1 Structure of MFN tariff in Sierra Leone, 2004 37
 
III.2 State involvement in enterprises, 2004 43 
III.3 Procurement procedures, as from 2004 46 
III.4 Procurement methods, as from 2004 47  
III.5 Export procedures, 2004 51  
IV. TRADE POLICIES BY SECTOR  
IV.1 Diamond exports under the certification regime 2000-04 65 
IV.2 Electricity tariffs, August 2003 69 
APPENDIX TABLES 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
AIII.1 Tariff averages by HS chapter  83 
 Sierra Leone WT/TPR/S/143 
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SUMMARY OBSERVATIONS 
1. Since the end of civil unrest in 2002 
and the return to a democratically elected Government, Sierra Leone, a least developed 
country (LDC), has pursued macroeconomic, 
structural, law, and trade reform.  Sierra Leone's participation in sub-regional economic integration initiatives within the Economic Community of West African States 
(ECOWAS), together with actions for 
consolidating peace and resuming operations in the mining sector, a key activity in Sierra Leone’s weakened economy, are among the most notable features of the post-conflict period.  Competitiveness and governance 
problems persist but are receiving attention.  
Sierra Leone’s economic outlook depends on 
the healthy performance of the dominant agriculture and mining sectors as well as the political and economic developments within 
the country and sub-region. 
(1) E
CONOMIC ENVIRONMENT  
2. Since the end of the conflict, Sierra 
Leone's economy has show n vibrant growth.  
This is largely due to improvements in the security situation, growing confidence in the 
country, increasing diamond exports, rising 
aid inflows, and the progress achieved in resettling people displaced by the civil war.  The inflation record has been erratic due to a rise in fuel prices (and their impact on 
transportation costs), a strong growth in 
import demand for reconstruction, an expansionary monetary policy, partly owing to delays in donor support, and the "pass-through" impact of the exchange-rate 
depreciation of the national currency on 
domestic prices  The size of the informal sector is significant. 
3. Macroeconomic stabilization and 
structural reform have been pursued within the framework of a 2001 Interim National Poverty 
Reduction Strategy (IPRSP).  The share of the 
population living below the poverty threshold seems to be falling and the share of health and education in total recurrent expenditure is up.  In order to enhance governance, an Anti-Corruption Commission (ACC) was 
established in 2001 and the United Nations Convention against Corruption was signed in 2003.  Efforts to decentralize the Government 
and launch law reform have been undertaken.  
Since 2002, under the Heavily Indebted Poor Countries (HIPC) Initiative  and the signing of debt-rescheduling accords,  Sierra Leone's external debt (ratio to GDP), has dropped. 
4. Sound fiscal policy lies at the core of 
Sierra Leone's economic reform efforts, particularly that directed to address deficiencies in the tax system.  The fiscal deficit, due in large measure to the post-conflict rehabilitation programme and a weak 
domestic tax base, has followed a declining 
trend;  the recurring deficits impair Sierra Leone's capacity to undertake growth- and development-related expenditures (including poverty alleviation, health, education, and 
infrastructure).  The impact of implementing 
an ECOWAS Common External Tariff (CET) on fiscal revenue is being assessed. 
5. The chronic deficit in the trade 
balance on goods and services has risen, mainly due to exchange-rate depreciation, 
increased import costs (petroleum products, 
rice), and a strong demand for manufactured goods for reconstruction activities.  Since 2001, foreign exchange reserves have followed a rising trend.  Between 1997 and 2003 the 
national currency – the leone - depreciated by 
58% (in foreign currency terms) against the U.S. dollar.   
6. Sierra Leone depends heavily on 
exports of diamonds and minerals and to a 
lesser extent on a few primary products 
(cocoa, coffee).  In recent years re-exports have grown steadily due, inter alia, to relative stability in neighbouring Liberia.  Imports are 
concentrated largely in hydrocarbons, food, machinery, and manufactured goods.  The 
European Communities (EC) remains Sierra 
Leone's leading supplier and export market, followed by ECOWAS and Asian trading partners. WT/TPR/S/143 Trade Policy Review 
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7. Foreign direct investment into Sierra 
Leone remains modest.  To cope with a weak investment environment, in August 2004 Sierra Leone updated its legal framework governing 
investment (now covering all sectors);  past 
fiscal incentives (including a lower payroll tax rate for ECOWAS citizens) remain in force pending the revision of the tax code.  Work on the adoption of an export processing zone 
regime is under way.  Although privatization is 
considered a key element in Sierra Leone's structural reform programme, the privatization programme, drawn up by the recently established National Commission for Privatization, does not specify any 
implementation dates. 
(2) T
RADE POLICY FRAMEWORK  
8. Sierra Leone, a contracting party to 
the GATT, became a WTO Member on 23 July 1995.  It grants at least MFN 
treatment to all its trading partners and 
benefits from the special and differential treatment provided for in the WTO Agreements.  Political developments and priorities seem to have caused delays in implementing these Agreements.  
9. Sierra Leone’s trade policy is part of 
its more general strategy for poverty reduction and in line with its ECOWAS commitments.  Since the launch of preparatory work for this Trade Policy Review, action has been taken 
for better policy coordination on trade and 
related matters through the establishment of an inter-institutional National Coordinating Committee on Trade (NCCT) (June 2004) and the reinforcement of the institutional capacity 
of the Ministry of Trade and Industry. 
10. Sierra Leone's involvement in and 
commitment to sub-regional integration initiatives have been strengthened, particularly with respect to ECOWAS whose provisions seem to supersede those of the 
WTO Agreements in Sierra Leone;  an attempt 
is being made to ensure the absence of inherent conflict between ECOWAS and WTO 
provisions.  ECOWAS members have been 
gradually liberalizing intra-community trade, and since 1 January 2004 they have granted 
preferential treatment on the products that were liberalized in the West African Economic and Monetary Union (WAEMU), whose 
members also participate in the ECOWAS 
integration scheme.  Sierra Leone does not implement the ECOWAS Trade Liberalization Schedule (ETLS), mainly due to uncertainty regarding forgone customs revenue. 
11. Sierra Leone is making considerable 
effort to benefit from the increasingly expanding non-reciprocal preferential trade arrangements that are made available by, or negotiated with, its developed trading partners.  Sierra Leone benefits from duty-free 
and quota-free access to the EC market;  it is 
also participating in the negotiations for the conclusion of an Economic Partnership Agreement (EPA) with the EC.  Sierra Leone is eligible for the trade preferences granted by 
the United States under the African Growth 
and Opportunity Act (AGOA) and the EC's "Everything but Arms" initiative. 
12. Sierra Leone was the first WTO 
Member to benefit from a new facility, the Trade Policy Clinics.  In accord with the 
Clinic, this Trade Policy Review aims, inter 
alia, to contribute to improving transparency in domestic policies at national and multilateral level.  By the time of completion of this report Sierra Leone had not submitted 
notifications to the WTO other than the 
national tariff information (now with the WTO Integrated Data Ba se):  in this respect, 
Sierra Leone has availed itself of trade-related technical assistance, and further notification 
should follow in due course. 
13. On technical assistance, in 2005 the 
WTO envisages the  participation of Sierra Leonean officials in:  trade policy courses in Geneva;  regional trade policy courses;  short trade policy courses on the Doha Development 
Agenda (DDA);  workshops or seminars at the 
regional or sub-regional level on a number of issues (including negotiating techniques);  meetings to promote awareness among parliamentarians;  and various other activities 
at the WTO headquarters.  These activities will Sierra Leone WT/TPR/S/143 
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cover, inter alia, issues identified by the 
authorities such as notification requirements, customs valuation, the implementation of the 
WTO Agreements, and the DDA.  The setting 
up of a representation in Geneva would allow 
closer participation in WTO activities (currently, ensured by the Embassy in Brussels or the bi-annual Geneva Week meetings), but financial constraints constitute an impediment. 
14. The development of international 
trade in Sierra Leone is also supported at the national and the sub-regional level by several development partners, including non-governmental bodies.  In October 2004 a "Technical review" was undertaken under the 
Integrated Framework (IF) as a first step 
toward Sierra Leone's inclusion in the IF process.  Sierra Leone does not benefit from the JITAP (Joint Integrated Technical Assistance Programme).   
(3) T
RADE POLICY DEVELOPMENTS  
15. The customs tariff is Sierra Leone’s 
principal trade policy instrument as well as its main source of government revenue.  The tariff comprises seven rates: zero, 5%, 10%, 15%, 20%, 25% and 30%.  The average effective 
applied MFN rate (including a 30% excise tax 
on certain imports and the 0.5% ECOWAS levy on imports from third countries) is 14.9%.  All tariff lines are bound, imparting a degree of predictability to market-access conditions;  
nevertheless, the large gap between average 
bound and applied MFN tariff rates (33.6 percentage points) provides significant scope for increasing applied tariffs within binding levels.  The average customs duty on 
agricultural (WTO definition) products 
(16.5 %) is higher than the average duty on industrial products (13.5 %).  All tariff rates are ad valorem thus ensuring a high degree of transparency.  The tariff reflects a concentration of tariff lines on four of the 
seven rates in force and a pronounced 
escalation pattern, seemingly in line with national as well as regional policy priorities.  Sierra Leone's customs tariff is being harmonized with those of other ECOWAS 
members that now apply the WAEMU CET.  An ECOWAS Common External Tariff (CET) 
is expected to be in place as of 1 January 2008. 
16. Sierra Leone has not yet implemented 
the WTO Agreement on Customs Valuation, 
continuing with the use of the Brussels Definition of Value;  it maintains reference values (officially established minimum customs values) for imports of sensitive items (rice, 
flour, sugar, cement, plastic slippers, used 
clothing, and used clothing accessories).  No official list of these reference values seems to have been issued or made publicly available.  Preshipment inspection is mandatory and importers bear the associated costs (1.10% of 
the f.o.b. value, 0.25% for rice).  Efforts to 
streamline customs-clearance procedures are under way;  a "one-stop-centre" for the clearance of imported goods has reduced time at the quay, and a project to implement the 
Automated System for Customs Data 
(ASYCUDA) has commenced. 
17. A few import prohibitions and 
restrictions are maintain ed for health, safety, 
security, and environmental reasons.  International standards constitute the basis for 
the preparation of Si erra Leonean standards;  
efforts are being made to follow WTO provisions on standards.  No contingency measures exist but ECOWAS is committed to developing a Community Anti-dumping and 
Safeguard Code. 
18. Complicated and lengthy procedures 
affect exports.  Exports of plants and charcoal are restricted through permits aimed at minimizing deforestation and preventing the 
extinction of tree species used for both fuel 
wood and medicinal production.  Export taxes are levied on cocoa and coffee (2.5%), and diamonds (3%).  As from 2004, a flat rate diamond export-licence fee has applied, thus eliminating past discriminatory rates. 
19. Assistance to domestic production is 
available in the form of tax incentives;  those for agri-processing activities are tied to a requirement of 60% of local input or value added.  State participation in certain activities WT/TPR/S/143 Trade Policy Review 
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continues, for example, in electricity, 
telecommunications, and transport.  Since 2004, Sierra Leone has been applying interim rules and regulations for government 
procurement, for a period of one year, pending 
the completion of a revised regulatory framework;  no preference s for local suppliers 
are currently in force. 
20. The regulatory and institutional 
framework for the protection of intellectual 
property rights (IPRs) is being strengthened;  Sierra Leone benefits from an extended time-limit (up until 2006) for the full implementation of the WTO Agreement on Trade-Related Aspects of Intellectual Property 
Rights (TRIPS).  The ratification of certain 
regional IPR arrangements (e.g., the 1999 Harare protocol for patents and industrial designs) and effective enforcement of protection measures seem to be impeded by 
institutional constraints and a lack of means.  
No legal framework is in place relating to competition policy and consumer protection.  Environmental concern s have been addressed 
by the introduction/enforcement of new legislation. 
(4) S
ECTORAL POLICY DEVELOPMENTS  
21. The labour-intensive and well-
endowed agricultural sector appears to be recovering progressively from the damages of the civil conflict, while retaining its pre-
conflict dominant role in the economy (almost 
half of GDP).  Sierra Leone is a net-food-importing country and a food aid recipient, with production unable to keep pace with the rapidly expanding food requirements.  
Although food security has improved 
progressively since 2001, due to stability that has allowed the subsequent return of displaced farmers,  free distribution of seedlings and other inputs is important in determining the scale of planting.  Local-content requirements 
need to be met to take advantage of tax 
incentives in agri-processing activities.  Domestic rice production (82% of the population's food intake) is protected at the border by a 15% tariff and a minimum 
reference value.  Special permits for the production, transport, and export of fuel wood 
and/or charcoal are used against deforestation, which has progressed rapidly in recent years;  some reafforestation action is 
being taken.  Industrial fishing takes place 
mainly under joint-venture agreements but the catch is processed abroad due to a lack of adequate facilities in Sierra Leone;  standards and codes of conduct are being developed in 
accord with the EC directives on sanitary 
certification for fish and fish products. 
22. Sierra Leone's vast mineral resources, 
reserves, and unexploited potential remain among the key elements in its development prospects;  a Core Mineral Policy is being 
developed.  The diamond subsector is the 
dominant activity and main foreign-exchange earner;  it accounts for more than 90% of total exports (2003).  Since 2000, mandatory certificate-of-origin requirements (Kimberley 
process) have contributed to the considerable 
growth of registered diamonds trade and the resulting fiscal revenue rise.  A Diamond Area Community Development Fund (DACDF) seeks to ensure an equitable allocation of benefits to communities in the diamond mining 
areas.  Ad hoc tax concessions have been 
granted for restarting rutile mining activities;  Sierra Leone was the largest world producer of this mineral before the conflict. 
23. In the light of Sierra Leone's fragile 
economy, dependence on increasingly 
expensive oil imports for, inter alia, electricity production and transportation constitutes, to some extent, a developmental constraint.  The National Power Authority, a state monopoly, is 
responsible for electricity generation, 
transmission, and distribution; a hydroelectric power plant is to be operational by the end of 2005.  Electricity tariff differentials penalize industrial consumers, who are charged up to 30% higher rates than other consumers. 
24. Manufacturing, mainly composed of 
small and medium-sized enterprises, remains underdeveloped.  Border protection, is confined to tariffs, which attain their highest levels on processed food, beverages, textiles, Sierra Leone WT/TPR/S/143 
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furniture, non-metallic mineral products, and 
other manufactures. 
25. Services account for one quarter of 
Sierra Leone's GDP.  Several inefficiencies  
contribute to the high cost of financial 
intermediation, and limit the availability of financing for productive investments, especially to small and medium-sized enterprises;  emphasis has been put on 
promoting the micro-financing programme.  
Prudential requirements, independent supervision, and rural bank reforms have marked the finance sector since 2000.  In telecommunications, two private operators have run mobile telephony networks since 
1990;  efforts are under way to update the 
regulatory framework.  The State Ports Authority levies higher charges on imports than exports (freight levy for navigational purposes,  harbour dues for containers);  port 
services have improved and the average ship 
turn-around time has decreased.  Since 1999, Sierra Leone has participated in the Yamoussoukro Initiative on the gradual implementation of an “open skies” agreement in order to liberalize air passenger and cargo 
transport. 
26. Sierra Leone has comprehensive 
commitments under the General Agreement on  Trade in Services (GATS);  an MFN exemption 
is in force with respect to its sub-regional preferential arrangements.  Sierra Leone did not take part in the negotiations on basic 
telecommunications or financial services. 
(5) O
UTLOOK  
27. Sierra Leone’s economic performance 
since the end of civil unrest, together with the authorities’ commitment to structural reform, 
holds the prospect of sustainable growth and 
poverty alleviation.  The intensity of efforts to strengthen the legal and institutional framework for coherent and sound policy-making, and to promote export and market diversification, will determine Sierra Leone's 
speed and sustainability of recovery.  As an 
LDC, Sierra Leone will continue to receive technical assistance from its development partners, as it has from the WTO since 1995.  The negotiations under way in the WTO could 
make a major contribution to Sierra Leone's 
market access.  Nevertheless, the benefits to Sierra Leone will not be fully realized until its economy is able to respond competitively to external demand.