RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/197 
27 February 2008 
 (08-0772) 
Trade Policy Review Body Original:   French 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
MADAGASCAR 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Madagascar is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Madagascar. Madagascar WT/TPR/G/197 
 Page 3 
 
 
  CONTENTS 
 
  Page 
INTRODUCTION 5 
I. RECENT DEVELOPMENTS IN THE ECONOMY 6 
 (1) E CONOMIC SITUATION  6 
 (2) T RADE POLICY DEVELOPMENTS  7 
 (3) I NVESTMENT REGIMES  11 
II. ECONOMIC REFORMS 12 
 (1) A T THE MACRO LEVEL  12 
 (2) A T THE SECTORAL LEVEL  16 
 (3) T RADE PROSPECTS  25 
III. INTERNATIONAL RELATIONS 26 
 (1) T HE WTO 26 
 (2) R EGIONAL AGREEMENTS AND ARRANGEMENTS  26 
 (3) B ILATERAL AGREEMENTS  28 
 (4) T ECHNICAL ASSISTANCE NEEDS  28 
CONCLUSION 30 
 Madagascar WT/TPR/G/197 
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  INTRODUCTION 
1. Situated in the south-western Indian Ocean, 350 km from the south-east coast of Africa, 
Madagascar is the fourth largest island in the world, with an area of 596,790 km2  and an estimated 
population of 17.5 million in 2006.  As well as biolog ical diversity and an exceptionally high rate of 
endemism (80 per cent for its fauna and 90 per cent fo r its flora), it has a very rich subsoil containing 
various minerals. 
2. In spite of its enormous potential, it falls  into the category of the least developed 
countries (LDCs), with an average annual per capita  income of US$348 in 2007.  Problems of access 
to financing and electrical energy supplies hamper  enterprise development, while the difficulties 
inherent in the transport service create obstacles to trade. 
3. The Government of Madagascar, with the suppor t of the technical and financial partners, has 
pursued its macroeconomic stabilization and sector al reforms programme in accordance with the 
country's development plans including the Mada gascar Action Plan (MAP), which since 2007 has 
taken over from the July 2003 Poverty Reduction Stra tegy Paper (PRSP).  The last review of 
Madagascar's trade policy took place in 2001 in th e context of the Policy Framework Paper (PFP). 
4. The MAP is an ambitious and realistic plan of action that sets out the road map and priorities 
for Madagascar from 2007 to 2011.  It describes the commitments, strategies and actions for rapid 
economic growth, in relation to the benefits and ch allenges of globalization, in accordance with the 
Millennium Development Goals and the " Madagascar Naturellement " National Vision.  The private 
sector is the engine for development and its promo tion is central to the MAP implementation strategy. 
5. The new Constitution adopted by referendum on 4 April 2007 specifies that the presidential 
mandate is for a five-year term, renewable for two fu rther periods.  The other institutions of the State 
are the Presidency of the Republic and the Govern ment, the National Assembly and the Senate, and 
the Constitutional Court.  Since 2004 the administ rative system has been marked by increased 
decentralization. 
6. Madagascar is subdivided into regions, districts, communes and fokontany .  The regions and 
communes are decentralized local authorities. 
7. Preparation of the second Trade Policy Review  is under way, and bears witness to the 
importance the Malagasy Government attaches to  the common rules regulating world trade, the 
functioning of the multilateral trading system, and transparency. 
8. The Ministry of Economy, Trade and Industry is  responsible for formulating Madagascar's 
trade policy in collaboration with the other ministerial departments.  The private sector, through the 
various occupational groupings, the chambers of co mmerce, employers' and workers' organizations 
and civil society also participate in trade policy formulation. 
9. The private sector and civil society also take part in multilateral or regional trade negotiations 
in the National Forum for Develo pment and Trade Policy (FNDPC). 
10. Madagascar maintains its regional integration policy in order to forge closer ties with 
neighbouring countries, in keeping with one of the challenges posed by the MAP, namely to exploit regional opportunities intensively by ma king use of its comparative advantage vis-à-vis  the members 
of COMESA, the Indian Ocean Commission (C OI) and the Southern African Development WT/TPR/G/197 Trade Policy Review 
Page 6 
 
 
 Community (SADC).  It is within the Eastern a nd Southern African Group (AFOA) that Madagascar 
is negotiating the Economic Partnership Agre ement (EPA) with the European Union. 
11. The ultimate objective of Madagascar's trade policy remains economic growth, which will 
enable poverty to be reduced.  The MAP has accordingly set the target of raising per capita GDP to 
around US$470 by 2012. 
I. RECENT DEVELOPMENTS IN THE ECONOMY 
(1) ECONOMIC SITUATION  
12. Madagascar's economic performance has improve d since 2003 despite the depreciation of the 
national currency (the ariary).  The implementati on of a sound budgetary policy (deficit reduction), an 
improvement in expenditure mana gement, implementation of a prude nt financial policy (controlling 
inflation and the money supply), the conclusion of bilateral and multilateral economic and trade 
agreements, inflows of aid and capital and the prom otion of exports through diversification have 
enabled the country to meet the challenges of a changing world economic environment, which is 
affecting some sectors. 
(a) Economic growth 
13. Since 2003, economic growth has outstripped demographic growth, which was running at 
2.8 per cent.  In 2006 and 2007, rates of econom ic growth reached 5.0 per cent and 6.3 per cent 
respectively, thanks to a rise in public investment in  real estate and infrastructure, the high level of 
foreign direct investment (FDI), strong growth in trade and the services sector including telecommunications, transport and tourism, and the development of free zones and enterprises. 
14. Madagascar's economic growth will depend on the performance of its external sector, its 
capacity to attract foreign direct investment and its ability to exploit its mining and oil resources.  Against that background, an Economic Developmen t Board of Madagascar (EDBM) has been set up 
with the principal task of establishing a climate conducive to increased investment. 
15. In accordance with the MAP objectives, economic growth will rise to more than 8 per cent in 
2012. 
(b) Public finances 
16. The tax ratio, which stood at 10.1 per cent in 20 05, reached 10.9 per cent in 2007.  That trend 
is attributable to the various reforms undertaken at the levels of internal ta xation and import taxation, 
good governance within the tax system and restructuri ng in that area.  The Government's objective is 
to bring the ratio up to 15 per cent in 2012. 
17. With a view to improving governance and facilitati ng coordination of the budget system, the 
Système Intégré de Gestion des Finances Publiques  – SIGFP (Integrated Public Finances 
Management System) has been put in place.  Initiativ es have been launched to secure a rapid increase 
in revenue derived from taxes and customs and othe r duties, including a broadening of the tax base, 
enhanced security of revenue, increased contro ls and reorganization of  the tax and customs 
administration. 
18. Over the last three years, the technical and financ ial partners have intervened in such areas as 
budget support and debt relief. Madagascar WT/TPR/G/197 
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  (c) Monetary policy 
19. Monetary policy is entrusted to the Centra l Bank of Madagascar.  While the years 2004 to 
2006 saw the ariary depreciate, that trend has been re versed since 2007.  The rate of inflation stood at 
11.4 per cent at end-December 2005, as compared to  10.9 per cent at end-December 2006 and an 
estimated 7.2 per cent at end-December 2007. 
20. The free floating of the currency enabled expor ts to grow and impor ts to be kept under 
control, thereby reducing the external current ac count deficit.  In order to support exports, the 
installation of industrial zones and free zones has been encouraged.  Air transport has also been 
liberalized. 
21. The Government's strategy in this area is to a pply a tight monetary policy in order to contain 
inflation and promote the stability of the currency while easing fluctuations in the foreign exchange 
market. 
22. The objective set out in the MAP is to bring the rate of inflation down to 5.0 per cent in 2012. 
(2) TRADE POLICY DEVELOPMENTS  
23. Madagascar's trade policy is oriented towa rds continued liberalization and opening up the 
economy to world trade. 
(a) Policy objectives 
24. The overall objectives of the trade policy place emphasis on: 
 - Establishment of healthy and fair competition; 
 
 - promotion of international trade with  special emphasis on "Made in Madagascar" 
export activities, and diversification of  export products and export markets; 
  - exploitation of the opportunities provided by regional and intern ational organizations; 
  - exploitation of areas in which Madagascar has comparative advantages.  This 
measure goes hand in hand with bringing products into compliance with the 
international standards and quality required by the trading partners; 
  - a broadening of the platform for ongoing collaboration with the private sector;  
 - making commercial activities more professional. 
 (b) Trade policy implementation 
25. Implementation of Madagascar's trade policy fa lls to the Ministry of Economy, Trade and 
Industry (MECI), which is responsible for impl ementation of the national and international 
regulations concerning international trade,  fair trading practices and standards. 
26. Madagascar's trade policy reflects at nationa l level the rights and obligations under the 
WTO Agreements.  In that context, the authorities ar e striving to ensure that they comply with the 
rules of the multilateral trade system. WT/TPR/G/197 Trade Policy Review 
Page 8 
 
 
 27. The instruments of the trade policy are: 
- Customs tariff structure  
28. In order to meet the requirements of a lib eralized economy, Madagascar embarked on a 
reform of its tariff system at the start of the 19 90s, in the context of its Structural Adjustment 
Programme.  It reorganized its tariff structure and now applies four rates:  0 per cent, 5 per cent, 
10 per cent and 20 per cent.  Most of the duties in the Customs Tariffs are ad valorem . 
29. Since 2007, Madagascar has bound 30 per cent of its  tariff lines, including all agricultural and 
some non-agricultural lines, and applies the zero per cent rate to members of the COMESA Free 
Trade Area (FTA).  In EPA negotiations, Madag ascar has already aligned itself with the common 
external tariff (CET) that COMESA plans to im plement in the framework of its Customs Union. 
30. Madagascar's tariff comprises 6,353 eight-digit tariff lines from the 2007 version of the 
Harmonized Commodity Description and Coding System (HS). 
- Customs valuation  
31. The rules established by the WTO Agreemen t on Customs Valuation are reproduced in 
Madagascar's Customs Code.  The methods set forth in that Agreement have been in use since 
November 2000.  A waiver was obtained from the WTO allowing it to maintain minimum values for 
the customs valuation of used goods until November 2003. 
32. Madagascar also maintains a reservation regarding the order of the methods to be used if the 
transaction value is rejected. 
33. The four-year contract concluded with the So ciéte Générale de Surveillance (SGS) for the 
management of a programme for inspection and verification of goods upon entry ended on 
30 March 2007.  Since 1 April 2007 collaboration w ith the SGS has continued in a more innovative 
form with the creation of GasyNet, a company inco rporated under Malagasy law.  Implementation of 
the Bordereau de Suivi des Cargaisons  – BSC (Cargo Monitoring Slip), which can be accessed on 
line, must be duly validated by GasyNet.  With  the actual start-up of electronic processing or the 
IT platform, it will be possible for all public and private partners involved in  international commercial 
transactions to be interconnected.  The custom s clearance system is still based on ASYCUDA++. 
- Trade facilitation measures  
34. The 2007 Customs Code grants customs clearance facilities to operators whose business is in 
order.  Duties and taxes are paid either by means of  a clearing credit or by direct payment.  The time 
taken for customs clearance h as been considerably reduced. 
35. Madagascar grants duty- and tax-free entry for imports by diplomatic missions and charitable 
organizations, materials covered by the Flor ence Agreement adopted by UNESCO, and goods 
imported in the context of changes of residence, small consignments, etc.  Exemptions from customs 
duties and taxes are also granted to goods importe d in the context of major mining investments, 
companies engaged in oil prospecting and explora tion operations, and the QIT Madagascar Minerals 
(QMM) Company under its establishment agreement. Madagascar WT/TPR/G/197 
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  - Market access  
36. The Ministry of Agriculture, Livestock and Fisheries (MAEP), through the Directorate of 
Animal and Plant Health (DSAPS), is responsible  for implementing the Agreement on Sanitary and 
Phytosanitary Measures.  Prior authorization in the form of a sanitary or phytosanitary permit 
delivered by the DSAPS is needed for the importati on of foodstuffs of animal origin, live animals, 
animal feedstuffs, live plants, seeds or parts of liv e plants, plant products, soil and growing media, and 
plant material packages.  The DSA PS also issues sanitary/phytosanita ry permits for exports of these 
products on the strength of import perm its issued in the importing country. 
37. In order to promote activities geared to the do mestic and external markets, the number of 
structures (farmers' organizations, markets, CERDIC, Chamber of Commerce) relaying market signals 
to producers has been increased.  W ith a view to diversifying agricu ltural production, the regions have 
identified priority for the dom estic market and for exports. 
38. In order to increase the value added of agri cultural goods, efforts are under way to develop 
agro-industry and increase the number of agri-busin ess centres as a means of providing technical and 
market access support for producer groups. 
39. Lastly, Madagascar's tariff policy grants rela tively higher nominal protection to agricultural 
than to non-agricultural products. 
40. Since 1989 Madagascar has been pursuing full lib eralization of imports.  The latter are not 
subject to any restrictions other than those relating to standards and quality. 
41. In general, all products may be freely imported and exported except those that are subject to 
special regulations (negative list in Annex III of Decree No. 92-424 of 3 April 1992). 
- Sanitary and phytosanitary measures and standardization  
42. The standardization regime is administered by the Bureau des normes de Madagascar  – BNM 
(Malagasy Standards Bureau) establis hed in 1998, with assistance from a Conseil national de 
normalisation  – CNN (National Standardization Council) in the process of being set up, under the 
guidance of the Ministry of Trade.  Registered standards are published in the Official Journal. 
43. Given the requirements of international markets, the BNM has devised standards for certain 
products with high export potential, including fruits and vegetables, juices and their products, honey, 
vanilla, edible oils and tubers. 
44. Madagascar has established standards for building materials, electrical equipment, road safety 
and urban transport.  Compliance with a Malag asy standard is certified by the national mark 
MALAGASY together with its distinctive logo. 
45. Sanitary and phytosanitary regulations ar e drawn up by the MAEP official services 
responsible for inspection and certification, in accord ance with international standards set by the three 
standardization organizations (OIE, IPPC, Codex Alimen tarius).  They apply to both animal and plant 
products, from production to marketing. WT/TPR/G/197 Trade Policy Review 
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 - Trade-Related Aspects of Intellectual Property Rights  
46. Madagascar has been a member of the World Intellectual Property (WIPO) since 
22 December 1989.  It has also acceded to various  agreements administered by WIPO including, 
recently, the Protocol Relating to the Madrid Agre ement concerning the International Registration of 
Marks.  In Madagascar intellectual property protec tion is shared by the Malagasy Industrial Property 
Office (OMAPI), which is responsible for indu strial property, and the Malagasy Copyright 
Office (OMDA), which is responsible for literary and artistic property. 
47. The Malagasy intellectual property regime is  being harmonized with the WTO Agreement on 
the Trade-Related Aspects of Intellectual Property Rights (TRIPS).  A draft law to reform Ordinance 
No. 89-019 of 31 July 1989 establishing the Industr ial Property Protection Regime will be finalized 
before the end of 2008. 
48. Work begun since Madagascar's first trade po licy review to enforce intellectual property 
rights, and particularly to combat piracy and co unterfeiting, is ongoing and a platform consisting of 
the various entities concerned was set up in 2007 in order to establish a National Committee to 
Combat Piracy and Counterfeiting. 
- Services  
49. Madagascar is preparing to broaden its commitments in professional services, communication 
services, financial services and tourism services. 
50. Air transport, financial services, consultancy,  tourism activities and telecommunications have 
already been liberalized. 
- Rules of origin  
51. As it is a member of the COMESA Free Trade Area and the COI and has made an offer to 
lower its tariffs within the SADC as part of th e implementation of the latter's Protocol on Trade, 
Madagascar applies the rules of origin of these organizations. 
52. It also uses the rules of origin of the AGOA a nd the EPA (Cotonou Plus) for its exports to the 
United States and Europe. 
(c) Legal and regulatory framework for trade policy 
53. The Constitution is the supreme legal text, follo wed by laws, ordinances, decrees and orders. 
54. From 2001 to 2006 trade policy was set out in th e Poverty Reduction Strategy Paper (PRSP).  
Currently it is contained in the Madagascar Action Plan (MAP). 
55. The President of the Republic has the power to negotiate and conc lude international 
agreements, which must have the approval of the Na tional Assembly and the Senate for ratification.  
He may delegate this power to a minister or to a member of the Executive. 
56. In 2007, a Lega Carta project for "improvement  of the multilateral legal framework for trade 
in Madagascar" was prepared in partnership with  the International Trade Centre (ITC), the United 
Nations Commission on International Trade Law (UNCITRAL) and the Cooperation and Cultural 
Action Service of the French Embassy. Madagascar WT/TPR/G/197 
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  (d) Government procurement policy 
57. Madagascar's government procurement regime h as been totally overhauled.  The new regime 
was prepared with technical assistance from the Wo rld Bank and adopted in 2004.  It is aimed at 
"ensuring efficient State orders and the proper use of public funds". 
58. The Malagasy Government Procurement C ode is contained in Law No. 2004-009 of 
26 July 2004.  Transparent procurement processes, equal treatment and free access are the hallmarks of the Code. 
59. The organization and functioning of the Gove rnment Procurement Regulatory Authority are 
governed by Decree No. 2005-215 of 3 May 2005, which sets forth the statutes, tasks and 
responsibilities of the Regulatory Authority and establis hes its administrative, financial and technical 
organization. 
60. The Government Procurement Code of Ethics is contained in Decree No. 2006-343 of 
30 May 2006. 
(3) I
NVESTMENT REGIMES  
61. Investment in Madagascar is governed by several laws, including Law No. 96-015 of 
13 September 1996, which sets out the general guarantees offered to investors, and Law No. 2007-036 
of 14 January 2008.  In order to offer guarantee s for investment and confidence to investors, 
Madagascar has acceded to the Mu ltilateral Investment Guarantee Ag ency (MIGA) with a view to 
protecting investors from non-commercial risks.  It is  also a signatory to the Agreement establishing 
the African Trade Insurance Agen cy (ATIA) aimed at covering, inter alia , political risks affecting 
commercial and financial transactions. 
62. At the institutional level, the main innovation since Madagascar's first Trade Policy Review 
in 2001 has been the establishment of the Ec onomic Development Board of Madagascar (EDBM). 
The APPI (Agreement on the Promotion and Protection of Investments)  
63. In the area of agreements on the promotion and protection of investments (APPIs), which are 
bilateral investment agreements, Madagascar has c oncluded such agreements with France, Mauritius, 
the OPEC countries, the Belgium-Luxembourg Economic  Union, China, Germany and South Africa.  
Other agreements are awaiting signature by the pa rtner governments, such as those with Switzerland, 
Thailand and Morocco.  APPIs are in the process of being negotiated with Italy, Canada, the 
Netherlands, Russia, Ukraine and Great Britain/Nor thern Ireland.  The APPIs guarantee security for 
investors and their investments. 
Tax and customs regimes  
64. Two regimes are in force:  (i) the ordinary regi me;  (ii) the exceptional regimes applying to 
Major Mining Investments in excess of US$250 million, and to Free Zones and Enterprises, which are reserved exclusively for export activities. 
Land tenure regimes 
65. Any foreign investor is authorized to acquire  real estate in Madagascar subject to certain 
conditions:  submission of an investment plan and programme, provision of certification that funds in WT/TPR/G/197 Trade Policy Review 
Page 12 
 
 
 an amount of US$500,000 or more or the equivale nt in foreign currency have been invested.  
Depending on the sector of activity i nvolved, the authorization issued by the EDBM relates to areas of 
between 5,000 and 25,000 square metr es with the possibility of a waiver, depending on the size of the 
investment in foreign currency. 
66. The possibility of entering into a leasehold cont ract for State or private lands continues to 
exist for private investors for a period of between 18 and 99 years with right in rem subject to mortgage.  Other measures have also been taken to  support access by foreigners to land tenure, such 
as the establishment of dedicated industrial zones, including a pilot free zone currently being set up in 
Taomasina, the country's chief port;  the establishment of tourist land reserves ( Réserves Foncières 
Touristiques );  and, more generally, the establishment of Zones d'aménagement économique 
spéciales – ZAES (special economic activity zones). 
Investment measures undertaken 
67. In 2003 Madagascar set up the Guichet Unique des Investissements et des Entreprises  – 
GUIDE (Single Window for Investments and Enterprises) pursuant to Decree No. 2003-938 of 9 September 2003. 
68. In spite of these incentives, FDI remains lo w for a country with Madagascar's strong 
potential.  In 2006, in the context of the MAP,  the Government set up the Economic Development 
Board of Madagascar (EDBM), which has taken over the activities of the GUIDE. 
69. More particularly, the EDBM is in charge of promoting Madagascar as an attractive 
destination for investments. 
70. The EDBM's objectives for 2012 as set out in the MAP are to attract US$500 million in 
FDI and to move Madagascar up to 80
th place in the Doing Business rankings. 
II. ECONOMIC REFORMS 
71. After having embarked in July 2003 on impl ementation of the Poverty Reduction Strategy 
Paper (PRSP), Madagascar set out in 2007 on the path  of change by laying the foundations for rapid 
and sustainable development. 
72. The year 2004 saw the publication of the " Madagascar Naturellement " National Vision, 
translated into projects and activities in the Mada gascar Action Plan (MAP), a five-year road map 
launched in January 2007 to reduce the poverty rate , in accordance with the Millennium Development 
Goals. 
(1) AT THE MACRO LEVEL  
(a) Good governance 
73. In the area of good governance, the challenge is to ensure an effective and efficient 
government budget process, in addition to combating corruption.  In that context, the following actions provided for in the MAP have been carried out by the Government: 
 - Increasing the financing of in stitutions combating corruption; Madagascar WT/TPR/G/197 
 Page 13 
 
 
   - reducing corruption through the establishment in 2003 of the Conseil Supérieur de la 
lutte contre la corruption  – CSLCC (Higher Council to Combat Corruption), which 
subsequently became the Comité pour la sauve garde de l'intégrité  – CSI (Committee 
for the Safeguarding of Integrity), and of the Bureau Indépendant Anti-Corruption –  
BIANCO (Independent Anti-Corruption Bureau).  It should be noted that the trend in 
Transparency International's latest Co rruption Perceptions Index has improved 
significantly for Madagascar, rising from 1.7 out of 10 in 2002 to 2.8 out of 10 in 2005; 
 - making the overall apparatus for control of  income and expenditure more effective; 
 - completing the reform of public finances; 
 - harmonizing and reviewing policies, laws  and regulations on taxes, duties and 
charges; 
 - improving the system for collection of tax revenue;  - ensuring implementation of the new Government Procurement Code. (b) Infrastructure development 
74. At the global strategy level, the MAP has se t as a priority the development of basic 
infrastructures to promote private sector investment a nd trade.  In this context, the challenges to be 
met consist in according priority to development infrastructures for the growth centres, improving the 
effectiveness and quality of the flow of goods and persons, improving access to transport services, 
ensuring adequate energy supplies at affordable  and competitive prices, and putting in place an 
efficient and universally accessible communication system. 
75. Maritime transport is conduc ted through two main merchant  ports, Taomasina, Madagascar's 
main port on the east (Indian Ocean) coast, and Ma hajanga on the west coast.  Antsiranana and 
Toliara are the country's other two main ports.  In  2007 work began on the construction of a mineral 
port at Ehoala (Taolagnaro) as part of the QMM – Ri o Tinto ilmenite extraction project, and a study is 
currently under way with a view to extending the port of Taomasina. 
76. The State has set up Aviation Civil de Madagascar  – ACM, a regulatory body for air 
transport.  Liberalization in this subsector consists in implementing the open sky policy. 
77. The focus of Government action will be the rehabilitation, renewal and modernization of 
existing infrastructure and the maintenance of  secondary airports and weather stations. 
78. The rural transport policy, adopted in 2001, is  aimed at extending the network of metalled 
roads and rehabilitating rural tracks, and at r esolving funding problems by decentralizing their 
maintenance. 
79. In 2005, 8,782 kilometres of roads were built, rehabilitated and/or maintained. 
80. Progress was noted on railways, ports and air ports, but these activities were confined to 
rehabilitation of existing infrastructures. WT/TPR/G/197 Trade Policy Review 
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 81. Tourism infrastructure, including transport, acco mmodation and related services, is confined 
to a few regions, such as Antananarivo, Nosy-Be a nd Île Sainte Marie.  Madagascar has adopted a 
sustainable development and management strategy fo r tourism, which has been identified as offering 
considerable potential. 
82. The authorities attach great importance to development of the telecommunications subsector, 
in accordance with their commitment under the MAP to make Madagascar "a connected nation".  
TELMA, the historic operator, is currently investing in the installation of backbone fibre-optic cable 
infrastructure, with a view to developing fixed br oadband services and telephony.  Postal services are 
managed by Paositra Malagasy, a public company. 
83. Madagascar's trade could be increased by 20 pe r cent with appropriate infrastructure support. 
(c) Maintaining economic stability 
84. In this area the overall objective is to estab lish a stable macroeconomic environment as a 
prerequisite for sustainable economic growth. 
85. With support from the technical and financ ial partners, Madagascar has continued its 
macroeconomic stabilization and structural refo rm programme under the Heavily Indebted Poor 
Countries (HIPC) Initiative.  It was able to benef it from a substantial reductio n in its external debt 
in 2000 (the date of attainment of the decision point of the Initiative) and in 2004 (the date of 
attainment of its completion point). 
86. In order to achieve higher, faster and more sustainable growth, the Government has put in 
place a number of reforms: 
 In the real sector : 
87. In 2006 the tertiary sector accounted for 57 per cent of nominal GDP, the primary sector 
27 per cent and the secondary sector 16 per cent. 
88. Between 2003 and 2006 average growth was 5 per cent, thanks to efforts to promote 
investment in general and private investment in particular. 
89. The implementation of a macroeconomic policy based on prudent management of the money 
supply and preservation of internal and external ba lances enabled inflation to be brought gradually 
under control, despite market prices having been liberalized. 
90. Madagascar's overall economic prospects ar e good in the short and medium terms.  
Reckoning on substantial flows of FDI in the mining sector, the authorities are projecting a rate of economic growth of between 8 per cent and 10 per cen t and a rate of inflation of 5 per cent in 2012. 
 In the external sector
: 
91. Improvement of the business climate with a view to attracting investment, particularly FDI, is 
a major concern. 
92. The Law on Major Mining Investments supplem ents the IFZ exceptional regime, the aim 
being to promote implementation of certain large-scale projects. Madagascar WT/TPR/G/197 
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  93. These mining investments should lead to a rise in imports, particularly of materials and 
equipment necessary for mining.  In spite of the dete rioration in the external current account likely to 
result from it, the balance of payments should remain  in surplus because of the substantial flows of 
FDI. 
94. The structure of Madagascar's trade has not de veloped greatly since 2001.  About one half of 
exports comprises primary products (shrimp, vanilla, cloves, chromite and graphite), and one quarter 
consists of exports of clothing from the IFZ. 
 At government level : 
95. As the budget is the Government's main tool for macroeconomic policy and stabilization, the 
question of tax and budget reforms is a major concern of the State. 
96. In the framework of its development progra mme, Madagascar has applied a sound budgetary 
policy (involving reduction of the budget deficit), th rough reforms of the tax and customs system and 
improved management of expenditure that have led to a fall in credit to the Government, an increase 
in private savings and credit to the economy and, consequently, to growth in private investment. 
97. The State continues to withdraw from the pr oduction and distribution sector and to devote 
itself more to its role as facilitator and guide.  It also attaches greater importa nce to the social field 
and putting in place infrastructures that are need ed for the development of the private sector. 
98. In order to improve tax revenue and pr ogressively reduce the dependence on customs 
revenue, the administration has adopted a number  of measures such as broadening the VAT base, 
while controlling inflation, improving security of  customs revenue, restricting exemptions, and 
reorganizing the tax and customs administration in order to increase the tax ratio to 15 per cent in 
2012. 
 In the monetary sector : 
99. Following the opening up of the financial sect or, seven commercial banks are operating in 
Madagascar, four of them subsidiaries of French banks, two subsidiaries of Mauritian banks and one 
Chinese bank.  However, the financial system su ffers from insufficient competition between banks 
and a limited supply of medium- and long-term financing. 
100. The private sector's financing needs remain largely unsatisfied.  Access by small and medium 
enterprises to short-term financing remains limited.   Use of the banking system by the population 
remains low and as yet there is no stock market. 
101. Several micro-finance institutions support sma ll private initiatives, but the 3 per cent monthly 
borrowing rate is very high. 
102. Monetary policy is geared to maintaining si ngle-digit inflation by strict and prudent 
management of liquidity.  Market instruments ( open market transactions) are increasingly used as a 
means of regulating liquidity. 
103. Since the floating exchange regime was adopted  in 1994, the external value of the currency 
has been freely determined by supply and dema nd on the interbank foreign exchange market.  
Intervention by the Central Bank in this market is  aimed at avoiding excessive volatility in the daily 
exchange rate and at attaining its ob jectives for foreign exchange reserves. WT/TPR/G/197 Trade Policy Review 
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 (2) AT THE SECTORAL LEVEL  
(a) Agriculture and Fisheries 
104. Commitment No. 4 of the MAP, "Rural Developm ent", sets out six major challenges:  (i) to 
secure land tenure;  (ii) to improve access to affordab le rural financing;  (iii) to launch a sustainable 
green revolution;  (iv) to promote market-oriented ac tivities;  (v) to diversify rural activities;  (vi) to 
increase agricultural value added and promote agri-business. 
105. The Ministry of Agriculture, Livestock and Fisheries is finalizing a Sectoral Policy for 
Agriculture, along with a Sectoral Programme for Agriculture. 
106. The Sectoral Policy aims to modernize agricultu re in Madagascar and to secure rapid and 
sustainable improvement in the performance of the prin cipal stakeholders in agricultural development.  
A branch-based approach will be developed and pub lic-private partnership w ill be promoted.  This 
will mean developing at one and the same time a production sector able to supply agricultural goods 
adapted to the needs of domestic and external markets, and a dynamic industrial sector capable of 
providing producers with outlets. 
Measures specific to the agricultural sector 
 
107. Rice is currently the focus of particular effo rts on the part of the Government.  Surplus 
production will be exported, as the private sector is investing heavily in order to gain access to the 
regional market (COMESA) and the Asian market (Indi a).  Within two to three years, cassava will be 
among the products exported to COMESA and Asia (China). 
108. The diversification efforts undertaken in the l ast few years will be continued in order to 
develop fresh fruit and vegetables for exportation. 
109. As from 2008, Madagascar will receive support from the WTO/STDF for the upgrading of 
dried grains for export and from UNCTAD for fresh fru it.  For traditional agricultural goods such as 
spices and vanilla, the research embarked on for pr oduction and processing will be  pursued in order to 
develop new product ranges.  Multiannual support is  planned to revitalize the sugar and coffee 
branches. 
110. For lychees, exporters and producers' organizations are to receive support to assist them with 
upgrading.  For access to the United States market, th e integrated phytosanita ry surveillance system 
required by the USDA will be validated by the end of 2009. 
111. In order to develop exportation of high quality fru it to the international market, there is to be 
research into variety improvement and efforts will be made to establish orchards.  New themes for 
vegetable research will be developed by the Minist ry's horticultural technical centres in partnership 
with the World Vegetable Center (AVRDC),  which has recently set up in Madagascar. 
112. Work on developing the "biofuels" branch will be stepped up with a view to extension to 
other regions that lend themselves to such activities. 
113. In the livestock branch, the priv ate sector and producers' organi zations favour ruminant meat 
(bovine, ovine/caprine), foie gras, honey, silk a nd milk, because there is considerable demand for 
these products on the regional market (COI) and the in ternational market (Europe, USA, the Gulf … ).  
The Administration has taken new measures to ensure  compliance with the sanitary requirements of Madagascar WT/TPR/G/197 
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  importing countries.  As part of the effort to revitalize the export of bovine and caprine meat, 
measures are under way to improve the quality, food safety and traceability of products by ranching 
beef cattle and small ruminants in the Ihorombe region and by compartmentalization in the Vohémar 
district (Sava region). 
114. The same disease surve illance arrangements will be maintain ed for duck and geese raised for 
the production of foie gras  so that products can be exported from a compartment. 
115. The Honey Surveillance Plan, to  be validated by importing countries, is among the measures 
to be implemented in order to improve product quality. 
116. Silk production will be intensified both in the hi ghlands and in the coastal regions in order to 
respond to growing demand for do mestic silk and wild silk. 
117. Both milk and rice are the focus of special e fforts on the part of the Government.  Production 
is being stepped up in order to strengthen the domes tic industry and also in order gradually to reduce 
imports of dairy products.  In the medium-term access to the regional market is envisaged. 
118. As from 2008, the recommendations of the Worl d Organization for Animal Health will be 
implemented with a view to aligning the Malagasy veterinary services with international standards.  
The same procedure is envisaged for the phyto sanitary services in charge of the control and 
certification of products destined for export.  An accreditation procedure is planned for analysis 
laboratories. 
Measures specific to the fisheries sector  
119. In the interests of conserving fishery resour ces, Madagascar intends to pursue measures aimed 
at gradually reducing fishing (tuna, shrimp, lobster … ). 
120. The following measures will acco rdingly be implemented over the next five years: 
 - Step up action against illegal fishing,  including overfishing by approved vessels; 
  - improve and strengthen organization of the Fishing Surveillance Centre so as to 
extend surveillance to the entire Malagasy coastline; 
 
 - step up sea surveillance in the framework of regional partnerships (COI and SADC); 
  - implement a more reliable system of statistics for catch data;  
 - establish a service to coordinate fisheries and aquaculture research in order to produce 
tools for decision making. 
 121. Efforts in this sector will be geared towards developing aquaculture so as to maintain or 
increase annual exports.  Priority will be given to the following products:  (i) shrimp, trepang and 
seaweed (marine aquaculture);  (ii) telapia and eel (c ontinental aquaculture).  The former destinations 
for exports are to be maintained (EU, Japan, China,  Mauritius), but the SADC ma rket is also targeted. 
122. Partnerships with national and foreign researc h centres will be reinforced.  Cooperation has 
been established between the Groupement des  Armateurs de Pêche Crevettière de Madagascar  – 
GAPCM (association of owners of shrimp-fishing vessels of Madagascar) and the WWF, for the WT/TPR/G/197 Trade Policy Review 
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 preparation of eco-certification criteria for aquacu lture, and with the Marine Stewardship Council for 
eco-certification criteria for fishing. 
123. With regard to sanitary measures, product upgrading and capacity building for the Fisheries 
Sanitary Authority (ASH), particularly for e xport inspection posts, will continue.  The efforts 
undertaken by two companies to obtain qua lity labels will be followed by others. 
Measures common to both sectors 
 
 - Provide for support for investment, the establishment of new agro-industries and 
better access to high quality services; 
 
 - promote the export of agricultural/agri-f ood products at regiona l and international 
level; 
  - put in place a coherent institutional framework;  
 - promote training for occupations in agriculture and agro-industry. 
 124. Technical and financial partners are supporting the development of agricultural and fisheries 
products for export, particularly upgrading (EU, USA, Japan, IFAD, World Bank) and compliance of 
control/certification services and analysis laboratories. 
(b) Environment and forests 
125. According to official statistics, the for estry sector accounts for 5 per cent of GNP and 
17 per cent of the primary sector.  Aromatic a nd medicinal plant products, CITES species and non-
CITES plant species account for most exports in the sector.  The issuance of operating permits for wood products by single tender has been suspende d since 2000.  Operations are gradually resuming 
with the introduction of a bidding system for the award of permits.  Efforts are also under way to 
combat illegal trafficking in precious woods. 
126. With regard to the eco-certification of forests,  the rainforest areas in the east of the country 
offer considerable potential for sustainable exploita tion.  This potential will be realised through the 
expansion of value-added woodworking industries s upported by labels of origin and certification.  
However, the latter requires high-standards of governance and product traceability.  A system of 
traceability of wood products is currently being tested in several regions.  Ultimately, it may be used 
throughout the country. 
127. According to the MAP and the Forestry Policy, the country's forests are the basis for a sector 
of economic activities which aims both to meet domestic household needs and to supply Malagasy 
and foreign markets with forestry products. 
128. The economic performance of the forestry sector is  to be enhanced through attainment of the 
following objectives: 
 - Meet the growing demand of the local market for better quality products; 
  - increase the value added of products in the interests of the national economy;  
 - exploit a wider range of species (woods); Madagascar WT/TPR/G/197 
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 - recover and use hitherto unexploited by-products;   - promote non-wood products; 
 
 - standardize products;   - regulate the exportation of forestry products;  
 - consolidate processing structures; 
  - improve the running of marketing channels;   - develop eco-tourism;  
 - promote the traceability of wood products; 
  - combat the illegal trafficking and expor tation of precious woods and CITES products. 
 (c) Energy 
129. Madagascar imports all its fuel requirement s.  The Malagasy Hydrocarbons Office (OMH) 
issues permits for the import, processing, transport,  storage and sale of hydrocarbons and ensures 
supply of the national territory.  Since 2004, pric ing policy has shifted away from price ceilings 
towards liberalization.  Imports of petroleum products are subject to specific taxes and VAT. 
130. Since the 2003 surge in world prices oil compani es have significantly increased investment in 
research and offshore exploration in Madagascar. 
131. A large proportion of the electricity consumed in Madagascar comes from hydroelectric 
stations, and the rest from thermal stations.  The State-owned company JIRAMA holds a monopoly on the transportation and distribution of electricity, and restructuring of the company is one of the 
Government's priorities in overcoming the problems of electricity supply. 
132. The State has undertaken to liberalize the production, transportation and distribution of 
electricity, but so far few private enterprises have i nvested in this sector.  The Electricity Regulatory 
Office (ORE) is responsible for th e granting of permits a nd concessions.  Permit holders pay a charge 
amounting to 1.2 per cent of turnover, which goes to the National Electricity Fund.  The Fund's purpose is to finance rural electrification. 
133. Forestry, mining, tourism and industrial companies produce electricity under authorization 
from the ORE for their own consumption and may freely supply rural communities. 
134. Wood and coal are the main sources of energy fo r households.  However, the continuing use 
of these resources poses a threat to the environment.  In order to provide energy for all consumers 
while conserving the environment, the Government has set as overall objectives in this sector the 
sustainable supply of high quality energy at an affo rdable price, and the gradual extension of services 
to the whole population. 
135. Three fundamental principles underpin the action to be taken in this field: WT/TPR/G/197 Trade Policy Review 
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  - To rationalize the conditions of supply, production, distribution and consumption of 
energy with due regard for the long-term interests of the country; 
  - to respect fundamental environmental ba lances and encourage rational management 
of rural areas where forests are being exploited for energy purposes; 
  - to provide both the rural and the urban population with access to at least basic energy 
services. 
 
(d) Mining 
136. Mining is a key sector in Madagascar's devel opment strategy.  The country has an abundance 
of mining resources including chromium, gold and pr ecious stones.  The mining policy is developed 
in the new Mining Code and a Law on Major Inv estments has been adopted introducing a more 
attractive tax regime for investors.  The general principles governing this sector are liberalization and 
withdrawal of the State. 
137. The mining policy, which is in line with the Government's economic reform programme and 
defines the roles of the State and the private sector, calls for private investment and spells out clearly 
their respective rights and obligations. 
(e) Tourism 
138. Tourism is one of the most important sources of foreign exchange for the country.  Having an 
environment that is rich in fauna and flora, Madagascar has all the necessary assets for developing 
tourism.  In this sector, the Government has set as its main objective the sustainable development of 
high quality tourism based on the following guiding principles: 
 - Contributing to the national poverty reducti on strategy through the creation of jobs 
and activities that generate income; 
 
 - developing tourism with due regard for the environment, social and cultural values, 
and the national heritage; 
  - developing high quality tourism;  
 - contributing as far as possible to the foreign trade balance by promoting international 
tourism; 
  - encouraging regional initiatives for the south-west Indian Ocean area; 
 
 - promoting investment; 
  - promoting Madagascar as a destination;   - promoting training.  Madagascar WT/TPR/G/197 
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  (f) Transport 
139. The Government has withdrawn gradually from this  sector and is in the process of privatizing 
transport services.  It also plans to adopt polic ies that include all the necessary institutional and 
regulatory changes making it possible to: 
 - Give priority to rehabilitating transport that has a direct impact on the development of 
economic and tourist activiti es and on rural development; 
  - restore balance in intermodal distribu tion by promoting alternative means of 
transport; 
 
 - maintain freedom of pricing;   - introduce organization and manageme nt mechanisms to support transport 
infrastructure, while increasing capac ity to mobilize local resources; 
 
 - for investment and infrastructure manage ment, develop a framework for partnership 
between the central Government, regions, beneficiary communities, the private sector and associations. 
 140. These activities are part of the National Transpor t Plan.  The State is working to update the 
Plan in cooperation with all the stakeholders, by transport subsector: 
 - Establishment of regulatory bodies:  Aviation Civile de Madagascar  (ACM) for 
aviation;  Agence de Transport Terrestre  (ATT) for land transport;  Agence Portuaire 
Maritime et Fluviale  (APMF), for maritime and river transport.  Operation of the 
TCE-TA-MLA northern rail network has been outsourced under concession to Madarail; 
 
 - liberalization of transport services;   - public/private partnership for the se tting up, modernization and operation of 
infrastructures (ports, airports, bus stations … ); 
 
 - public/private partnership fo r transport safety and security; 
  - rejuvenation of the vehicle fleet (road subsector), rolling stock (rail subsector) and 
fleet (air, maritime and river transport subsectors); 
 
 - application of regulations (Highway C ode, Maritime Code (to come into effect 
shortly), Civil Aviation Code … ). 
 (g) Telecommunications 
141. Implementation of the telecommunications sector's  development policy is the responsibility of 
the Ministry of Telecommunications, Post and Communication. 
142. The Government has established a policy to liberalize the telecommunications sector and 
open it up to local and foreign competiti on by adopting the following measures: WT/TPR/G/197 Trade Policy Review 
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  - Reform and restructuring of the sector; 
  - promotion of private initiative by est ablishing the infrastructure needed for 
investment; 
 
 - broader public access to telecommunications services.  143. Liberalization of the sector has led to an in flux of mobile telep hone operators, producing 
12 per cent growth in this branch in 2006.  As with electricity, spatial coverage of the networks is still 
confined to centres with high economic potential. 
144. The Office Malgache d'Étude et de Régulation des Télécommunications  – OMERT (Malagasy 
Telecommunications Studies and Regulation Board) gran ts licences, permits for service providers and 
suppliers of terminals and auxiliary services. 
145. Investment in this area is free and all investors are treated on a par. 
146. In 2005, in keeping with the State's wish to shift to e-governance, Law No. 96-034 of 
27 January 1997 was amended, liber alizing telecommunications and putting an end to State monopoly 
of the sector.  All the recently introduced technolog ies should give most people access to less and less 
costly new tools and contribute to the country's development. 
147. Law No. 2005-023 of 17 October 2005 was accord ingly enacted to introduce institutional 
reform of the telecommunications sector.  Priva tization and the reforms undertaken are paving the 
way towards an information society an d competitiveness of the national economy. 
148. The Government's relationship with the Regul ation Board has changed.  ARTEC, the new 
Regulatory Agency, has been given a broader ma ndate, and transparency rules aimed at fair 
competition and accountability have been spelled out and endorsed in the interests of removing 
measures that hampered development in this sector.  New investment opportunities are opening up for the private sector in telecommunications and ICT. 
149. The coverage of fixed and m obile telephony continues to expand at an annual rate of 
40 per cent. 
(h) Handicrafts 
150. Madagascar has potential for the export of ha ndicraft products, with an abundance of raw 
materials of animal, plant and mineral origin, as well as recycled material. 
151. The objectives of the handicrafts sector are as follows: 
 - To increase the handicraft industry's contribution to GDP to 18 per cent; 
  - to improve the competitiveness of the sect or in order to satisfy market needs; 
 
 - to structure the sector; 
  - to encourage this area of activity to beco me part of the formal sector and increase 
exports; 
 Madagascar WT/TPR/G/197 
 Page 23 
 
 
   - to bring a professional dimension to the crafts industry.  
 152. Accordingly, the following actions have been undertaken and are being pursued in order to 
achieve those objectives: 
- Setting up Centres Régionaux de l'Artisanat Malagasy – CERAM (Malagasy 
Regional Handicrafts Centres) in six regi ons, and reviving and giving impetus to 
professional associations; 
  - unifying the Centres Espace Promotion de l'Artisanat  (Handicrafts Promotion 
Centres), whose task is to inform, guide , support and assist any operator or person 
doing research in the sector; 
  - registering craftsmen in order to enhance their awareness and encourage them to 
move out of the informal sector, and fost er partnership and subcontracting with 
industry in the CERAMs; 
 
 - increasing craftsmen's awareness with a view to their integration into professional 
circuits; 
  - training craftsmen in specific fields in order to improve handicraft manufacturing and 
ensure the quality of handicraft products; 
  - facilitating trade by adopting ICTs (Internet, Trade Map);   - promoting craftsmen by giving support, advice and assistance and creating contacts 
between craftsmen and national and international operators; 
 
 - producing and distributing marketing aids such as handouts, brochures, catalogues, 
etc.; 
  - organizing and taking part in economic and trade events; 
 
 - establishing a "handmade" certification window for export products;   - revising the customs nomenclature.  
(i) Industry 
153. The industrial sector plays a key role in the national economy as a whole as the engine of 
economic and social change, and is regarded as one of the main growth sectors since it generates both 
employment and income. 
154. Despite Madagascar's potential and comparative advantages, the industrial sector contributes 
only 16 per cent to GDP. 
155. Action to develop the sector focuses on two main priorities: 
 - Institutional and production capacity build ing, in order to increase industrial 
competitiveness at national and internationa l level (formulation and implementation WT/TPR/G/197 Trade Policy Review 
Page 24 
 
 
 of industrial development policies/strategy;  strengthening centres for the production 
and organization of industrial information;  building up national pilot structures for 
industrial restructuring and upgrading); 
 
 - support for income-generating activiti es in rural areas (targeting the poorest 
populations);  actions focused on processing industries, including fruit and vegetables, essential oils and silk. 
 156. The Lettre de Politique Industrielle – LPI (Industrial Policy Letter) will be implemented 
along the following strategic lines: 
- Operational strengthening of the EDBM, wh ich is an economic and industrial policy 
instrument and an investment promotion bod y, with a view to implementing the new 
Investment Law; 
- effective application of legislation an d regulations governing competition, legal 
metrology, standardization, a nd quality testing and control; 
- restructuring and upgrading of local industries; 
- establishment and building up of Centres d'Expansion Régi onaux de Développement 
Industriel et Commercial  – CERDIC (Regional Industrial and Trade Development 
Centres); 
- promotion of the National Industrial Innovation System. 
157. The Ministry of Industry has embarked on and will pursue: 
 - The promotion of industrial zones and industrial buildings; 
  - the introduction and implementati on of Framework Law No. 99-021 of 
19 August 1999 on industrial pollution management and abatement policy; 
 
 - the setting up of specialized training centres in the various branches of industrial 
activity; 
  - the establishment of a programme for th e restructuring and upgrading of export 
enterprises; 
 
 - the promotion of partnerships and joint ve ntures;  establishment of the CERDICs;  the 
development of cooperative facilities; and the promotion of one promising sector in each region. 
 
158. The following activities are planned: 
 - Strengthening of the standards qualifica tion and quality-based system for industrial 
products, under an ecologically sustaina ble industrial development approach; 
 - identification of market opportunities and promising sectors; Madagascar WT/TPR/G/197 
 Page 25 
 
 
   - market development through export promotion (new export legislation in 
preparation); 
 - alerting industrialists to the be nefits of regional integration; 
 - promotion of technology transfer; 
 - development of the existing leasing system; 
 - vocational training/job promotion and matching (development of technical and 
vocational training to ensure a sounder command of technologies and the modernization of SMEs). 
(3) T
RADE PROSPECTS  
159. Madagascar's international trade efforts will focus on enhancing the competitiveness of its 
exports and opening up more to trad e beyond its borders.  It has alr eady defined priority projects and 
activities to attain these goals: 
 - Establish a single window for exports; 
  - facilitate access to credit by setting up a special export fund; 
 
 - encourage promotional activities by embassies and consulates;   - set up export outposts in target countries and organize promotional activities for 
Madagascar and its products; 
 
 - foster a high-standard promotion campaign;   - accredit chemistry, microbiology and metrology laboratories;   - focus on local industrial processing of raw materials by branch and by region; 
 
 - develop reliable trade statistics and indicators;   - facilitate and make a greater cont ribution to international negotiations; 
 
 - increase private-sector participation in international negotiations. 
 160. Madagascar intends to pursue its commitments to  integration in sub-regional entities such as 
the SADC and COMESA as the first step towa rds the establishment of an African Economic 
Community, an objective set by the African Union. 
161. Strategies have been developed to that end;  these involve: 
 - Continuing to ratify regional agreements in order to gain br oader access to regional 
trade and investment opportunities; 
  - alerting national opinion to regional market opportunities;  WT/TPR/G/197 Trade Policy Review 
Page 26 
 
 
  - supporting regionalism through the developm ent of inter- and intra-regional trade; 
  - strengthening vertical in tegration at regional level; 
 
 - promoting regional cooperation. 
 
III. INTERNATIONAL RELATIONS 
(1) T
HE WTO  
162. Having a Permanent Mission in Geneva, Ma dagascar takes part in WTO activities and 
Ministerial Conferences.  It supports the positions of the LDCs, the G33, the African Group and the 
ACP countries on issues relating to multilateral ob ligations and the reinforcement of technical 
assistance activities. 
163. Madagascar is willing to cooperate with the other WTO Members in forwarding the process 
of re-initiating and completing the D oha Development Agenda negotiations. 
(2) REGIONAL AGREEMENTS AND ARRANGEMENTS  
(a) African Union 
164. Madagascar is a founding member of the Afri can Union, the successor to the Organization of 
African Unity (OAU).  Eventually, the African Un ion will be an economic and monetary union whose 
institutions will include the Conference of Heads of  State and Government, the Council of Ministers, 
the Peace and Security Council, the Commission, a nd the Pan-African Parliament, together with a 
Central Bank, a Monetary Fund, the African Invest ment Bank, the Court of Justice, the Economic, 
Social and Cultural Council (statutes alr eady prepared), and technical committees. 
(b) Common Market for Eastern and Southern Africa (COMESA) 165. Madagascar became a member of COMESA in 1995.   The objective of this organization is to 
improve and broaden the integration process amo ng its members by various means, including the 
adoption of more comprehensive trade liberalizatio n measures, such as the complete elimination of 
tariff and non-tariff barriers to trade and the adop tion of a common external tariff (CET);  the free 
movement of capital, labour and goods, and the righ t of establishment within COMESA;  the adoption 
of a common set of technical standards and re gulations, quality control procedures, certification 
schemes and sanitary and phytosanitary regulations;  the harmonization of tax rates (particularly VAT 
and excise duties) and conditions for technical c ooperation, particularly regarding company law, 
intellectual property rights, and investment legisla tion;  and the establishment of a monetary union. 
166. The COMESA common external tariff should be applied as from 2008 with zero per cent duty 
on raw materials and capital goods, 10 per cent on in termediary inputs and 25 per cent on finished 
goods. 
167. The programme providing for the free movement of  persons is to be implemented, beginning 
with the abolition of compulsory visas for nationals of member countries. Madagascar WT/TPR/G/197 
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  (c) Southern African Development Community (SADC) 
168. Madagascar became a full member of the S ADC on 18 August 2005.  The SADC Treaty was 
signed in 1992 with the objective of creating a development community that would achieve economic 
integration.  Through regional c ooperation and integration, the Comm unity aims to provide balanced 
economic growth and development, political stability and security for its 14 member States.  
Decisions and agreements are legally binding on members, and the Treaty provides for several protocols in specific areas such as trade, finance, industry, agriculture, transport, and investment. 
169. Madagascar ratified the SADC Treaty in Dece mber 2004 and has acceded to the following 
protocols:  the Protocol on Imm unities and Privileges, the Protocol  on Trade, the Tribunal Protocol, 
the Protocol on Health, and the Protocol on Educa tion and Training.  The Protocol on Tourism has 
already been adopted by Parliament.  In 2006, Madagascar signed the Protocol on Finance and 
Investment. 
170. Madagascar is now embarking on implementati on of the SADC Trade Protocol.  Its tariff 
reduction plan, prepared jointly by the administ ration and the private sector, was adopted by the 
Extraordinary SADC Summit of Heads of State and Government, held at Midrand (South Africa) in 
October 2006. 
(d) Indian Ocean Commission (COI) 
171. The Indian Ocean Commission has five member States:  Comoros, Madagascar, Mauritius, 
Reunion (France), and the Seychelles.  It was established in 1984 by the General Cooperation 
Agreement. 
172. The main objectives of the Commission are to promote trade between its members;  
strengthen the ties of friendship and solidarity  among the people of the member States while 
respecting each State's sovereignty;  improve liv ing standards by developing cooperation in all 
sectors, particularly in the diplomatic, economic, so cial, cultural and technical fields.  Seventy per 
cent of the Commission's work is financed by the European Union through the European 
Development Fund. 
(e) Relations with the European Union (EU) 
173. Madagascar is one of the 79 African, Caribbean and Pacific (ACP) countries that have 
maintained close economic relations  with the EU since 1975, when the Group came into being in 
Georgetown, Jamaica. 
174. Various agreements (Lomé I to Lomé IV bis and the Cotonou Agreement) have been 
concluded to serve as a framework for cooperation between the two parties. 
175. The three pillars of cooperation are financ ial assistance through the EDF;  technical 
assistance;  and trade provisions for duty- and quot a-free entry into the EU market for ACP products 
(except for products covered by the Common Agri cultural Policy) on a non-reciprocal basis. 
176. A WTO waiver was granted for the implementa tion of this preferential scheme, which does 
not comply with Article I of the GATT 1994 relating to  MFN treatment.  The wa iver was set to expire 
on 31 December 2007.  The Cotonou Agreement provides for the establishment, as of 1 January 2008, of a new trade arrangement between the EU and vari ous ACP regional groupings, in the form of an WT/TPR/G/197 Trade Policy Review 
Page 28 
 
 
 economic partnership agreement ( EPA) consistent with WTO rul es.  This EPA should improve 
ACP trade flows to the EU and eventu ally reduce poverty in these countries. 
177. The EPA negotiating process was launched on 27 Se ptember 2002.  Madagascar is taking part 
in the EPA negotiations as a member of the Eastern and Southern Africa (AfOA) Group within 
COMESA.  The main objectives of EPAs are to enc ourage sustainable develo pment and facilitate the 
integration of the ACP countries in the global econom y.  The guiding principle for EPAs is to build on 
and strengthen the process of regional integrati on among ACP countries, in the interests of better 
economic development.  Given the vast discrepancy between the two parties' levels of development, 
commitments will be undertaken on an asymmetri cal basis, with a gradual opening up of the 
ACP market and provision for a transition period.  The European Commission is due to provide the 
necessary support to that end. 
178. As a least developed country, Madagascar benefits from the "Everything but Arms" initiative. 
(f) Relations with the United States of America 
179. Madagascar enjoys preferential access to the United States market both under the GSP and, 
since 2 October 2000, under the programme initiate d by the United States pursuant to the African 
Growth and Opportunity Act (AGOA).  Since 1 March 2002, Madagascar has been AGOA-eligible 
under the special textile clause as well.  Under th e Act, eligible countries are granted duty- and 
quota-free access (other than for clothing) for a range  of products, including selected agricultural and 
textile products, until 2015. 
180. In 2007, Madagascar's exports of clothing pro ducts under the AGOA rose by 20.6 per cent in 
value terms over 2006.  This is primarily due to the favourable performance of industrial free zone 
companies and to their compliance with U.S. buyers' quality and sell-by date standards. 
181. According to the latest USITC data, Madag ascar ranks second after Lesotho in terms of 
clothing exports under the AGOA. 
182. The new law on Industrial Free Zones and its e nhancements, issued in January 2008, together 
with government measures aimed at attracting FDI should amplify this trend in the textile and 
clothing sector.  Madagascar has also adopted cust oms measures to streamline the dispatch, loading 
and unloading of goods. 
(3) BILATERAL AGREEMENTS  
183. Many countries, including Canada, China and Ja pan, grant (non-reciprocal) preferential tariff 
treatment under the GSP for goods originating in Madagascar. 
184. Madagascar has signed bilateral trade agreem ents with several countries, such as Japan, 
Switzerland, Finland, Spain, Denmark, Norway, U SSR, Algeria, Cuba, Seychelles, China, Mauritius, 
Turkey, South Africa, and Botswana. 
(4) TECHNICAL ASSISTANCE NEEDS  
185. Implementation of the measures set forth in the MAP reflect a major commitment on the part 
of the Government to lead the country towards ra pid economic growth and t hus contribute to poverty 
reduction.  With this in view, the Malagasy authorities are relying on this second review of the Madagascar WT/TPR/G/197 
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  country's trade policy to attain the MAP objec tives through the strengthening of trade-related 
technical assistance. 
186. Madagascar is among the beneficiaries of the Integrated Framework programme.  According 
to the recommendations made by the Hong Kong Mini sterial Conference, the Integrated Framework 
should be strengthened or supporte d by additional funding from inte rnational organizations or donor 
countries so that needs identified in the Diagnostic Trade Integration Study (DITS) can be fulfilled. 
187. Madagascar wishes to benefit from the Joint Integrated Technical Assistance Programme 
(JITAP) and the Enhanced Integrated Framework. 
188. The WTO and other international organizations  including the United Nations Conference on 
Trade and Development (UNCTAD), the Internat ional Trade Centre (ITC), the United Nations 
Development Programme (UNDP), the World Bank and the International Monetary Fund (IMF) have 
provided support for Madagascar through various ac tivities aimed at furthering development of the 
country's foreign trade. 
189. The WTO has established a reference centre in the premises of the Ministry of Trade. 
190. According to the Doha development manda te, LDCs should receive more extensive 
trade-related technical assistance and capacity build ing support to enable them to take a more 
effective part in the negotiations, facilitate their im plementation of the WTO rules, and allow them to 
diversify their economies. 
191. Madagascar currently needs trade-related technical assistance in a number of areas:  
implementation of trade-related ag reements;  participation in the WTO's day-to-day activities;  
capacity building for participation in trade negotiati ons and for trade policy formulation;  removal of 
supply-side constraints;  and integra tion of trade and development policies. 
(a) Implementation of agreements , training and policy formulation 
192. Madagascar's main implementation-related concerns relate to WTO rules, such as 
anti-dumping, countervailing and safeguard measures;  trade-related aspects of intellectual property 
rights (TRIPS);  sanitary and phytosanitary measures (SPS);  technical barriers to trade (TBT);  and 
customs valuation. 
193. Madagascar is in need of technical assistance for Geneva-based, national or regional training, 
courses or seminars (for the public and private sec tors) in the following areas:  trade negotiation 
techniques;  establishment of institutional stru ctures;  harmonization of Malagasy laws and 
regulations with WTO principles and rules;   notifications;  and dispute settlement. 
194. As regards rules, the Government wishes to es tablish a national authority responsible for trade 
remedies (safeguard measures and anti-dumping ac tions), and legislation governing anti-dumping and 
countervailing duties and safeguard measures. 
195. Measures to promote compliance with internati onal standards for agricultural exports and the 
dissemination of information on such standards are still inadequate, which lowers Madagascar's 
potential to access regional and international markets. WT/TPR/G/197 Trade Policy Review 
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 196. As regards cross-cutting issues and in order to implement the various Agreements, 
Madagascar will need capacity-building and technical assistance to bring its domestic regulations into 
conformity with the WTO rules. 
197. Although a number of measures applied by its trading partners are inconsistent with 
WTO rules, Madagascar has never had recourse to th e Dispute Settlement Body (DSB).  It hopes to be 
able to rely on support from the WTO and the Advisory Centre on WTO Law (ACWL) should it need to resort to such procedures. 
(b) Supply-side constraints 198. Supply-side constraints are the principal fact ors limiting the expansion of Madagascar's 
external trade.  The Government has already take n measures to develop infrastructure, but it requires 
further trade-related technical assistance in order to facilitate trade.  Madagasca r's need in this area is 
for a platform from which to support the developm ent of a multimodal transport system and devise 
solutions for overcoming such constraints by  providing operational support to the customs 
administration, rehabilitating ports and roads, and resolving the problem of costly air transport. 
199. Agriculture is Madagascar's leading sector but it is poorly structured.  Producers have 
difficulty in gaining access to production factors a nd therefore suffer from low agricultural yields 
which prevent the country from taking advantage of  foreign outlets.  Madagascar requests further 
efforts on the part of its technical and financia l partners so that it can increase and diversify 
production and obtain support for product processing and the creation of value added. 
200. Madagascar's exports have suffered from th e dismantling of the Multifibre Arrangement, 
preference erosion and falling commodity prices on the international market.  The lack of 
competitiveness of Malagasy products both internat ionally and regi onally remains one of the main 
factors hampering the country's exports. 
201. Investors have recently been faced with rest rictions on access to energy and water.  The 
banking system's limited financing of business activities, at SME leve l in particular, low coverage of 
microfinance institutions, especially in rural areas, and inadequate services offers restrict the country's 
supply-side capacity.  Madagascar therefore seeks support in these areas. 
(c) Integration of trade in development strategies 202. Madagascar has consistently devised progr ammes aimed at upholding its development 
strategy.  Its poverty reduction strategy pape r (PRSP) has been updated on the basis of the 
"Madagascar,  naturellement " vision.  In a resolute move to speed up its development and ensure 
more effective coordination of the development process, Madagascar is now entering the 
MAP implementation phase. 
203. The expansion of foreign trade and regiona l integration are among the lynchpins of 
Madagascar's development policy.  The MAP thus c ontains challenges relating to international trade. 
CONCLUSION 
204. This report has been prepared within the cont ext of the WTO review of Madagascar's trade 
policy, which enables the country to meet its obligations within the multilateral system, whilst 
drawing investors' attention to Madagascar's business environment, presenting its programme for 
development and stating its expectations  vis-à-vis its development partners. Madagascar WT/TPR/G/197 
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  205. The report takes stock of Madagascar's econo mic situation, emphasizing efforts already 
undertaken and highlighting activities contemplated for the future.  It details current development and 
policy instruments and defines the key directions for development. 
206. Although progress has been achieved, more ambitious programmes are yet to be 
implemented. 
207. Through the analyses contained in this document,  Madagascar has identified the strengths and 
weaknesses of its trade policy. 
208. Technical assistance from all donors and its develo pment partners will enable Madagascar to 
overcome these weaknesses and address the de velopment challenges that lie ahead. 
 
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