Malawi Trade Policy Final



Malawi Trade Policy

June 2015

Table of Contents

1 Introduction 7

2 Statement of the Problem 10

2.1 Key constraints 10

2.2 Linkages with other relevant policies 11

3 Broad Policy Directions: 11

3.1 Policy Vision and Goal 11

3.2 Policy Outcomes 12

3.3 Policy Objective(s) 12

3.4 Policy Priority Areas 14

4 Implementation Design through Integrated Policy Instruments 21

4.1 Institutional Arrangements 21

4.2 Implementation and Action Plan 21

4.3 Policy Instruments 22

Foreword

This section must be signed by a political head of the sponsoring Ministry.

The most critical component of realising the potential of the trade policy is high level political commitment to implementation and prioritisation in a way that is consistent, credible and transparent. The trade policy is further underpinned by a commitment to use the existing processes, action plans and institutional reforms as identified by the NES and NIS. This will ensure that the policy avoids the duplication of existing initiatives that can lead to the kind of contradiction and overlap that clouds follow-through.

Preface

This section must be signed by the administrative head of the sponsoring Ministry.

List of Acronyms and Abbreviations

AGOA African Growth and Opportunity Act

BIT Bilateral Investment Treaty

BRICS Brazil, Russia, India, China and South Africa

CAADP Comprehensive African Agricultural Development Plan

COMESA Common Market for Eastern and Southern Africa

DTIS Diagnostic Trade Integration Study

DTA Double Taxation Agreement

EAC East African Community

EBA European Banking Authority

EDF Export Development Fund

UK United Kingdom

USA United States of America

ESTAP Financial Sector Technical Assistance Project

EU European Union

FDI Foreign Direct Investment

FIP Protocol on Finance and Investment

FSDT Financial Sector Deepening Trust

GATS General Agreement on Trade in Services

GCI Global Competitiveness Index

GDP Gross Domestic Product

GNI Gross National Income

GOM Government of Malawi

GVC Global Value Chain

HIV AIDS Human Immunodeficiency Virus, Acquired Immune Deficiency Syndrome

HQCF High Quality Cassava Flour

ICSID International Centre for the Settlement of Investment Disputes

ITC International Trade Centre

LDC Least-Development Country

ACE Agricultural Commodity Exchange

MBS Malawi Bureau of Standards

MGDS Malawi Growth and Development Strategy

MIGA Multilateral Investment Guarantee Agency

MITC Malawi Investment and Trade Centre

MOIT Ministry of Industry and Trade

MSME Micro Small Medium Enterprises

NES National Export Strategy

NIP National Industrial Policy

NTB Non-Tariff Barrier

NTF-AP National Trade Facilitation Action Plan

NTP National Trade Policy

PPP Purchasing Power Parity

R&D Research and Development

RoO Rules of Origin

SADC Southern African Development Community

SPS Sanitary and Phytosanitary

TAF Trade Advocacy Fund

TAML Tea Association of Malawi Ltd

TBT Technical Barriers to Trade

TFTA Tripartite Free Trade Area

TIP SWAp Trade, Industry, and Private Sector Development Sector-Wide Approach

WEF World Economic Forum

WRF World Rural Forum

WRS Warehouse Receipt System

WTO World Trade Organisation

Introduction

This trade policy conveys the Government of Malawi’s commitment to make trade as a tool for sustainable socio-economic development and poverty reduction as expounded in the Malawi Growth and Development Strategy II. The policy reflects the range of opportunities and challenges facing Malawi. It recognises the critical issue of implementation – of both the trade agreements already in place and sectoral policies needed to harness trade for development. Consequently, it is particularly entwined with National Export Strategy (NES) and the National Industrial Policy (NIP), their priorities and implementation structures.

Trade has fundamentally shaped the economy of Malawi. Despite being a landlocked LDC, it has a relatively high export to GDP ratio of 30%, Malawi’s exports are primary or semi processed products, which were developed solely for sale to the global markets. Malawi also relies heavily on imported goods, in particular fuel, fertiliser, and most manufactured goods.

A key challenge for Malawi is an unsustainable trade deficit. Imports increased from approximately US$2 billion in 2009 to nearly US$3 billion in 2013, an average of 10% growth per annum over the 5 year period. On the other hand Exports grew by about 26% between 2008 and 2009, reduced by 12% between 2009 and 2010, grew by 25% between 2010 and 2011, and reduced again by 18% between 2011 and 2013. As such exports have failed to keep track, resulting in a widening trade deficit (Figure 1). While a low-income country such as Malawi, with a low level of savings and high investment needs, would be expected to import more than it exports, the trade deficit of Malawi is unsustainable without an expansion and strengthening of the exports sector[1].

Figure 1 Malawi's balance of payments

[pic]

A further challenge is a concentrated export base, creating volatility in Malawi’s export earnings. Tobacco dominates Malawi’s export basket, accounting for around 50% of Malawi total exports (exceeding 60% in some years); mining around 11%, sugar at 9%, coffee and tea at 8% and oil seeds at 7%.

Figure 2 Exports by value 2009-13 US$ 000

[pic]

The poor external performance has contributed to Malawi fundamental development challenge of slow economic growth relative to population. Malawi’s GDP per capita is increasingly falling behind Sub Saharan Africa as a whole (see Figure 3).

Figure 3 GDP per capita US$ Current

[pic]

Statement of the Problem

Malawi trade deficit continues to widen despite the numerous market access opportunities available at bilateral, regional and multilateral levels. The key challenges remain in trade competitiveness and development of comparative advantages.

1 Key constraints

The key constraints underlying these problems have been identified as:

1. Restrictive Non tariff measures, non tariff barriers and the lack of certainty regarding market access

2. Lack of conducive business environment,

3. Narrow productive base: investment and skills

4. The high cost of entry into markets for small scale producers and traders

5. The “governance gap” with regards to

a. Implementation including weak institutional capacity and coordination

b. policy coherence, in particular in the areas of food security and finance, and transport policy and trade costs; trade policy formulation and negotiation

.

Figure 4 Addressing key constraints

[pic]

2 Linkages with other relevant policies

In developing this policy, there is recourse to a number of policy documents.

The trade policy is anchored on the Malawi’s Growth and Development Strategy (MGDS II), which is the overreaching development policy document and other key strategies and policies such as the National Export Strategy (NES) and the draft National Industrial Policy (NIP). The above policies aim at developing a competitive Malawi that is driven by a diversified and strong productive base, promotion of value addition, a conducive business environment, and improved market access.

Broad Policy Directions:

1 Policy Vision and Goal

The strategic vision for the trade policy is for Malawi to become a globally competitive export-oriented economy, generating higher and sustainable livelihoods through trade that is inclusive of MSMEs and the poor.

The goal of the policy is structural transformation of the productive sector through supporting and managing integration in regional and global markets and value chains and increasing exports.

2 Policy Outcomes

The broad outcome envisioned for this trade policy is for Malawi to become a globally competitive economy, generating higher and sustainable livelihoods through trade that is inclusive of MSMEs and the poor.

The trade policy aims at addressing the challenges that Malawi faces with a view to promoting:

i. the diversification and growth of domestic trade and exports;

ii. the diversification of export markets;

iii. the empowerment of small producers and the poor;

iv. reducing the trade balance;

v. improving the stability of export revenue; and

vi. increasing the productivity and productive capacity of the private sector, and

vii. enhance the pro-poor impact of trade.

3 Policy Objective(s)

The objective of the trade policy is to address the key constraints to trade that is supportive of broader development goals. The specific objectives are as follows:

1. To eliminate external and domestic policy barriers to trade

2. To provide support and certainty for traders in the external and domestic framework

3. To reduce the cost of doing business and trading

4. To strengthen the linkages between domestic and international trade

5. To facilitate investment and providing a more secure framework

6. To reduce barriers to movement of service providers and high skilled immigrants

7. To facilitate cross border market access opportunities for MSMEs

8. To address the governance gaps in terms of policy formulation, implementation and institutional framework

| |Limited Market access for Malawi’s exports. |

|Objectives|The removal of external and domestic |Provide greater certainty for exporters|Provide direct support for exporters |

| |policy barriers to trade in goods and |in the external and domestic framework | |

| |services |for trade | |

| |Poor Business operating environment |

|Objectives|Using trade policy to reduce the cost |Reduce the cost of trading through |Improving the linkages between domestic|

| |of doing business by lowering barriers |improving the transit and customs |and international trade |

| |to imported inputs of both goods and |arrangements and also trade | |

| |services; ensuring greater and fairer |infrastructure (transport and quality | |

| |competition; and increasing regional |infrastructure) | |

| |co-operation on power supply | | |

| |Narrow Productive base: investment and skills |

|Objectives|Facilitating investment and providing a|Reducing barriers to movement of |Enhance remittances flows from the |

| |more secure framework |service providers and high skilled |diaspora |

| | |immigration | |

| |Pro poor trade: entry costs |

|Objectives|Facilitate the free movement of goods to neighboring markets|Maximise the cross border market opportunities for small |

| |by small traders |scale producers |

| |Governance gap: enhance policy coherence and implementation |

|Objectives|Address the issue of food |Improve the capacity for |Explicitly include trade and |Institutional structures to |

| |security and trade, and |trade policy formulation |use trade related indicators |engender and harness |

| |transport restrictions and |(impact assessment) and |in the budgeting cycle of key|political will |

| |the cost of trade |negotiation |ministries | |

[pic]

4 Policy Priority Areas

1 Market access for Malawi’s exports

Introduction

Malawi enjoys a competitive advantage in terms of lower tariffs under unilateral market access under EBA and AGOA, and regional market access under SADC and COMESA.

However, Malawi fails to take full advantage of the market access opportunities due to the existence of restrictive non-tariff measures and barriers[2]. Under market access the two broad policy objectives are: 1)To eliminate external and domestic policy barriers to trade; and 2)To provide support and certainty for traders in the external and domestic framework.

Problem Issues

i) Tariff Barriers

Malawi faces tariff barriers specific to NES priority clusters and emerging markets such as Brazil and Russia.

ii) Non-Tariff Barriers

Malawi continues to face non-tariff barriers such as import or export controls, restrictive rules of origin; and behind the border measures (including internal charges and taxes). The difficulties and delays caused by Malawi authorities in relation to trade procedures are widely documented.. There is lack of credibility and certainty of market access arrangements.

iii) Barriers to services

For trade in services there are substantive barriers in the region for professional services and globally for semi-skilled service providers and these will be addressed in the range of trade agreements currently being developed.

iv)

Direct Support to market information and market entry requirements

There is a lack of direct support to the productive sector in Malawi in terms of market information, diversification and entry requirements.

Policy Statements for Market Access

The policy shall ensure that:

i) external and domestic policy barriers to trade in goods and services such as NTBs and Tariff barriers are eliminated

ii) greater certainty for exporters in the external and domestic framework for trade are ensured

iii) Direct support for exporters in the context of the NES is facilitated.

2 Improve the business operating environment

Introduction

In recent years, Malawi has embarked on a number of initiatives to improve its overall business environment, with the aspiration of moving into the top 100 of the rankings. However, Malawi’s overall business climate is still ranked low by the World Bank Doing Business Report. This points to an implementation gap, as much as it does to the need for specific reforms.

Trade Policy plays a role in improving the business environment by reducing the costs of trading (in terms of both time and money). This is particularly important for a landlocked country. Trade policy is also important in driving through a rationalisation of tariffs on key business inputs and improving the regulation of domestic competition by incorporating the regional dimension to competition policy.

Improving the business environment is disseminated into 1) reducing the costs of trading, and 2) reducing the cost of doing business.

Problem Issue 1: Cost of Trading

i) Customs reform and trade facilitation

Cumbersome customs procedures and documentation both at national and regional levels. These include issues identified under the NES, customs co-operation arrangements and trade facilitation instruments in COMESA, SADC and WTO.

ii) Trade-related Infrastructure

Trade infrastructure is lacking in particular transport and quality infrastructure including compliance with SPS and TBT requirements.

iii) Domestic and International Trade Linkages

There is weak linkage and limited access to formal domestic and international markets for MSMEs in part because of problems in meeting quality requirements and access to information.

Problem Issue 2: Cost of Doing Business

i) Import tariff rationalisation

Imported inputs (raw material and intermediate) still attract higher tariffs unlike their related finished products that is inconsistent with the NES aspirations.

ii) Access to key services

There is shortage of competitively priced services in Malawi in sectors such as energy, transport, telecommunication, financial,which impedes the development of strong industrial sector..

iii) Effective Regulation of Competition

A number of sectors in the Malawian economy remain concentrated, particularly in the transport and financial sectors that are the two key enabling sectors to the productive economy.

Policy Statement

The policy shall ensure that:

i) There is reduction in the cost of doing business by eliminating tariffs on imported inputs of both goods and services; ensure greater and fairer competition in key services.

ii) The cost of trading is reduced by improving the transit and customs arrangements and also trade infrastructure (transport and quality infrastructure)

iii) The challenges of linking producers to domestic and international markets..

3 Narrow Productive Base: Investment and Skills

Introduction

Fundamental to Malawi’s long term growth prospects is its ability to attract resources, both investment and skills. Trade policy can play a critical facilitating role in attracting these factors of production. Furthermore, an effective supply response to the incentives created from market access arrangements requires investment in the favoured sector.

Problem Issues:

i) Framework for Investment

The key constraints to investment are more linked to Malawi’s macroeconomic fundamentals and lack of strategic focus.

With regards to trade policy instruments, there is alimited association between investment agreements signed and investment flows. In addition, the existing incentives regimes and rebate scheme are not robust enough to attract investment. .

.

ii) Inadequate Skills

There is a shortage of skills that is directly and indirectly constraining exports. These skills are mostly related to technical productive and services areas.

Policy Statement

The policy shall ensure that:

i) a more targeted and predictable investment framework is facilitated

ii) Reduce barriers to movement of service providers and high skilled immigrants

4 Promoting, and Reducing Entry Costs to, Pro-Poor Trade

Introduction

There is limited integration of MSMEs into the formal value chains and international trade. The Malawi Business Linkages programme has the potential to better integrate MSMEs within the formal economy. The Rural Infrastructure Development Programme is also targeting non connectivity of the rural areas to markets and services.

Problem Issues

Cross Border Trade (CBT)

There is limited participation of small scale traders and in particular women and the youths in CBT due to procedural challenges at the border. There is also lack of support for cross border market opportunities within domestic trade-related policies

Business Linkage

MSMEs are unable to supply to the formal sector such as chain stores due mainly to lack of capacity to meet standards and supply-side constraints.

Policy Statement

The policy shall ensure that:

i) There are deliberate initiatives to support free movement of goods to neighbouring markets by MSMEs. The business linkage programme is resourced and upscaled.

5 Governance-gap: Implementation of Trade Agreements, Trade Support and Policy Coherence. `

Introduction

Malawi is a party to several trade arrangements but fails to effectively and credibly implement them. The issues of implementation relate to: (i) the implementation of trade agreements by Malawi and the domestic management of trade policy; (ii) implementation of supply side measures and aid for trade; (iii) weak institutional capacity in relation to both technical and financial resources

Problem Issues

Domestic implementation of trade policy

There is a lack of legal resource to be able to domesticate regional agreements into national law. There is also lack of transparency and credibility as well as weak high level political oversight in the implementation of trade policies. Furthermore, fiscal and monetary policies are often in conflict with trade policy.

Supply Side Constraints

One of the key challenges for Malawi is its inability to generate enough output for exports due to supply side constraints. This is compounded by lack of trade mainstreaming, coordination and information sharing within the key Ministries and other implementing agencies.

Policy Coherence

Food Security and Trade

Malawi’s food security policy and trade policy are incoherent. It is recognised that in the short term measures to remove restrictions on food crops would be of limited credibility and therefore unlikely to lead to private sector investment in the sector. However, over the longer term the approach to food security needs to be addressed through an integrated approach including the regional framework which allows the export of food crops at the same time ensure food security.

Policy Statement

The policy shall ensure that:

i) The issue of policy coherence regarding food security, monetary and fiscal policies, and trade policy is addressed

ii) Improve the capacity for trade policy formulation, implementation (i) and evaluation

iii) Trade is mainstreamed into all key Ministries, Departments and Agencies (MDAs) and coordination and information sharing is enhanced

iv) The capacity to transpose Trade Agreements into national laws and the implementation of international trade commitments are addressed.

Implementation Design through Integrated Policy Instruments

1 Institutional Arrangements

The Ministry is required to indicate the key stakeholders and their roles and responsibilities in the implementation of the policy.

Trade policy implementation involves a wide range of stakeholders from government institutions, private sector, academia and civil society. They are all critical from policy development and provide a good platform for feedback in policy implementation.

The Ministry of Industry and Trade which is the lead institution for implementation of trade policy shall provide leadership for this policy. However, it shall endeavour to engage with all key stakeholders in the policy process and cycle. The Ministry will continue to engage with stakeholders through the National Working Group on Trade policy, the TIPSWAp implementation framework, and Inter-Ministerial Committee on Trade.

2 Implementation and Action Plan

Effective and credible implementation is critical.

The key pillars for success are:

[pic]

1

The action plan is detailed and attached in Annex ...

3 Policy Instruments

To realise the objectives of the trade policy, a range of actions have been identified for implementation as detailed out in the relevant policy instruments below:

i) Non-Tariff Barriers

National

• The GOM will continue negotiating for the elimination of NTBs prevalence in its export markets and the reduction of its own NTBs. The removal of any NTBs that are behind schedule under the NES action matrix will be actioned immediately.

• Through the NTB National Monitoring Committees, compile a list (a “living document”) of the most prevalent NTBs faced by Malawian exporters in all markets (current and prospective). This should be done through a combination of sources; including the COMESA-EAC-SADC NTB Monitoring Mechanism, input from the private sector, and reference to published NTB databases.

Bilateral

Mozambique:

• Use article XX of the bilateral agreement to meet at least once a year, at HoS level or Joint Permanent Commission for Cooperation level, to discuss issues relating to, in particular; facilitation of transit trade, border trade facilitation, and cooperation on border administration.

• Ensure that the technical subcommittees meet regularly, and that any specific trade concerns that arise within the course of those meetings are elevated by MoIT to HoS level.

South Africa:

• Use the six (6) month meetings of respective Ministers of Foreign Affairs, under the Joint Permanent Commission for Cooperation, to ensure that any respective trade barriers are unblocked.

• In dialogue with South Africa promote the invigoration of Art 13 under the bilateral trade agreement to meet at least once a year, at Senior political level to discuss issues relating to specific trade concerns;

Zimbabwe:

• To use article XIX to raise, at the political level, specific trade concerns with respect to non-tariff barriers faced by Malawi (as and when they arise).

• To use art XIX to meet at least once a year, at Ministerial level to discuss issues relating to, in particular; facilitation of transit trade, transport links, and respective trade promotion activities.

• Ensure the technical subcommittees meet regularly, and that any specific trade concerns, arising within the course of those meetings, are elevated by MoIT to Ministerial level.

Regional

At COMESA and SADC level:

• Within regional structures, the GoM will promote compliance with commitments. This will include the use of dispute settlement mechanisms.

At Tripartite Free Trade Area (TFTA) level:

• The GoM will take a multi-pronged approach, which entails: cooperation under the COMESA-EAC-SADC NTB reduction processes;

ii) Non-Tariff Measures

a. Technical Regulations and Standards

National

• The Ministry in collaboration with relevant institutions will facilitate private operators - farmer organisations, cooperatives, women’s groups, MSMEs and businesses - to meet the standards of destination markets.

• With regards to the Malawi Bureau of Standards (MBS), the GoM will

o Prioritise funding for the improvement in its institutional capacity.

o Steer the MBS towards being a market-led facilitator (as opposed to a regulator) of standards and accreditation of Malawi exports, and particularly ease the cost burden on MSMEs.

o Fast-track the relevant accreditation for the MBS to facilitate priority exports (with support from the EU SQAM Project).

• The GoM will source funding for the implementation of the NTF-AP’s recommended actions relating to standards and accreditation issues.

• Implement the Malawi Programme for Aflatoxin Control (MAPAC)

Regional

• The GoM will negotiate Mutual Recognition Agreements (MRAs) and equivalence with trading partners for priority NES products

b. Rules of Origin

• Malawi will support simple and realistic rules of origin within the regional frameworks

iii) Tariff Barriers

National

• Continue rationalisation of domestic tariffs

o To reduce tariffs on the inputs of central importance to the NES clusters.

Regional

• The GoM will negotiate for duty free and quota free access under the expanded tripartite free trade area in products such as; tea, sugar, coffee, rice, toordhall lentils, likuni phala, high quality cassava flour (HQCF).

• Over the longer term, enhanced market access will be explored with, inter alia, Brazil, India and China.

iv) Trade Facilitation

National

• The immediate domestic priority will be the implementation of the actions recommended by the NTF-AP.

Bilateral

• A revival of the transit agreement between Malawi, Tanzania and Zambia;

Regional

• Under COMESA:

o the effective implementation of the Yellow Card Scheme,

o and the regional customs bond guarantee scheme;

• Under SADC:

o The harmonisation of customs procedures and customs classifications and increased customs cooperation,

o Introduction of a single, standardised customs document,

o Introduction of electronic system of customs certification (e-certificate of origin)

o The establishment of one-stop border posts.

o The effective implementation of the SADC regional customs bond guarantee by SADC member states;

o Expansion of yellow card insurance scheme to SADC;

• Under the TFTA/CFTA:

o Harmonisation of transit policies (using the TFTA negotiations to facilitate intra- and inter-REC and continental harmonisation).

Multilateral

• Fully implement the WTO Trade Facilitation Agreement

v) Import and Export Licencing

National

• Streamline export and import documents and processes, benchmarking it on best practices

•

• Review the substantive and procedural aspects of the Control of Goods Act and implementing regulations.

• Establish a transparent procedure regarding the control of imports and exports.

vi) Simplified Trade Regime (STR)

National

• Allocate finance for the implementation of the STR;

• Liaise with MRA to dedicate officers for the implementation of the STR;

•

• Ensure the establishment and implementation of the charter for Cross Border Traders

Bilateral

• Establish and enhance dialogue on STR with Mozambique, Tanzania, Zambia and Zimbabwe.

Regional

• Under COMESA

o Continuously review the common lists (some of the products on the list are seasonal). A better alternative would be a negative list (only containing excluded products).

o Increase the threshold from USD$1000.

• Under SADC:

o Malawi should actively promote the extension of the STR to SADC

vii) Services Market Access

a. Services Liberalisation

National

• Reduce barriers to entry in the key areas, including through implementing GATS commitments:

o Banking and Financial Services (GATS and NES);

o Tourism Services (GATS and NES;

o Energy-Related Services (NES);

o Construction and Related Engineering Services (GATS);

o Professional (including accounting) Services (GATS and NES)

o Other Business Services (including those incidental to mining, exploration) (GATS and Investment Promotion Act);

o Transport Services (GATS)

o

Regional

• At the SADC and COMESA level, Malawi, from both a strategic and cautionary perspective, make offers in sectors in which it has existing commitments under GATS; and/or the NES proposes the reduction in regulatory barriers to entry. These include:

o Banking and Financial Services;

o Tourism Services;

o Energy-Related Services;

o Construction and Related Engineering Services;

o Professional (including accounting) Services (;

o Other Business Services (including those incidental to mining, exploration);

o Transport Services (GATS).

• Regional regulatory cooperation and MRAs with respect to qualifications;

o Use the current SADC Protocol on Trade in Services and COMESA process to negotiate mutual recognition agreements among regional professional bodies to facilitate (temporary) movement of natural person professional service providers in the priority professional services sectors;

b. Market Access

National

• Conduct a diagnosis of the structure of key service sectors to drive future policy. Such a diagnosis:

o Create mechanisms and systems for building adequate data of services exports and imports on a sector by sector basis (technical assistance);

o Assess offensive and defensive interests in the context of the SADC and COMESA priority sectors in which to request market access – which include communication services, construction services, energy-related services, financial services, tourism services, and transport services (all NES import and export priorities);

o Take into account (the performance of) sectors in which Malawi has already made liberalisation commitments (banking services; tourism services; construction and related engineering services; the listed professional services, and other business services.

Regional

• Pursue identified offensive interest in the SADC and COMESA Services Negotiations.

• Regional regulatory cooperation and MRAs with respect to qualifications;

Multilateral

• As part of fast-tracking the increase of services exports, the GoM will join other LDCs at the multilateral level in calling for:

o The implementation of commitments under [GATS Article IV.3], and the LDC waiver which requests Developed countries and developing countries in a position to do so to offer favourable market access treatment to services and service providers from LDCs,

o A clarification the modalities of special and differential treatment;

• The GoM to implement priority sectors for medium-long term development and promotion;

• Technical assistance for the foregoing will be sought.

viii) Domestic trade

• Better interaction between the objectives of trade policy and other trade-related policies such as investment policy, competition policy, agricultural policy, MSME Policy, procurement policy, etc. It is important that:

• Cross border trade opportunities will be taken into account in support to domestic trade policy;

• Competition policy is applied in a way which promotes broader private sector growth;

• Investment policy does not inadvertently crowd out domestic trade;

• Agriculture policy should be applied in a way that promotes both trade and food security

ix) Supply Side Measures

• Although there is a defined, standard process for engagement on all trade issues (policy, implementation, negotiations), there should also be one in place to deal with specific (and urgent) trade concerns.

• The latter will also utilise the PSs to fast-track issues that cannot be unblocked at technical level. This will be underpinned by a defined process for emergency or reactive measures (particularly when these arise in-between cabinet meetings) These issues will include:

• Export Licensing (export bans)

• Trade remedies;

• Sudden / unilateral barriers in trade partner markets

• One of the key aspects for implementation will be for the various Ministries to reflect trade policy priorities in the budgeting cycles. Given the sometimes competing priorities of ministries, the trade policy proposes the use of indicators within the budgeting process. These can, give the Ministry of Finance a better indication of budget priorities.

• Where there is insufficient funding from the Ministry of Finance, the indicators will facilitate resource mobilisation from other sources.

• The GoM needs dedicated human resources (at least one) with legal expertise in international trade and investment (law, policy and negotiations, drafting and audit of trade-related domestic laws).

x) Aid for Trade

• Aid for Trade, and related resource mobilisation, should be linked to identified budget priorities;

• Strengthen joint setting of expectations and priorities with local representatives of development partners.

• Increase the capacity of the MoIT, through a higher cabinet office such as the OPC, to coordinate interventions across other ministries and agencies.

• As part of this, use aid for trade to facilitate greater ownership of trade issues across the various ministries and agencies

• Continuous engagement with the development partner community to:

o Ensure consistency across donor efforts

o Improve contribution of aid for trade to private sector development

o Continue to assess the ultimate causes of development and trade constraints (binding constraints, structural issues, productive capacity issues, human capacity issues) and tailor the various interventions accordingly.

4.3 Prioritisation, Implementation and M&E

The Ministry will need to indicate a monitoring and evaluation strategy that will be put in place to track the implementation of the policy. This should also include a statement on time frame for policy review.

-----------------------

[1] Onelie Nukuna “Sustainability of the Malawian current account deficit: Application of structural and solvency approaches” Journal of Economics and International Finance, Vol 5(5) August 2013.

[2] A recent (ITC) study found that NTMs affected over three quarters of all firms exporting, a much higher share of exporters affected by trade compared to many other countries in Sub-Saharan Africa. However, the majority of the barriers to Malawi exports reported by companies resulted from Malawi’s own policies or from institutional deficiencies

-----------------------

Unlocking key constraints

A higher and more certain return to exports

With broader participation in the exporting sector

And a more competitive economy

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download