RESTRICTED WT/TPR/S/332 15 February 2016 (16-0923) Page: 1/96 Trade Policy Review Body TRADE POLICY REVIEW REPORT BY THE SECRETARIAT MALDIVES This report, prepared for the third Trade Policy Review of Maldives, has been drawn up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from Maldives on its trade policies and practices. Any technical questions arising from this report may be addressed to Sergios Stamnas (tel: 022 739 5382) and Nelnan Koumtingué (tel: 022 739 6252). Document WT/TPR/G/332 contains the policy statement submitted by Maldives. Note: This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on Maldives. This report was drafted in English. WT/TPR/S/332 • Maldives - 2 - CONTENTS SUMMARY ........................................................................................................................ 6 1 ECONOMIC ENVIRONMENT ........................................................................................ 10 1.1 Overview ................................................................................................................. 10 1.2 Recent Economic Developments.................................................................................. 10 1.2.1 Growth, income, and employment ............................................................................ 10 1.2.2 Prices ................................................................................................................... 13 1.3 Main Macroeconomic Policy Developments .................................................................... 13 1.3.1 Monetary and exchange rate policy .......................................................................... 13 1.3.2 Fiscal policy .......................................................................................................... 14 1.4 Main Structural Policy Developments and Challenges ..................................................... 14 1.4.1 Tax and fiscal reform .............................................................................................. 14 1.4.2 Subsidies reform ................................................................................................... 14 1.4.3 State-owned enterprises (SOEs) .............................................................................. 15 1.4.4 Labour market reform ............................................................................................ 15 1.4.5 Pension reform ...................................................................................................... 15 1.5 Balance-of-Payments Developments ............................................................................ 15 1.6 Developments in Merchandise Trade ............................................................................ 16 1.7 Trends and Patterns in Foreign Direct Investment ......................................................... 18 2 TRADE AND INVESTMENT REGIME ............................................................................ 20 2.1 Introduction ............................................................................................................. 20 2.2 General Constitutional and Legal Framework ................................................................ 20 2.3 Trade Policy Formulation, Implementation, and Evaluation ............................................. 21 2.4 Trade Policy Objectives ............................................................................................. 22 2.5 Main Trade Laws and Transparency ............................................................................. 22 2.5.1 Legislation ............................................................................................................ 22 2.5.2 Transparency ........................................................................................................ 23 2.6 Trade Agreements and Arrangements .......................................................................... 24 2.6.1 Multilateral agreements .......................................................................................... 24 2.6.2 Regional agreements .............................................................................................. 25 2.6.3 Bilateral agreements .............................................................................................. 25 2.6.4 Generalized System of Preferences (GSP) and other unilateral preferences ..................... 26 2.7 Foreign Investment Regime ....................................................................................... 26 3 TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 29 3.1 Introduction ............................................................................................................. 29 3.2 Measures Directly Affecting Imports ............................................................................ 30 3.2.1 Registration, documentation, and customs clearance .................................................. 30 3.2.2 Customs valuation ................................................................................................. 31 3.2.3 Rules of origin ....................................................................................................... 32 3.2.4 Tariffs .................................................................................................................. 32 WT/TPR/S/332 • Maldives - 3 - 3.2.4.1 Applied MFN tariff ............................................................................................... 33 3.2.4.2 MFN tariff dispersion and escalation ....................................................................... 33 3.2.4.3 Tariff bindings .................................................................................................... 35 3.2.4.4 Tariff exemptions and concessions ......................................................................... 36 3.2.4.5 Tariff preferences ................................................................................................ 37 3.2.5 Import prohibitions, restrictions, and licensing ........................................................... 37 3.2.6 Anti-dumping, countervailing, and safeguard measures ............................................... 38 3.2.7 State trading ......................................................................................................... 38 3.3 Measures Directly Affecting Exports ............................................................................. 39 3.3.1 Registration and documentation ............................................................................... 39 3.3.2 Export taxes, charges, and levies ............................................................................. 39 3.3.3 Export prohibitions, controls, and licensing ................................................................ 39 3.3.4 Export assistance ................................................................................................... 39 3.3.5 Export-processing zones ......................................................................................... 39 3.3.6 State trading ......................................................................................................... 40 3.4 Measures Affecting Production and Trade ..................................................................... 40 3.4.1 Standards and other technical requirements .............................................................. 40 3.4.1.1 Standards, testing, and certification ....................................................................... 40 3.4.1.2 Sanitary and phytosanitary (SPS) requirements ....................................................... 41 3.4.1.3 Marking, labelling, and packaging .......................................................................... 41 3.4.2 Taxation and tax incentives ..................................................................................... 42 3.4.2.1 Indirect taxes ..................................................................................................... 42 3.4.2.1.1 Goods and services tax ..................................................................................... 42 3.4.2.1.2 Bed/Green tax ................................................................................................. 43 3.4.2.1.3 Other taxes ..................................................................................................... 43 3.4.2.2 Direct taxes ....................................................................................................... 43 3.4.2.3 Tax incentives .................................................................................................... 44 3.4.3 Financial assistance ................................................................................................ 45 3.4.4 Other forms of assistance ....................................................................................... 45 3.4.5 Government procurement ....................................................................................... 45 3.4.6 Local-content requirements ..................................................................................... 47 3.4.7 State involvement in the economy ..........................................................................