WTO TRADE POLICY REVIEW OF MOZAMBIQUE
Statement by U.S. Charge d'Affaires David P. Shark
Geneva, January 24, 2001

Thank you Mr. Chairman. The United States welcomes the delegation from Maputo for Mozambique's first Trade Policy Review under the WTO. We appreciate the Secretariat's
thorough report on Mozambique's trade policy regime. We also commend the Government of Mozambique for the hard work put into its report. These reports represent an important analysis of Mozambique' s commercial policies, laws, regulations and practices. We have developed a number of questions based on those reports. We look forward to receiving answers from the Government of Mozambique and discussing in detail Mozambique's record and future progress in trade and investment liberalization.

The United States and Mozambique enjoy warm relations and the US is committed to encouraging Mozambique's trade and development. This is demonstrated in our Bilateral Investment Treaty signed in 1998. Expanded trade with Mozambique and other sub-Saharan African countries is also a goal of the African Growth and Opportunity Act (AGOA) of 2000, which will allow Mozambique to export a wider range of products into the U.S. duty free. The US assistance program in Mozambique is one of the largest in Africa, reflecting our firm commitment to Mozambique's economic and political reform efforts.

The United States and Mozambique also enjoy a solid commercial relationship, which has plenty of room to grow. The United States exports to Mozambique are more than $40 million annually and imports from Mozambique are estimated to be around $20 million in 2000. The stock of United States foreign investment in Mozambique is more than $22 million with US investor interest growing steadily in recent years. We look forward to continuing to expand these commercial ties with Mozambique in the future.

While still one of the world's poorest countries, Mozambique is a major success story in the war-to-peace transition in sub-Saharan Africa. Mozambique's economic performance has been highly commendable and in recent years its policy reforms have resulted in double-digit growth, among the highest in the world. Macroeconomic stabilization and fiscal reform supported by international financial institutions led a to fall in inflation from 70 percent in 1994 to less than 5 percent in 1999. At the same period GDP per capita increased significantly from $145 to reach over $ 240 in 1999. Mozambique's exports have been rising steadily, from $164 million in 1994 to $268 million in 1999. Exports of goods and services now represent about 10 percent of Mozambique's GDP.

Since the mid 1990's Mozambique has made significant progress liberalizing its previously government-dominated-closed trading regime. The government is committed to progressive lowering of tariff and non-tariff barriers to trade. Government policy and regulation has attempted to codify the country's WTO obligations. In the last several years it has passed legislation concerning foreign investment, privatization, banking, petroleum and intellectual property, amongst others; commercial code reform is on the agenda for this year. Mozambique should be commended for these efforts.

Mozambique is not only a least developed country, it has also been one of the most heavily indebted nations in the world. As a result of its good record on reform however it has qualified for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. The US has supported efforts to expedite the process of qualifying countries for the expanded HIPC program and was very pleased that Mozambique qualified for such debt relief.. This has meant that resources previously associated with debt servicing can now be used to improve economic capacity, enhance competitiveness and increase investment.

Mr. Chairman, although the US and Mozambique have widely different economies we share a common commitment to strengthen the multilateral trading system through the WTO. We agree that capacity building is important for increased trade liberalization in least developed countries. The US is pleased that Mozambique participated in the Integrated Framework for Trade-Related Technical Assistance by preparing an assessment of its needs for trade related assistance, which is included in the Secretariat report.

We support the mainstreaming of trade into broader development assistance strategies and were glad that Mozambique was one of the first countries to prepare an Interim Poverty Reduction Strategy Paper for the World Bank and the IMF. We are also committed to providing effective assistance through the WTO's own programs and recently provided a $650,000 direct grant to the WTO to support technical assistance for African countries, including Mozambique, for the development and production of computer-based training on WTO agreements. In the coming year we will spend roughly $5 million on technical assistance on WTO related issues for Africa. Such assistance will help Mozambique and other members take advantage of open markets and further liberalize.

Turning to the built-in agenda negotiations we are pleased with Mozambique's recognition of the vital role of agriculture and services to its economic growth and development. The further development of the agricultural sector is crucial to Mozambique's trade growth, employment creation and social cohesion. Continued reform and liberalization of international agriculture trade should lead to improved access to world markets for all our agricultural exports. We have a common hope that we can make progress in the built-in agenda negotiations on agriculture, in particular with respect to our shared objective that they should lead to the elimination of agricultural export subsidies. Turning to services, we welcome the active participation of Mozambique in the GATS negotiation. The US also believes that Mozambique's participation in the WTO's modern agreements on basic telecommunications, financial services and information technology would send a powerful signal to international investors about its resolve to create an enabling environment for trade and investment.

The Secretariat's report notes that despite its high potential and progress in recent years, Mozambique continues to be constrained by a number of key factors such as inadequate infrastructure, insufficient managerial and administrative expertise, fiscal difficulties, lack of accountability and poor governance. For these reasons, continued trade liberalization and parastatal reform, coupled with progress in attracting foreign investment and promoting non-traditional exports, will be important for Mozambique's development.

Mozambique has made much progress towards economic reform and has enacted considerable legislation to that end. However, the application of some of these new laws and policies has sometimes fallen considerable short of their objectives. We are concerned that the significant disparity between regulations as written and their administration undermines the benefits of a liberal trading regime.

Mozambique passed a customs law a few years ago and the regulations in place are among the most progressive in the region. A major program to improve the customs services has been initiated which includes considerable technical assistance. Some progress has been made in reforming the customs regime. However, companies continue to find that the actual import clearance process is extremely time consuming, overly bureaucratic and too expensive. To resolve the problems with the importation of goods we recommend that Mozambique further streamline its customs process by limiting redundancy and discretionary conduct in inspections and speeding up training and capacity building in customs.

Similarly, Mozambique is committed to abiding by the Sanitary and Phytosanitary Agreement. However, SPS measures are not well understood by customs agents, are unevenly applied and in some cases are significant barriers to trade. In its report the Secretariat noted it was unable to obtain lists of Sanitary and Phytosanitary Standards regulations and practices. The Government of Mozambique should notify its official SPS enquiry point to the Secretariat. In addition, Mozambique should identify the specific needs that would allow it to comply with the SPS agreement.

Mozambique has made few notifications to the WTO so far. The Secretariat's report notes that the low level of notifications derives mainly from the general lack of information and knowledge of the officials in the responsible ministries dealing with the various WTO agreements. The Government should increase its efforts to increase coordination and interaction among the various ministries, technical and private-sector institutions to enable them to become more active in the area.

The Secretariat's report notes Mozambique has relatively low tariffs but has bound only 17 non-agricultural tariff lines. The absence of bindings creates uncertainty among potential investors and traders. We would strongly encourage Mozambique to bind its entire schedule in the context of a new Trade Round, thereby giving greater confidence to private enterprise and complementing the government's industrialization initiative.

We were pleased that to try to meet its TRIPS obligations Mozambique passed an Industrial Property Act in 1999 and a Copyright Bill in 2000. We understand that the Government has received many requests for both patents and trademarks. We urge Mozambique to act promptly on these requests.

Mozambique's commitments under GATS are limited to banking and other financial services (excluding insurance) and fall far short of its current levels of openness in services. We encourage Mozambique to expand its commitments, believing that it can enhance its own competitiveness in the global economy by allowing its consumers ready access to better, cheaper, and more diversified services.

We commend the Government's privatization program which has resulted in most state-owned companies now being in the private sector. We encourage the Government to follow up on this and consider privatizing some of the remaining companies considered "particularly important", primarily public utilities, including telecommunications, ports and railroads and certain mining enterprises.

Mr. Chairman, Mozambique has made remarkable economic progress in recent years. Its policy reforms have led to rapid sustained growth. It is very heartening to see a least developed country like Mozambique achieves these results. It demonstrated what can be accomplished. We support and encourage Mozambique to continue and expand its liberalization efforts in order to maintain this momentum.

We look forward to engaging with the delegation of Mozambique and other delegations in this review.