WT/TPR/S/231 Trade Policy Review 
Page 10 
 
 
II. TRADE AND INVESTMENT POLICY FRAMEWORK 
(1) GENERAL INSTITUTIONAL AND LEGAL FRAMEWORK  
1. Malawi gained independence from Britain in 1964 and became a republic in 1966.  Its 
constitution of 1995 is a hybrid of a presidential sy stem and a British-style parliamentary system.  The 
Constitution guarantees a multi-party democracy.  Presidential elections are held every five years, 
with the President limited to serving two terms.  The President is Head of State and Government.1  
Parliament, the National Assembly, is composed of 193 members and the President.  Members of Parliament are elected by direct vote on a constituency basis, as in the British Westminster system.  The legislative agenda is formulat ed by the executive, and approved by Parliament.  Legislative and 
presidential elections take place simultaneously, an d the last elections were held in May 2009. 
2. The legal system is based on English Common Law and the independence of the judiciary.  It 
consists of the Supreme Court of Appeal and the High Court, headed by the Chief Justice.  In 2007, a 
commercial division was established within the High Court to expedite the resolution of commercial 
disputes to less than six months.
2  A Sheriff has been appointed at the Commercial Court to strengthen 
enforcement, and foreign Commercial Court judges ha ve been invited to provide advisory services. 
3. Malawi has 27 administrative divisions or districts.  Elections of district assemblies take place 
within 12 months of presidential and parliamentary elections;  the next local government elections are 
to be held before the end of 2010.  As part of  a move to decentralize government, local authorities 
have been granted the right to levy taxes and prov ide social services (Local Government Act of 1998). 
(2) PARTICIPATION IN THE WORLD TRADE ORGANIZATION  
4. Malawi has been participating in the DDA ne gotiations through the LDC, ACP, and African 
groups.  It has also participated in regional mee tings hosted by the WTO.  Malawi has expressed its 
interest in an ambitious outcome of the DDA negotiations, including the elimination of trade-
distorting domestic support and e xport subsidies in the cotton sector;  and special and differential 
treatment. It has also called for technical assist ance and capacity building through the Enhanced 
Integrated Framework and Aid for Trade.3 
5. A National Working Group on Trade Policy is  open for participation by stakeholders, 
including the private sector, public institutions, the donor community, academia, and civil society.  In 
trade negotiations, private-sector representatives and civil society are normally part of the Malawi delegation, according to the authorities. 
6. During the review period, Malawi was involve d as third party in the dispute settlement 
proceedings concerning EU export subsidies on sugar.
4  Sugar is one of Malawi's main export 
commodities (Chapter IV(1)(ii)). 
7. Malawi has made efforts to provide update d WTO notifications, for example to the 
Committee on Agriculture.5  However, a number of notifications remain outstanding, including on 
domestic support in agriculture, and implem entation of regional trade agreements. 
                                                      
1 The President also currently heads the Mi nistry of Agriculture and Food Security. 
2 This initiative is part of the World Bank's Busi ness Environment Strengthening Technical Assistance 
Project (BESTAP), co-financed by the EU. 
3 WTO document WT/MIN(09)/ST/64, 1 December 20 10, Malawi – Statement by the Minister for 
Industry and Trade;  Geneva Seventh Ministerial Conference. 
4 Complaints brought by Australia (WT/DS265), Brazil (WT/DS266), and Thailand (WT/DS283). Malawi WT/TPR/S/231 
 Page 11 
 
 
(3) PREFERENTIAL TRADE AGREEMENTS AND ARRANGEMENTS  
(i) Bilateral trade agreements 
8. Malawi maintains bilateral trade agreements with Mozambique, South Africa, and Zimbabwe, 
and a customs agreement with Botswana.  Arrangeme nts are being made to negotiate bilateral trade 
agreements with India and Tanzania.   
9. According to the authorities, bilateral trade ag reements are still of practical relevance for 
Malawi in view of the different stages of th e regional integration process under SADC and COMESA 
(although the agreement with Botswana has effec tively been superseded by the SADC Trade 
Protocol).6  Once a full-fledged customs union is in place, in either COMESA or SADC, the bilateral 
agreements and their exclusion lists, will need to be reviewed. 
(ii) Regional trade agreements 
(a) Common Market for Eastern and Southern Africa (COMESA) 
10. Malawi is a member of the COMESA Cust oms Union which was launched in June 20097; 
member states have a transitional period of three years to align their national tariffs with the 
COMESA Common External Tariff (CET).8  The CET has a three-band structure:  0% for capital 
goods and raw materials, 10% for intermed iate goods, and 25% for finished products.9  During the 
transition period, member states are also to finalize the list of sensitive products and agree on their CET rates.  According to the authorities, Malawi has submitted a provisional list of sensitive products.  
Malawi generally applies no customs duties on imports from other COMESA members.  The COMESA tariff rates indicated in Malawi's tariff schedule, reaching 20% on some products 
(Table III.3) apply only to COMESA members that have not yet signed the FTA protocol. 
11. Malawi has signed and ratified the COMESA Fund.  The Fund comprises two facilities: the 
Adjustment Facility, to assist member states cope with adjustment costs arising from implementation 
of COMESA integration programmes; and the Infrast ructure Facility, whose priority programmes and 
projects are in the transport and communication sector.  COMESA is considering a Community Levy, which will be a tax levied on transactions within the Customs Union. 
12. Malawi is implementing several COMESA trade facilitation initiatives, including the 
COMESA Simplified Trade Regime, the COMESA Ye llow Card Scheme (motor vehicle insurance 
valid in all participating countries), and the Regiona l Customs Bond Guarantee Scheme.  It is also a 
party to the COMESA Protocol on Trade in Services  and is  participating in a number of COMESA 
institutions.
10 
                                                                                                                                                                     
5 WTO document G/AG/N/MWI/3 dated 28 September 2009. 
6 Malawi is also a signatory to  the African Economic Community. 
7 Prior to the formation of the Customs Union, Malawi had been participated in the COMESA FTA 
since 2000. 
8 The three-year transitional period may be revi ewed by COMESA Council after 18 months, and may 
be extended to 5 years. 
9 COMESA online information.  Viewed at: http://programmes.comesa.int/index.php?option=com_ 
content&view=article&id=119&Itemid=73&lang=en. 
10 COMESA Leather and Leather  Products Institute;  COMESA  Court of Justice; COMESA 
Competition Commission;  Federation of Women in Business (FENCOM);  PTA Bank;  Re-insurance Bank;  
COMESA Clearing House;  COMESA Regional Invest ment Agreement;  and the Africa Trade Insurance 
Agency.  Malawi is hosting FENCOM and the COME SA Competition Commission (Chapter III(3)(iii)). WT/TPR/S/231 Trade Policy Review 
Page 12 
 
 
(b) Southern African Development Community (SADC) 
13. Malawi has signed the SADC Free Trade Area, which was launc hed in August 2008, 
following an eight-year transition period governed by the SADC Protocol on Trade.11  According to 
the authorities, Malawi is behind schedule in ph asing down tariffs but a derogation was sought from 
SADC for an extension of the implementation peri od.  Based on the findings of a study conducted on 
implications of the FTA on the Malawi economy in 2009, Malawi will start implementing further 
tariff reductions in July 2010 for a period of three y ears, notably on intermediate and finished goods.  
Tariffs on the remaining sensitive goods are to be phased out by 2012.  SADC's sensitive product list 
is similar to COMESA's and includes sugar, and te xtiles and clothing.  In 2009, the simple average 
preferential tariff was 10.2% on imports from Sout h Africa, and 7.8% on imports from other SADC 
countries, with a maximum tariff of 25% (Table III.3). 
14. SADC's trade facilitation initiatives include ha rmonizing customs procedures and customs 
classifications;  increased custom cooperation;  redu cing costs by introducing a single, standardized 
document (Single Administrative Document) for customs clearance throughout the region;  and 
establishing one-stop border posts. 
15. Malawi's dual membership in SADC and COMESA has so far not created any conflict, 
according to the authorities.  The issue of overlapping  membership may be also resolved once the plan 
to harmonize the three regional economic grouping s of COMESA, East African Community (EAC), 
and SADC, materializes.  However, the authoriti es are expecting a delay in launching the SADC 
Customs Union as planned in 2010. 
(iii) Other preferential trade arrangements 
(a) United States African Growth and Opportunity Act (AGOA) 
16. Malawi has duty-free and quota-free market access to the United States under AGOA¸ 
including its textiles and apparel benefits.  Since th e last Review of Malawi, textiles and clothing have 
represented about one third of Malawi's total exports  to the United States, which show a declining 
trend (US$30-48 million in 2007-08 , compared with about US$60 million in 2002).  Malawi is also 
exporting macadamia nuts under AGOA (238 tons  in 2008, up from 140 tons in 2005). 
(b) EU Everything-But-Arms Initiative 
17. Malawi is a beneficiary of the EU's Everythi ng-But-Arms (EBA) initiative.  Its main export 
product to the EU is tobacco, followed by sugar a nd tea.  LDC sugar exports enter the EU duty-free 
and quota-free as from 1 October 2009 (Chapter IV(1)(ii)).  The EBA scheme is non-reciprocal. 
18. In the negotiations on an Economic Partnershi p Agreement (EPA) with the EU, Malawi is 
party to the Eastern and Southern Africa (ESA) ne gotiating group, a sub-group of COMESA member 
states.  Malawi has not yet initialled the ESA – EU  Interim Agreement, since the Interim EPA does 
not adequately address issues of interest to the co untry, according to the au thorities.  Nonetheless, 
Malawi continues to participate in the negotiations  for a full EPA.  According to the authorities, 
Malawi's core objectives in the EPA negotiations are to secure more trade-related development 
finance, as well as special and differential treatment on market access to the EU, given Malawi's weak industrial base and the impact of EU trade on Malawi's economy. 
                                                     
 
11 Information about the tariff phase out and other details are available in the Factual Presentation on 
the agreement (WTO document WT/REG176/4 dated 12 March 2007). Malawi WT/TPR/S/231 
 Page 13 
 
 
(c) Other non-reciprocal preference schemes 
19. Malawi has an agreement on trade, investment, and technical cooperation with China.  From 
1 July 2010, Malawi is eligible for tariff preferences in China covering some 4,800 products, 
according to the authorities. 
20. Malawi is also eligible for non-reciprocal tariff preferences under the GSP schemes of various 
WTO Members, including Australia, Canada, the EU, Japan, New Zealand, Norway, Switzerland, 
Turkey, and the United States. 
(4) INVESTMENT FRAMEWORK  
21. Malawi is open to foreign investment and fo reign investors are generally granted national 
treatment.  Its constitution protects investment, irrespec tive of ownership.  Malawi is a member of the 
Multilateral Investment Guarantee Agency (MIGA), a nd the International Centre for the Settlement of 
Investment Disputes (ICSID). 
22. The Investment Promotion Act of 1991 establishe d the Malawi Investment Promotion Agency 
(MIPA).  Malawi's Statement of  Investment Policies of 1991 proclaims freedom to invest (no 
restrictions on ownership, size of investment, source of funds, and on sale in domestic and export 
markets).12  A revised National Investment Policy is pending. 
23. Restrictions on foreign investment are few.  Small-scale prospecti ng and mining operations 
are reserved for Malawians and fore igners who have resided in Malawi for a minimum of four years. 
Restrictions also apply to industries whose ope rations pose health, environmental, and security 
concerns (including manufacture of firearms, am munition, chemical and biological weapons, 
explosives, or involving hazardous waste and radioactive materials).  The minimum investment is 
US$50,000.  Investment certificates are granted by the Investment Approval Committee, comprising 
various ministries and agencies (including the Malawi Revenue Authority). 
24. Overall, Malawi does not perform favourably comp ared to most of its neighbours in terms of 
starting a business, according to the World Bank.  Pr ocedures to incorporate and register a business 
with the Registrar General in Bl antyre are lengthy (about 37 days).13   The fight against corruption 
remains a major challenge in Malawi14, although it appears that progress has been made.15  
Impediments for investment in Malawi include  unreliable utilities, and transport and finance 
difficulties (notably for SMEs), eroding its advantages of low cost labour. 
25. In 2007, Malawi launched the World Bank and EU-funded Business Environment 
Strengthening Technical Assistance Project (BESTAP) to support capacity development and 
investment climate reforms in order to accelerate economic growth.  The project aims to raise 
Malawi's Doing Business ranking from 132 in 2008/09 to the top 100 by 2012.  The project's main components are the revision of Malawi's Companies La w to align it with international best-practice, 
and modernization of the business registry (to redu ce registration time to ten days), land registry, and 
temporary employment and business residency permits. 
                                                     
 
12 This statement is annexed to the Investment Promotion Act, 1991. 
13 World Bank's Doing Business Project online information.  Viewed at:  http://www.doingbusiness. 
org/economyrankings/. 
14 President of the Republic of Ma lawi (2009), Inaugural Speech, Blan tyre.  Viewed at:  http://www. 
malawi.gov.mw/presidentia l_speeches/PresidentInau guralSpeechMay09.pdf. 
15 Transparency International  Corruption Perceptions Index.  Viewed at:  http://www.transparency. 
org/. WT/TPR/S/231 Trade Policy Review 
Page 14 
 
 
26. One of the main constraints for many foreign investors is difficulty in obtaining temporary 
employment permits (TEPs) and business residency permits (BRPs).  All operations in the processing 
of these permits are manual and are carried out at th e Immigration Headquarters in Blantyre, which is 
time-consuming.  Under BESTAP, the Immigration Depa rtment is to be computerized.  Work permits 
are granted based on a needs assessment. 
27. Foreign investment capital needs to be regist ered, through any commercial bank in Malawi, 
with the Reserve Bank of Malawi.  Malawi mainta ins rules on portfolio investment in companies 
listed on the Malawi Stock Exchange (Chapter IV (3)).  Land can be leased, through MIPA, from the 
Government and private leaseholders;  fr eehold land can be purchased by foreigners. 
28.  Mining operations are governed by the Mi nes and Minerals Act of 1981, which is 
administered by the Department of Mines (Ministr y of Natural Resources and Environmental Affairs). 
Three types of licences are granted for large-scale prospecting and mining operations.16  
Reconnaissance licences are issued for one year for an agreed programme over an area not exceeding 
100,000 km2.  Subsurface operations are not permitted unless specifically authorized.  An exclusive 
prospecting licence (EPL) confers exclusive rights to  carry out prospecting operations for specified 
minerals in an area of initially 2,500 km2, reduced by 50% at each licence renewal.  The licence is 
issued for a maximum of three years, renewable twice for two years each. There must also be a 
proposal for the training and employment of Malawi citizens.17  A mining licence which may be 
issued to holders or non-holders of an EPL, confers exclusive rights to prospect, mine, produce and sell specified minerals from a designated area (not exceeding the land subject to the EPL).  The initial 
term of mining licences is 25 years or the estimat ed life of the mine, renewable for a period of 
15 years.  The terms of mining licences include empl oyment and training obligations for Malawians. 
                                                     
 
16 Small-scale mining and prospecting operations re quire a non-exclusive pr ospecting licence, and a 
mining claim licence (for a maximum of two hectares) issued for one year and renewable annually. 
17 The law does not provide for automatic progression  to a mining licence.  After prospecting, the 
miner must submit the findings to the authorities an d an Environmental Impact Assessment is undertaken.