WTO TRADE POLICY REVIEW OF MALAWI
Statement by U.S. Ambassador Linnet Deily
February 6, 2002

Opening Remarks:

Thank you Mr. Chairman. The United States welcomes the delegation from Lilongwe to the first WTO Trade Policy Review of Malawi. We commend the Secretariat for its report on Malawi's trade policy regime. We also greatly appreciate the Government's report and the contribution of the discussant. These reports can be helpful not only in understanding and improving trade policy formulation and coordination, but also in the process of helping to integrate trade into national development strategies. We have produced a series of questions stemming from those reports and anticipate obtaining answers from these questions from Malawi. We look forward to learning in greater detail Malawi's trade liberalization policies and practices.

The United States and Malawi have developed solid economic ties which are being strengthened. United States imports from Malawi were more than $55 million dollars in 2000 and increased to more than $74 million in the first eleven months of 2001. Expanded trade with Malawi and other sub-Saharan African countries is also a goal of the African Growth and Opportunity Act (AGOA) which allows Malawi to export a wider range of products to the United States duty free. AGOA has significantly expanded market access for countries in Africa and should assist in Malawi's efforts to further diversify exports.

In recent years, U.S. economic assistance to Malawi has totaled more $30 million annually. Working together with Malawi to reduce poverty and increase food security through broad-based, market-led economic growth, U.S. economic assistance focuses on activities that strengthen the policies and institutions (public, private and non-governmental) that address Malawi's fundamental economic and social problems and which emphasize local empowerment and decentralization. We have jointly supported projects to increase rural incomes, increase civic involvement in the rule of law, and improve the quality and efficiency of basic education.

Malawi has a market-based economy and a relatively free investment climate.
Economic liberalization and deregulation have, for example fostered development of small scale farms and agricultural diversification. In addition, a series of measures have been undertaken since February 2000 to improve the economic climate including enhancing revenue collection, controlling expenditures, civil service reform, and increased privatization and regulatory reform. Over the past several years Malawi's real GDP has been around 2 percent, increased marginally to 2.3 percent in 2001, and is projected to increase somewhat more in 2002.

Malawi and the WTO

Mr. Chairman, the United States and Malawi share a commitment to the multilateral trading system. Malawi become a founding member of the WTO in 1995. We recognize that the
Government is trying to ensure that all relevant institutions understand the provisions of the WTO Agreements. We also recognize that Malawi has limited technical, financial and institutional capacities and that it has not yet established representation in Geneva. We appreciate the detailed discussion of Malawi's trade related technical assistance needs in the Secretariat's report.

We are committed to trying to see that effective trade related technical assistance is provided to Malawi both bilaterally and multilaterally. The United States has provided over $192 million during the last three years for trade capacity building in Sub-Saharan Africa. In response to technical assistance requests from sub-Saharan Africa, the United States donated $1 million to the WTO in the last two years to support technical assistance for African countries, and for the development and production of computer-based training on WTO agreements, to conduct two regional seminars and to provide scholarships for African trade officials to attend WTO trade policy courses. Malawi has been a participant in the USAID funded Leland Initiative and we would be interested in Malawi's views on how the internet can further trade capacity building, especially on WTO related issues.

In October President Bush announced the Trade for African Development and Enterprise Program. With $15 million in initial funding, this new, multi-year trade capacity building initiative will promote regional integration and cooperation by strengthening the ability of African countries and businesses to develop their export trade. In January United States Trade Representative Robert B. Zoellick announced that the United States will contribute $1 million for the WTO Doha Development Agenda Trust Fund. This is in addition to the $1 million contribution to Global Trust Fund in 2001.

The United States is pleased that Malawi has been selected as one of the next group of Integrated Framework for Technical Assistance for Least Developed Countries pilot project countries. The United States strongly supports this program and the mainstreaming of trade into the development strategies of developing countries. We look forward to working with other bilateral donors and multilateral agencies on Malawi's IF pilot project.

On Going Matters of Concern

Malawi has undertaken a number of significant reforms since 1996 to create a more stable and liberalized trade environment. The Secretariat's report notes however that Malawi's economy remains very fragile with a narrow base, lacking in social services and infrastructure and that the economic performance of Malawi has remained quite unsatisfactory in the past five years.

In the context of the Uruguay Round Malawi bound tariffs on less than 1 percent of its non-agricultural tariff lines. Lowering and binding tariffs would also improve the efficiency and predictability of its economy. We also would hope that the government of Malawi will agree to transfer the tariff and trade data collected by the Secretariat for this Trade Policy Review to the WTO's Integrated Tariff Base (IDB), which would facilitate Malawi's ability to participate in the negotiations.

The Secretariat's report notes that in the late 1990's expansionary fiscal policy resulted in imbalances which then resulted in an economic crisis. Malawi has moved recently to improve its stabilization policies which includes controls on the financial operations of parastatal entities, closer monitoring of monetary issues and exchange rate reforms. We applaud these moves and urge Malawi to continue this work.

Malawi has privatized several public enterprises. The Secretariat's report notes however that the problems of preparing highly indebted companies for divestment and a lack of buyers have slowed down the implementation of the privatization program, which was suspended for review from July to October 2001. We urge the Malawi government to move forward on privatization.

The Secretariat's report notes the high transportation costs aggravated by Malawi's landlocked position. Greater transportation liberalization would help lower costs thereby increasing competitiveness and investment.

CONCLUSION

Mr. Chairman, Malawi has made real efforts towards economic liberalization and growth. Some of this has occurred under challenging circumstances. We encourage Malawi to continue its endeavors. We also recognize that Malawi may need some assistance to maintain and expand its ongoing reforms and economic recovery. We look forward to discussing Malawi's trade policies, problems and practices with other delegations during this review.