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RESTRICTED WORLD TRADE WT/ACC/YEM/3 20 November 2002 ORGANIZATION (02-6453)

Working Party on the Original: English Accession of Yemen

ACCESSION OF YEMEN

Memorandum on the Foreign Trade Regime

In a communication circulated in document WT/ACC/YEM/1 on 14 April 2000, the Government of the Republic of Yemen applied for accession under Article XII of the Agreement Establishing the World Trade Organization (WTO).

The General Council established a Working Party (WT/ACC/YEM/2) on 17 July 2000 with the following terms of reference: "To examine the application of the Government of the Republic of Yemen to accede to the World Trade Organization under Article XII and to submit to the General Council recommendations which may include a draft Protocol of Accession".

In accordance with the established procedures (WT/ACC/1), the Secretariat is circulating the attached Memorandum on the Foreign Trade Regime received from the Government of the Republic of Yemen. WTO Members wishing to submit questions on the Memorandum are invited to do so by 18 December 2002 for transmission to the Yemeni authorities.

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TABLE OF CONTENTS

I. INTRODUCTION...... 1 II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE...... 3 1. Economy...... 3 (a) General description...... 3 (b) Current economic situation...... 4 2. Economic Policies...... 5 (a) Main directions of the ongoing economic policies...... 5 (b) Monetary and fiscal policies...... 6 (c) Foreign exchange and payments system...... 8 (d) Foreign and domestic investment policies...... 9 (e) Competition policies...... 11 3. Foreign trade in goods and services...... 11 4. Domestic trade in services...... 12 5. Information on financial movements related to nationals working abroad, remittances, etc...... 12 6. Information on growth in trade in goods and services over recent years and forecasts for years to come...... 12 III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES AFFECTING FOREIGN TRADE IN GOODS AND TRADE IN SERVICES...... 13 1. Powers of executive, legislative and judicial branches of government...... 13 2. Government entities responsible for making and implementing policies affecting foreign trade...... 14 3. Division of authority between central and sub-central governments...... 14 4. Any legislative programs or plans to change the regulatory regime...... 15 5. Laws and Legal Acts...... 15 6. Description of judicial, arbitral or administrative tribunals or procedures...... 15 IV. POLICIES AFFECTING TRADE IN GOODS...... 15 1. Import Regulation...... 15 (a) Registration requirements for engaging in importing...... 15 (b) Characteristics of national tariff...... 15 (c) Tariff quotas, tariff exemptions...... 16 (d) Other duties and charges...... 17 (e) Quantitative import restrictions...... 17 (f) Import licensing procedures...... 17 (g) Other border measures...... 17 (h) Customs valuation...... 17 WT/ACC/YEM/3 Page ii

(i) Other customs formalities...... 18 (j) Pre-shipment inspection...... 18 (k) Application of internal taxes on imports...... 18 (l) Rules of origin...... 18 (m) Anti-dumping...... 19 (n) Countervailing duty...... 19 (o) Safeguard regimes...... 19 2. Export Regulation...... 19 (a) Registration requirements for engaging in exporting...... 19 (b) Customs tariff nomenclature, types of duties, duty rates, weighted averages of rates...... 19 (c) Quantitative export restrictions, including prohibitions, quotas and licensing systems...... 19 (d) Export licensing procedures...... 20 (e) Other measures...... 20 (f) Export financing, subsidy and promotion policies...... 20 (g) Export performance requirements...... 20 (h) Import duty drawback schemes...... 20 3. Internal policies affecting foreign trade in goods...... 21 (a) Industrial policy, including subsidy policies...... 21 (b) Technical regulations and standards...... 21 (c) Sanitary and phytosanitary measures...... 22 (d) Trade-related investment measures...... 23 (e) State-trading practices...... 23 (f) Free zones...... 23 (g) Free economic zones...... 23 (h) Trade-related environmental policies...... 23 (i) Mixing regulations...... 24 (j) Government-mandated counter-trade and barter...... 24 (k) Trade agreements leading to country-specific quotas allocation...... 24 (l) Government procurement practices...... 24 (m) Regulation of trade in transit...... 24 4. Policies affecting foreign trade in agricultural products...... 24 (a) Imports...... 25 (b) Exports...... 25 (c) Export prohibitions and restrictions...... 25 (d) Export credits, export credit guarantees or insurance programmes...... 25 WT/ACC/YEM/3 Page iii

(e) Internal policies...... 25 5. Policies affecting foreign trade in other sectors...... 25 (a) Textiles regime...... 25 (b) Policies affecting foreign trade in other major sectors...... 25 V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME...... 26 1. General...... 26 (a) Intellectual property policy...... 26 (b) Responsible agencies for policy formulation and implementation...... 26 (c) Membership of international intellectual property conventions and of regional or bilateral agreements...... 27 (d) Application of national and m.f.n treatment to foreign nationals...... 27 (e) Fees and taxes...... 27 2. Substantive standards of protection...... 28 (a) Copyright and related rights...... 28 (b) Trademarks...... 28 (c) Geographical indication...... 29 (d) Industrial designs...... 29 (e) Patents...... 29 (f) Plant variety protection...... 30 (g) Layout designs of integrated circuits...... 30 (h) Requirements on undisclosed information, including trade secrets and test data ...... 30 (i) Any other categories of intellectual property...... 30 3. Measures to control abuse of intellectual property rights...... 30 4. Enforcement...... 31 (a) Civil judicial procedures and remedies...... 31 (b) Provisional measures...... 31 (c) Any administrative procedures and remedies...... 31 (d) Any special border measures...... 31 (e) Criminal procedures...... 31 5. Laws, decrees, regulations and other legal acts relating to the above...... 32 6. Statistical data on applications for grants of intellectual property rights...... 33 VI. TRADE-RELATED SERVICES REGIME...... 34 1. General...... 34 2. Policies affecting Trade in services...... 36 (a) Government departments, agencies, professional associations or other bodies with authority or a role relevant to the conduct of service activities...... 36 WT/ACC/YEM/3 Page iv

(b) Judicial, arbitral or administrative tribunals or procedures providing for the review of, or remedies in relation to, administrative decisions affecting trade in services...... 37 (c) Provisions, including those in international agreements, concerning qualification requirements and procedures, technical standards and licensing and/or registration requirements for the supply of services...... 37 (d) Provisions governing the existence and operation of monopolies or exclusive service suppliers...... 37 (e) Provisions relating to safeguard measures as they apply to trade in services...... 37 (f) Provisions relating to international transfers and payments for current transactions of services...... 38 (g) Provisions relating to capital transactions affecting the supply of services...... 38 (h) Provisions governing the procurement by governmental agencies of services...... 38 (i) Provisions concerning any form of aid, grant, domestic subsidy, tax incentive or promotion scheme affecting trade in services...... 38 3. Market Access and National Treatment...... 38 (a) Limitations on the number of service suppliers...... 38 (b) Limitations on the total value of service transactions or assets...... 38 (c) Limitations on the total number of service operations or on the total quantity of service output...... 38 (d) Limitations on the total number of natural persons that may be employed in a particular service sector...... 38 (e) Restrictions on, or requirements of specific types of legal entity through which a service may be supplied...... 39 (f) Limitations on the participation of foreign capital...... 39 (g) Measures providing for less than the treatment accorded to national services or service suppliers...... 39 4. Most-Favoured-Nation Treatment...... 39 VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH THIRD COUNTRIES...... 39 1. Bilateral or plurilateral agreements relating to foreign trade in goods and trade in services...... 39 2. Economic integration, customs union and free-trade area agreements...... 39 4. Multilateral economic cooperation, membership in the multilateral economic organizations, trade-related programmes of other multilateral organizations...... 40 ANNEX 1...... 41 ANNEX 2...... 42 ANNEX 3...... 44 ANNEX 4...... 45 ANNEX 5...... 49 ANNEX 6...... 50 WT/ACC/YEM/3 Page v

ANNEX 7...... 51 WT/ACC/YEM/3 Page 1

I. INTRODUCTION

Historically, Yemen has a deeply ingrained tradition for trade. It was a passage route for international trade, in the old world. Yemen's ancient seaports of Makha, Mawza`a, and Qana were quite famous. With the arrival of the Portuguese, Dutch, British, French merchants and others to Yemeni seaports, especially to Makha from where the famous brand name (Mocha Coffee) originated, trade between Yemen and European nations was developed rapidly. European traders were highly interested in Yemen's coffee trade. Later, Yemen's center of foreign trade moved from Makha to Aden, which became one of the most important world seaports serving international trade, especially after the opening of the Suez Canal in 1869.

When the Republic of Yemen was established on 22 May 1990, the new constitution emphasized that the basis of the national economy is the freedom of economic activities. Meantime, democracy was enhanced in the country by the adoption of a multi-party system and the participation of women in all aspects of political and economic activities, including representation in the House of Representatives (Parliament) and top government posts.

Consecutive Yemeni governments continued their efforts to emphasize the role of Yemen's foreign trade and build on its leading role in the national economy as a catalyst for economic development. Imports substitution policy proved to be insufficient and contrary to the newly embarked free market policies.

Despite the reunification of Yemen in 1990, the country witnessed neither economic nor political stability during the transitional period (May 1990 - April 1993).

The outbreak of the Second Gulf War caused the Yemeni economy to suffer a number of negative economic setbacks, when almost one million Yemeni workers in the neighbouring Arab countries were forced to return home. Consequently, the country lost one of its important foreign currency sources, i.e. Yemeni expatriates' remittances. Financial loans, aid and grants were discontinued.

The country also experienced internal political tensions and a secessionist attempt that led to a brief armed conflict in mid-summer 1994, which caused vast damages to the Yemeni economy; estimated at US$10 billion. War outbreaks in the Horn of Africa had led to influx of refugees into Yemen. The economic suffering was also aggravated by the damages caused by natural disasters such as heavy rains and floods in mid 1990s. In addition, the large amount of foreign debt inherited from the former North and South regimes, had doubled the burden on the Yemeni economy after the establishment of the Republic of Yemen.

Yemen is classified as one of the Least Developed Countries (LDCs), where GDP per capita in 1998 (based on 1995 prices) was US$250, less than all LDCs average of US$287 for the same period, according to UNCTAD Annual Report of 2000.

Yemen is facing a number of challenges to its development. The most important is the rapid increase in poverty levels. The Poverty Survey of 1999 indicated that 27.3 per cent of total families suffer from food poverty and almost 34.9 per cent of families suffer from absolute poverty. According to UNCTAD, World Bank's estimation, and international development indicators, and national indicators the number of people who live on less than US$2 per day is 35.5 per cent. Poverty is mostly centered in rural areas where the majority of the country's population lives.

Human Poverty Indicator ranked Yemen 76 out of 85 countries in 2000. The acute unemployment problem with an aggregate rate of approximately 37 per cent of the total labour force of about 4.2 million (Gross Unemployment 11.9 per cent Partial Employment 25.1 per cent), which WT/ACC/YEM/3 Page 2 represents another major challenge to the development efforts. The unemployment problem is compounded by a low level of qualified human resources and a high illiteracy rate.

The results of the Poverty Survey of 1999 had shown that the number of illiterates was around 5.1 million, which represented 55.7 per cent of the 15 year old and above population category, with greater concentration among females and rural areas. The annual average of population growth rate of 3.5 per cent adds more challenges and puts much pressure on the basic limited infrastructure facilities such as roads, electricity, water, communications, health and education services, etc. Human Development Report ranked Yemen as the 133 out of 162 countries in 2000.

Due to such internal and external factors, Yemen suffered from sharp structural imbalances as a result of its limited resources and increased public expenditure. This has led to a continuous deficit in Government's budget, accompanied by Balance of Payment deficit, and rapid depreciation of the local currency exchange rate.

Consequently, Yemen embarked on a number of economic reform attempts, which were crowned in March 1995 by the implementation of a comprehensive economic reform program supported by the World Bank and the International Monetary Fund (IMF), within the Stabilization and Structural Adjustment Program. The implementation of this program has halted the deterioration of the macro- economic indicators through the removal of the main structural imbalances, elimination of the price distortions related to subsidies, privatization of some public enterprises, and encouragement of the private sector to take a leading role in the development process.

Foreign trade has a new role and different objectives, through which it could contribute towards achieving, targeted growth rates. The most important objectives are the continued implementation of the economic reform policies, including reforming the trade sector and further liberalizing foreign trade; achieving an equitable and just integration into the world economy; increasing and diversifying non-oil exports and raising their contribution in the Yemeni exports, especially in the promising sectors; enhancing competition in the provision of consumer and intermediate goods and services; establishing free zones and free trade areas to enhance the development of Yemeni economy, including the completion of Aden Free Zone and studying the establishment of other zones.

The accession to the World Trade Organization (WTO), including the utilisation of benefits and opportunities available for LDCs, is a prime foreign trade objective of Yemen's Government. Therefore, Yemen is currently seeking full integration into the world economy and the multilateral trading system, based on the Government's belief in the importance of such integration. Its application to accede to the WTO affirms this belief.

Yemen may be considered as a natural candidate for WTO membership as a result of existing harmony between the Government's policies, including the economic reform program, and WTO objectives. It is worth noting that Yemen was one of the countries that applied the General Agreement on Tariffs and Trade (GATT) on a de facto basis, as its former southern part was a British colony/protectorate(s) until gaining its independence in November 1967. WT/ACC/YEM/3 Page 3

II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE

1. Economy

(a) General description

- Location and Area

Yemen lies in the southwestern part of Asia. It borders the Kingdom of Saudi Arabia in the north, the Arabian Sea and the Indian Ocean in the south, the Sultanate of Oman in the east, and the Red Sea in the west.

Yemen's coastal line and islands extend for about 2,500 km, and its total land area is approximately 460,000 km2. Topographically, Yemen is classified into five different regions, i.e. the plateau, mountains, desert, coast, and islands.

- Population

Yemen's resident population was 15.1 million according to the 1994 census, and was estimated at 18.3 million in 2000. Yemeni immigrants constitute about 4.7 per cent of total population. The annual population growth rate was 3.7 per cent in 1994, which is one of the highest growth rates in the world. Some recent surveys have shown that the growth rate has decreased to 3.5 per cent as a result of government family planning and advocacy efforts.

The population is distributed among 19 governorates in addition to Sana'a, the capital city. Population density is about 39.7 persons per square kilometre. Population distribution by region varies, where 26.1 per cent of total population lives in urban centers while 73.9 per cent lives in rural areas.

- Economic specialization

The Yemeni economy relies heavily on agriculture. Although the share of the agricultural sector in Gross Domestic Product (GDP) has fallen, it still occupies a major place in the national economy. Agriculture tops the list among non-oil producing sectors, accounting for an average of about 14.2 per cent of GDP of 2000. It employs about 52 per cent of the total employment, provides the necessary livelihood for more than 75 per cent of the entire population, and enhances exports potential for a number of agricultural products.

The oil sector is the dominant sector in the national economy accounting for almost 33.7 per cent of GDP at 2000 current prices. It accounts for not less than 60 per cent of Government's revenues. Crude oil exports accounted for about 97 per cent of the total goods exports in 2000. Manufacturing, except oil refining, accounted for only 4.9 per cent of GDP, for the same year.

The fishery sector could contribute to the achievement of food security strategy for Yemen and creation of job opportunities. It could also help in diversifying the sources of production and income for the national economy. However, the sector's growth was very modest during the First Five Year Plan 1996-2000. Its contribution to GDP reached about 1.2 per cent.

The services sector accounted for 26.8 per cent of GDP of 2000. It employed around 17.4 per cent of the total employment in 1999. The leading services sub-sectors are transport, storage and communications, and wholesale and retail trade, as indicated below. WT/ACC/YEM/3 Page 4

Sectoral Structure of GDP of 2000 (at current prices)

Per cent Per cent Goods Sectors Services Sectors* (approx.) (approx.) Agriculture, forestry, and hunting 14.2 Wholesale and retail trade 7.2 Fishing 1.2 Restaurants and hotels 0.7 Crude oil extraction 33.7 Repair and maintenance 0.8 Mining and extracting industries 0.1 Transportation, storage & 10.3 (except oil) communications Manufacturing (except oil refining) 4.9 Finance and insurance 2.9 Oil refining 2.6 Real estate & construction 4.9 Electricity, water and gas 0.7 Total 26.8 Construction 4.3 Total 61.7 Source: Statistical Year Book of 2000, Central Statistical Organization.

(b) Current economic situation

In early 1995, Yemen embarked on an economic, financial and administrative reform program with the support of the World Bank and the IMF. The program enabled the Yemeni economy to overcome a number of economic difficulties. The implementation of this program involved the privatization of some public enterprises and adjustment for the integration into the world economy, including trade liberalization and opening domestic markets. It also involved granting the private sector a leading role in the process of national development in order to advance the national economy and its own capacity, industrial productivity, and competitiveness. The most important achievement of this program was to maintain a reasonable stability of the macroeconomic indicators. Doubling oil exploration investment coupled with the rising of world oil prices enhanced resources availability, which was reflected in an economic stability, as shown by the following indicators:

Real GDP increased from 511,058 million Yemeni riyals (YR) in 1995, in the First Five-Year Plan base year prices, to YR 666,261 million in 2000; with an annual average growth of 5.5 per cent.

The government budget situation improved through a gradual reduction of its deficit and later achieving a surplus in 1999 and 2000. The budget deficit estimated at 5.2 per cent of GDP in 1995 was transformed into a surplus equivalent to 1.6 per cent and 7.1 per cent of GDP in 1999 and 2000, respectively.

The money supply growth rate decreased from 48.5 per cent in 1995 to 25.1 per cent in 2000. The inflation rate decreased remarkably from 57.2 per cent in 1995 to 8.0 per cent in 2000. The Central Bank of Yemen has liberalized interest rates since mid 1995 and adopted an Open Market Operations Policy, through the issuance of treasury bills since December 1995. The official foreign reserves of the banking system increased from US$319.7 million in 1995 to US$3,013 million in 2000.

Yemen's foreign debt decreased from US$10,530 million in 1995 to US$4,943 million in 2000 as a result of debt rescheduling with the Paris Club on the basis of Naples rules, equivalent to 250 per cent and 58 per cent of GDP in 1995 and 2000, respectively.

In 1995, the Balance of Payments recovered from a deficit of YR 10,103 million, equivalent to 2 per cent of GDP, to a surplus of about YR 241,820 million, equivalent to 17.5 per cent of GDP in 2000. The positive results of foreign debt rescheduling have played a major role in improving the capital account situation, and oil revenues have increased the current account surplus. WT/ACC/YEM/3 Page 5

The Balance of Trade deficit of YR 72,713 million in 1995, equivalent to 14.2 per cent of GDP, was transformed, due to oil prices improvement, into a growing surplus reaching YR 55,731 million in 1999, before it peaked at YR 260,600 million in 2000, equivalent to 18.9 per cent of GDP.

The macroeconomic indicators showed a noticeable improvement as a result of economic stabilization policies. Final private consumption grew by an average of 13.2 per cent, at current prices, whereas, GDP growth rate was 22.0 per cent and inflation rate 10.4 per cent. This led to a decrease in the ratio of the final private domestic consumption rate to GDP from 83.3 per cent in 1995 to 68.0 per cent and 57.9 per cent in 1999 and 2000, respectively. Total investments and exports of goods and services increased from 22.1 per cent and 21.9 per cent of GDP in 1995 to 24.6 per cent and 36.3 per cent in 1999, respectively. Total investments declined to 19.2 per cent in 2000, while exports continued to grow to 50.5 per cent of GDP, during the same year. As a result, domestic demand gap decreased from 20.4 per cent of GDP in 1995 to 6.4 per cent in 1999, and later turned into a surplus of nine per cent of GDP in 2000. GNP per capita was estimated at US$321 and US$404 in 1995 and 2000, respectively.

2. Economic Policies

(a) Main directions of the ongoing economic policies

The Constitution of Yemen states that the national economy is based on the principles of the freedom of economic activities, ensuring free competition among the public, private, cooperative, and mixed sectors.

The Government protects the freedom of trade and investment that serves the national economy, and issues legislations that would ensure the protection of both consumers and producers. It ensures the supply of basic goods, prevents monopoly, and encourages the private capital to participate in the economic development process.

- Economic plans

In conjunction with the implementation of the economic reform program, the Government embarked on the First Five-Year Plan for the period 1996-2000. Currently, the Government is implementing its Second Five-Year Plan 2001-2005 to achieve a considerable economic growth, and ensure economic and social stability, through the following principles of the economic and social development strategy:

 Development of Yemen's human resources capacity building and increasing the productivity of Yemeni labour, which would help to maintain a sustainable development;  Achievement of economic stability as a basis for the development of all national economic sectors. The development of production capacity in sectors such as small-scale and traditional enterprises, mining and non-oil extraction, fishery, and tourism would ensure the national economic stability and sustainable development;  Enhancement of partnership and expanding the role of the private sector projected in Yemen's Strategic Vision 2025. This would require providing and preparing legislative and institutional policies and procedures ground work so that the private sector can play its leading role;  Improvement of the investment environment in the national economy that would help to attract foreign direct investment and transfer of technology;  Directing of economic activities towards exportation in order to overcome the limitation of the domestic market and to respond positively to the requirements of trade liberalization and integration into the global economy; WT/ACC/YEM/3 Page 6

 Good governance and decentralization of public administration, which would enhance partnerships with the private sector;  Development of scientific and technological national capacities through developing national Yemeni personnel skills to meet the needs of the national economy, and production improvement;  Conservation of the local environment as a basis to promote social and economic development and as a sustainable development measure in various economic activities and sectors.

- Privatization

The privatization of the public sector's institutions is a main component of the structural adjustment policies. The Council of Ministers issued several decrees related to privatization, e.g. Decree No. 150 of 1994 on Privatization of Public Institutions and Decree No. 8 of 1995 on Regulatory and Executive Procedures for Privatization. During 1994-1996 more than 60 enterprises, in various economic sectors, were privatized.

Law 45 of 1999 on Privatization aims at:

 regulating and streamlining the privatization procedures of the state-owned enterprises;  asserting the role of the State in the management of the economy in line with market economies;  reducing the expenditure of state-owned enterprises;  increasing the efficiency of state-owned enterprises on competitive bases;  encouraging competitive private investment and ownership;  ensuring the flow of new investments and advanced technology; and  encouraging the establishment of a financial market.

To assert the vital role of the privatization policy, both the Supreme Privatization Committee and the Technical Privatization Office were established so as to ensure that standardized, neutral and transparent privatization procedures are applied.

(b) Monetary and fiscal policies

- Monetary policies

Efforts are continued to reform the monetary sector, and to adopt necessary measures in the reform process.

The main directions of the monetary policies are as follows:

 Reducing the annual inflation rate in cost of living, and curbing the inflation rate in non- oil GDP;  Containing the unnecessary growth of money supply through reducing money supply, and increasing deposits in local currency;  In light of investment constraints elimination, improvement of the banking system, and maintenance of a macroeconomic monetary stability; a gradual expansion will be carried out in the monetary and credit policies in order to secure a low inflation rate, a stable exchange rate, and foreign reserves enhancement;  Enhancing the independence of the Central Bank of Yemen, activating its monitoring role over banking activities, increasing freedom for banking activities, and improving treasury bills mechanism; WT/ACC/YEM/3 Page 7

 Encouraging the establishment of specialized financing institutions for sectoral development and exportation, and implementing credit programs to provide loans for producing families, women and the poor;  Completing the financial reform program, particularly restructuring public and mixed banking sectors, which would help create favorable conditions to stimulate savings, credits, and investment;  Launching a new round of foreign debt reduction with the Paris Club and minimizing the Government's resort to foreign debt, particularly from non-concession sources, and establishing a tight central system for foreign debt administration;  Limiting the money liquidity available to individuals and attract domestic savings so as to increase the rate of private sector borrowing from banking and financial institutions;  Establishing a Financial Market as a viable tool for mobilizing financial resources and savings in order to activate investment. Efforts are underway for providing an appropriate legislative and institutional framework, and ensuring a supportive environment for its establishment, particularly judicial and administrative reforms, as well as establishment of stock companies, and adopting a transparent financial statements publication policy.

The Central Bank of Yemen (CBY) draws up, adopts, and implements the monetary policy that is conducive to the bank's main objective, i.e. to maintain stable prices and properly provide suitable liquidity in order to establish a stable financial system based on market mechanism.

The CBY, in consultation with the Government, determines the exchange rate system. Then the bank designs, adopts, and implements the foreign exchange rate. The CBY is in charge of licensing and monitoring the financial institutions and banks, holding and managing its official reserves abroad, encouraging and simplifying the procedure of payment system, and working as a financial agent and advisor to the Government.

The economic and monetary policies have scored considerable achievements, the most important of which was reduction in inflation from 57.2 per cent in 1995 to 8.0 per cent in 2000, and in the money supply growth rate from 48.5 per cent in 1995 to 25.1 per cent in 2000.

- Fiscal policies

The focus of the fiscal policy has been on maintaining a low growth rate of current expenditure and high growth rate of capital spending to stimulate economic growth.

Future trends of fiscal policies are exemplified in increasing non-oil revenue, rationalizing Government's expenditure, and achieving budget surplus through oil revenues. To realize the above objectives, efforts are concentrated on the following:

 Continuing the implementation of financial and structural institutional reforms within the framework of comprehensive integrated policies;  Developing and mobilizing domestic and foreign resources to finance public projects;  Containing the growth rate of current expenditure so as not to exceed the GDP growth rate, developing and diversifying revenue resources, controlling budget deficit, and financing the deficit from non-inflationary sources;  Restructuring public budget in order to increase investment expenditure in infrastructure, education and health sectors; and increasing allowances for operation and maintenance with priority given to existing projects;  Improving tax laws through applying simplified and transparent tax policy, expanding tax base, and eliminating discrimination against production and exports, if any; WT/ACC/YEM/3 Page 8

 Selecting investment projects in accordance with sectoral strategies and major macroeconomic trends and in conformity with standards determination pertaining to social and economic feasibility.

Components of total Government revenues from taxes are shown in the following table:

(Sums in million YR) Total Taxes on Taxes on Item/ government Tax revenues Customs duties goods and Income tax corporate Other taxes Year revenues services profits 1 2 3 4 5 6 7 Sum Sum 2:1 Sum 3:2 Sum 4:2 Sum 5:2 Sum 6:2 Sum 7:2 1996 250029 58834 23.5 26294 44.7 15180 25.8 8765 14.9 5804 9.9 2791 4.8 1997 274659 69570 25.3 25814 37.1 21226 30.5 10685 15.4 8318 12.0 3527 5.1 1998 222620 78852 35.4 24121 30.6 24974 31.7 13093 16.6 13156 16.7 3508 4.5 1999 328394 85419 26.0 25703 30.1 24419 28.6 16389 19.2 14498 17.0 3198 3.8 2000 583715 110990 19.0 29843 26.9 36944 33.3 22246 20.1 18444 16.6 3405 3.1 2001 563401 113700 20.2 33789 29.7 27918 24.6 46864 41.2 4007 3.5 Source: Ministry of Finance, Central Bank, and IMF estimates

(c) Foreign exchange and payments system

Yemen's national currency is the Yemen riyal (YR), which consists of 100 fils. The legal tender consists of banknotes and coins issued by the Central Bank of Yemen. The current foreign exchange system is a floating system. The multi-exchange rate system was abolished in 1996. The exchange rate of the Yemeni riyal was 175.55 against the US$1 in June 2002.

Yemen is committed to neither join a discriminatory monetary agreement, nor adopt a multi- exchange rate system. In accordance with Yemen's agreement with the IMF, the Central Bank of Yemen does not impose restrictions on foreign payments and transfers, and guarantees the transfer of foreigners` accounts resulting from foreign transactions.

From the outset, the IMF supported the Yemeni reform steps. In December 1996, Yemen informed the IMF of its commitment to abide by Article VIII of the Fund Agreement. This step came within the context of the Financial and Economic Reform Program with the cooperation of the IMF and World Bank.

Yemen officially agreed on the fourth amendment of the Fund Agreement, and on increasing its share on 22 January 1999, within the framework of the Eleventh Review concerning members' share in the Fund, from 176.5 million SDR units to 243.5 million, i.e. 38.0 per cent. A quarter of this increase has been paid in foreign currency and the rest in local currency.

(d) Foreign and domestic investment policies

Investment Law No. 22 of 2002 enacted on 20 July 2002, aims at encouraging and regulating investments of Yemeni and foreign capitals, within the framework of the State's general policy and the objectives and priorities of the national plan for economic and social development, as far as it is not contrary to Islamic legislation (SHAREA'A), in all sectors except the following:

 exploration and extraction of oil, gas and minerals, which are governed by special agreements;  weapons industry and explosive materials;  industries that harm the environment and health; WT/ACC/YEM/3 Page 9

 banks and exchange bureau's; and  financial trade, importation, wholesale and retail trade.

Guarantees and benefits accorded to investment projects are:

 Yemeni and foreign investor's freedom to invest in investment projects;  foreign capital and foreign investors shall be on a par with Yemeni capital and Yemeni investors without discrimination with respect to the rights, obligations, rules and procedures set forth in this Law;  registered projects shall be deemed to be private sector projects whatever the legal nature of the contributed capitals may be;  investors shall be entitled to purchase or lease land and buildings owned by the private sector or the State to be used for the purpose for which the project is registered;  industrial and agricultural projects may open commercial stores, either solely or in collaboration with other projects, from which to sell their products;  investors shall be entitled to manage their projects in the light of their appraisal of economic conditions and the status of their businesses;  no additional financial or other burdens or obligations shall be imposed resulting in violation of the principal of parity amongst private, public, cooperative and mixed sector projects carrying out the same type of activity;  all projects products shall be exempted from compulsory price regulation and profit limiting, provided project not creating or indulging in monopolistic practices or trying to fix prices in overt or implicit agreement with other producers or vendors of similar products and services;  projects may not be nationalized or seized;  funds may not be blocked, frozen, or sequestered by any decision other than the court's of Law;  all or part of project real estate may not be expropriated save for the public interest according to the Law and a final court judgment and against fair compensation on the basis of such market price on the issuance date of the court judgment;  the project shall be entitled to obtain the foreign currencies it requires at any time from its foreign currencies accounts;  a foreign investor shall be entitled to transfer abroad his foreign currency funds and net profit earned by investment or any of its accrued returns to any transferable currency;  foreign investors shall have the right to transfer abroad their invested capital upon liquidation or disposal;  projects may import directly or through some other party, their requirements to establish, expand, rehabilitate or operate the project, including fixed assets, means of transportation and production inputs appropriate to the nature of their activity; and  projects shall recruit and train the maximum number of Yemenis possible, and project may recruit non-Yemenis in accordance with the requirements stated in its requirement lists and are entitled to obtain work permits and residence visa for such personnel.

Customs duty and tax exemptions accorded to investment projects:

 Fixed assets imported to establish, expand, or rehabilitate a project shall be exempted from all types of customs duties and taxes;  fisheries, livestock and agricultural production inputs shall be exempted from Customs duty, and production inputs of other projects shall be exempted 50 per cent of all the customs duty; and WT/ACC/YEM/3 Page 10

 without prejudice to any more advantageous tax exemption granted, or to be granted, under any other Law, all projects shall enjoy exemption from taxes in the following manner: (1) projects shall be exempted from profit tax for seven years and the investment projects extensions issued by the Authority shall be exempted from profit tax for seven years; (2) projects shall be exempted from the real estate tax; (3) contracts establishing projects, and all project-related contracts, shall be exempted from the notarization fees; (4) projects shall be exempted for five years as of the date of commencement of production or activity, as the case may be, from all taxes and fees on the proceeds from licensing the use of imported technology utilised in the project; (5): a) interest on loans granted by local and foreign banks operating in Yemen to finance establishing, expanding, or rehabilitating projects shall be exempted from 50 per cent of taxes levied thereon; b) dividends distributed by projects shall be exempted from income tax.

Settlement of investment disputes:

 Investors and projects may appeal decisions by the authorities concerned infringing on their interests, by applying in writing to the decision making authority or to the President of the Authority within 30 days following notification of the decision. The party appealed to shall decide on the appeal within 20 days of its submission. Elapse of such time without reply shall be deemed an acceptance of the appeal, and in such case the decision making authority should rectify its decision in consistency with the appeal submitted by the investor. If the appeal was rejected, the appellant shall be entitled to submit his appeal to the Prime Minister, who shall take a decision thereon in ten days or refer it to the Council of Ministers to take such a decision as may be appropriate within no more than 30 days.  An appeal regarding the decisions may be filed directly with the competent court after exhausting the appeal before the President of the Authority or the Prime Minister, and may be referred to an arbitration tribunal to be agreed upon with no need for continuing the administrative appeal.

Without prejudice to the right to resort to Yemeni courts, investment disputes arising between the Government and a project may be settled by arbitration resorting to any of the following procedures as may be selected by the investor or the project:

 the Standardized Agreement for Arab Capital Investment in Arab Countries;  the International Convention for the Settlement of Investment Disputes between the State and the nationals of another state;  any international or bilateral agreement to which the Republic is a party;  commercial arbitration rules and procedures of the United Nations' Commission on International Trade Law at the nearest regional center for international commercial arbitration using such rules; and  rules and procedures of arbitration within the Republic of Yemen.

Settlement of disputes arising between investors in a project or between a project and other projects shall be through the medium of Yemeni courts or arbitration on the basis of a written agreement between the parties concerned.

Disputes relating to agreements on the transfer of technology shall be applicable to the parties concerned before the courts of law in the Republic and all parties involved shall be entitled to settle disputes by arbitration. WT/ACC/YEM/3 Page 11

Decisions reached at by arbitrators shall have the same power and effectiveness of the rulings of Yemeni courts and the courts of competence in the Republic shall order that they be enforced promptly upon receipt of a request in writing to this effect from the party concerned.

(e) Competition policies

Law No. 19 of 1999 aims at encouraging competition and preventing monopoly and trade deception.

3. Foreign trade in goods and services

- Trade in goods

Foreign trade plays a significant role in Yemen's economy. The exports and imports ratios to GDP were 48.0 per cent and 29.1 per cent in 2000, respectively. Exports for the same year, according to usage categories, were 98.34 per cent, 1.65 per cent, and 0.01 per cent for intermediate, consumer, and capital goods, respectively. Meantime, imports were 58.94 per cent, 20 per cent, and 21.06 per cent for intermediate, consumer, and capital goods, respectively.

Yemen's major exports are crude oil, fish, hides and skins, and coffee. The most important geographical region for Yemen's exports is the non-Arab Asian countries, with 84.02 per cent.

Yemen's major imports are wheat, flour, sugar, milk powder, medicines and medical equipment, equipment and machinery, electronics, machinery spare parts and construction materials. The most important geographical regions for Yemen's imports are Arab countries, with 37.71 per cent, and non- Arab Asian countries, with 24.49 per cent.

Trade liberalization and increasing openness, coincided with the improvement in the Balance of Trade, which recorded a surplus during the period 1995-2000, with the exception of 1998, which witnessed a sharp decline in world oil prices that plunged to almost US$10 per barrel.

- Trade in services

During 1995-2000, Trade Balance in services witnessed a continuous deficit. The deficit increased from YR 28,780 million in 1995 to YR 95,747 million in 2000, with an annual growth rate of about 27.2 per cent. Services deficit ratio to GDP increased from 5.63 per cent in 1995 to 6.94 per cent in 2000. The continuation of this deficit, throughout this period, is due to the following:

 The exceptionally high freight costs and insurance payments for imported goods:  Increased payments on commercial, professional and technical services by oil companies;  Payments for traveling abroad;  Full operations of shipment and insurance on maritime foreign trade are carried out by foreign companies;  High cost of imported constructional services; and  Tourism sector's limited earnings and low rate of growth, compared to its potentialities.

4. Domestic trade in services

Yemen lacks, as do many other LDCs, accurate figures on domestic trade in services, including foreign direct investment and its composition, especially as no specific categorization of services is available. WT/ACC/YEM/3 Page 12

Within the framework of the Structural Adjustment Program the Government has made a number of legal and institutional reforms that aim at liberalizing trade, attracting foreign investment, and encouraging joint ventures with local private sector.

Nevertheless, Yemen has not been able to attract a significant amount of foreign direct investment (FDI). The highest amount reached so far was in 1993, when FDI topped US$897 million. During the 1995-1998, the total FDI inflow was negative at US$316 million. Most FDI inflows were in the form of oil companies spending; hence, its fluctuation was subject to oil projects implementation.

5. Information on financial movements related to nationals working abroad, remittances, etc.

Yemeni expatriates' remittances are considered an important source of revenue for economic development. They constitute the second foreign currency earner next to oil revenues. They also contribute to the transfer of technical skills gained abroad. Remittances were officially estimated at US$1,121 million and US$1,472 million in 1995 and 2000, respectively. However, it is quite difficult to accurately estimate these figures due to non-banking transfers.

6. Information on growth in trade in goods and services over recent years and forecasts for years to come

Foreign and domestic trade in Yemen grew considerably between 1995 and 2000. Imports value increased from YR 172.7 billion in 1995 to YR 401.8 billion in 2000, an annual average growth rate of 18.4 per cent. Export earnings increased from YR 99.9 billion to YR 662.2 billion, with a growth rate of about 46 per cent during the same period. The increase of the dollar's exchange rate for the riyal contributed to the increase of such nominal growth rates.

Domestic trade, represented by wholesale and retail trade, grew by an average of 5.9 per cent. Its contribution to GDP (at constant prices) increased from 5.9 per cent to 6.0 per cent in 1995 and 2000, respectively. The number of workers in this sector increased from 295,000 to 407,000, around 10.8 per cent of the total employment.

The Second Five-Year Plan predicts the increase in non-oil goods exports by an average 17 per cent and the reduction of oil export revenues by an average of 3.2 per cent. The total goods exports, therefore, represented a negative growth by an average of 0.2 per cent. Oil exports participation in total goods exports would be reduced to 76.7 per cent in 2005. As a consequence, goods exports are expected to be reduced to 28.7 per cent of GDP. Imports are expected to increase by seven per cent and its contribution in GDP to 28.1 per cent. As a result of the growth in imports and reduction in exports, the Balance of Trade surplus is expected to be reduced to 0.6 per cent of GDP.

III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES AFFECTING FOREIGN TRADE IN GOODS AND TRADE IN SERVICES

1. Powers of executive, legislative and judicial branches of government

- Powers of the Executive

The President and the Council of Ministers exercise the executive power, on behalf of the people, and in accordance with provisions laid down in the Constitution. The President of the Republic is the Head of the State and is elected through direct and competitive elections for a seven year term. In collaboration with the Government, the President draws up the general policy of the State and supervises its implementation. In addition, the President issues decisions and decrees on treaties and agreements WT/ACC/YEM/3 Page 13 ratified by the House of Representatives. The President also endorses agreements that fall within the jurisdictions of the Council of Ministers.

The Council of Ministers is the highest executive and administrative body in the State. It is entrusted with the following:

 Preparing the State Economic Plan and the annual public budget, and supervising their implementation;  Preparing the Final Accounts Statements;  Drafting laws and decrees, and their submission to the House of Representatives or to the President according to their mandates;  Approving treaties and agreements before submitting them to the House of Representatives or to the President according to their mandates;  Supervising the organization and administration of monetary, credits, and insurance regimes; and  Signing loan agreements within the framework of the State's General Policy and in accordance with the Constitution.

- Powers of the Legislative

The House of Representatives is the legislative branch of the State that ratifies laws, decides on the State's general policy, and approves the general plan of economic and social development, annual public budget, and the final account statements. It also monitors the performance of the executive branch.

The House of Representatives consists of 301 members, who are elected by the people through direct and competitive elections for a six year term. Yemen is divided into equal electoral constituencies in terms of population distribution.

The Shura Council (consultative) was established by a Presidential Decree to propose studies and recommendations that would assist the Government in drawing development strategies. The Shura Council exercises its mandate within the constitutional provisions governing its works. It consists of 111 members, of well-experienced, qualified, and social personalities. Members are Presidential appointees and shall not be members in either the House of Representatives or local councils.

- Powers of the Judicial

The Judiciary is a financially, administratively and judicially independent power. The Public Prosecutor's office is a part of the judicial institution. Courts settle all disputes and pass sentences on crimes. Judges rule in accordance with the law, and no influence whatsoever is exerted on their judgment. No authority is allowed to intervene whatsoever in any legal proceedings. Any kind of intervention is considered a criminal act punishable by law.

2. Government entities responsible for making and implementing policies affecting foreign trade

 The Ministry of Industry and Trade is responsible for establishing and implementing trade policies, including the supervision of insurance services, commercial and industrial intellectual property rights.  The Ministry of Planning and Development is responsible for formulating and implementing economic policies.  The Ministry of Finance is responsible for formulating and implementing financial policies. WT/ACC/YEM/3 Page 14

 The Customs Authority, supervised by the Ministry of Finance, is responsible for customs tariffs and procedures.  The Taxation Authority, supervised by the Ministry of Finance, is responsible for tax collection.  The Central Bank of Yemen is responsible for formulating and implementing monetary policies, banking services procedure, and banking and currency exchange licensing.  The Ministry of Agriculture and Irrigation is responsible for implementing sanitary and phytosanitary measures.  The Ministry of Fisheries is responsible for fisheries research, surveillance, control, resource management, training, quality control and exports.  The Ministry of Tourism and Environment is responsible for tourist and environmental services.  The Ministry of Communications is responsible for postal and telecommunications services.  The Ministry of Public Health and Population is responsible for health services and population issues.  The Ministry of Social Affairs and Labor is responsible for movements and work of natural persons.  The Ministry of Culture is responsible for the intellectual property rights related to cultural aspects.  The Ministry of Transportation and Maritime Affairs is responsible for transportation services.

3. Division of authority between central and sub-central governments

Local Councils Law No. 4 of 2000 determines the authority of central governmental organs in drawing the general policies, formulating regulatory rules, exercising supervision, training and qualification as well as implementing projects that local councils face difficulties to implement, upon a request from local councils, or if projects are of a national magnitude.

Executive organs in governorates exercise the role of central Government concerning the implementation of government activities and administrative oversight on local districts' branches.

The executive local organs in local districts represent the administrative and executive body of the local council. They establish, prepare, and manage all services and development projects embodied in the economic plan and annual public budget for localities.

4. Any legislative programs or plans to change the regulatory regime.

The Constitution of Yemen stipulates that the House of Representatives must enact all laws.

5. Laws and Legal Acts

A list of laws and legal acts is attached (Annex 2 refers).

6. Description of judicial, arbitral or administrative tribunals or procedures

The Judicial Law No. 1 of 1990 regulates courts' affairs in all governorates, their types, levels and jurisdictions, including judges' rights and duties. According to the law, courts are divided into primary courts, courts of appeal, and the Supreme Court.

Yemen emphasizes the importance of enhancing and improving the role of the judiciary, and revitalizing and updating the judicial structure to cope with the current reform transformations and WT/ACC/YEM/3 Page 15 changes. This orientation serves the development process and the economic, financial and administrative reforms, and creates suitable conditions for investment.

Republican Decree No. 378 of 1999 establishes Commercial Courts of primary level, and departments of appeals in order to accelerate commercial disputes settlements.

Commercial courts and appellate courts are located in the capital and the main trade governorates, namely, Aden, Taiz, Mukala, and Hodieda. However, their mandates cover all the governorates in Yemen. Disputing parties have the right to resort to arbitration according to the Republican Decree on Law No. 22 of 1992 pertaining to Commercial Arbitration.

IV. POLICIES AFFECTING TRADE IN GOODS

1. Import Regulation

(a) Registration requirements for engaging in importing

Natural and legal Yemeni Importers should obtain Commercial Registration through the General Directorate of the Commercial Registrar at the Ministry of Industry and Trade or its branches in accordance with Decision No. 314 of 1996, which defined the requirements for obtaining an importation registration. The importation registration procedures are a simplified, inexpensive and convenient regulatory means.

(b) Characteristics of national tariff

National tariffs are prepared in accordance with Tariff nomenclatures issued by the World Customs Organization and based on the Harmonized Commodity Description and Coding System (HS 1996). The Government of Yemen has carried out a number of reductions in tariff schedules during the First Five-Year Plan 1996-2000. Customs reductions were accompanied by comprehensive administrative reforms where customs procedures were simplified and became more transparent.

The new Automated System for Customs Database (ASYCUDA) has been manually applied since the end of 1997. Currently, this system is gradually applied automatically for processing of customs data, collection of fees and taxes, and goods clearance. The Customs Authority is following up the amendments and add-ons of HS 2002, and intends to include them under the applied tariffs after completing the legislative procedure for their issuance.

- Tariff Schedules

The Government has carried out the following chain of reduction amendments on the customs tariffs schedules:

 In 1996, customs duties were reduced from 15 bands, ranging from five per cent to 200 per cent, to only five bands, ranging from five per cent to 70 per cent.  Duties were also reduced, for the second time in the same year, to four bands, ranging from five per cent to 30 per cent, along with reducing tariffs of most goods included in the fourth band, from 30 per cent to 15 per cent. The remaining goods of the fourth band, which were subject to 30 per cent and 70 per cent, were fixed at 30 per cent duty.  Customs tariffs were partially amended, for the third time in the same year, duties were reduced on most goods from 15 per cent to ten per cent, and on some goods from five per cent to four per cent. The minimum rate was four per cent and the maximum was 30 per cent, within the five bands. WT/ACC/YEM/3 Page 16

 In 1997, the four bands' customs tariffs were reduced to range from five per cent to 25 per cent, in addition to reducing duties on some goods from 15 per cent to ten per cent.

- Customs tariff rate

There are four bands of customs duties applicable to all imported goods. Customs rates are levied on an ad valorem basis with a weighted average rate of 10.5 per cent.

There are 3,134 items, according to (HS) classification, subject to ten per cent tariff rate or less, which represent about 51 per cent of the total number, equals 6,237 items.

Tariff Rates Distribution

% of imported value Tariff Rate % Number of Item (HS) % of item (1998) 5 1405 23 42.4 10 1729 28 25 15 2329 37 23.4 25 774 12 9.2 Total 6237 100 100 Source: Customs Authority

(c) Tariff quotas, tariff exemptions

Currently, tariff quotas are not applicable in Yemen. Tariff exemptions are as follows:

Goods exempted according to the Tariffs Law No. 37 of 1997:

 The Holy Qura'an;  Cash bank notes;  Valid travel checks;  Serial numbered signed stocks and bonds; and  Non-circulated coins (except golden coins).

Exemptions included in Customs Law No 14 of 1990:

 Donations and contributions for the Government, local councils, NGOs, and social charity associations, subject to specific conditions and procedures;  Exemptions for imported diplomatic personnel effects for the heads and members of diplomatic missions, in accordance with international agreements;  Machinery, equipment, tools, and imported items by the Ministry of Agriculture and Irrigation for agricultural utilisation in Government's projects, fishery and agricultural inputs, equipment, machinery, and spare parts utilised in agriculture and fishery;  Trade samples;  Exemptions for local and foreign investment projects, in accordance with the Investment Law; and  Imports under agreements with international organizations and donor countries.

(d) Other duties and charges

Other duties and charges levied on imports as well as fees and charges levied on the services rendered will be submitted in a separate annex at a later stage upon their final receipt from respective authorities. WT/ACC/YEM/3 Page 17

(e) Quantitative import restrictions

All goods are allowed to import into Yemen except goods that are contrary to Islamic legislation (SHAREA'A), environment, health, and national security. A list of prohibited imports will be submitted at a later stage upon receipt from respective authorities.

(f) Import licensing procedures

Import licensing was abolished according to Law No 16 of 1996 on Foreign Trade. Upon accession and in case this system is needed, it will be implemented in accordance with the WTO agreements (Annex 3 refers).

(g) Other border measures

No other border measures apply, except measures related to sanitary and phytosanitary aspects, and technical regulations and standards.

(h) Customs valuation

The customs valuation system, under the effective Customs Law, is based on Brussels Definition of Value. Customs duties are calculated according to (C.I.F.) valuation for all imports on the date of customs registry declaration. Financial and technical assistance would be needed to fully comply with WTO agreements (Annex 4 refers).

(i) Other customs formalities

Imported goods are released upon completion of the procedure of reviewing documents, and payment of relevant duties. In case documents are delayed, and the importer wishes to release the goods for any reason, duties shall be paid on the value proposed by the Customs Authority until the documents arrival, which will prove the real value.

(j) Pre-shipment inspection

Currently, there is no pre-shipment inspection regime in Yemen. In case of using such a system, it will be in accordance with WTO agreements upon accession.

(k) Application of internal taxes on imports

A consumption tax rate, equal to ten per cent of the goods' value, is collected on domestic and imported goods in accordance with Law 70 of 1991, amended by the Republican Decree on Law 23 of 1999 pertaining to taxes on production, consumption and services. The following tables are annexed to the Law:

 Table 1 contains 40 items of domestic and imported goods subject to production, consumption, and service tax, with a rate less or more than ten per cent;  Table 2 contains domestic and imported goods exempted from production, consumption, and service tax.

(l) Rules of origin

Currently, non-preferential rules of origin govern bilateral agreements; no specific value added percentage is imposed. Preferential rules of origin contained in two preferential agreements, WT/ACC/YEM/3 Page 18 signed with Kingdom of Saudi Arabia and Republic of Iraq, require a minimum of 40 per cent local value added on imported goods into Yemen.

In principle, each customs declaration must be accompanied by an invoice endorsed by the Chamber of Commerce or any other body accepted by the Customs Authority, which establishes the correctness of prices and origin. A Yemeni or Arab consulate mission, when present in the city where they are issued, should endorse such invoices.

The origin of goods, in accordance with the Customs Law 14 of 1990, is indicated as follows:

 The origin of goods is the country of their production, and the source of goods is the country from which they have been directly imported.  Goods imported from a country other than the country of origin, after being placed for consumption in that country, will be subject to the tariffs of the country of origin or the country of source, whichever is higher.  If the goods have had value added in a country other than the country of origin, they shall be subject to the tariffs applied to the country of origin or the country of manufacture according to the level of manufacture.  The country of origin is the country where goods' tariff code changes into another code due to manufacturing process.

(m) Anti-dumping

(n) Countervailing duty

(o) Safeguard regimes

According to Articles 12 and 13 of Customs Law No. 14 of 1990, it shall be permissible through a Republican Decree pending proposals made by the Tariffs Council, to:

 Subject imported goods to compensating duties in the following two cases:

 When the country of origin provides direct subsidies to exports.  When a country reduces the prices of its products in a manner that leads to Yemen's domestic products depression.

 Adopt appropriate measures needed when a country adopts harmful measures to the interests of the national economy.

As a remedy, a Republican Decree may impose customs duties on some imported products. However, these duties shall not exceed the double normal tariff, and shall not be less than 25 per cent of the value of the imported products.

The Pan-Arab Agreement for Trade Facilitation and Development, to which Yemen is a signatory, approved the application of internationally recognized anti-dumping, countervailing, and safeguard measures on trade among Arab countries. Yemen is currently in the process of finalizing local laws concerning anti-dumping, countervailing, and safeguard measures, and establishing the administrative institutions, along with the appropriate staff training, to be responsible for their implementation in accordance with WTO agreements.

Currently, Yemen is not applying countervailing duties, anti-dumping duties, and safeguard measures. Equally, its exports have not been subject to such duties/measures. In case of using such a system, it will be in accordance with WTO agreements upon accession. WT/ACC/YEM/3 Page 19

2. Export Regulation

(a) Registration requirements for engaging in exporting

Yemeni natural and legal exporters are required to obtain a Commercial Registration Permit (Export Category) in order to engage in export activities. Such licensing is available at the branches of Ministry of Industry and Trade.

The exportation registration procedures are a simplified, inexpensive and convenient regulatory means.

(b) Customs tariff nomenclature, types of duties, duty rates, weighted averages of rates

Exports are classified according to HS classification, for statistical purposes. However, no tariff duties or taxes are levied on exports.

(c) Quantitative export restrictions, including prohibitions, quotas and licensing systems

There are no quantitative restrictions, prohibitions, or quotas on exports; however, the following products require technical clearance from competent authorities:

 Fish and marine exports require clearance from the Ministry of Fisheries. This requirement, however, aims at regulating and enforcing safety and inspecting measures on fish exports and issuing the appropriate sanitary certificate, and the approval is automatically granted. This process also aims to maintain the good reputation of the Yemeni fish exports in accordance with the requirements of importing countries;  Ingots, coins, gold, silver, platinum, jewels, and precious stones are inspected by the YSMO, to ensure specifications' conformity;  Antiquities and items of historical value require approval by the Ministry of Culture.

(d) Export licensing procedures

All licensing requirements for exports have been abolished, with the exception of goods mentioned in paragraph "c" above, where a technical clearance is needed from the respective authority, to ensure Yemen's exports reputation.

The required documents are as follows:

 Detailed information on the consignment declaration (for statistical purposes);  Certificate of origin; and  Sanitary certificate (e.g. for fish and marine products).

(e) Other measures

Yemen is not imposing any requirements for minimum export prices, voluntary export restrictions, or orderly marketing arrangements.

(f) Export financing, subsidy and promotion policies

Republican Decree No. 127 of 1997 established the Supreme Council for Export Promotion (SCEP), with the objective of promoting Yemeni exports. The main functions of the council are to study potential foreign markets, organize trade missions, organize trade fairs, and provide information to both domestic and foreign exporters. WT/ACC/YEM/3 Page 20

Currently, there are no subsidies or financing policies on exports. However, there are some considerations to establish policies in this area, if materialized, they will be guided by WTO disciplines, upon accession.

(g) Export performance requirements

Currently, there are no export performance requirements.

(h) Import duty drawback schemes

Customs Law 14 of 1990 allows for import duty drawback schemes, partially or completely, on some imported inputs incorporated in the products or goods destined for exportation. Application is based on actual cost, and never in excess of those levied on imported inputs consumed in the production of exported products.

The respective authorities verify that the refund does not exceed the actual duties paid upon importation through:

 Studying all the submitted documents (e.g. customs declaration, invoice, manifest, goods type, size and weight, etc); and  Making sure that inspection upon entry conforms to the imported goods and a payment voucher (TF50) through the re-exportation declaration of the final product, actual inspection, and review of data by Customs authorities.

3. Internal policies affecting foreign trade in goods

(a) Industrial policy, including subsidy policies

The industrial sector plays a potential important role in economic activities for improving the Balance of Trade through the increase of industrial exports, contribution to the economic development, and creation of job opportunities. The Government encourages the expansion of this sector in order to increase its share to GDP. Currently, however, there are no subsidy policies for the industrial sector or industrial exports. The Government is studying certain possibilities geared to promote and develop this sector, in conformity with the WTO provisions.

Certain policies directed at encouraging and developing the industrial production, are to:

 Utilise natural gas in electric power generation for industrial activities;  Expand infrastructure projects required for industrial investments;  Establish industrial zones to facilitate small and medium enterprises foundation, and provision with required utilities services, in order to create more job opportunities and contribute to poverty reduction; and  Achieve economic diversification of production as well as more contributions of industrial sector to GDP.

(b) Technical regulations and standards

The Government has long been aware of the importance of the standardization and metrology to protect human, animal, and plant health as well as the environment. To this end, the Government issued Law No. 44 of 1999 on Standardization, Metrology, and Quality Control, in addition to the Republican Decree No. 52 of 2000 on the establishment of the Yemeni Standardizations and Metrology Organization (YSMO). WT/ACC/YEM/3 Page 21

As a financially and administratively independent organization supervised by the Council of Ministers, the YSMO is in charge of issuing the accredited specifications and standards. It prepares draft specifications and metrology through specialized committees, based on specifications issued by the Arab Industrial Development and Mining Organization, regional organizations, Codex Alimentarius, and the International Standardization Organization (ISO). The drafts are circulated to respective agencies to receive their comments and proposals before the approval and issuance to ensure that the approved specifications would comply with the international standards. The specifications are published in the official Gazette, the Specifications Magazine (a monthly publication issued by the YSMO), and two wide spread daily newspapers for five days.

In collaboration with the other respective agencies at customs points, the YSMO:

 Allows the exportation of goods and products having a compliance certificate issued by YSMO; and  Releases imported goods that comply with standard specifications approved at the YSMO, and have a compliance certificate from the country of origin.

Since Yemen is in the process of accession to the WTO, the YSMO would review the existing legislation and practices, and propose their modification so that they would comply with the Agreement on the Technical Barriers on Trade. Therefore, the YSMO needs technical assistance, in particular, advanced equipment and laboratories, establishment of a technical standards enquiry unit, and training on technical specifications and standards issues in order to ensure that the YSMO acquires strong capacity, carries out its mandates successfully, and grants certificates to Yemeni exporters properly.

Other agencies, which oversee the compliance of special groups of products relating to their mandates, are:

 The Ministry of Agriculture and Irrigation is responsible for the compliance of veterinary medicines and pesticides with technical specifications, and for quarantines of animal and plant imports/exports, i.e. seeds and seedlings; and  The Ministry of Public Health and Population is responsible for the compliance of medicines, antitoxins and vaccines with technical specifications, and for the registration of drugs and cosmetics.

(c) Sanitary and phytosanitary measures

Yemen adopts certain sanitary and phytosanitary measures on plants and animals and agro- food products in order to protect consumers' health and safety, as well as plants against pests and plant diseases. Such measures are applied in conformity with prevailing international standards.

Measures taken at the borders, such as quarantine, plant quarantine, and specifications standards of imported goods, are enforced by YSMO.

Law No. 32 of 1999 on Plant Quarantine was issued to protect plant life from any diseases and pests spread, organize plant importation/exportation, and the transit of plant consignments. The Law aims at expanding international cooperation in this field, as Yemen is a member of the World Health Organization, Food and Agriculture Organization, and International Office of Epizootics. Yemen is a signatory to the International Plant Protection Convention (IPPC), and it implements its technical standards in sanitary and phytosanitary and veterinary quarantines. Commercial consignments of veterinary medicines, insecticides used for agricultural purposes, animal fodders, plants and animals, and fish are inspected in compliance with the IPPC, plant Quarantine Law No. 32 of 1999, and Law No. 25 of 1999 on the Regulation of Handling Agricultural Pesticides. WT/ACC/YEM/3 Page 22

The Ministry of Agriculture and Irrigation is in charge of issuing and implementing the SPS measures. Imported, exported, and transit plant consignments are subject to inspection; and the entry, taking out, or transit of a plant consignment needs an agricultural phytosanitary certificate issued by the respective agency in the exporting country. The Ministry, in coordination with the respective State organs, implements SPS measures, and publish them in the official Gazette and its scientific guide. The sanitary and phytosanitary measures implemented do not impede international trade, and have no discriminatory impact on trading with other countries.

Since Yemen is in the process of accession to the WTO, the Ministry of Agriculture and Irrigation needs technical assistance through the provision of equipment and stations for plant quarantine, and training on SPS issues in order to enable the ministry to carry out its mandates in conformity with the WTO Agreement on SPS measures.

(d) Trade-related investment measures

Arab and foreign capital and investors shall be on a par with Yemeni capital and investors without discrimination with respect to the rights, obligations, rules and procedures set forth in the Investment Law and regulations enacted in execution thereof.

TRIMs, as stipulated in the WTO Agreement, are not present in Yemen's Investment Law.

(e) State-trading practices

There is no state trading practices in Yemen, as stipulated by Article 17 of GATT 1994. Business enterprises owned completely or partially by the state, work in accordance with market rules. However, the Government supervises trading in petroleum products (Annex 6 refers).

(f) Free zones

Aden Free Zone (ADZ) was established under Law No. 4 of 1993 on Free Zones. ADZ has an area of 32,500 ha, including 15 sites.

The Law defines the economic activities to be performed as follows:

 Founding and establishing industrial projects and any activities related to installation, assembly, equipping and renovation of manufactured and semi-manufactured products;  The bringing in of national and foreign goods, their storage, use, and consumption as well as taking the same out of the zone;  Carrying out all processes pertaining to goods in the Free Zone such as sorting, cleaning, blending, mixing, packaging and repackaging, breaking, segmenting, assembling and modifying shape or condition as well as maintaining and other activities that are required by trade conditions and market needs;  All services; financial, banking, insurance, and commercial activities;  Constructing hotels, tourist utilities and installations and sports complexes;  All building and construction works, as well as maintenance of ships, aircraft and various means of transport;  Supplying ships, airplanes and other means of transport with fuel, oil, foodstuffs, beverages, tobacco, and any other materials necessary for their operations; and  Any profession, vocation, and other works required by activities within the Free Zone.

According to the Customs Law 14 of 1990 and the Free Zones Law 4 of 1993, goods coming out of the free zones into local markets are considered as imported from abroad and are subject to customs duties, other taxes and fees, and usual customs procedures. WT/ACC/YEM/3 Page 23

(g) Free economic zones

Currently, there are no free economic zones in Yemen.

(h) Trade-related environmental policies

According to Law No. 26 of 1995 on Environment Protection, the Council of Ministers may prohibit, completely or partially, the importation or exportation of dangerous and poisonous materials, and their use, sale, or distribution.

The Law prohibits the establishment of or investment on projects, which are harmful to environment, or increase pollution. There are goods prohibited to import for environmental reasons in accordance with Ministerial Decision No. 148 of 2000.

(i) Mixing regulations

Not applicable.

(j) Government-mandated counter-trade and barter

The Government does not engage in any counter or barter trade, however, the private sector may practice this type of trade, with no intervention by the Government or banks.

(k) Trade agreements leading to country-specific quotas allocation

There are no trade agreements that include specific quotas for foreign countries. Should quotas be applied, they will be in harmony with WTO rules upon accession.

(l) Government procurement practices

Government procurement is conducted in accordance with Law No. 3 of 1997 governing tenders, auctions, and governmental warehouses. All government procurement for ministries, governmental agencies, public enterprises and companies, or companies in which Government owns at least 50 per cent of their capital (with the exception of the Ministry of Defense), is conducted through public and published tenders.

Government procurement is subject to supervision and monitoring by the High Committee for Tenders and its branches in the governorates. This committee is responsible for announcing, receiving, evaluating, and awarding tenders.

There are two types of tenders:

 Public tenders, which are open for all competitors to obtain the best offers in public works, construction, maintenance, and the procurement of equipment and the like. Tenders are published in various media channels and in the Official Gazette;  Limited tenders, which are open for a minimum of three competitors. These tenders are not published in mass media.

(m) Regulation of trade in transit

Customs Law No. 14 of 1990 governs trade in transit, in accordance with conditions laid down by the Customs Authority related to parcel compressing, means of transport, guarantee rendering, and other relevant commitments. WT/ACC/YEM/3 Page 24

Trade in transit is carried out by various transport means under Customs Authority's supervision.

4. Policies affecting foreign trade in agricultural products

The state-owned Agricultural Credit Bank is entrusted to grant loans to farmers to enable them to buy tractors, pumps, motors, seeds, fertilizers, and animal fodder. The bank's policy does not discriminate in favor of a particular crop or any other agricultural product whether directed to export or domestic market.

(a) Imports

Policies affecting imports are centered on the collection of customs duties and taxes, as well as sanitary quarantine and standard specifications.

(b) Exports

Currently, there are no restrictions, or subsidies on agricultural exports. However, Yemen will abide by rights and obligations of LDCs within the framework of the Agriculture Agreement, upon accession.

(c) Export prohibitions and restrictions

There are no prohibitions or restrictions on agricultural exports except for environmental considerations, and for the purpose of maintaining good reputation of Yemeni agricultural products; a technical clearance is to be obtained from Ministry of Agriculture and Irrigation for such exports.

(d) Export credits, export credit guarantees or insurance programmes

Currently, there are no programs for export financing, export credits, or national export credit guarantees. However, Yemen is contemplating the establishment of a specialized bank for export development that will abide by WTO disciplines, upon accession.

(e) Internal policies

The Government encourages agriculture through:

 Preparation of studies and researches related to agriculture, and participation in financing the infrastructure needed for marketing agricultural products.  Enhancement of rural development and poverty alleviation.  Contribution to efforts combating pests and other agricultural diseases.  Encouragement of agricultural production and introduction of modern technology to achieve higher levels of food supplies.  Development and promotion of agricultural exports.

5. Policies affecting foreign trade in other sectors

(a) Textiles regime

Yemen does not currently impose any restrictions or quotas on textiles importation. WT/ACC/YEM/3 Page 25

(b) Policies affecting foreign trade in other major sectors

Currently, there are no policies affecting foreign trade in other major sectors.

V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME

1. General

(a) Intellectual property policy

Since 1940s, there had been limited intellectual property rights protection in Yemen, where certain aspects of intellectual property rights were included in Aden Colony laws of 1945. Among these laws were the Copyright Law No. 32, the Industrial Designs Law No. 43, the Patent Law No. 111, and the Trademarks Law No. 151. When the former Southern Yemen gained its independence in 1967, those laws were included in the Civil Law enacted in 1978. The Law had a specific section under the title "Intellectual Right". As for the former Northern Yemen, Law No. 45 of 1976 was issued to regulate trademarks.

After the unification of the two former parts of Yemen, a Republican Decree enacting Law No. 19 of 1994 on Intellectual Right was issued. By virtue of this law, all Intellectual Rights laws and regulations, applied in the past, were abolished. The Law aims at protecting the copyrights of the author, inventor, and discoverer to ensure creativity and the promotion of technical development, and to secure the benefits of innovation in literary, scientific and technical realms. The Law also regulates the different aspects of the intellectual property rights, such as copyright, creative work, the right of discoverer, the right of inventor, trade marks, and industrial designs.

Other provisions to ensure enforcement of intellectual property rights are found in Customs Law, Law on the Press and Publications, and Commercial Law.

Ministry of Industry and Trade issued Decision No. 353 of 1995 on implementation of trademarks regulations, and the Ministry of Culture issued Decision No. 126 of 1999 on the establishment of a special department for Intellectual Property Rights, within the General Directorate for Artistic Classification and Intellectual Property.

Nevertheless, it must be emphasized that the legal, administrative, and institutional infrastructure for intellectual property rights protection have not been completed yet. Government agencies, responsible for intellectual property rights protection, need to be strengthened and modernized, including provision of equipment such as computers and enhancement of personnel capacity building. In particular, it should be noted that the cost to achieve efficient enforcement for such protection requires considerable financial resources, which the budget of an LDC cannot afford.

As Yemen is in the process of accession to the WTO, technical and financial assistance to complete necessary institutional and personnel capacity building to effectively implement the high level of protection of intellectual property rights would be needed. An appropriate transitional period is, therefore, needed to commensurate with the country's development, financial, and trade circumstances as one of the Least Developed Countries.

(b) Responsible agencies for policy formulation and implementation

The Ministry of Industry and Trade is responsible for regulating and protecting industrial and trade intellectual rights. WT/ACC/YEM/3 Page 26

The Ministry of Culture is responsible for regulating and protecting copyrights and neighbouring rights.

(c) Membership of international intellectual property conventions and of regional or bilateral agreements

Yemen has been a member of the World Intellectual Property Organization since 1979. Currently, it is not a party to international intellectual property rights agreements.

(d) Application of national and m.f.n treatment to foreign nationals

The law provides for national treatment and m.f.n treatment to natural and legal persons of foreign countries.

(e) Fees and taxes

Registration of creative activities (copyrights) is rendered free of charge, until fees are determined for such registration services.

Registration fees for trademarks and patents.

No. Measure Fees in YR 1 Application form for product or service trademark 3,000 2 Trademark registration 9,000 3 Replacement for lost certificate 6,000 4 Protest to trademark registration 6,000 5 Application for trademark transfer and mortgage 7,500 6 Application for trademark deletion 3,000 7 Application for trademark renewal. 12,000 8 Invention registration 3000

Registration fees for industrial designs

No. Measure Fees in YR 1 Application for deposition of industrial design 20,000 2 Registration fees 10,000 3 Application for registration of modifications to data of design owner 10,000 4 Fees for obtaining a true copy 10,000 5 Application for obtaining data from registry 10,000 6 Fees for replacing a lost registration certificate 10,000 7 Fees for raising a grievance to Grievance Commission 10,000 8 Application for registering the transfer of property, mortgaging, or waiving 20,000 the industrial design. 9 Application for registering a licence to use the design 20,000 10 Application for deletion 5,000 11 Application for renewal of industrial design 20,000 (a) when submitted during the last year of protection 2,000 + fine, equals to (b) when submitted during the 3 months after expiry of protection. 5,000 per month Source: Ministry of Industry and Trade. WT/ACC/YEM/3 Page 27

2. Substantive standards of protection

(a) Copyright and related rights

In accordance with Intellectual Right Law, copyrights are granted to distinguished creative works in the field of arts, literature and science regardless of form, purpose, importance, or production process.

Copyright, according to the law:

 Include translating, adapting, transforming, arranging or altering the work in a manner that makes it creative or new, without violation to the original author's rights;  Include photographic works;  Do not extend to any work that became public domain, or added to national archives, or works that are not eligible for copyrighting such as collections contained old heritage, or popular creation, folklore, or works of unknown authors:  Extend to the economic utilisation or acquiring a reward for the authors' whole span of life. After the author's death, the material right for economic use extends to the heirs for a 30-year period, calculated from 1 January of the author's death year;  Cinematographic and television film producers have the right to utilise their works economically, or to acquire a reward from whoever uses it for a 25 year period, calculated from 1 January of the production year;  Portraits right holder has the right to utilise it economically, or acquire a reward from whoever uses it for a ten year period, calculated from 1 January of publishing year;  Radio and television stations have the right to utilise their programs for two and three years, respectively. However, authors, performers, and their heirs have the right to utilise their works in accordance with the Law.

Protection covers the following works:

 Scientific, literary, and artistic writings;  Drawing, painting, architectural, sculptural, engraving lithography works, and the like;  Speeches, lectures, sermons, and other works of similar nature;  Theatrical and dramatic-musical works;  Musical compositions, with or without words;  Photographic and cinematographic works;  Maps, geographic drawings, and sketching works;  Illustration works, in any related arts;  Audiovisual works prepared for Radio or TV broadcasting;  Works of applied arts; and  Protection also covers any work through writing, sound, drawing, photographing, illustrating, or movement.

(b) Trademarks

According to Intellectual Right Law:

 A trademark is the mark that is taken as a symbol to distinguish a product of an industrial, agricultural, commercial project, an extracting industry, or to indicate the services of an establishment;  Registration of marks is not permitted except to a production or service establishment. The mark has to be distinguished clearly from other marks. The law does not allow for WT/ACC/YEM/3 Page 28

the registration of trademarks that are completely or partially identical, imitated, or translated to a known mark/a known trade name;  Articles 92-95 describe the procedures and steps for trademarks registration starting with the submission of an application, inspection, publication, protesting, and issuance of the registration certificate;  Trademark registration prevents others from its usage without the owner's approval; and  Protection for trademarks is effective for a ten year period from the date of registration, unless it has been extended during the last year of its validity for another period. If three months have elapsed without renewal, the relevant department at the Ministry of Industry and Trade automatically deletes the mark registration after writing a notice to its owner within a 2-month period from the date of its expiry. The relevant court has the right to delete the trademark if its usage has been ceased for five consecutive years without an acceptable reason.

(c) Geographical indication

There are no specific rules covering geographical indication, including appellations of origin. However, the law does not exclude the registration and protection of geographical indications.

(d) Industrial designs

The Intellectual Right Law regulates registration of industrial designs and drawings. An industrial design is an innovative external template characterized by newness and aims at giving industrial item special adornment using specific arrangement for colours or lines, or selecting a specific shape.

Articles 106-108 of Intellectual Right Law include measures and procedures to register the design or the model, i.e. application, inspection, and issuance of registration certificate.

Registration prevents others from using the industrial design/model without permission from the licensee.

Registration protects the industrial design/model for a five year period from the date of application, and may be renewed for two consecutive times – five years each.

(e) Patents

According to Intellectual Right Law, an invention is an innovation that has a solution for a technical problem, and has a positive outcome in any field of economy, culture, health or defense. Such invention might not be related to technical work, such as obtaining new kinds of seeds, or discovering new ways of medical treatment. Invention must be applicable in industry or agriculture.

Articles 68-73 of Intellectual Right Law determine steps and procedures to register an invention and grant patent rights, which include application, inspection, and registration of invention in the patent registrar.

The law prohibits granting patents for inventions that violate the Islamic legislation (SHAREA'A), and Yemeni social norms.

The Ministry of Industry and Trade is responsible for patent registration. WT/ACC/YEM/3 Page 29

(f) Plant variety protection

There is no special legislation for plant variety protection. However, the Intellectual Right Law does not grant patents registration for biological methods to produce new types of plants or animals.

(g) Layout designs of integrated circuits

Currently, there is no specific legislation for covering layout design of integrated circuits rights.

(h) Requirements on undisclosed information, including trade secrets and test data

The current law has no specific requirements on undisclosed information, including trade secrets and test data.

(i) Any other categories of intellectual property

The Intellectual Right Law stipulates the protection of creative proposals for production development.

3. Measures to control abuse of intellectual property rights

The Intellectual Right Law and the Law on Competition Promotion and Prevention of Monopoly and Trade Deception define the measures to control the abuse of intellectual property rights as follows:

Article 81 of the Intellectual Right Law states that:

 if no agreement on licensing the use of the invention with reasonable terms has been reached at with the patent owner, the person who would like to use the invention may apply to the court for a licence to do so under the conditions decided by the court; and  in case the invention is of significant interest to the State, and no agreement on waiving the patent right or granting a licence has been reached at with the patent owner, the State may compulsorily purchase the patent under a decision made by the Council of Ministers.

Paragraph "c" of Article 4 of the Law on Competition Promotion and Prevention of Monopoly and Trade Deception, states that the application of this Law do not limit the rights accorded by intellectual property protection, trademarks protection, patents rights, and publication rights. However, its provisions are applied when the use of such rights leads to harmful impact on competition and free trading.

4. Enforcement

(a) Civil judicial procedures and remedies

Civil and commercial courts consider and settle the intellectual property rights disputes. The judgment procedures are conducted in accordance with the Law 28 of 1992 on Procedures and Civil Enforcement. The courts have considered several cases related to intellectual property rights. WT/ACC/YEM/3 Page 30

(b) Provisional measures

In case of committing infringements to intellectual property rights, provisional measures would be taken as follows:

According to Intellectual Right Law, "the owner of a trademark registry certificate or industrial design may request the court to seize products, goods, labels, and other items that have a fake trademark or imitated industrial design or model, as a provisional measure until a dispute is settled by the judiciary."

According to the Law of the Press and Publications, "the publication or newspaper may be administratively seized, under a decision by the Minister or his representative, if it has been printed, published, or circulated in contradiction to the Law. The issue is to be submitted to the court to consider the confiscation of the seized objects."

The Department of Intellectual Property in the Ministry of Culture is responsible for field inspections to seize unoriginal or fake copies of literary and artistic works.

(c) Any administrative procedures and remedies

In 1999, the Department of Intellectual Property in the Ministry of Culture was established. The department is responsible for field inspection to seize unoriginal or fake copies of literary and artistic works, and issue reports, in cooperation with other relevant agencies. The Law of the Press and Publications allows administrative seizure on literary and artistic works, if they were produced in contradiction with the law.

(d) Any special border measures

Customs Law No. 14 of 1990 prohibits entry of any foreign product that has any mark or sign indicating that the product was made in Yemen. Meantime, locally produced products are prohibited from entry or exit from Yemen, which convey a sign, label, or indication that may give the impression that they are foreign made.

(e) Criminal procedures

The following acts are considered in violation to the Intellectual Right Law:

 Imitating or forging a design, model or registered mark;  Intentionally use a drawing of an industrial design or trademark that was imitated or faked;  Intentionally use a trademark, which belongs to others, on one's products or services; and  Intentionally sell, or display for sale products that have faked design, model or mark.

Intellectual Rights Law entitles the owner of registration certificate, in order to protect intellectual rights, to ask the judicial authorities to resort to one or more of the following relief actions:

 Publish the infringement violation in newspapers;  Seize violated products, goods, etc;  Confiscate items of violation and compensation;  Destroy the items, if applicable; and  Order the abuser not to use the trademark in the future. WT/ACC/YEM/3 Page 31

Without prejudice to any stricter sanctions provided for in another law, Intellectual Rights Law punishes with imprisonment for a period not exceeding six months, or by a fine not less than YR 10,000 for committing any of the following acts:

 Infringement against copyrights of authors, discoverers, inventors, proposal holders covered by the law;  Claiming to oneself, through publishing or advertising, a publication, invention, discovery, or creative proposal made by others;  Distortion or participating in any action forbidden by the law; and  The law of the Press and Publications prohibits publishing and republishing of any writings, drawings, audiovisual tapes, musicals, or photographs, except with a legal permission by the owner of the copyrights, be it a natural or legal person.

Without prejudice to any stricter sanctions provided for in another law, the law of the Press and Publications punishes any one who commits any violation covered by the law, with a fine not exceeding YR 10,000, or by imprisonment for a period not exceeding one year. The court may close the print shop, publishing house, or outlets where the violating items are circulated. As a complementary punishment, the court may prevent the violator from practising the business for a period not exceeding one year.

Punishments indicated above do not neglect the right of the aggrieved person for compensation.

5. Laws, decrees, regulations and other legal acts relating to the above

 Republican Decree on law No.19 of 1994 on Intellectual Right.  Republican Decree on Law No. 19 of 1999 pertaining to Competition Promotion and Prevention of Monopoly and Trade Deception.  Republican Decree on Law No. 28 pertaining to Procedures and Civil Enforcement.  Law No. 25 of 1990 on the Press and Publications.  Law No. 14 of 1990 on Customs.  Minister of Supply and Trade's decision No. 353 of 1995, on trademarks regulation.  Minister of Industry and Trade No. 61 of 2002, on Designs and Industrial Designs Registration.  The Press and Publications Law No 49 of 1993, on the Press regulations.  Minister of Culture's decision No. 126 of 1999, on the establishment of the Intellectual Rights Department.

6. Statistical data on applications for grants of intellectual property rights

Industrial and commercial intellectual property rights:

List of deposited local and foreign trademarks for 1990- 2000

Year Local Foreign Total 1990 65 350 415 1991 114 228 342 1992 96 181 277 1993 139 393 532 1994 400 365 765 1995 384 1,010 1,394 1996 310 1,532 1,842 WT/ACC/YEM/3 Page 32

1997 402 1,259 1,661 1998 479 1,532 2,011 1999 314 1,247 1,561 2000 387 1,556 1,943 2001 283 174 1,757 Grand Total 3,373 11,127 14,500 Source: Ministry of Industry and trade

Patents and Industrial Designs

Year Patents Industrial models 1997 24 29 1998 20 35 1999 64 76 2000 24 32 2001 16 6 Total 148 178 Source: Ministry of Industry and Trade

Copyrights and related rights:

Recorded Tapes

Year Local Foreign 1995 15 - 1996 35 - 1997 121 14 1998 153 13 1999 117 11 2000 280 26 Total 721 64 Source: Ministry of Culture.

Other Creative Works

Type Number Year Paintings 7 1997+2000 Symbols 7 1997+98+2000 Photographic pictures 26 1998 Computer programs 1 1999 Source: Ministry of Culture

VI. TRADE-RELATED SERVICES REGIME

1. General

Most of trade-related services are run by the private sector in accordance with laws and procedures relevant to each service sector. However, radio, TV, and fixed telephone services are supplied by the State.

It is difficult to differentiate between tradable and non-tradable services represented in GDP. However, the tradable services are estimated at about 27 per cent of GDP, as indicated in the table of the GDP Structure. The most important service sectors contributing to GDP are transport, storage and communications, wholesale and retail trade, real estate and construction, and insurance and financing. WT/ACC/YEM/3 Page 33

Services Sectoral Classification:

 Professional Services;  Professional Health Services.

The Ministry of Public Health and Population is in charge of supervising and monitoring professional health services. Republican Decree on Law No. 32 of 1992, pertaining to Professional Health Services, stipulates that health services suppliers need to be, inter alia, Yemeni nationals. However, the Ministry of Public Health and Population may recruit non-Yemeni health services specialists, provided that they work under approval by the Medical Council for a renewable two-year permit. Foreign specialists may not work for private health institutions except when approved by the respective Professional Syndicate. The Yemeni Medical Council is the agency in charge of monitoring the implementation of this law as well as instructing the professional health syndicates to issue permits for health services provision.

- Medical and pharmaceutical services

According to Law 26 of 2002 on Practicing Medical and Pharmaceutical Professions, it is prohibited to practice such professions except upon licensing by the Medical Council. The same applies to invited and visitor physicians, who should be licensed before commencing work in public and private institutions. The Law also stipulates to register in the registry of the Medical Council and the Assemblies of Medical Doctors, Dentists, and Pharmacists.

- Legal Services

Law No. 31 of 1999 on Regulation of Lawyers Profession stipulates that lawyers need to be, inter alia, Yemeni nationals. The Syndicate of Lawyers is the agency in charge of licensing lawyers to practice the profession.

- Accounting, auditing and bookkeeping services

Law No. 26 of 1999 on Accounts Auditing stipulates that the applicant for a chartered accountant licence needs to be, inter alia, a natural Yemeni national. The Minister of Industry and Trade issues the licence to practice the profession, on the basis of the recommendation made by the Chartered Accountants Certification Committee. According to the law, foreign auditing companies branches or foreign natural persons shall be licensed to work in Yemen if they comply with the provisions, which require, inter alia, having a Yemeni chartered accountant(s) as partner(s), whose share should be at least 25 per cent of the establishment capital.

- Telecommunication services

According to Republican Decree on Law No. 38 of 1991 on Basic Telecommunications, amended by Law No. 33 of 1996, the Ministry of Communications is the agency responsible for implementing the laws in respect of telecommunications, and licensing the establishment and operations of private and/or public telecommunication networks. The ministry supervises the General Corporation for Cable and Wireless Telecommunications. The corporation is in charge of operating and improving the national telecommunication network. The provision of international telecommunication services is made through one company, i.e. a joint venture between the General Corp. for Cable and Wireless Telecommunications "public sector" and the British Company Cable and Wireless Ltd., which ends in 2003. The latter company supplies TACS mobile services. Two Yemeni/foreign private companies are the exclusive providers of GSM mobile services for 4 years, starting in July 2000. The Ministry of Communications licensed the private sector to operate and market global mobile personal calls (GMPCS) via satellites, on a competitive basis. Private sector is permitted WT/ACC/YEM/3 Page 34 to resell the service through telecommunications centers and provide public telephone calls services by means of prepaid cards. The Ministry conducts the administrative procedures required for licensing the private sector to operate Internet and e-mail services, on a competitive basis.

- Financial Services

- Banking Services

According to Law No. 14 of 2000 on the Central Bank, Law No. 38 of 1998 on Banks, and Regulation No. 2 of 1997 on Provisions and Procedures for Granting Licenses for Banking Activities; only the CBY is authorized to monitor and supervise the banking sector, and issue licenses for exercising banking activities. Currently, there are 17 banks (9 national banks, 4 branches of foreign banks, and 4 joint venture banks).

The policy of the CBY is to licence only the high-rated banks that have a rate of (A+) from one of the international evaluation companies, i.e. Moody, Standard & Poor, and satisfy the Basle Standards, i.e. capital adequacy ratio (8-12 per cent minimum).

For a bank to open in Yemen, the paid capital shall not be less than YR 2 billion. Foreign banks need to secure the same amount in convertible foreign currencies to establish their branches in Yemen. Paid-in Capital and reserves must be greater than 5 per cent of total obligations to depositors. A reserve account of 15 per cent of net profits is required, prior to dividends distribution or transferring, excluding amounts set for taxes and other liabilities, until reserves reach the double of the capital. The CBY has the right to modify the reserves and requirements, as needed. Any person, who has more than ten per cent of voting power in a bank, may not possess shares in the bank unless a prior written approval is issued by the CBY.

According to Law No. 21 of 1996 on Islamic Banks, foreign share holding should not exceed 20 per cent of the authorized capital.

Republican Decree No. 15 of 1996, amending Law No. 19 of 1995, on Money Exchange Activities, stipulates that only Yemeni national shall be licensed as money exchangers.

- Insurance Services

According to Law No. 9 of 1997, amending Law No. 37 of 1992, on Supervision and Monitoring of Insurance Companies and Brokers, the Ministry of Industry and Trade is the authority in charge of supervising and monitoring insurance companies and brokers. The ministry is also responsible for licensing insurance activities in accordance with the Law. The Law stipulates that insurance and reinsurance companies need to be owned by natural or legal Yemeni persons holding at least 75 per cent of their shares. Foreign insurance companies, covering activities in Yemen, may only exercise reinsurance activities through a branch or an agency located in Yemen.

- Maritime transport services

The Ministry of Transportation is in charge of supervising maritime transport. Yemen has six main seaports, namely, Aden, Hodieda, Mukala, Mokha, Al Salef, and Nashton. These ports are equipped for servicing cargo, vessels, and containers handling. The Aden Containers Terminal is being managed and operated by the Singapore Port Authority (SPA).

The Government is also working on the establishment of a new port in the Island of Soctra, in addition to two other ports. It has encouraged private sector activities in the transport sector and, WT/ACC/YEM/3 Page 35 therefore, initiated privatization steps in the field of shipping and maintenance services. There are up to 40 private companies working in shipping, cargo handling and ship servicing and supplies.

Republican Decree No. 15 of 1994 on Maritime Law, regulates maritime transport by means of organizing the registration and documentation of ships in the relevant maritime agency, hiring of vessels, maritime transport contracts for both cargo and passengers; maritime assistance, and guidance and towing. The Law includes general provisions on maritime insurance, and specific provisions on insurance on vessels, cargo and the like.

Services are subject to a ten per cent general sales tax of the total value of the service rendered, with the exception of services included in table 4 attached to the General Sales Tax Law No. 19 of 2001.

2. Policies affecting Trade in services

(a) Government departments, agencies, professional associations or other bodies with authority or a role relevant to the conduct of service activities

 The Ministry of Industry and Trade is responsible for insurance, and some professional services.  The Central Bank of Yemen is responsible for banking services.  The Ministry of Communications is responsible for telecommunications, and postal services.  The Ministry of Social Affairs and Labor is responsible for work and movement of natural persons.  The Ministry of Education is responsible for educational services.  The Ministry of Public Health and Population is responsible for health services.  The Ministry of Transport and Maritime Affairs is responsible for land air, and sea transportation.  The Ministry of Public Works and Urban Development is responsible for engineering and construction services.  The Ministry of Tourism and Environment is responsible for tourist and environmental services.  The Ministry of Oil and Minerals is responsible for services related to petroleum products.

Other bodies and syndicates that have a role relevant to the conduct of services activities are:

 General Authority for Maritime Affairs.  General Authority for Civil Aviation and Meteorology.  Environment Protection Authority.  Syndicate of Medical Doctors and Pharmacists.  Syndicate of Dentists.  Syndicate of Lawyers.  Association of Tourism and Travel Agencies.  Hotels Union and Hotels Association.  Association of Chartered Accountants.  General Federation for Chambers of Commerce and Industry.  Insurance Union. WT/ACC/YEM/3 Page 36

(b) Judicial, arbitral or administrative tribunals or procedures providing for the review of, or remedies in relation to, administrative decisions affecting trade in services

The following procedures are available:

 Complaint to the head of the relevant authority that issued the decision;  Resort to arbitration, as agreed between disputing parties or in accordance with the relevant law; and  Resort to courts.

(c) Provisions, including those in international agreements, concerning qualification requirements and procedures, technical standards and licensing and/or registration requirements for the supply of services

Investment Law No. 22 of 2000, the Company Law No. 22 of 1997, and laws pertaining to other service sectors, regulate the requirements and procedures qualifying for providing services, as well as technical standards for registration and classification (Annex 2 refers).

(d) Provisions governing the existence and operation of monopolies or exclusive service suppliers

The Government is the exclusive supplier of television, radio, and fixed telephone services. Tele-Yemen Company (Government joint venture with the British company Cable and Wireless) has the exclusive right to provide international phone calls services until end of 2003.

(e) Provisions relating to safeguard measures as they apply to trade in services

There are no provisions related to safeguard measures applicable to trade in services.

(f) Provisions relating to international transfers and payments for current transactions of services

Currently, there are no restrictions on international transfers and payments for financing transactions on trade in services.

(g) Provisions relating to capital transactions affecting the supply of services

Currently, there are no provisions related to capital transactions, affecting the supply of services.

(h) Provisions governing the procurement by governmental agencies of services

Law No. 3 of 1997 on Tenders, Auctions, and Government Warehouses regulates the procurement of governmental agencies (Annex 2 refers).

(i) Provisions concerning any form of aid, grant, domestic subsidy, tax incentive or promotion scheme affecting trade in services

Currently, there are no provisions concerning aid, grant, domestic subsidy, tax incentives, or promotion schemes affecting trade in services. WT/ACC/YEM/3 Page 37

3. Market Access and National Treatment

(a) Limitations on the number of service suppliers

The number of foreign services suppliers depends on economic and market needs in general. However, there are, criteria for the establishment of service projects such as:

 Area's need to the services; and  number of economic enterprises in the area.

(b) Limitations on the total value of service transactions or assets

Currently, there are no limitations on the total value of service transactions. Relevant laws identify minimum values of capital in accordance with nature of service.

(c) Limitations on the total number of service operations or on the total quantity of service output

The total number of service operations or total quantity of service output is generally dependent on market demand and economic needs.

(d) Limitations on the total number of natural persons that may be employed in a particular service sector

Labour Law No. 5 of 1995 stipulates that the number of foreign employees for services suppliers shall not exceed ten per cent of total employment.

(e) Restrictions on, or requirements of specific types of legal entity through which a service may be supplied

Law No. 22 of 1997 on Business Companies defines the requirements and types of legal entity through which a service may be supplied, in addition to conditions and regulations included in respective services sector laws.

(f) Limitations on the participation of foreign capital

Foreign capital is permissible to participate in business establishment as follows:

 No limitation on participation of foreign capital in businesses established under Investment Law; however,  Stock companies and limited partnership companies are limited to 75 per cent ownership by Yemeni nationals;  Non-Yemeni nationals may establish businesses with Yemeni partner(s) ownership of no less than 51 per cent, in accordance with Republican Decree on Law No 32 of 1991 on Trade Law, amended. WT/ACC/YEM/3 Page 38

(g) Measures providing for less than the treatment accorded to national services or service suppliers

Oil agreements give preference to local service suppliers to service petroleum operations needs, provided that the capacities related to quantity and quality are met.

Only Yemeni tourist guides are permitted to provide tourist guidance services.

Priority is given to local companies and agencies in providing services related to constructional projects of size and nature which local contractors can implement.

Foreign companies need to employ local workers in order to provide services locally.

4. Most-Favoured-Nation Treatment

In general, Yemen applies most-favoured-nation treatment according to the agreements with other countries. Preferential treatment in exception to m.f.n. would be presented in services schedules.

VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH THIRD COUNTRIES

1. Bilateral or plurilateral agreements relating to foreign trade in goods and trade in services

The Government is keen in improving commercial links with other countries. It exerts its efforts to activate joint committees and trade cooperation agreements and protocols. Yemen longs for strengthening economic ties and integration of its economy into Arab, regional and world economy (Annex 7 refers).

2. Economic integration, customs union and free-trade area agreements

In 1981, Yemen signed the Pan-Arab Agreement for Trade Facilitation and Development. An execution program was entered into force in January 1998, in the form of Pan-Arab Free Trade Area. Currently, Yemen is completing its membership in the area, and will apply the provisions for preferential treatment with other members in accordance with the agreement, upon membership.

Since 1996, Yemen has been a party to a preferential trade agreement with the Kingdom of Saudi Arabia, which entered into force in August 2000. Another agreement to establish the Free Trade Area with the Republic of Iraq was signed in August 2001 and ratified in June 2002 (Annex 7 refers).

3. Labour markets integration agreements

Two agreements were signed between Yemen and Qatar and UAE to regulate labour force issues. However, no special privileges were extended.

4. Multilateral economic cooperation, membership in the multilateral economic organizations, trade-related programmes of other multilateral organizations

Yemen is a member of several economic organizations that aim to promote economic relationships among their members. The list covers International Bank for Construction and Development (World Bank), IMF, the International Cooperation for Investment Guarantee, United Nations Conference for Trade and Development, Economic and Social Commission for Western Asia, Islamic Bank for Development, Standing Committee for Economic and Commercial Cooperation of the Islamic Conference Organization, Arab Fund for Economic and Social Development, Arab WT/ACC/YEM/3 Page 39

Monetary Fund, Council of Arab Economic Unity, Council of Arab Social Unity, World Intellectual Property Organization, Food and Agriculture Organization, International Fund for Agricultural Development, United Nations Industrial Development Organization, International Labor Organization, International Organization for Migration, World Customs Organization, World Tourism Organization, and League of Indian Ocean Rim Countries. Yemen is a member in some ministerial councils of the Gulf Cooperation Council, i.e. Sports, Labour, Education, and Health. Yemen is also a signatory to a Cooperation Agreement with the European Union since 1997, covering trade, development, economy, tourism, as well as other fields.

______WT/ACC/YEM/3 Page 40

ANNEX 1

STATISTICS AND PUBLICATIONS

The official agencies that issue annual statistics of all social and economic activities, including statistics on internal and external trade, are:

 The Ministry of Planning and Development (MPD);  The Ministry of Finance;  The Central Statistical Organization (CSO);  The Central Bank of Yemen; and  Statistical data are published in the Statistical Year Book issued by the CSO under the supervision of the MPD.

Attached Tables

Tables A:

 A/1: GNP and per capita GNP, 1995-2000 (at current prices);  A/2: Standard Classification of State's Public Budget, 1995-2000;  A/3: Production of Basic Goods, 1998-2000;  A/4: Distribution of Employed Persons, the year prior to the survey (1999);  A/5: Annual Changes in Prices for 1995-2000;  A/6-1: Balance of Payments for 1995-2000;  A/6-2: Balance of Payments for 1995-2000; and  A/7: Exchange Rate of Yemeni Rial against US$.

Tables B:

 B/1: Exports by Sections and Divisions of SITC for 1998-2000;  B/2: Imports by Sections and Divisions of SITC for 1998-2000;  B/3: Imports of ROY according to Main Economic Groups and Trade Partners for 1998-2000; and  B/4: Exports and Re-exports of ROY according to Main Economic Groups and Trade Partners for 1998-2000. WT/ACC/YEM/3 Page 41

ANNEX 2

LIST OF LAWS AND LEGAL ACTS

Laws and legal acts regulating the activity of the customs authorities; responsible agencies.

No. Law/Legal Act Responsible Agency 1 Law 14 of 1990 on Customs Customs Authority 2 Law 37 of 1997 on Tariffs Customs Authority 3 Law 35 of 1998 on Abolishment of Fees and Commission collected Customs Authority on imports when opening the customs declaration. 4 Law 14 of 1998 on the Approval of Yemen's Accession to the Customs Authority International Agreement on Harmonized System

Laws and legal acts relating to non-tariff regulation of imports and exports, trade in transit, and rules of origin; responsible agencies.

No. Law/Legal Act Responsible Agency 1 Republican Decree on Law 28 of 1991 on metrology and its YSMO tools. 2 Law 44 of 1999 on Standardization, Metrology and Quality YSMO Control. 3 Law 32 of 1999 on Plant Quarantine Ministry of Agriculture and Irrigation 4 Republican Decree of Law 38 of 1992 on the Control of Ministry of Public Works and foods and Regulation of their Circulation Urban Development 5 Republican Decree on Law 6 of 1994 on Censorship on Ministry of Culture Artistic Works. 6 Republican Decree 52 of 2000 on the Establishment of YSMO YSMO. 7 Ministerial Decision (Minister of Fisheries) No. 35 of 1998 Ministry of Fisheries on the regulation of the Exportation of Fish and Marine Products

Laws and legal acts relating to foreign investment; responsible agencies.

No. Law/Legal Act Responsible Agency 1 Republican Decree of Law 22 of 2002 on Investment. General Authority for Investment. 2 Law 35 of 1996 on approval to join the Islamic Institution Agreement Agreement on Investment Insurance and Export Credit. 3 Law 49 of 1999 on approval to join the Agreement on Agreement Settlement of Investment Disputes between a State and Citizens of other States.

Other Laws and legal acts dealing with economic issues affecting trade; responsible agencies.

No. Law/Legal Act Responsible Agency 1 Republican Decree of Law 33 of 1991 on Trade Ministry of Industry and Trade. Registration, amended. 2 Law 70 of 1991 on Production, Consumption, and Services Tax Authority Tax, amended. 3 Law 4 of 1993 on Free Zones Public Authority for Free Zones 4 Law 3 of 1997 on Tenders, Auctions, and Government High Committee for Tenders, Warehouses. Ministry of Finance. WT/ACC/YEM/3 Page 42

No. Law/Legal Act Responsible Agency 5 Law 22 of 1997 on Business Companies, amended. Ministry of Industry and Trade. 6 Law 33 of 1997 on Regulation of the Branches and Agents Ministry of Industry and Trade. of Foreign Companies. 7 Law 45 of 1999 on Privitization. Supreme Committee for Privitization 8 Law 14 of 2000 on the Central Bank of Yemen Central Bank of Yemen 9 Republican Decree on Law 19 of 1994 on Intellectual Ministry of Industry and Trade, Right. and Ministry of Culture. 10 Republican Decree on Law 32 of 1991 on Trade Law, Commercial Sector amended 11 Republican Decree on Law 25 of 1990 on Press and Ministry of Information Publications 12 Republican Decree on Law 19 of 1999 on Competition Ministry of Industry and Trade. Encouragement and Prevention of Monopoly and Commercial Defraud. 13 Law 25 of 1999 on Regulation of Plant Pesticides Ministry of Agriculture and Circulation Irrigation 14 Law 1 of 1992 on Foreign Trade, amended. Ministry of Industry and Trade.

15 Republican Decree No. 378 of 1999 on Commercial Courts Ministry of Justice

Laws and legal acts, or existing administrative instructions, which greatly affect trade in services; responsible agencies.

No. Law/Legal Act Responsible Agency 1 Republican Decree on Law 38 of 1991 on Fundamental Ministry of Telecommunications Law of Cable and Wireless Telecommunications, amended. 2 Law 60 of 1999 on Private Medical Establishments. Ministry of Public Health and Population 3 Law 19 of 1995 on Currency Exchange Activities, Central Bank of Yemen amended. 4 Law 38 of 1998 on Banks. Central Bank of Yemen 5 Law 21 of 1996 on Islamic Banks. Central Bank of Yemen 6 Law 40 of 1999 on Tourism. Ministry of Tourism and Environment 7 Law 3 of 1999 on Touristic Promotion, amended Ministry of Tourism and Environment 8 Law 26 of 1999 on Profession of Accounts Auditing. Ministry of Industry and Trade. 9 Law 31 of 1999 on Regulation of Lawyers' Profession. Ministry of Justice. 10 Republican Decree on Law 37 of 1992 on Supervision and Ministry of Industry and Trade. Monitoring of Insurance Companies and Brokers, amended. 11 Republican Decree on Law 5 of 1995 on Labor Law, Ministry of Social Affairs and amended. Labor 12 Republican Decree 32 of 1992 on Practice of Medical Ministry of Public Health and Professions. Population 13 Prime Minister's Decision 133 of 1995 on Regulation of Public Authority for Civil Aviation Aviation fees and Airport Facilities. and Meteorology WT/ACC/YEM/3 Page 43

ANNEX 3

INFORMATION ON IMPORT LICENCING PROCEDURES

Importation licensing was abolished under Law 16 of 1996 on Foreign Trade. The following products require technical clearances:

No. Item Responsible Agency 1 Seeds, seedlings, fertilizers, and insectsides. Ministry of Agriculture and Irrigation 2 Fire weapon, ammunition, explosives, and fire-works. Ministry of Interior. 3 Books, newspapers, publications, and audio-visual Ministry of Culture recordings 4 Medicines and medical drugs Ministry of Public Health and Population

The importation of animals/meat from infected areas may be stopped, for a temporary time, as a precaution, and be subject to veterinary quarantine. WT/ACC/YEM/3 Page 44

ANNEX 4

INFORMATION ON IMPLEMENTATION AND ADMINISTRATION OF CUSTOMS VALUATION AGREEMENT

1. Questions Concerning Article 1.

(a) Sales between related persons.

(i) Are sales between related persons subject to special provisions?

The current Customs Law defines business partners as any two natural or legal persons who have a mutual interest in a particular business, or one of them has an interest in the other's business, or a third person has an interest in their business, whether these two persons are corporated or incorporated.

Article 36, paragraph 5, stipulates that:

 payment of price by the purchaser is his sole real obligation to the seller;  the agreed upon price is not influenced by commercial, financial or other relations between the seller and/or his partner on the one hand, and the purchaser and/or his partner on the other, save for relations arising out of the sale itself, be such relations contractual or otherwise;  Neither the seller nor his partner, be they natural or legal persons and whether in direct or indirect manner shall have revert to them any part of the outcome of the subsequent sale of the goods or their relinquishment or use.

(ii) Is the fact of inter-company prices prima-facie considered as grounds for regarding the respective price as being influenced?

Article 36, paragraph 5, of Customs Law presumes that the sale took place in a free competitive market between a purchaser and a seller independent of each other.

(iii) What is the provision for giving the communication of the afore-mentioned grounds in writing if the importer requests so? (Article 1-2(a))

Importers shall be given a rejection form for justification.

(iv) How has Article 1-2 (b) been implemented?

The current Customs law does not incorporate such an Article, as it applies Brussels definition of customs valuation.

(b) Price of lost or damaged goods

Are there any special provisions or practical arrangements concerning the valuation of lost or damaged goods?

Article 21 of the Customs law stipulates that the tariff in force shall be applied to the goods subject to an ad valorem duty according to their condition. As for the goods that are subject to a determined specific duty, then such duty shall be collected on them in full, regardless of their WT/ACC/YEM/3 Page 45 condition, unless Customs ascertains that they have been damaged by a force majeure or a sudden accident, the amount of the specific duty shall be reduced in equivalence to the estimated damage.

The percentage of damage is determined by a decision issued by the Chairman of the Customs Authority or his representative. Concerned persons can object to such a decision and complain to the arbitration committee established by Article 77 of Customs Law.

Article 43 of the Customs Law also stipulates that if a shortage in the number of pieces or parcels unloaded from that entered in the cargo statement is established, or a shortage in the amount of excess goods surpassing the ratio of allowance permitted by resolution of the chairman of the Authority is established, then the vessel's captain or his representative must justify such a shortage and support it with documents of established relevance. If the submission of such documents is not possible immediately, a period not exceeding a six-month grace may be granted for their submission after taking such surety as to guarantee the right of the Customs Department.

2. How has the provision of Article 4 to allow the importer an option to reverse the order of application of Article 5 and 6 been implemented?

Yemen applies Brussels definition of customs valuation. Currently, there is no provision in the Customs Law concerning the implementation of customs valuation in accordance with Article 4, and intended for the purpose of implementing Article 7 of GATT 1994, which requires financial and technical assistance.

3. How has Article 5.2 been implemented?

Currently there is no such a provision in the Customs Law, please refer to answer No. 2.

4. How has Article 6.2 been implemented?

There is no such a provision in the current Customs Law, please refer to answer No. 2.

5. Question concerning Article 7

What provisions have been made for making value determinations pursuant to Article 7?

There are no provisions in the current Customs Law that determine the implementation of Article 7, please refer to answer No. 2.

6. How have the options in Article 8.2 been handled?

Customs valuation is carried out in Yemen on the basis of CIF calculation, which includes cost, insurance and freight.

7. Where is the rate of exchange published, as required by Article 9.1?

Exchange rates are issued daily by the Central Bank.

8. What steps have been taken to ensure confidentiality, as required by Article 10?

Article 62 of the Customs law stipulates that it shall not be permissible for other than the owners of goods or their legal representatives to learn on customs data, with exception of respective official or judicial authorities. WT/ACC/YEM/3 Page 46

9. Questions concerning Article 11.

(a) What rights of appeal are open to the importer or any other person?

If a dispute arises between Customs Authority and an importer, the dispute shall be recorded in minutes and referred to two experts, one of them appointed by the Customs Department and the other by the owner of goods or his legal representative. If the two experts agree, their recommendations shall be final. If they disagree, the dispute shall be referred to an arbitration committee. The committee shall issue its decision, which shall be final and binding, and the losing party shall incur the cost of arbitration. Article 225 of the Customs law indicates that the judgment issued by competent court shall be subject to impingement before the courts of appeal and cassation within the periods and according to the conditions determined in the trials fundamentals law. If the impingement is not submitted during such period the judgement of the court shall become decisive and irrevocable and not subject to any manner of impingement or stay of execution.

(b) How is the importer to be informed of his right to further appeal?

Article 224 of the Customs law stipulates that notification shall take place in accordance with the fundamentals determined in the competent trials fundamentals law, with due regard for the following two cases:

 If the person required to be notified changes his chosen place of domicile or his work place after the date of the arrest warrant prepared against him, without informing the Customs Authority of that in writing, or gives a false or dubious address, he shall be notified by affixture on the last/known/selected place of his residence or work and on the notices board of the relevant Customs Department.  If the person required to be notified is unknown or of unknown domicile and the value of the goods subject of the violation or smuggling does not exceed 16,965 rials, notification shall be made by affixture on the court notice board or the notice board of the relevant Customs Department and that shall be established in an arrest warrant.

However, if the value of the goods subject of the violation or smuggling exceeds the aforementioned amount, notification shall be made by affixture on the notice board of the court and the relevant customs department and by announcement in a daily newspaper, and this also shall be established in the arrest warrant.

The fact of notification shall be established in a minute signed by two of the Customs employees or policemen.

10. Provide information on the publication, as required by Article 12.

All customs decisions, laws, and regulations are published in the Official Gazette.

11. Question Concerning Article 13:

How is the obligation of Article 13 (last sentence) being dealt with in the respective national legislation?

According to the Customs law, goods that are subject to taxation may be permitted to be released before payment of duties and taxes thereon against banker's or cash guarantee that covers the WT/ACC/YEM/3 Page 47 due duties and taxes on goods. Goods subject to arbitration, they can be released before settling the dispute, unless they are prohibited. 12. Question Concerning Article 16:

(a) Does the respective national legislation contain a provision requiring customs authorities to give an explanation in writing as to how the customs value was determined?

The Customs declaration gives an explanation in writing as to how the customs value was determined and importers receive their own copy.

(b) Are there any further regulations concerning an above - mentioned request?

Customs Law does not contain any other provision in this regard, please refer to answer a.

13. How have the Interpretative Notes of the Agreement been included?

The Interpretative Notes are not included in the current Yemeni Customs Law. WT/ACC/YEM/3 Page 48

ANNEX 5

DATA ON TECHNICAL BARRIERS TO TRADE

The Yemeni Standardization and Metrology Organization (YSMO) was established by Republican Decree No. 52 of 2000, under the supervision of the Minister of Industry and Trade. YSMO is responsible for the preparation of Yemen's technical standards and specifications and related activities of standardization and metrology. It issues regulations and administrative instructions in accordance with its respective functions and powers.

YSMO publishes technical standards and specifications in the Official Gazette, and in its Specifications Magazine and guides. In addition, it attempts to establish information centers for the technical trade-related rules documentation.

Address of YSMO:

ROY, Sana'a, Zubairy St., Al-Mugama'a Al-Sina'ee Area Telephone: 967-1-408608/9/10 Fax: 967-1-219908 P.O. Box: 15261 e-mail : [email protected]

YSMO is the technical agency which presents, through the Ministry of Industry and Trade, clarifications on the implementation of the Agreement on Technical Barriers to Trade within the framework of the WTO Agreement.

YSMO is responsible for future notifications, through the Ministry of Industry and Trade, upon accession to WTO.

YSMO distributes drafts of technical regulations and standards to the relevant agencies for their comments prior to the final issuance of the same. WT/ACC/YEM/3 Page 49

ANNEX 6

STATE-TRADING PRACTICES

There is no state trading practices in Yemen, as stipulated by Article 17 of GATT 1994. Business enterprises owned completely or partially by the state, work in accordance with market rules. However, the Government supervises trading in petroleum products. WT/ACC/YEM/3 Page 50

ANNEX 7

FOREIGN TRADE AGREEMENTS

A. Non - Preferential Agreements

Country Title Date of Signature Validity Sultanate of Oman Framework Agreement 8 September 1993 5 Years Automatically Renewable for Cooperation between for similar Periods. Yemen and Oman Arab Republic of Trade Agreement 6 June 1996 3 Years Automatically Renewable Egypt for the Same Period. Hashymiate Kingdom Trade Cooperation 18 June 1995 3 Years Automatically Renewable of Jordan Agreement for another year Kingdom of Morocco Trade Agreement 28 March 1996 5 Years Automatically Renewable for other Periods, one year each Peoples Democratic Trade Agreement 25 November 1999 3 Years Automatically Renewable Republic of Algeria for the Same Period Republic of Sudan Trade Agreement 10 August 1999 5 Years Automatically Renewable for other Periods, one year each Arab Republic of Trade Agreement 9 October 1996 5 Years Automatically Renewable Syria for Same Period State of Qatar Economic, Trade, and 30 January 2000 5 Years Automatically Renewable Technical Cooperation for Same Period Agreement Republic of Lebanon Trade Agreement 25 November 1999 5 Years Automatically Renewable every year United Arab Emirates Economic, Trade, and 15 March 1990 5 Years Automatically Renewable (UAE) Technical Cooperation Agreement Republic of Djibouti Trade Agreement 18 April 1998 5 Years Automatically Renewable for other Periods, one year each Republic of Vietnam Trade Agreement 22 March 1996 5 Years Automatically Renewable for other Periods, one year each Republic of Ethiopia Trade Agreement 22 December 1992 5 Years Automatically Renewable for the Same Period Republic of Romania Trade Agreement 29 June 1992 5 Years Automatically Renewable for other Periods, one year each Republic of Poland Trade Agreement 19 November 1993 5 Years Automatically Renewable for one year Republic of Turkey Economic, Trade, and 26 August 1991 5 Years Automatically Renewable Technical Cooperation for one year Agreement Republic of Croatia Economic and Trade 17 January 1993 5 Years Automatically Renewable cooperation Agreement for 3 years Republic of Indonesia Economic, Trade, 24 January 1994 5 Years Automatically Renewable Scientific and Technical for other similar Periods Cooperation Agreement Malaysia Trade Agreement 11 February 1998 5 Years Automatically Renewable for similar Periods Republic of Cyprus Trade Agreement 19 June 1991 5 Years Automatically Renewable for other Periods, one year each Government of Memorandum of 6 November 1991 2 Years Automatically Renewable Quebec Cooperation every 2 years State of Eritrea Trade Agreement 18 April 2001 5 Years Automatically Renewable for one year WT/ACC/YEM/3 Page 51

Country Title Date of Signature Validity Republic of Cuba Trade Agreement 1996 5 Years Automatically Renewable

B. Preferential Agreements

State Title Date of Signature Duration Kingdom of Saudi Economic, Trade, 29 August 1996 Two Years Automatically Arabia Investment, and Renewable for Similar Periods Technical Cooperation Agreement.

Preferential Advantages:

 Goods of national origin, listed in tables A&B attached to this agreement, directly traded between both countries shall be exempted from all custom duties and other taxes and duties as well as from non-tariff restrictions, provided that the value added percentage is not less than 40 per cent.  Ships and boats, owned by either of the two States visiting seaports of the other contracting State shall be granted similar privileges and concessions as those of their national ships/boats; i.e. freight, unloading, guidance/illumination, and other facilities.  National land, air, and naval means of transport shall be granted priority in transferring goods traded between both countries.

State Title Date of Signature Duration Republic of Iraq Agreement to Establish 21 August 2001 the Free Trade Area

Preferential Advantages:

 Goods of national origin traded between the two countries shall be exempted from custom duties and other similar taxes, applied in both countries.  As a least developed country, Yemeni products, exported to Iraq would be of no less than 20 per cent, whereas, Iraqi products should have no less than 40 per cent value added. Gross National Product and Per Capita GNP 1995-2000 (At Current Prices)

Table A:1 WT/ACC/Y EM/3 No. Item 1995 1996 1997* 1998** 1999** 2000** Page 52 1. Resident mid-year population (000 inhabitants) 15,421 15,961 16,520 17,090 17,700 18,261 2. GDP at market prices (Million YR) 511,058 736,385 888,808 849,321 1,132,619 1,379,812 3. Net Factor income from abroad (Million YR) -16,173 -71,468 -76,040 -47,816 -105,676 -185,293 4. GNP at market prices (Million YR) 494,885 664,917 812,768 801,505 1,026,943 1,194,519 5. Average exchange rate of US$ per YR 100 128.19 129.28 135.88 155.75 161.73 6. GNP at market prices (US$ Million) 4,949 5,187 6,287 5,899 6,594 7,386 7. GNP per capita: Yemen riyal 32,092 41,659 49,199 46,899 58,019 65,414 US$ 321 325 381 345 373 404 Source: Central Statistical Organization

*provisional actual **provisional data Standard Classification of the State's Public Budget 1995-2000 Table A:2 (in million YR) Items 1995 1996 1997 1998 1999 2000 WT/ACC/Y State's Revenues: EM/3 Page - Including Loans and Aid 93,314 232,225 299,752 244,570 360,791 599,902 53 - Excluding Loans ( Capital Revenues) 89,652 216,056 287,388 222,161 326,416 583,715 Tax Revenues 42,662 64,898 77,835 80,832 89,745 110,990 Direct Taxes 11,544 16,706 21,528 29,045 34,314 43,241 Indirect Taxes 31,118 48,192 56,307 51,787 55,431 67,749 Non-Tax Revenues 46,605 118,642 209,006 140,890 236,244 472,408 Capital Revenues 385 2,516 547 439 427 317 (without loans and Aid) Loans and Aid 3,662 16,169 12,364 22,409 34,375 161,687 - Loans 1,900 11,358 10,426 16,915 23,960 11,118 - Aid 1,763 4,811 1,938 5,495 10,415 5,069 Other Revenues 11,988 232,755 307,568 301,431 342,933 50,244 State's Expenditures Current Expenditure 97,542 175,507 238,116 226,883 260,290 373,995 Salaries and Wages 63,729 73,963 82,150 93,635 119,113 141,397 Commodity & service Expenditures 8,811 27,857 45,183 36,741 44,651 46,647 Current Transferring Expenditures & Interest of Public Debt 22,739 74,485 119,182 94,631 58,866 141,594 Public Debt Interests 15,297 19,053 20,707 26,022 40,671 34,601 External 573 1,017 2,434 3,562 8,319 5,435 Internal 14,724 18,036 18,273 22,460 32,352 29,166 Capital and Investment Expenditures 13,798 31,919 40,083 47,609 54,886 90,821 Earning of Fixed and Visible Capital assets 13,688 30,274 45,800 46,594 53,682 69,677 Earning of Real Estates and Capital Assets 58 194 252 907 1,007 1,706 Capital Transfers 52 1,451 31 108 197 19,438 Budget Deficit : Including Loans and Aid -26,566 -530 -7,816 -56,861 17,858 97,462 Excluding Loans and Aid -30,228 -16,699 -20,180 -79,270 -16,517 81,275 Financing of Budget Deficit: 30,229 16,699 20,180 79,270 16,517 -81,275 - External Financing 3,662 16,169 12,364 22,409 34,375 16,187 - Loans 1,900 11,385 10,426 16,915 23,960 11,118 - Aid 1,763 4,811 1,938 5,495 10,415 5,069 - Internal Financing 26,566 530 7,816 56,861 -17,858 -97,462 Other Source: Ministry of Finance: Statistical Bulletin. Vol 5 for 2001 Production Of Basic Goods 1998-2000 Table A:3 WT/ACC/Y Years EM/3 Produced Commodities Unit 1998 1999 2000 Page 54 Agricultural Products Cereals ton 911,304 757,932 735,317 Vegetables ton 747,131 759,820 774,908 Fodder ton 1,380,571 1,399,477 450,669 Production of Cash Crops ton 63,784 65,010 68,963 Fruits ton 554,785 578,573 590,796 Meat ton 45,262 47,110 51,698 Milk ton 168,199 176,630 179,781 Poultry Meat ton 61,352 63,115 66,734 Eggs million egg 600 603 604 Honey ton 161.3 173.6 178 Leather ton 6,324 6,160 7,729 Fish and Marine life ton 127,621 123,607 134,733 Mining and Quarrying Gypsum 1,000 ton 37 40 43 Manufacturing Canned Fish 1,000 can 6,407 7,162 7,162 Fruit Juices million litre 16 15 16 Cooking Oils 1,000 ton 78 51 82 Ghee 1,000 ton 56 82 72 Fluid Milk million litre 41 48 50 Yoghurt ton 20 22 23 Flour Milling 1,000 ton 304 319 338 Biscuit, Cakes, etc. 1,000 ton 44 45 46 Chocolate & Sweets 1,000 ton 16 16 17 Mineral Water million litre 68 92 97 Beverages million litre 69 80 92 Cigarettes million pocket 299 288 298 Textile Industries Clothes 1,000 metre 7,021 6,543 6,688 Leather Industries Animal leather tanned 1,000 metre 1,665 1,672 1,740 Chemical Products Powder Soap 61 51 53 Non-Metallic Products Cement 1,000 ton 1,195 1454 1,406 Years Produced Commodities Unit 1998 1999 2000 Refined Petroleum Products Gasoline 1,000 metric ton 856 992 998 WT/ACC/Y Solar Oil 1,000 metric ton 990 1,298 1,301 EM/3 Page Mazot 1,000 metric ton 1,423 1,339 1,342 55 Kerosine 1,000 metric ton 514 418 420 Source: Statistical Year Book, 2000, Central Statistical Organization Distribution of Employed Persons during the Year Prior to the Survey (1999) Table A:4 WT/ACC/Y Economic activity Total EM/3 Agriculture, hunting and forestry 1,731,954 Page 56 Fishing 29,661 Mining and quarrying 17,136 Manufacturing 132,525 Electricity, gas and water supply 12,245 Constructions 206,627 Wholesale and retail trade - repair of motor vehicles &hh. commodities 395,933 Hotels and restaurants 39,960 Transport storage and communications 123,024 Finance and business services 10,810 Real estate, renting and business activities 18,608 Public administration and defence, compulsory social security 352,540 Education 206,396 Health and social work 41,924 Other community, social and personal service activities 49,989 Private households with employed persons 6,114 Extra territorial organizations and bodies 376 Unspecified 1,521 Total 3,377,343 Source: Labour Force Survey 1999 Annual Changes in Prices for 1995-2000

Table A:5 WT/ACC/Y Consumer Price Index (CPI)* (1994=100) Years (CPI)Annual Changes in % EM/3 Page 100 1994 57 157.2 1995 57.2 200 1996 27.2 214.1 1997 7.1 239.6 1998 11.9 264 1999 10.2 285.2 2000 8 Source: Central Bank of Yemen *Average Consumer Price Index for Sana'a and Aden cities in December 2000 Balance of Payments for 1995-2000

Table A:6-1 WT/ACC/Y (in million Yemeni riyals) EM/3 Items 1995 1996 1997 1998 1999 2000 Page 58 Current account 4,745.9 7,388.5 2,882.8 -20,295.2 119,689.1 250,435.1 Trade Balance -72,712.8 -22,628 -17,129.6 -106,675.6 5,5731.1 260,600.0 Exports 99,946.7 262,407 293,982.7 204,326.7 385,994 662,444.4 Imports -172,659.5 -285,035 -311,112.3 -311,002.3 -330,263 -401,844.4 Services (net) -28,779.8 -43,580.6 -60,735.8 -70,452.3 -83,397.1 -72,355.7 Credit 16,009.7 2,3179.5 26,838.5 23,697.5 28,533.4 30,893.7 Debt -44,789.5 -6,6760.1 -87,574.3 -94,149.8 -111,931 -103,249.4 Transportation -1,7336 -20,639.1 -28,919 -35,566.5 -37,866.5 -54,711.3 Travel -206.7 -2,575.6 -7,019.9 -6,236.9 -11,743.6 464.7 Communication 2,593.3 5475 5747.8 2,418.7 6,401.3 7,310.0 Construction -2,284.2 -6,842.9 -8,915.1 -12,797.2 -19,531.1 -6,629.5 Insurance -4,168.7 -4,855.4 -6,581.3 -7,073.9 -7512 -9,140.1 Other business services -7,490.9 -14,119.8 -14,285.4 -10,761.7 -12,444.4 -7,140.2 Government Service, NIE 113.4 -22.8 -762.8 -434.8 -700.9 2,509.3 Income (net) -22,535.1 -72,364.8 -77,697.3 -23,846.9 -74,261.6 -167,731.8 Credit 2,836.4 5,519.3 8,997.9 13,737.5 14,656.1 50,081.5 Debt -25,371.5 -77,884.1 -86,695.2 -37,584.4 -88,917.7 -217,813.3 Direct investment income -17,552.7 -61,827.9 -71,659.9 -25,029.1 -74,775.6 -175,742.6 Portfolio and other investment -4,982.4 -10,536.9 -6,037.4 1,182.2 514 21,626.6 income Current transfers (net) 128,773.6 145,961.9 158,445.5 180,679.6 221,616.7 229,922.6 Credit 132,457.7 153,768.2 164,017.5 187,161.1 226,398.2 241,587.9 Debt -3,684.1 -7,806.3 -5,572.0 -6,481.5 -4,781.5 -11,665.3 General government 1,486.4 7,514.4 12,721.2 21,115.8 29,561.4 15,247.9 Other sectors 127,287.3 138,447.5 145,724.4 159,563.9 192,055.3 214,674.7 Source: Central Bank of Yemen Balance of Payments for 1995-2000

Table A:6-2 (in million Yemeni riyals) WT/ACC/Y Items 1995 1996 1997 1998 1999 2000 EM/3 Page Capital and financial account -47,181.8 -40,933.8 -31,263.5 -67,240.5 -89,264.6 -103,221 59 Financial account balance -47,181.8 -40,933.8 -31,263.5 -67,240.5 -89,264.6 -103,221 Direct investment -8,816.9 -6,863.4 -17,905.3 -29,812.1 -30,262.2 -42,215.2 Portfolio investment -861 -412.5 84.4 599.3 579.3 14.1 Assets -861 -412.5 84.4 599.3 579.3 14.1 Liabilities Other investment -37,504 -33,657.8 -13,442.6 -38,027.7 -59,581.7 -61,019.4 Assets -31,757.8 4,027.2 24,085.2 -3,171.5 -63,936.1 -32,359 Liabilities -5,746.2 -37,685 -37,527.8 -34,856.2 4,354.4 -28,660.4 Errors and Omissions 32,333.4 16,565.5 39,935.2 22,542.3 14,439.5 94,605 Overall balance -10,102.5 -16,979.8 11,554.7 -64,993.5 44,864 241,819.5 Financing 10,102.5 16,979.8 -11,554.7 64,993.5 -44,864 -237,463 Net Reserves (increase) -20,325.1 -58,597.8 -34,850.9 45,155 -66,466.4 -257,046 Reserves -28,983.6 -91,206 -57,533.1 33,703.6 -85,220.1 -244,791 Monetary Authority Liabilities 8,658.5 32,608.2 22,682.2 11,451.4 18,753.7 -12,254.2 IMF Loan (net) 0 15,300 17,413.3 10,095.9 19,406.5 -12,638.6 AMF Loan (net) 2,291 4,567 4,028.5 -1,386 3,893.8 -1,071.4 Liabilities making reserves Liabilities- LCFAR 6,367.5 12,741.2 1,240.4 2,741.5 -4,546.6 1,455.8 Debt Relief and arrears 30,427.7 75,577.6 23,296.3 19,838.5 21,602.5 19,583.1 Parallel Market Exchange Rate of Yemeni riyal against US$

Table A:7 WT/ACC/Y (riyals per US$) EM/3 Year Annual Average Exchange Rate Page 60 1995 121.09 1996 128.18 1997 129.28 1998 135.88 1999 155.75 2000 161.73 Source: Central Bank of Yemen Exports by Section and Divisions of SITC for 1998-2000

Table B:1 (Value in thousand Yemeni riyals) WT/ACC/Y Years EM/3 Page No. Sections & Divisions of the (SITC) 1998 1999 2000 61 Export Re-Export Export Re-Export Export Re-Export 1. Food and live animals 6,685,006 56,945 8,754,234 225,652 12,159,636 311,582 2. Beverages and tobacco 530,189 0 781,505 1,591 944,262 61,041 3. Raw materials, inedible 3,180,058 177,864 2,166,107 55,770 2,915,947 114,944 4. Mineral Fuels and Lubricants 166,504,718 19,647,229 337,430,854 21,673,852 594,891,380 41,611,683 5. Animal and Vegetable Oils and Fats 942,151 799 611,718 338 666,042 2,023 6. Chemical and Related Products 678,470 179,002 835,887 178,693 1,256,610 642,411 7. Manufactured Goods Classified by Material 367,338 370,035 666,258 354,533 662,761 404,638 8. Machinery and Transport Equipment 28,468 2,451,173 96,615 5,253,573 89,178 1,732,741 9. Miscellaneous manufactured Articles 197,956 1,290,932 271,404 630,018 347,469 790,839 10. Commodities and Transactions 3,480 188,482 10,382 11,206 3,827 0 Grand total 179,117,834 24,362,461 351,624,964 28,385,226 613,937,112 45,671,902 Sources: Statistical Year Book 2000, Central Statistical organization Imports by Sections and Divisions of SITC for 1998-2000

Table B:2 WT/ACC/Y (Value in thousands riyals) EM/3 Year Page 62 No. Sections & Divisions of the (SITC) 1998 % 1999 % 2000 % 1. Food and live animals 83,667,489 28.41 103,400,204 33.06 111,136,589 29.57 2. Beverages and tobacco 5,920,637 2.01 6,304,522 2.02 6,297,400 1.68 3. Raw materials inedible 6,604,543 2.24 6,583,775 2.11 8,178,049 2.18 4. Mineral Fuels and Lubrications 18,977,062 6.44 25,165,068 8.05 44,930,521 11.96 5. Animal and Vegetable Oils and Fats 11,274,045 3.83 10,435,044 3.34 14,612,081 3.89 6. Chemical and Related Products 28,690,140 9.74 29,123,376 9.31 36,406,767 9.69 7. Manufactured Goods Classified by Material 50,936,859 17.30 47,848,132 15.30 55,190,204 14.69 8. Machinery and Transport Equipment 71,356,983 24.23 67,250,948 21.50 78,332,024 20.85 9. Miscellaneous manufactured Articles 15,541,670 5.28 16,524,650 5.28 16,883,300 4.49 10. Commodities and Transactions 1,540,320 0.52 113,692 0.04 3,815,988 1.02 Grand total 294,509,748 100 312,749,411 100 375,782,923 100 Sources: Statistical Year Book 2000, Central Statistical Organization Imports of ROY According to Main Economic Groups and Trade Partners for 1998-2000

Table B:3 (Value in thousand Yemeni riyals) WT/ACC/Y Years EM/3 Page Countries 1998 % 1999 % 2000 % 63 Arab World 86,784,374 29.47 117,975,363 37.72 141,708,221 37.71 GCC Countries 70,141,273 23.82 99,342,441 31.76 119,581,203 3.82 UAE 26,520,226 9 37,962,139 12.14 37,385,719 9.95 Saudi Arabia 34,451,093 11.7 36,424,675 11.65 51,737,060 13.77 Kuwait 6,734,528 2.29 17,834,353 5.7 17,555,100 4.67 Other GCC Countries 2,435,426 0.83 7,121,274 2.28 12,903,324 3.43 Other Arab countries 16,643,101 5.65 18,632,922 5.96 22,127,018 5.89 non-Arab Asian countries 73,243,444 24.87 69,830,324 22.33 92,015,680 24.49 Malaysia 10,780,884 3.66 10,563,939 3.38 12,671,822 3.37 Singapore 9,415,838 3.2 10,588,471 3.39 11,823,867 3.15 Japan 10,152,666 3.45 8,231,430 2.63 11,941,414 3.18 India 6,379,686 2.17 8,213,363 2.63 9,570,260 2.55 China 9,047,128 3.07 9,226,405 2.95 13,179,809 3.51 Other Asian Countries 45,776,202 9.32 23,006,716 7.35 32,828,508 8.73 non-Arab African countries 1,532,824 0.52 1,598,070 0.51 2,775,885 0.74 EU 78,412,427 26.62 64,242,896 20.54 65,868,317 17.53 United Kingdom 14,876,299 5.05 12,972,833 4.15 11,970,928 3.19 Germany 10,470,267 3.56 9,358,073 2.99 11,474,264 3.05 Italy 12,680,490 4.31 11,047,966 3.53 10,003,407 2.66 France 16,469,488 5.59 13,108,026 4.19 17,118,123 4.56 other EU countries 23,915,883 8.11 17,755,998 5.68 15,301,595 4.07 Other European Countries 11,376,315 3.86 10,631,005 3.4 21,574,665 5.74 Eastern European Countries 2,197,317 0.75 2,247,205 0.72 3,355,614 0.89 American Countries 31,864,383 10.82 32,100,312 10.26 31,309,635 8.33 USA 16,996,275 5.76 18,549,694 5.93 16,682,383 4.44 Other American Countries 14,895,108 5.06 13,550,618 4.33 14,627,252 3.89 Australia & Pacific Islands (Oceanic) 8,243,284 2.8 13,353,163 4.27 9,967,775 2.65 Australia 7,121,821 2.42 13,144,336 4.2 9,456,896 2.52 Other Oceanic Countries 1,121,463 0.38 208,827 0.07 510,879 0.13 Other countries 855,378 0.29 771,070 0.25 7,207,134 1.92 Grand total 294,509,746 100 312,749,408 100 375,782,926 100 Source: Statistical Year Book for 2000, Central Statistical Organization Exports and Re-Exports of Roy According to Main Economic Groups and Trade Partners for 1998-2000

Table B:4 WT/ACC/Y (value in thousand Yemeni riyals) EM/3 Year Page 64 Country 1998 1999 2000 Exports % Re-exports % Exports % Re-exports % Exports % Re-exports % Arab World 11,970,172 6.68 10,449,948 42.89 9,386,007 2.67 16,156,593 56.92 16,386,240 2.67 17,643,266 38.63 GCC 4,667,099 2.61 9,818,241 40.30 6,357,268 1.81 11,080,496 39.04 12,446,207 2.53 13,229,617 28.97 Saudi Arabia 3,849,778 2.15 700,597 2.88 5,127,394 1.46 1,530,306 5.39 7,326,192 1.19 420,668 0.92 UAE 713,214 0.40 852,614 3.50 1,040,790 0.30 1,641,211 5.78 4,872,118 0.79 1,123,616 2.46 Kuwait 3,477 5.55 8,194,958 33.64 19,605 0.01 7,865,765 27.71 16,571 0.00 11,464,316 25.10 other GCC countries 100,630 2.88 70,072 0.28 169,479 0.04 43,214 0.16 231,326 0.05 221,020 0.49 other Arab countries 7,303,073 4.08 631,707 2.59 3,028,739 0.86 5,076,097 17.88 3,940,033 0.64 4,413,649 9.66 Egypt 3,940,663 2.20 146,763 0.60 85,484 0.02 950,425 3.35 638,172 0.10 39,582 0.09 other Arab countries 3,362,410 1.88 484,944 1.99 2,943,255 0.84 4,125,672 14.53 33,301,861 0.54 4,374,067 9.57 non-Arab Asian 142,514,338 79.56 1,423,968 5.84 330,574,047 94.01 224,796 0.79 515,840,788 84.02 566,649 1.24 countries Singapore 11,515,544 6.43 498,264 2.05 30,538,262 8.68 333 0.00 36,047,971 5.87 1,899 0.00 Thailand 45,044,995 25.15 4,661 0.02 95,457,858 27.15 113,222,666 18.44 3,766 0.01 Japan 7,456,597 4.16 7,114 0.03 3,845,455 1.09 3,195 0.01 13,588,318 2.21 40,496 0.09 China 50,737,070 28.33 5,136 0.02 107,924,808 30.69 11,697 0.04 125,197,366 20.39 22,453 0.05 South Korea 23,032,645 12.86 51,227,096 14.57 11,539 0.04 113,973,886 18.56 47,788 0.10 other Asian countries 4,727,487 2.63 908,793 3.72 41,580,568 11.83 198,032 0.70 113,810,581 18.55 450,247 0.99 non-Arab African 5,298,014 2.96 33,008 0.14 872,378 0.25 78,316 0.28 5,927,249 0.97 167,431 0.37 countries EEC 8,976,926 5.01 2,923,749 12.00 1,608,298 0.46 1,410,279 4.97 6,999,891 1.14 1,007,509 2.21 other European 18,761 0.01 8,457,551 34.72 7,951 0.00 4,644,841 16.36 19,757 0.00 7,342,149 16.08 countries Eastern European 35,532 0.02 3,403 0.01 21,859 0.01 3,395 0.01 7,214,830 1.18 0 0.00 countries American countries 5,115,321 2.86 643,713 2.64 1,594,934 0.45 901,965 3.18 50,301,712 8.19 524,617 1.15 Year Country 1998 1999 2000 Exports % Re-exports % Exports % Re-exports % Exports % Re-exports % US 5,103,727 2.85 402,333 1.65 1,578,910 0.45 705,684 2.49 40,031,607 6.52 520,108 1.14 WT/ACC/Y other American EM/3 Page 11,594 0.01 241,380 0.99 16,024 0.00 196,281 0.69 10,270,105 1.67 4,509 countries 65 Australia and Pacific 4,121,379 2.30 2,579 0.01 7,508,729 2.14 614 0.00 1,123,569 1.83 Islands (Oceanic) Other 188,828 0.59 424,542 1.74 50,762 0.02 9,244,694 17.49 10,079 38,420,277 40.33 Grand Total 185,523,583 16,536,617 354,645,753 33,096,749 607,744,391 62,743,398 Source: Central Statistical Organization, 2000

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