WTO Trade Policy Review of Niger and Senegal

Statement by David P. Shark, United States Chargé d’Affaires, a.i.
Geneva, November 11, 2009

Opening

Thank you, Mr. Chairman. The United States welcomes Secretrary General Soumana and Minister Niang and their respective delegations to this, Niger’s and Senegal’s, second joint WTO Trade Policy Review. We appreciate the Secretariat’s thorough examination of both governments’ trade policy regimes. We also appreciate the detailed reports submitted by the governments of Niger and Senegal. We have developed some questions based on those reports, and we look forward to considering closely your governments’ responses. The United States is also pleased to welcome Ambassador Abdelwahib Jemal in his role as discussant for this TPR, and we wish to thank him for sharing his views on the trade policy regimes of these two nations.

The United States recognizes the trade and development efforts of Niger and Senegal. Both countries have been beneficiaries of our African Growth and Opportunity Act (AGOA) and our Generalized System of Preferences (GSP) program. This is consistent with our view that trade is a key component of development. We have provided grants to each country through the U.S. Millennium Challenge Corporation. Each of these programs offers broad opportunities to both countries to pursue their economic well-being. We would also encourage the governments to further your leadership in the region by championing the benefits of open trade and the advantages of the rules-based trading system. We urge both governments to review your regional and bilateral obligations in light of the WTO Agreements (including the Customs Valuation Agreement). We hope that this TPR will factor into your efforts toward opening markets and achieving economic reform and into your strategies for meeting the challenges of the global marketplace.

Today, I would like to share a few thoughts about each government’s trade and investment policy regimes, and their impact on development.

Niger

The Republic of Niger and the United States have generally enjoyed close and friendly relations since Niger attained independence on August 3, 1960. Although USAID does not have a Mission in Niger, $30 million in annual official aid is administered through American and local non-governmental organizations with programs addressing food security, health, local governance, youth training, girls’ education, corruption control, and improving the business environment.

With per capita income of about $270, Niger is one of the poorest countries in the world ranking at the bottom of the United Nations Human Development Index. The economy is based largely on subsistence crops and livestock that face Mother Nature’s implacable will, and some of the world’s largest uranium deposits that, nonetheless, face the challenges inherent in commodity prices.

The good news for Niger is that recent global price increases have led to higher revenues for its uranium sector, which provides approximately 55.4% of national export proceeds. Even so, we must remain mindful of the risks that reliance on a single commodity can pose for an economy. Niger enjoyed substantial export earnings and rapid economic growth during the 1960s and 1970s; however, when the uranium-led boom ended in the early 1980s the economy stagnated.

Exploitable deposits of gold are known to exist in Niger. In 2006, gold was Niger’s third most important export. Niger also has oil potential. But exploration and production in the Agedem block, where Niger’s largest oil deposit resides, are essential if the benefits from such potential are to be realized. In addition, substantial deposits of coal, phosphates, iron, limestone, and gypsum also have been found in Niger. Again, the conditions necessary for their exploitation must be found.

We understand that the government of Niger actively seeks foreign private investment and considers it key to economic growth and development. And, the government has undertaken a concerted effort to revitalize the private sector by revising the investment code, the petroleum code, and the mining code with a view to attracting investors. Yet, privatization of the state-owned electric utility and the national oil distribution company remain on indefinite hold.

While we acknowledge the government’s efforts to promote open markets, improve the nation’s business environment, expand trade and investment, reduce poverty, promote regional integration, and facilitate the integration of Niger into the global economy, it seems that additional reforms are necessary. The investment climate, according to the Secretariat’s report, has not improved since Niger’s first TPR. The 2010 World Bank Doing Business Report ranks Niger 174 out of 183 economies, thereby reflecting the challenges of doing business in Niger. And, as the Secretariat’s report states, Niger’s current socio-political crisis can only exacerbate this difficult business climate. Niger’s tourist industry, for example, has been ruined by unrest in its northern territory.

To quote from the Secretariat’s report, “The negative points,” with respect to the investment climate, “are serious and numerous.” The most salient relate to governance and persistent infrastructure problems, and the United States hopes for improvements that will lead to a more positive evaluation in the coming year.

To its credit, the Nigerien government seems to be taking action to reduce corruption and, as the result of a participatory process encompassing civil society, has devised a Poverty Reduction Strategy Plan that focuses on improving health, primary education, rural infrastructure, agricultural production, environmental protection, and judicial reform. According to the Secretariat, within the framework of its Plan, Niger hopes to obtain trade related technical assistance to be better able to participate in and benefit fully from the multilateral trading system. The Secretariat advises that since its first review in 2003, Niger has been benefiting from a number of activities carried out by the WTO and other international organizations such as the IMF, the World Bank, and UNCTAD, designed to help boost its international trade. Niger participates in the Integrated Framework and has had the benefit of a Diagnostic Trade Integration Study (DTIS). Senior representatives of Niger have also participated in numerous WTO activities during the review period at both the national and sub regional levels, and new activities are planned. One important way that the United States has supported Niger is through the Millennium Challenge Corporation. Under a $23 million grant, Niger is implementing various reforms, focusing its efforts on promoting girls’ education, fighting corruption, and improving the business environment.

Turning to regional integration, we would like to draw particular attention to the Secretariat’s mention of ongoing negotiations within the Economic Community of West African States (ECOWAS) to adopt a common external tariff (CET) with a 35 percent rate, rather than the lower 20 percent CET rate of the West African Economic and Monetary Union (WAEMU) CET rate. The higher tariff structure of the proposed ECOWAS CET may inhibit the competitiveness of certain industries and may not encourage investment in others. Furthermore, despite regional integration measures, the level of intra-ECOWAS trade has remained low. It would seem, therefore, that raising the CET would be ill advised.

The United States will continue to encourage trade and poverty reduction in Niger. We would take this opportunity to note, however, that the United States is increasingly concerned that President Tandja’s recent actions have not only dealt a severe setback for democracy in the country but also could hinder the progress made by Niger on the economic front.

Senegal

Since the Republic of Senegal’s last Review in 2003, the government has implemented reforms to improve the nation’s business environment and to attract much-needed foreign direct investment. The government of Senegal has pursued an open trade policy as a means to spur greater economic growth and development. President Wade’s liberal agenda for Senegal includes privatizations and other market-opening measures. We encourage the government to continue to pursue this course.

Senegal plays a significant role in regional and international affairs and our two governments maintain friendly relations. The United States provides considerable economic and technical assistance to the nation, and we support Senegal’s economic development and reform efforts through bilateral and regional assistance programs. Our assistance program focuses on promoting economic growth by expanding microfinance and business development services and commercializing natural and non-traditional products; improving local delivery of services and sustainable use of resources; increasing use of decentralized health services; and improving middle school education, especially for girls. The United States provided $55.9 million in development assistance to Senegal in fiscal year 2008. Senegal is in the first year of implementation of a five-year, approximately $540 million compact with the Millennium Challenge Corporation. Signed on September 16, 2009, this compact is aimed at reducing poverty and investing in economic growth by improving agricultural productivity, transportation, and water resources management. The assistance it offers responds specifically to many of the goals that Senegal, itself, identified in its poverty reduction program.

Senegal’s economy has grown consistently at rates close to 5 percent since the mid-1990s, although the nation continues to contend with external factors, such as the rise in energy prices, in addition to rainfall variations, international tourist demand and variable commodity prices. Fish, phosphates, and peanuts (in the form of peanut oil) are major exports, with tourism an important additional foreign exchange earner. As of 2008, U.S. foreign direct investment stock in Senegal totaled $18 million. In 2008, total bilateral trade in goods totaled $155 million.

Senegal’s development potential seems clear. With its capital city of Dakar located on the westernmost point of Africa, Senegal is a gateway to the continent and has some of the best transportation, telecommunications, and communication infrastructure in West Africa. Senegal has well-developed though costly port facilities, an international airport serving 28 international airlines that serves as a regional hub, and a reasonable telecommunications infrastructure, including a fiber optics backbone and cellular phone penetration approaching 15% of the population.

Nonetheless, Senegal’s commercial climate is challenging for companies accustomed to a business environment where the driving forces remain fair competition, transparent rules, and a level playing field. For example, there is a perceived lack of transparency in the allocation of public contracts. In addition, the judicial system seems to be time consuming and expensive, and allegations of corruption have tarnished the image of the judiciary. Also, Senegal’s bureaucracy is perceived to be significantly burdensome.

The World Bank ranks Senegal as 157 out of 183 countries in its “Doing Business 2010” report. Nonetheless, the report points out that Senegal’s reform efforts have resulted in improved processes at the container terminal, shortening the time required to move containers from the port of Dakar. The report further notes that trade has also been facilitated by improvements to the computerized customs system and the expansion of the number of agencies included in the network.

The United States is encouraged by the government of Senegal’s efforts to increase private sector development and continue structural reform. We look forward to hearing about and discussing the pace of these reforms as well as the timing of the next phase of Senegal’s reform program during the course of this review.

As a relatively small market of 11 million consumers with an average per capita GDP of $709, Senegal’s ability to attract investment remains critical. For this reason, in order to promote its economic efficiencies, Senegal must reinforce them in the process of regional integration. Adopting a high common external tariff cannot be an effective strategy for the West African region as a whole, nor for Senegal or Niger, respectively, to take advantage of the global marketplace. We, therefore, hope that both nations will consider seriously the wisdom of seeking a lower tariff approach to regional integration.

For that matter, we hope that Senegal and Niger will continue to insist on open markets internationally, and actively seek the creation of new market access opportunities for their products through the Doha Round negotiations The United States remains committed to achieving a balanced and ambitious completion of the Round as soon as possible. But we cannot accomplish this alone. We look forward to working with Niger and Senegal to achieve the creation of new trade flows and the meaningful market opening required to accomplish trade-generated economic growth and development in Africa and in all countries.

Closing

Mr. Chairman, the United States has submitted a number of questions seeking clarification and elaboration on some of the points made in the governments’ and in the Secretariat’s reports.

While acknowledging these governments’ advances, we also believe that much work remains to be done to foster more open trading and economic environments that promote greater competitiveness, export diversification, and, perhaps most importantly, much-needed investment. The United States appreciates the Government of Niger’s and the Government of Senegal’s efforts in these important areas, and we offer our best wishes for a successful TPR.