WTO TRADE POLICY REVIEW OF NIGERIA

 

 

Statement of the U.S. Representative

June 28, 2011

As Delivered

Thank you, Chair. The United States welcomes Ambassador Agah and the Nigerian delegation to the fourth review of the trade policies and practices of Nigeria. The presence of such a large delegation from Nigeria demonstrates your government’s commitment to the WTO. I should add that Ambassador Agah’s unanimous selection as the WTO’s current Chairman of the General Council represents a strong statement from all of us as to the high esteem in which he is held. He has a difficult job, including the planning for the upcoming MC8. We are appreciative of his work and we will all work to support him. The government of Nigeria’s report helped us better to understand the challenges that Nigeria faces as it seeks to participate more effectively in the global trading system and to use trade as a means to spur economic development. We also would like to thank the Secretariat for its informative and comprehensive report. Finally, we would like to thank the discussant, Ambassador Faizel Ismail, for his important contributions to this review, and more broadly, to this institution.

President Obama’s meeting with President Jonathan in Washington on June 8 renewed the dialogue between our two governments on a wide range of issues. These bilateral discussions complement our cooperation at the WTO, and will hopefully result in stronger trade and economic exchanges between our countries.

In our continuous work with the government and private sector in Nigeria to help them address their challenges, we are pleased to note that total two-way goods trade between the United States and Nigeria was valued at $34.6 billion in 2010, a 52% increase over 2009. We also note that Nigeria is among the leading beneficiaries of the African Growth and Opportunity Act (AGOA). During 2010, U.S. imports from Nigeria under AGOA and our Generalized System of Preferences totaled $25.2 billion, an increase from $17.2 billion of imports under AGOA and GSP in 2009. Most of Nigeria’s exports under AGOA are oil but non-oil AGOA imports include increasing amounts of leather products, cassava, spices, cocoa paste, nuts, and vegetables.

The United States commends the government of Nigeria for its renewed commitment to economic reform under the National Economic Empowerment and Development Strategy 2 (NEEDS 2). For our part, the United States continues to support Nigeria’s economic development and reform efforts through bilateral and regional assistance programs. Recently, the Obama Administration underscored this commitment, with the announcement of the new African Competitiveness and Trade Expansion (ACTE) initiative. ACTE will provide $120 million over four years to support the four USAID-funded regional trade hubs located in Ghana, Senegal, Kenya, and Botswana and will help Nigeria and other African countries take full advantage of AGOA. Ultimately, AGOA serves as a tool for its beneficiaries to expand and diversify their trade – not only with the United States, but also with the rest of the world.

In addition, our two countries consult bilaterally on a regular basis in accordance with the United States-Nigeria Trade and Investment Framework Agreement (TIFA). In the fall of 2011, we will hold our seventh meeting since our governments created this forum for senior-level discussions in 2000. We look forward to the opportunity this meeting provides for us to discuss a broad range of issues of interest to both our countries.

Since Nigeria’s last Review in 2005, the Secretariat reports that Nigeria’s macroeconomic fundamentals have improved and its merchandise exports and imports have increased strongly. We note the Secretariat’s attribution of the improvement, in part, to Nigeria’s trade reforms, including the reduction of tariffs and the number of tariff bands and more streamlined customs procedures. We also note the reduction of import bans and other import restrictions.

Nevertheless, we are troubled by apparent back-tracking on Nigeria’s reform efforts. We urge Nigeria to renew its efforts to reform its trade policies to better encourage its economic wellbeing. We are concerned by Nigeria’s apparent departure from the open and market-based approach to development that Nigeria had been following. Nigeria continues to use restrictive trade measures, nontransparent valuation procedures, and nontransparent laws and regulations which raise the cost of trade and doing business. Particularly disturbing are new measures, that I will discuss in a moment, that have been enacted that deleteriously affect trade and investment in Nigeria’s critically important oil and gas industry. We encourage the Nigerian government to undertake trade policies that support its goals to strengthen its economic well-being, including diversification, increased private investment, and a strengthened agricultural sector.

In its Report, the Secretariat advises that in order to achieve its development goals under its official development plan, Vision 20:20, the government of Nigeria needs further to diversify its economy beyond oil, significantly increase private investment, and deepen reforms focused on improving the business and regulatory environments. We agree with the Secretariat that additional legal, structural, and institutional reforms focused on improving the regulatory environment should improve Nigeria’s business environment. We also recognize that Nigeria faces important challenges to its business environment for reasons relating to infrastructure, competition law, financing, regulations for utilities, and corruption. Although state-owned enterprises are less prevalent in Nigeria’s economy than they were in 2005, we continue to urge Nigeria to privatize infrastructure services that can improve the competitiveness of downstream industries and attract more investment.

The transparency of a country’s laws, regulations, procedures, and decisions is essential to the stability and predictability of its trade and investment regime. The Jonathan Administration has undertaken a number of measures to combat corruption and to create a more favorable investment environment, including through legislative measures in the Corrupt Practices and other Related Offences Act, and institutional reform in the Corrupt Practices and Other Related Offences Commission. We urge the government to continue to build on these positive developments.

Adequate and effective protection of intellectual property rights continues to be a major U.S. concern. We are, therefore, pleased that in 2005, the Nigerian government took steps in the right direction when the Nigerian Copyrights Commission (NCC) initiated the Strategic Action Against Piracy (STRAP) campaign, and in 2006, the Copyrights Optical Discs Plant Regulations (CODPR) were put in place. The government of Nigeria states that it is drafting a National Bill on intellectual property protection that will proceed on the fast track. During the course of this review, we invite Nigeria’s representatives to describe when the government expects to draft and implement this legislation and whether this bill covers all elements of intellectual property, or just certain elements, i.e., patents, trademarks, copyrights and designs. We urge Nigeria to continue its efforts to strengthen its protection and enforcement of intellectual property rights, including revisions to the Copyright Act. Strengthening IPR protection and enforcement would also improve Nigeria’s chances of attracting increased investment in key sectors.

While the United States supports Nigeria’s broad efforts to diversify its economy, we are deeply troubled by trade restrictive measures that have recently been enacted in the oil and gas sector. The Nigerian Content Act, signed into law this year, establishes discrimination against foreign goods and services as a central pillar of policy in a critically important sector of Nigeria’s economy. The stringent local sourcing requirements mandated by this law not only distort trade across a wide range of goods and services, but will also increase costs and disrupt production operations in an industry that both Nigeria and the Secretariat have acknowledged is already operating at well below its potential capacity.

The restrictions enacted by this legislation represent a departure from the policies that have been ingredients of Nigeria’s recent success – fostering competition, promoting economic efficiency, and reducing the role of government in decision-making by private enterprise. Local investment will best be served by a continued focus on improvement of the business climate and liberalization reform, not by imposition of government mandates. We urge Nigeria to revisit the Nigerian Content Act in light of its declared commitment to economic openness, and to ensure that any legislation in this sector is implemented in a manner consistent with Nigeria’s WTO commitments.

The United States suggests that Nigeria examine its tariffs as it looks toward economic reform. In 2009, Nigeria’s average applied MFN tariff was 11.9%, down from 28.6% in 2003. However, the average bound tariff was 118% in 2009 and only 20% of tariff lines are bound. We, therefore, encourage Nigeria to increase its tariff bindings beyond the 20% of tariff lines that it agreed to bind in the Uruguay Round. Increased tariff bindings that are in line with Nigeria’s applied rates would increase predictability in Nigeria’s marketplace and encourage more trade and investment.

Nigeria’s economy is already benefiting from the steps it has taken since 2005 to liberalize its trade regime. Together with its macroeconomic and structural reforms, Nigeria has been able to achieve higher growth rates since its last TPR. The United States applauds these steps and urges Nigeria to do more. Several areas that would benefit from particular scrutiny are Nigeria’s import prohibitions, quantitative restrictions and licensing. The Secretariat’s Report identifies several import prohibitions and import licensing requirements which, in light of the WTO Agreements, could call into question Nigeria’s adherence to its commitments. We urge Nigeria’s continued commitment to the principles of openness and market-based economic reform that have spurred the nation’s growth in the last five years. Those principles, along with the WTO’s disciplines, rather than discriminatory measures or government mandates will best serve Nigeria’s efforts to achieve its long-term economic goals.

The United States appreciates Nigeria’s active participation in the Doha Round. We encourage Nigeria’s active participation in the difficult task facing Members in assessing next steps in the Round, and in trying to determine what is achievable in the coming months. My government looks forward to working with the government of Nigeria toward bringing the Round to a successful conclusion.

In closing, I would like to emphasize that Nigeria is one of our most important trading partners in Africa, and the United States appreciates this opportunity to engage in an open discussion of Nigeria’s trade regime. We look forward to continuing our dialogue with your government, both here at the WTO and bilaterally. We look forward to studying Nigeria’s answers to our questions and to those of other Members. We wish you a successful trade policy review. Thank you.