Madagascar

Location : Southern Africa, island in the Indian Ocean, east of Mozambique

Capital : Antananarivo

Languages : French (official), Malagasy (official)

Area : 587,040 sq km

Land Use : arable land: 5.07%; permanent crops: 1.03%; other: 93.91% (2001)

Natural Resources : graphite, chromite, coal, bauxite, salt, quartz, tar sands, semiprecious stones, mica, fish, hydropower

Population : 18,040,341 (July 2005 est.).

Labour force : 7.3 million (2000)

Labour force participation rate : 40.46% of population (2000)

Population below poverty line : 50% (2003 est.)

International Organisation participation : ABEDA, ACCT, ACP, AFDB, AU, FAO, G-77, IAEA, IBRD, ICAO, ICC (signatory), ICFTU, ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, IOC, Interpol, IOC, IOM, ISO (correspondent), ITU, MIGA, NAM, OPCW, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WToO, WTO

GDP per capita : U$800 (2004 est.)

GDP Real Growth Rate : 5.5% (2004 est.)

GDP sectoral composition : agriculture: 29.3%; industry: 16.7%; services: 54% (2004 est.)

Investment (gross fixed): 14.7% of GDP (2004 est.)

Industries: meat processing, soap, breweries, tanneries, sugar, textiles, glassware, cement, automobile assembly plant, paper, petroleum, tourism

Industrial production growth rate : 3% (2000 est.)

Agriculture - products : coffee, vanilla, sugarcane, cloves, cocoa, rice, cassava (tapioca), beans, bananas, peanuts; livestock products

Exports : U$12.76 billion f.o.b. (2004 est.)

Exports - commodities : coffee, vanilla, shellfish, sugar; cotton cloth, chromite, petroleum products

Exports - partners : US 35.7%, France 30.7%, Germany 7.1%, Mauritius 4.4% (2004)

Imports : U$1.147 billion f.o.b. (2004 est.)

Imports - commodities : capital goods, petroleum, consumer goods, food

Imports - partners : France 17.6%, China 11.1%, Hong Kong 6.7%, Iran 6.2%, South Africa 5.8% (2004)

QUALITATIVE TRADE PROFILE

While Madagascar does not have any formally enunciated overall trade-policy objectives, government policymakers focus on the promotion of Malagasy exports and the maintenance of open markets abroad, with particular emphasis on areas where Madagascar has export capacities, such as in agriculture (e.g. coffee, vanilla, and litchi) and fisheries. Agriculture (including fishing, livestock, and forestry) contributes some 30% to Madagascar's GDP, and accounts for about 40% of the value of merchandise exports In recent years, climatic conditions have made agricultural production unpredictable; they have contributed to fluctuations of export earnings, and to food shortages. Manufacturing, dominated by light industries (e.g. food processing, textiles, clothing, footwear, and beverages), represents some 12% of GDP and nearly 60% of merchandise exports in value (mostly textiles and apparel goods). Development of the sector is constrained, inter alia, by poor infrastructure and high transportation costs. The mining sector, centered around chrome ore and graphite, is still underdeveloped despite its potential. The services sector accounts for around 52% of GDP, with large potential still unexploited in the tourism subsector. Madagascar is a net importer of services.

Its present trade policy framework is essentially based on tariffs. Export restrictions have been eliminated, as have foreign exchange controls. The Government has placed emphasis on export promotion, but limited capacity has constrained any significant export‑led growth. MFN customs tariff rates have been organized into four bands ranging from zero to 30%. The tariff structure is somewhat escalatory (in certain branches) with many processed products accorded a higher effective rate of protection along the processing chain. The simple average of applied MFN import duties (including an import tax also ranging up to 30%) is 16.2%. An import statistics tax of 2% and a customs stamp duty of 1% also apply to imports. An excise duty ranging to over 100% is levied on petroleum, alcoholic and non-alcoholic beverages, and tobacco products. A value-added tax of 20% is also collected. Import duties and taxes continue to constitute a significant source of government revenue.

INSTITUTIONAL FRAMEWORK

The agencies in charge of trade policy formulation include the Ministries of Trade and Consumption; Finance and the Economy (currently the portfolio of the Prime Minister); Agriculture; Budget and Autonomous Provinces; Industrialization and Handicraft; Energy and Mines; Privatization and Private Sector Development; Public Works; Justice; Information, Culture and Communication; Transport and Meteorology; the Central Bank of Madagascar; and the Technical Secretariat for Adjustment.

Trade policy implementation is primarily the responsibility of the Ministry of Trade, which is responsible for regulating imports, promoting exports, ensuring fair trade, protecting certain intellectual property rights, and setting and enforcing standards. The Ministry also has responsibility for regional initiatives such as the Common Market for Eastern and Southern Africa (COMESA), the Indian Ocean Commission (IOC), and the Cross-Border Initiative (CBI), as well as the WTO and most other multilateral trade issues. The Ministry of Budget and Autonomous Provinces is responsible for the collection of taxes and import duties. Other ministries have responsibility for trade issues that fall within their overall responsibilities (e.g., the Ministry of Agriculture).

There are no formal coordinating bodies for the formulation and implementation of trade policy. All of the concerned agencies work together to address trade-policy-related issues as necessary. A national committee to follow the implementation of the WTO Agreements will be established. There are no independent bodies with a formal mandate to carry out public review and assessment of the Government's trade policy.

The private sector provides input into trade policy formulation through groups organized according to sectoral branches; the traditional branches of coffee, spices, and rice; and through professional associations, such as the Reflection Committee on Competitiveness (CRC), grouping all private associations, Femmes Entrepreneurs de Madagascar (FEM), Syndicat des Industries de Madagascar (SIM), Chamber of Commerce, Industry and Agriculture (CCIA), and Groupement des Entreprises de Madagascar (GEM).

TRADE AGREEMENTS

Bilateral

Madagascar benefits from preferential tariff treatment granted by Australia, Canada, the EU, Japan, New Zealand, and the United States under the Generalized System of Preferences (GSP)

Regional

Madagascar is a member of the Common Market for Eastern and Southern Africa (COMESA), the Cross-Border Initiative (CBI), and the Indian Ocean Commission (IOC). In addition, Madagascar recently joined the Southern African Development Community (SADC). Madagascar is currently negotiating an Economic Partnership Agreement with the EU through the Eastern and Southern Africa (ESA) configuration.

Multilateral

Madagascar is a member of the WTO and grants at least MFN treatment to all its trading partners. It has GATS commitments in 2 sectors.

NEED PRIORITIES 

Madagascar is in need as assistance in multilateral negotiations, trade policy formulation with incorporation of the priorities of national public and private sectors and implementation of accession commitments. Training and the dissemination of information are also pressing challenges for Madagascar. Given its multiple memberships, policy coherence will be a particular challenge moving forward.

Source: Commonwealth Yearbook 2005, World Fact Book, WTO Secretariat.