WORLD TRADE WT/TPR/M/159 4 April 2006 ORGANIZATION (06-1557) Trade Policy Review Body Original: French 27 February and 1 March 2006

TRADE POLICY REVIEW

DJIBOUTI

Minutes of Meeting

Chairperson: HE Ms Claudia Uribe (Colombia)

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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3 II. OPENING STATEMENT BY THE REPRESENTATIVE OF DJIBOUTI 4 III. STATEMENT BY THE DISCUSSANT 6 IV. STATEMENTS BY MEMBERS 7 V. REPLIES BY THE REPRESENTATIVE OF DJIBOUTI AND ADDITIONAL COMMENTS 10 VI. CONCLUDING REMARKS BY THE CHAIRPERSON 13

Note: Advance written questions by WTO Members and the replies provided by Djibouti are reproduced in document WT/TPR/M/159/Add.1 and will be available online at http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm.

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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON

1. At the opening of the meeting on the first review of Djibouti's trade policy, held on 27 February and 1 March 2006, the Chairperson welcomed the delegation of Djibouti, led by the Minister HE Mr Rikfi Abdoulkader Bamakhrama, and the discussant, HE Mr Samuel Amehou (Benin), who as usual would speak in his personal capacity and not as a representative of his country. In accordance with established procedures, he had made available in advance a broad outline of the themes he intended to raise (document WT/TPR/D/135).

2. The Chairperson recalled the purpose of Trade Policy Reviews and the main elements of the meeting's procedure. The report by the Government of Djibouti was contained in document WT/TPR/G/159, and that of the Secretariat in document WT/TPR/S/159. Copies of advance written questions submitted by: Japan; the European Union; the United States of America; and Brazil had been transmitted to the delegation of Djibouti.

3. The Chairperson said that the documents prepared for the meeting highlighted the reforms implemented by Djibouti with the aim of creating a trade environment that allowed it to make full use of its comparative advantages at the regional and multilateral levels in order to diversify its economy. To achieve that objective, Djibouti's current trade regime would have to be streamlined, with the introduction of a transparent fiscal regime; a number of the sectoral strategies adopted recently would have to be put into effect and the legal and judicial system strengthened. Djibouti's full compliance with the WTO Agreements and the enhancement of its multilateral commitments on goods and services should also help to make its trade regime more transparent and more predictable and would help to attract foreign investment so as to complete the process of diversifying the economy. The Chairperson gave the floor to the Minister for Trade of Djibouti to make the opening statement on behalf of his delegation.

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II. OPENING STATEMENT BY THE REPRESENTATIVE OF DJIBOUTI

4. After expressing his thanks, the representative of Djibouti said that his country's accession to the WTO had coincided with the structural adjustment programmes, whose results had proved beneficial in strengthening Djibouti's economy and fostering growth. He also underlined the challenges faced by Djibouti, a country without agriculture and lacking mineral wealth. Djibouti had focused its economy on liberalization and opening up to the region and the world. He sought the support, technical assistance and expertise of the WTO's Members and of development partners in defining the future direction of Djibouti's trade policy.

5. Djibouti lay at the crossroads of the European, African and Asian continents, on the Horn of Africa, a land for exchanges and contacts. Its history and its geostrategic situation had made it a site of geographical, cultural, eommercial and economic convergence. It was situated on the road leading to and from Europe, Asia and East Africa and across the path linking Asia to East Africa. Djibouti had taken advantage of this situation and served as a platform, notably through its ultra-modern maritime and air transport logistics and as a telecommunications hub linking Asia to Europe and soon to the eastern shore of Africa, but it was also an axis for all those countries that needed it.

6. In partnership with the Dubai Port Authority and the Jebel Ali Free Zone, Djibouti offered exceptional and unique opportunities to forge links between the production of goods and services and the economic development of African countries, especially those belonging to the Common Market for Eastern and Southern Africa (COMESA). After having modernized its old port and expanded capacity in its small free zone, Djibouti had made the initial investment in building a new port able to receive the most modern ships and in setting up a vast free zone that was unique in Africa because of its exceptional advantages.

7. The hydrocarbons terminal in the port at Doraleh had been opened in February 2006. Its main clients were the armies along the Red Sea and Indian Ocean and the Ethiopian market. Djibouti aimed to become the foremost point of convergence for the development of certain COMESA countries by creating a suitable environment. Its aim was not to compete with other ports and corridors in the subregion but to offer them services that could be useful to them, as well as those that were already essential. As an example, he cited access by the most modern ships and mentioned that Djibouti served as a hub-port for others in the subregion.

8. In addition, Djibouti had developed a highly attractive strategic environment. It had constantly sought to follow a realistic and prudent diplomatic approach through a strictly neutral foreign policy. It had taken part in all action to promote peace (combating terrorism or peace-making in the Horn of Africa). Djibouti belonged to all the major international organizations and was also associated with the European Union within the framework of the Lomé Convention; with the United States through the African Growth and Opportunity Act (AGOA); with the majority of African countries through the COMESA; and with other channels and points of convergence through partnerships.

9. Djibouti had a highly attractive environment for trade. The Djiboutian franc, which had fixed parity with the dollar, was covered by deposits with the French American Banking Corporation and was freely convertible. There were no exchange controls. Profits could be repatriated in full and funds imported and exported without restriction.

10. Djibouti had adopted liberal business legislation, providing for freedom of transaction (freedom to acquire real estate and personal property and to engage in trade). The Law of 17 May 2004 on the Free Zones Code provided that no nationalization nor any measure restricting private property might affect the exercise of economic activities in free zones and that companies in free zones were not subject to corporation tax or import duties. The Law guaranteed the ownership

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rights of individuals and companies and allowed broad flexibility for recruitment and international arbitration in trade disputes in the free zone. Moreover, Djibouti had allowed Ethiopia to set up its own customs office in Djibouti's ports and airport in order to facilitate and accelerate the clearance of goods in both directions.

11. He emphasized that Djibouti had attained a degree of maturity that reaffirmed the soundness of its economic choices. It had embarked upon the analyses needed for the review of its economic and trade principles and practices in order to reorient them. The conclusions of these analyses and the Secretariat's report would be presented at a national forum open to representatives of civil society and the public and private sectors in order to define Djibouti's trade policy, which would then be put before Members for their comments and suggestions. He called on the WTO to give advice on the drafting and formulation of the texts and framework documents and also for the financial and technical support required to organize the forum. It would give Djibouti a trade policy that was in line with international trade capable of evolving and of sharing with other developing countries. He thanked France, which had made a specialist available to Djibouti to review its legislation as part of the process of preparing Djibouti's draft Commercial Code, which should be adopted at the end of 2006.

12. In order to meet its international commitments and strengthen its active role in trade, as well as to reinforce its links and its place within the COMESA, in November 2006, Djibouti would host the 11th Summit of the COMESA. He invited the Director-General of the WTO to attend the meeting and asked for support from the WTO for its organization.

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III. STATEMENT BY THE DISCUSSANT

13. After referring to Djibouti's economic performance, the discussant noted that the structural reforms undertaken by Djibouti had allowed it to stabilize its economy. Moreover, this process had been particularly important not only for the Republic of Djibouti but also for the group of Least Developed Countries (LDCs), to which Djibouti belonged, and for the WTO as a whole, which was reviewing the trade situation of a small country, a vulnerable country, that, like other countries in its category, was showing its determination to make trade a real tool for boosting economic growth and development and for poverty alleviation.

14. He asked Djibouti about the measures and initiatives already taken or planned to bring down the high unemployment rate of 60 per cent. He also sought explanations on the strategies and initiatives taken to diversify production.

15. The discussant noted that services, especially port activities, accounted for over 80 per cent of the GDP. Furthermore, with the building of the port at Doraleh, port activities could result in still greater growth in the services sector, making the Djibouti's economy even more dependent on port activities. He asked how the authorities intended to pursue their diversification objectives while at the same time continuing to invest mainly in the ports sector.

16. The discussant considered that the multilateral trading system and trade liberalization were beneficial to growth and development. Nevertheless, Djibouti was not able to take full advantage of the preferences given. He therefore urged strengthening of trade-related technical cooperation and measures in favour of LDCs. He asked Djibouti to explain the efforts made to integrate trade into its development strategy and to eliminate supply constraints.

17. With regard to trade policy instruments, he expressed appreciation of the authorities' determination to enhance the legal environment. He drew attention to the tariff role played by the TIC, underlining the problem of observance of tariff bindings which that entailed, and/or the principle of national treatment. He encouraged Djibouti to implement the WTO Customs Valuation Agreement and to streamline the other duties and taxes levied. He asked for clarification concerning the Djibouti free zone regime.

18. Lastly, the discussant indicated that the services sector, in which Djibouti was a net exporter, should pursue the reforms already initiated. He requested further details concerning the reforms in the area of financial services.

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IV. STATEMENTS BY MEMBERS

19. The representative of Japan highlighted the economic cooperation between Japan and Djibouti and Japan's development aid to Africa (TICAD). He drew attention to the development initiatives launched prior to the Hong Kong Ministerial Conference, which not only provided financial assistance but also market access duty free without quotas for almost all products originating in LDCs. Japan congratulated Djibouti on the structural reforms implemented and on the binding of all its tariffs. He pinpointed areas in which efforts were needed in order to comply with the WTO's rules, for example, customs valuation, notifications, the dual nature of the Internal Consumption Tax (TIC) and observance of bound rates. Liberalization of services in particular, a key sector of the economy, would assist the economy's growth and competitiveness, although the predictability of Djibouti's trade regime needed to be improved.

20. The representative of the European Union (EU) congratulated Djibouti on the efforts made since the civil war with a view to strengthening its economy, and noted with satisfaction the positive growth forecasts. The EU also welcomed Djibouti's intention to develop and exploit its potential and resources for growth, particularly in the transport, finance and telecommunications sectors. Nevertheless, he urged Djibouti to step up liberalization of certain services that played an important role in its development and to strengthen its institutional capacity.

21. The integration of trade into development strategies clearly confirmed the recognition that aid could not replace trade as the main catalyst for development. In the context of the Economic Partnership Agreement (EPA), Djibouti negotiated as a member of the COMESA. It was eligible for the preferences granted under the "Everything But Arms" (EBA) initiative. It had expressed its intention of boosting technical cooperation. The EU wished to draw attention to the need to observe the common rules of the multilateral trading system. The representative of the EU pointed out, however, that the measures envisaged by Djibouti, for example, restrictions on imports from the EU, would raise substantial problems and could lead to a dispute settlement case in the WTO.

22. The representative of Brazil congratulated Djibouti on its economic performance since the end of the civil war, which was the result of economic reform and an increase in investment. He emphasized the importance of the services sector, particularly port activities, in combating poverty. He noted that Djibouti needed more trade-related technical assistance. He said that his Government understood well the difficulties facing Djibouti in its efforts to become integrated into the global economy and the multilateral trading system.

23. The representative of the United States welcomed the reforms being implemented. He noted the importance attached by the authorities to the Integrated Framework in overcoming the major development constraints such as the small scale of Djibouti's economy and its situation as an LDC. Two projects identified in the Diagnostic Study's action plan had been completed in May 2004. Djibouti was eligible for the preferences granted within the AGOA framework, but its exporters encountered problems in making use of them. He noted that Djibouti had already received US$6 million in the form of technical assistance for capacity-building, which had chiefly been used to set up a regional centre for cattle exports. He indicated that the regional office of the United States Agency for International Development (USAID), situated in Nairobi, was in a position to help the authorities in their efforts and in their export diversification strategies.

24. He underlined the importance of the services sector for Djibouti's economy. The port at Doraleh should help to enhance Djibouti's competitiveness as a hub for regional transport. He said that the United States had financed a feasibility study on the container terminal in the port of Doraleh. He also mentioned the financing of the "Heatmap" multi-purpose econometric model, which should make it possible to quantify the economic viability of an energy resource, calculate its cost, its efficiency and the environmental impact.

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25. He would like to receive further details concerning the progress made in the integration process within the COMESA, as well as on the Djiboutian authorities' plan to undertake further commitments in the services sector.

26. The representative of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) expressed appreciation of Djibouti's various trade and economic reforms which were more in keeping with its commitments under the WTO and the COMESA. Continued economic reform, however, was needed in order to maintain growth, reduce poverty and unemployment and allow Djibouti to become more competitive in the region. Bilateral trade amounted to some US$11 million, mainly in the form of machinery for plastic articles and textile goods. He was certain that cooperation, as well as trade, would increase in the years to come. He expressed a desire to develop cooperation with Djibouti, in particular in the area of investment and market access.

27. The representative of Colombia congratulated Djibouti on its poverty alleviation efforts and the reforms undertaken. He hoped that Djibouti would reaffirm its commitments within the WTO. He noted, however, that even though Djibouti had bound all its tariffs, in some cases, the rates applied exceeded those bound.

28. The representative of Nigeria congratulated Djibouti on the reforms implemented in order to stabilize its economy. He underlined the value of trade policy reviews for the formulation of domestic trade policies. He expressed his support for the reforms under way and called for increased technical assistance and capacity-building programmes for Djibouti.

29. Nigeria requested clarification on the mechanisms introduced in order to integrate Djibouti's trade policy into its development strategy and on the integration of the informal sector into the economy.

30. The representative of Benin drew attention to the efforts made by Djibouti, as an LDC, to stabilize its economy. He encouraged Djibouti to pursue the reform of its legislative and regulatory framework already initiated so as to attract investment and diversify production. He called for more technical assistance and capacity-building programmes for Djibouti.

31. The representative of Zambia, speaking on behalf of the group of LDCs, recalled Djibouti's geostrategic situation in trade flows between Africa and Asia and the importance of port activities for Djibouti's economy. He said that the problems facing Djibouti, such as poverty and unemployment, were characteristic of developing countries, particularly the LDCs. He agreed that trade-related technical assistance needed to be strengthened and called on development partners to cooperate for that purpose.

32. The representative of Burkina Faso congratulated Djibouti on the reforms undertaken to promote its development. He drew attention to the links between his country and Djibouti and their common problems as LDCs. With regard to technical assistance, the support of development partners was needed.

33. The representative of the Congo indicated that Djibouti had signed the United Nations Convention against Corruption. He drew attention to the importance of the services sector for Djibouti's economy and the progress made in introducing reforms since the end of the civil war. Support was needed from the WTO Secretariat and other international institutions with a view to providing trade-related technical assistance.

34. The representative of Senegal congratulated Djibouti on the efforts made to enhance its economic performance.

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35. The representative of Canada highlighted the role played by the Integrated Framework in identifying priority sectors for development and integrating them into the Poverty Reduction Strategy Paper (PRSP).

36. The representative of Ecuador underlined the importance of the review process in making the trade policies of each Member better known, and added that her country had recently been the subject of review. She drew attention to the problems facing Djibouti in participating fully in the Doha Development Agenda negotiations and in WTO commitments and called for more technical assistance.

37. The representative of the Republic of Guinea congratulated Djibouti on the reforms undertaken, but listed the following challenges: the high rate of unemployment, the volume of the informal sector and the limited size of the production sector. He encouraged Djibouti to pursue reform and underlined the need to provide more technical assistance.

38. The representative of Rwanda underscored the determination of the Djiboutian authorities to integrate trade into their development strategy, through the Integrated Framework. He called for strengthening of technical assistance in order to allow Djibouti to become better integrated into the global economy.

39. The representative of Singapore welcomed the efforts made by Djibouti to implement reforms in order to stabilize its economy. He noted the integration of trade into Djibouti's development strategy and the role played by the Integrated Framework. The integration of Djibouti and other LDCs into the multilateral trading system was an important element and, in order to achieve that objective, technical assistance was essential. Lastly, he added that Singapore was one of the major exporters to Djibouti, with annual trade amounting to US$12 million.

40. The representative of Mali congratulated Djibouti on the reforms being implemented and called for more technical and financial assistance in order to complete them and promote economic and social development.

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V. REPLIES BY THE REPRESENTATIVE OF DJIBOUTI AND ADDITIONAL COMMENTS

41. After having thanked the speakers for their encouraging words, the representative of Djibouti recalled that, since 1996, with the support of international financing institutions (IMF, World Bank), Djibouti had been implementing large-scale macroeconomic and financial reforms under the various structural adjustment programmes. A Poverty Reduction Strategy Paper had been finalized in June 2004 in order to offset the adjustment programmes' negative effects. Moreover, a round-table of Arab donors had been organized in November 2005 with a view to financing the development programme for the period 2006-2011. Financing amounting to US$370-530 million covering a number of infrastructural components (education, health, water and sanitation, housing, energy, highway infrastructure, etc.) had been approved at that meeting.

42. As far as structural reform was concerned, government enterprises were still being reorganized, particularly through the granting of a concession to the Dubai Port Authority in 2000 for the management of the port and airport, the fishing port and the dairy plant. Three new government- owned enterprises had been established and their capital was open to regional councils and representatives of the private sector. The purpose of these enterprises was to create economic infrastructures in the regions in the interior of Djibouti, to boost the potential of natural resources in those regions and to combat unemployment.

43. Regarding the business climate, Djibouti offered extremely attractive arrangements in order to encourage foreign investors to become established in Djibouti. The relevant texts would be bolstered by the adoption of a new investment code currently being drawn up. The medium-term economic outlook for the period 2006-2010 was encouraging, with an average real rate of economic growth estimated at over 4 per cent and controlled inflation of around 2 per cent.

44. Because of its geographical situation, Djibouti's socio-economic development focused on multilateral and regional trade through its membership of the WTO, with countries in Africa, the Caribbean and the Pacific (ACP), the AGOA and the COMESA. In order to reinforce its integration in global trade, Djibouti needed technical assistance in building its trade negotiating capacity and in implementing the WTO Agreements, such as those on customs valuation, rules of origin, sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT). He emphasized that those issues would be dealt with at the national forum on the creation and adoption of Djibouti's national trade policy.

45. Djibouti had always sought to facilitate trade by entrusting the management of its ports and airports to the private sector and through streamlined procedures such as the "provisional receipt" and "on-the-spot unloading of containers".

46. In October 2000, following the enactment of Law No. 108/AN/00/4èmeL, the TIC ceased to be a customs tax when domestic production became subject to the same rates as imported goods. He confirmed that the TIC rates applicable since the 2004 finance law were 8 per cent, 20 per cent and 33 per cent and much lower than the bound rates, which varied from 40 to 450 per cent. On 15 January 2005, a study on application of the value-added tax (VAT) had been launched. The objective was to replace the current TIC and to prevent the emergence of inflation following the entry into force of the Common External Tariff (CET) of the COMESA on 1 January 2009.

47. In Djibouti's fiscal arrangements, there were no import prohibitions or restrictions with the exception of a ban on imports of right-hand-drive vehicles and non-biodegradable plastic bags. For animal products, a phytosanitary certificate was required at the time of customs clearance. The government procurement code gave a 7.5 per cent preference on prices in favour of domestic suppliers in order to boost domestic production and protect jobs. Regarding the protection of

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industrial property, a regulatory text was under consideration and would be endorsed at the national level from 6 to 11 March 2006 with support and assistance from the WIPO.

48. Regarding sectoral policies, he confirmed that the Government's roadmap redefined the priorities set in the economic and social law for the period 2001-2010.

49. In the primary sector, the development strategy was to make Djibouti a hub for the export of live cattle and meat. A regional centre for re-exporting cattle, financed through American cooperation, was nearly completed and its management would be entrusted to the private sector. The centre would help to combat poverty by creating jobs, generating revenue and foreign currency.

50. A number of initiatives had been taken to boost agriculture and enhance productivity, for example, the drilling of new wells in deprived rural areas financed by the Saudi Development Fund; direct aid to young farmers setting up in rural areas; the project to create perimeters of date palms in isolated areas; the start of laboratory work on in-vitro reproduction of date palms; the creation of an agricultural training centre (project being implemented); and rural micro-loans from the International Fund for Agricultural Development (IFAD) to improve living standards among the most vulnerable sectors of the rural population.

51. The outline plan for the fisheries sector had recently been adopted. The granting of a concession for management of the fishing port and bringing its facilities up to standard with loans from the Arab Development Bank (ADB) would make the programme sustainable. The programme focused on diversification of fisheries resources and increasing the capacity of the fishing sector. Those measures would ultimately enable "made in Djibouti" products to be exported.

52. Contrary to the general impression, Djibouti's mining resources should boost the regional economy and the elections to be held within the next couple of weeks should reaffirm the new decentralization policy.

53. An outline plan for industrialization of the country's five regions was being prepared. It would form part of the framework documents to be discussed in the course of a participatory process during the forthcoming adoption of the national industrialization and crafts policies. Salt and perlite, two important minerals, were the subject of keen interest because of their potential. For those minerals, investors with the necessary technical, scientific and financial capacity to exploit them and develop their by-products were being sought.

54. With regard to energy, a State-owned enterprise was currently responsible for generating and distributing electricity. He added that the price of a KW/H constituted an obstacle to development. Djibouti was diversifying its energy resources through a link with Ethiopia; the creation of the ARTA wind-power electricity zone; efforts to exploit geothermal sources in order to supply electric power to a large part of the north of the country. For petroleum products, the State had not intervened in the marketing of hydrocarbons nor in fixing pump prices since 1999.

55. The Government's strategic objectives for transport were to ensure the competitiveness and efficiency of the transport system and to make Djibouti a major multimodal site at the regional level. The Government had undertaken large-scale work to overcome the capacity constraints in the autonomous port of Djibouti. A concession for its management had been granted and the area of the free zone had been increased fourfold, with larger transshipment facilities.

56. With the building of the vast port complex at Doraleh, Djibouti, a meeting-point at the Horn of Africa, was playing its role in strengthening and developing international trade. The hydrocarbons terminal (the first phase of the project) was inaugurated on Sunday, 26 February 2006. The outline plan for this second port also included an industrial and commercial free zone and a container

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terminal with a draught of 20 metres able to receive the most modern ships. The installation of a transshipment facility in Djibouti should provide better services at lower cost than those of Djibouti's direct competitors.

57. The telecommunications network could become the regional axis for distribution of large volumes of data transmission, not only as a major route into the hinterland but also for the east coast of Africa. Djibouti was one of the first concessionaires of "Se Me We 1-2 and 3" submarine cables. It was currently negotiating with the Flag consortium on placing of the "Eassy" cable linking Durban to Khartoum.

58. Djibouti joined the World Tourism Organization in 1997. Two years later, its tourism development plan had been adopted, encouraging investors from abroad and from the domestic private sector. Tourism policy aimed not only to preserve the ecosystem and the cultural environment of the various regions, but also to develop and exploit the potential and the advantages of sites that had remained intact so far. He indicated that, because of the current situation and despite the communication campaigns undertaken, the Government had been unable to attract the foreign investment needed for its development plan.

59. The financial sector had recently been the subject of reform and new rules to broaden the responsibilities of the Central Bank had been adopted. The rules (control of financial institutions and private banks and their responsibilities) were intended to ensure respect for precautionary rules. The regulations on guarantees to cover users and the institutions' liability in the event of bankruptcy had just been adopted. The measures complemented those on good governance and had been completed by the adoption of anti-money laundering legislation.

60. In order to encourage the development of private financial institutions, Djibouti granted incentives under the Investment Code for the creation of banking or financial establishments. The private financial institutions complemented the existing financing mechanism and private banks and the funds set up by the State (for example, the Djibouti Economic Development Fund). Moreover, the fixed parity of the Djiboutian franc and the United States dollar and the possibility of repatriating profits were also advantages.

61. The representative of the United States asked the Djiboutian authorities for information on the introduction of the "Heatmap" system.

62. The representative of the European Union (EU) underlined the importance of the bilateral meeting held.

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VI. CONCLUDING REMARKS BY THE CHAIRPERSON

63. This first Trade Policy Review of Djibouti had been both thorough and informative; it had allowed a better understanding of Djibouti's trade policies and practices, and of their outlook. We owe this to the presence of a high-level delegation of Djibouti, led by HE Mr Rifki Abdoulkader Bamakhrama, Minister for Trade and Industry, to the very incisive comments by our discussant, Ambassador Samuel Amehou, and to the active involvement of Members.

64. Members acknowledged Djibouti's reform efforts, and emphasized the contribution of port activities to its recent economic performance. They encouraged Djibouti to pursue its reforms, in particular to further reduce State intervention in the economy, address its supply-side constraints and rationalize its trade regime, with a view to diversifying its economy and further benefiting from its membership of the WTO. Referring to Djibouti's recent experience with the Diagnostic Trade Integration Study (DTIS) process under the Integrated Framework, Members encouraged Djibouti to mainstream trade into its development and poverty reduction strategies. Questions were posed about Djibouti's further integration into regional groupings, including the Common Market for Eastern and Southern Africa (COMESA), and about its planned strategies to fully exploit trade preferences available to it.

65. Members commended Djibouti for having bound all its tariff lines and for its ongoing customs reforms. However, they expressed concerns about the lack of transparency in its internal consumption tax (TIC) system: considered as a tariff, the TIC rates carried by some tariff lines could be seen as exceeding Djibouti's bindings; otherwise, the exemption of most domestic production from the TIC could lead to concerns about compliance with the WTO principle of national treatment. Members urged Djibouti to implement the WTO Customs Valuation Agreement, and to take steps to reform its taxation system and to meet the notification requirements under the WTO Agreements. Further information was sought about Djibouti's government procurement regime, the scope of activities allowed in its free zones, and about the codes on investments and on commerce under preparation. Referring to a recent declaration by the Government of Djibouti, a Member noted that implementation of any restriction not in conformity with WTO rules could result in a problem.

66. Members also sought clarification on other issues, notably: agriculture; mining and energy; services; standards and technical regulations; investment incentives; protection of intellectual property rights; and technical assistance needs.

67. Members appreciated the responses provided by the Djibouti delegation.

68. In conclusion, Members valued Djibouti's efforts and its commitment to improving its business environment, with a view to fully exploiting its comparative advantages. A business-friendly environment, combined with the full enforcement of the WTO Agreements by Djibouti and the improvement of its multilateral commitments on goods and services, would enhance the transparency and predictability of its trade regime, and contribute to attracting the foreign direct investment needed for the diversification of its economy. I am pleased that many Members identified ways in which they were assisting Djibouti and had committed to continue doing so. I urge both the WTO Membership and the Secretariat to be receptive to Djibouti's needs of trade-related technical assistance, which, together with its reforms, would help it to fully integrate into the multilateral trading system.

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