(USDA 2013a). A variety of vegetable oils are available in the world market, with different characteristics (CME 2010). As discussed below, groundnuts have been Senegal’s predominant cash crop since the colonial era and Senegal is a major producer of peanut oil. Peanut oil is relatively expensive, however, so most of the peanut oil produced in Senegal is exported with domestic consumption dominated by cheaper imported palm and, until recently, soybean oils. Argentina, Brazil, and the E.U. were the world’s largest exporters of soybean oil in 2012-13, exporting 3.8 Mt, 1.5 Mt, and 0.8 Mt, respectively. Indonesia and Malaysia are the largest exporters of palm oil at 20.1 Mt and 17.2 Mt respectively (USDA 2013c). Although South-East Asian countries, particularly Malaysia and Indonesia, are the most competitive producers of palm oil, Senegal imports mostly from Côte d’Ivoire, given that Ivoirian imports are exempt from customs duties.

# **4. Market Structure, Policies, and Prices in the Three Industries**

# **4.1. Overview of Senegalese Industrial Development and Trade Policies**

As in many African countries, Senegal adopted Import Substitution Industrialization Policies (ISI) in the 1960s and 1970s, involving high trade barriers and substantial government involvement in industry. Following the economic crisis of the 1980s, Senegal, again like most other countries in Africa, turned to structural adjustment policies, involving privatization, deregulation and liberalization, culminating in the 1994 devaluation and related structural measures. Market competition was established as the norm in Senegal under law 94-63 of August 22, 1994. With the structural adjustment programs and the resulting reductions in import tariffs and quotas, Senegal was rated as one of the developing countries making the most progress in trade liberalization (Hinkle and Herrou Aragon, 2002). However, important safeguard clauses were introduced by decree 95-77 of January 20, 1995, providing substantial discretion to the government to control prices for “sensitive” products. In recent years, political conflicts and social unrest (strikes, hoarding of stocks, shortages— whether contrived or not-—and factory shutdowns) have opposed traders, domestic producers, and the government in price setting.

At the same time, regional integration progressed within the West African Economic and Monetary Union (WAEMU), involving a single currency, the CFA franc, and harmonization of trade and other tax policies.<sup>1</sup> These two trends came together in 2000 with the creation of the Common External Tariff ( _Tarif Exterieur Commun_ , or TEC). The TEC involved a substantial streamlining and reduction of trade barriers. The TEC dramatically reduced the infamous complexity and lack of transparency of Senegal’s tariff structure by consolidating tariffs into 4 categories, with the top import duty rate, applicable to consumer goods, of 20 percent. The other major WAEMU tax on imports is the Value Added Tax

> 1 Importantly, WAEMU is limited to the Francophone countries of West Africa (Senegal, Cote D’Ivoire, Niger, Mali, Burkina Faso, Benin and Togo) along with Lusophone Guinea Bissau, but does not include neighboring Anglophone countries, particularly The Gambia, thus maintaining substantial regional disparities in policies despite harmonization within WAEMU.  Senegal is also a member of the Economic Community of West African States (ECOWAS), as is The Gambia, but ECOWAS has made little progress in integrating trade policies in practice (Golub and Mbaye 2009).

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