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) Page 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. WT/TPR/M/159 Page 3 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. WT/TPR/M/159 Page 4 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 WT/TPR/M/159 Page 5 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. WT/TPR/M/159 Page 6 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.