WTO Trade Policy Review of the Democratic Republic of the Congo

WTO-TPRStatement of the United States

As Delivered by Mr. David Shark
Deputy Permanent Representative to the WTO

November 24, 2010

– As Delivered –

Thank you, Mr. Chairman.

The United States welcomes Mr. Albert Kwete Minga Bope and the delegation from the  to the first WTO review of the trade policies and practices of the Democratic Republic of the Congo. We thank the Government of the Democratic Republic of the Congo for the helpful background report it submitted for this review and look forward to a candid and constructive exchange of information regarding the Democratic Republic of the Congo’s trade policies and practices. We also would like to thank the Secretariat for its comprehensive report. Finally, we would like to welcome our discussant for this Trade Policy Review, Ambassador Jean Feyder, and to thank him for providing the themes to help focus our deliberations during this TPR. It is our hope that this review will serve to recognize and reinforce the trade policy advances that the Government of the Democratic Republic of the Congo has made, as well as to identify areas in which further attention and action are required.

The United States is aware of the special circumstances affecting the Democratic Republic of the Congo’s trade policy environment, including the vastness of the country, its status as a least developed country, and its recent history of armed civil conflict.

Since the holding of democratic elections in 2006, the Democratic Republic of the Congo, an original Member of the WTO, has demonstrated a commitment to open markets, and to implementing structural reforms that have enabled the country to begin to recover from the economic stagnation brought on by years of armed conflict and civil strife. For example, many state owned enterprises have been targeted for reform, including in the telecommunications, mining, and energy sectors. Since 2009, the commercial banking system has undergone a restructuring and several new commercial banks have opened in the country. The government has also made commitments in the GATS in a number of sectors. We encourage the government to extend commitments to its services sectors to improve transparency and predictability, and to attract investment in these sectors that are critical to economic growth and development.

The country has become a candidate for the Extractive Industries Transparency Initiative which seeks to increase transparency in transactions between governments and companies in the extractive industries. The government is also about to join the Organization for the Harmonization of Business Law in Africa (OHADA), wherein Members agree to adopt a common set of commercial laws and submit interpretation of such laws to the final jurisdiction of the OHADA court. The country’s National Agency for the Promotion of Investment has opened a one-stop shop for those interested in starting a business in the Democratic Republic of the Congo in an attempt to reduce barriers to doing business. Although measures that the government has undertaken over the last few years have not yet brought the higher levels of investment and two-way trade that the government seeks, they have, nonetheless, helped lay the foundation for future success. We, therefore, strongly encourage the government to continue its economic reforms and liberalization. The government’s trade liberalization measures have not gone unnoticed by donors and international financial institutions. Recognizing the progress that has been made on economic reforms, the Boards of the IMF and World Bank voted to approve the Democratic Republic of the Congo’s exit from the Heavily Indebted Poor Countries Initiative in July 2010. As a result, last week, the Paris Club group of creditor nations agreed to cancel $7.35 billion of DRC’s bilateral debts. The U.S. joined with other creditors in commending the government for implementing economic reforms, but stressed that there is still much work to do.

The Democratic Republic of the Congo still faces many challenges in improving its trade and investment environment and employing trade to boost economic growth, development, and poverty alleviation. In spite of the progress made since 2006, and despite the country’s natural endowments, the Democratic Republic of the Congo remains a least-developed country with a daunting business environment. The business climate suffers greatly from, among others, insufficiencies in infrastructure, problems with corruption, and burdensome bureaucratic procedures. In our view, these, along with serious human rights concerns, have had a negative impact on the country’s ability to increase trade and investment. We urge the government to give these issues high priority attention and to address them urgently. We also encourage the government to continue to tackle the problem of child labor in all sectors and we look forward to seeing further progress in this area.

The government’s increased efforts to improve the DRC’s investment climate are welcome, particularly those efforts to ensure the fair treatment of investors and the full and transparent application of trade and investment-related regulations and laws. Companies currently operating in the Democratic Republic of the Congo are its best advocates for attracting increased foreign trade and investment. However, we are concerned about the increasing number of commercial disputes between the government and multinational firms operating in the Democratic Republic of the Congo. If these companies view their treatment as corrupt and unfair, they typically do spread the word to future investors and traders.

We recognize the Democratic Republic of the Congo’s need for trade capacity building programs in order to improve its trade environment and to participate more effectively in the WTO. The United States offers such programs and trade-related technical assistance through its East and Central African Regional Trade Competitiveness Hub in Nairobi, Kenya. The United States also supports the trade-related assistance activities of the WTO Secretariat through contributions to the Doha Development Agenda Global Trust Fund. We are interested to know about the government’s plans for addressing the challenges it faces to convince its technical and financial partners that more assistance is warranted. The challenges in this regard seem to be twofold: (1) to mobilize more resources on a stable basis in order to develop infrastructure and production capacity; and (2) to clearly identify and precisely identify priority action.

I would like to highlight some aspects of the Secretariat=s Report that deserve special attention. According to the report, imports are subject to a large number of non-tariff fees that are disproportionate to the costs of any services rendered and act as additional taxes on trade. Every excessive fee impedes the ability of trade to stimulate growth and development. Moreover, despite the creation of a one-stop shop for imports and exports, several other institutions are still operating outside that framework, thereby prolonging the time required for administrative formalities and increasing their cost. Pre-shipment inspection is also mandatory for imports of $2,500 or more, and the corresponding fees are borne by the importer. If PSI firms are conducting customs clearance (and charging for it), we wonder why imports are nonetheless subject to so many fees.

We encourage the Democratic Republic of the Congo’s government, as well as those of its neighbors, to continue their efforts to regulate the trade in minerals mined in the eastern part of the country that have been used by armed groups to fuel conflict. The government’s continued collaboration with international forums will be critical to curbing illicit trade.

Finally, the Democratic Republic of the Congo’s government does not appear to have given sufficient attention to intellectual property rights protection. Intellectual property rights are in principle protected by laws, but their enforcement is still limited, and this gives rise to numerous infringements. Strong protection of intellectual property rights helps attract investment, and we urge the government to give due consideration to this fact in its policy deliberations. Furthermore, according to the Secretariat, the government has not yet notified the WTO of its intellectual property legislation or appointed a contact point as the TRIPS Agreement requires. We would like to know what plans the government has to notify the WTO of its legislation and when it will appoint its contact point. We look forward to the new law that is reportedly being prepared in order to bring domestic legislation into line with the relevant WTO and WIPO provisions.

Mr. Chairman, the United States has submitted a number of questions seeking clarification and elaboration on some of the points made in the Government=s and Secretariat=s reports. We are most interested in the government’s responses to our questions, including those involving the government’s import licensing practices and its intentions with respect to sanitary measures. We plan to examine the government’s responses carefully.

In closing, the United States believes that LDCs such as the Democratic Republic of the Congo have much to gain from a balanced and ambitious result in the Doha negotiations that include meaningful new market access for all. Such a result could further enhance opportunities for your nation’s trade and investment growth and, hence, help you achieve your development aspirations. The United States looks forward to our work together to bring the Round to a successful conclusion. And we offer all good wishes to the Government of the Democratic Republic of the Congo for a successful Trade Policy Review.

Thank you.