RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/119
30 June 2003
(03-3350)
Trade Policy Review Body
TRADE POLICY REVIEW
SENEGAL
Report by the Secretariat
This report, prepared for the second Trade Policy Review of Senegal, 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 the Government of Senegal on its trade
policies and practices.
Any technical questions may be addre ssed to Mr S Stamnas (tel. 022.739.5382).
Document WT/TPR/G/119 contains the policy statement submitted by the
Government of Senegal.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Senegal.Senegal WT/TPR/S/119
Page iii
TABLE OF CONTENTS
SUMMARY OBSE RVATI ONS........................................................................................................... .vii
(1) ECONOMIC ENVIRONMENT ........................................................................................................vii
(i) Overv iew.................................................................................................................... ..vii
(ii) Monetary and ex change pol icy ...................................................................................viii
(iii) Trade and balance-of  payments-str ucture ...................................................................viii
(2) FOREIGN TRADE REGIME ..........................................................................................................viii
(i) Multila teral ................................................................................................................ .viii
(ii) Regional................................................................................................................... .....ix
(iii) Inte rregional............................................................................................................. ......x
(3) TRADE POLICY .............................................................................................................................x
(4) INVESTMENT POLICY ..................................................................................................................xi
(5) SECTORAL POLICIES ..................................................................................................................xii
(6) OUTLOOK ............................................................................................................................... ...xiii
I. ECONOMIC ENVI RONMENT.................................................................................................1
(1) OVERVIEW ............................................................................................................................... ....1
(2) BACKGROUND .............................................................................................................................1
(3) RECENT ECONOMIC DEVELOPMENTS ...........................................................................................3
(i) Macroeconomic indicato rs.............................................................................................3
(ii) Monetary and ex change policy ......................................................................................4
(iii) Budget  policy............................................................................................................. ....6
(4) TRENDS IN TRADE ........................................................................................................................7
(i) Breakdown of  trade........................................................................................................7
(5) OUTLOOK ............................................................................................................................... ......9
II. INSTITUTIONAL FRAMEWORK OF THE FOREIGN TR ADE REGIME..........................11
(1) OVERVIEW ............................................................................................................................... ..11
(2) CONSTITUTIONAL AND GENERAL LEGAL FRAMEWORK .............................................................11
(3) TRADE AND INVESTMENT POLICY .............................................................................................12
(i) Main fe atures ............................................................................................................... 12
(ii) General fr amework ......................................................................................................13
(iii) Instr uments............................................................................................................... ....14
(4) TRADE POLICY FRAMEWORK AGREEMENTS ..............................................................................17
(i) WTO ......................................................................................................................... ...17
(ii) Regional agreements  of economic scope.....................................................................22
(iii) Economic Community of Wes t African States (ECOWAS) .......................................22
(iv) ACP-EU Partners hip Agreement .................................................................................25
(v) Bilateral ag reements ....................................................................................................26WT/TPR/S/119 Trade Policy Review
Page iv
III. TRADE POLICIES  BY MEASURE ........................................................................................33
(1) OVERVIEW ............................................................................................................................... ..33
(i) Import m easures...........................................................................................................33
(ii) Export m easures...........................................................................................................3 3
(iii) Domestic measures ......................................................................................................34
(2) MEASURES DIRECTLY AFFECTING IMPORTS ..............................................................................34
(i) Registr ation................................................................................................................ ..34
(ii) Customs pr ocedures.....................................................................................................35
(iii) Customs valuation........................................................................................................3 6
(iv) Custom s levies ............................................................................................................. 37
(v) Rules of  origin ............................................................................................................. 43
(vi) Prohibitions and products  subject to licensing.............................................................44
(vii) Technical standards and accreditation procedures.......................................................44
(viii) Sanitary and phyt osanitary m easures...........................................................................45
(ix) Contingency measures .................................................................................................45
(x) State trading ............................................................................................................... ..46
(3) MEASURES DIRECTLY AFFECTING EXPORTS ..............................................................................46
(i) Duties a nd taxes...........................................................................................................4 6
(ii) Prohibitions and products subject to licensing, sanitary and phytosanitary
measures ......................................................................................................................4 6
(iii) Export subsidies and promotion ..................................................................................46
(iv) State trading .............................................................................................................. ...47
(4) DOMESTIC MEASURES ................................................................................................................47
(i) Legal regime governing enterpri ses and companies in Senegal ..................................47
(ii) Investment  regime........................................................................................................48
(iii) Protection of intellec tual property  rights .....................................................................53
(iv) Competitio n policy ......................................................................................................58
(v) Subsidies and other fo rms of production aid ...............................................................59
(vi) Government procurement ............................................................................................61
IV. TRADE POLICY  BY SE CTOR...............................................................................................65
(1) OVERVIEW ............................................................................................................................... ..65
(2) AGRICULTURE , LIVESTOCK , FORESTRY .....................................................................................66
(i) Overv iew.................................................................................................................... ..66
(ii) Agricultur al policy.......................................................................................................6 6
(3) FISHERIES ............................................................................................................................... ...70
(i) Overv iew.................................................................................................................... ..70
(ii) Fisherie s poli cy........................................................................................................... .71
(4) MINING AND PETROLEUM ..........................................................................................................73
(i) Min ing...................................................................................................................... ....73
(ii) Petr oleum.................................................................................................................. ...75
(5) INDUSTRY ............................................................................................................................... ...76
(i) Elect ricity................................................................................................................. ....76
(ii) Manufa cturing.............................................................................................................. 76Senegal WT/TPR/S/119
Page v
(6) SERVICES ............................................................................................................................... ....78
(i) Telecommunications....................................................................................................78
(ii) Tourism.................................................................................................................... ....79
(iii) Financial  services........................................................................................................ .80
References..................................................................................................................... .........................83
APPENDIX TABLES................................................................................................................ ............85
CHARTS
III. TRADE POLICIES BY MEASURE
III.1 Escalation of duties actually applied (including taxes) according to the
ISIC two-digit classifica tion of industry (2002) .......................................................................41
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Basic economic indicators  for Senegal, 1994-2002....................................................................2
I.2 Economic indicators for Senegal, 1994-2002.............................................................................3
I.3 Structure of exports, 1996-2001 ............................................................................................. ....7
I.4 Structure of  imports, 1996-2001............................................................................................. ....8
I.5 Exports by destination, 1996-2001 ........................................................................................... ..8
I.6 Imports by origin, 1996-2001 ................................................................................................ .....9
II. INSTITUTIONAL FRAMEWORK OF THE FOREIGN TRADE REGIMEII.1 Documents relating to Senegal's pa rticipation in the WTO, April 2003 ..................................21
II.2 Permanent duties and taxes applicab le to WAEMU extra-community trade ...........................25
III. TRADE POLICIES BY MEASUREIII.1 Breakdown of MFN a nd bound tariff s, 2002............................................................................38
III.2 Rate of duty actually applied (MFN customs duties plus principal
supplementary duties/taxes a nd import surcha rges), 2002 .......................................................40
III.3 Investment-related conditions  and benefits in Senegal.............................................................50
III.4 Benefits under Senegal's fr ee-export enterpri se regime............................................................52
III.5 Subjects and terms of protection under the Bangui Agreement (1977)
and its revision (1999) ........................................................................................................ ......53
III.6 Fines and terms of imprisonment under the Bangui Agreement (1977)
and its revision (1999) ........................................................................................................ ......56
III.7 Products, goods and services subj ect to price cont rols, April 2003..........................................58
III.8 Categories of State aid pr ogrammes under WAEMU regulations............................................61
III.9 New features of the reform of government procurement on behalf
of the State, local authorities or public establishments  in Senegal ...........................................62
III.10 Procedures for awarding gove rnment procuremen t contracts...................................................63WT/TPR/S/119 Trade Policy Review
Page vi
IV. TRADE POLICY BY SECTOR
IV.1 Imports, exports and pr oduction of SONAC OS, 1999-2002 ....................................................68
IV.2 Trend in maritime catches and catc hes unloaded in Senegal, 1994-2001.................................71
IV.3 Level of exploitation of  various species, 2001 .........................................................................71
APPENDIX – TABLES
III. TRADE POLICIES BY MEASURE
AIII.1 Schedule of Senegal with a view to the application of West African
Economic and Monetary Union (WAEMU ) reference pric es, April 2003 ...............................87
AIII.2 Applied MFN tariff rates (customs duties plus main import taxes
and surcharges), by HS Chapter, 2002......................................................................................88
AIII.3 Bound MFN ta riff rates by HS Chapter, 2002..........................................................................93
AIII.4 Status of Senegal with regard to the intellectual property protection
treaties administered by WIPO  currently in force, 2002 ..........................................................98Senegal WT/TPR/S/119
Page vii
SUMMARY OBSERVATIONS
(1) ECONOMIC ENVIRONMENT
(i) Overview
1. The structure of Senegal’s economy
has changed little since the first review of itstrade policy in 1994.  The economy is mainly
based on services – trade, transport and
tourism – owing to Senegal’s special location
on the West African coast.  Nevertheless, the
relative importance of these activities is alsothe result of the low level of development of
agriculture and industrial activities.  The main
industrial activities are the processing of local
resources (principally fisheries products,
groundnut oil mills and phosphates), andbuilding materials. Since the devaluation of the
CFA franc in 1994, the Government’s
economic policy has focused on overcoming the
obstacles to their development.
2. In 1994, the authorities launched a
structural reform and macroeconomicstabilization programme.  The programme’s
objective was the State’s gradual withdrawal
from economic activities through the
liberalization of prices and trade and the
privatization of State enterprises.  Thecompletion of several components of this
programme led to greater control over
government finance.  The programme also
contributed to an average increase in the
growth rate of 4.7 per cent between 1995 and2002.  Inflation has been brought under
control, with an average annual rate of 2-3 per
cent.
3. Trade policy has been substantially
liberalized.  The authorities have abolished the
constraints on the exercise of professions, as
well as quantitative restrictions on imports and
exports.  The tariff liberalization process is also
well advanced within the West African
Economic and Monetary Union (WAEMU),
created in 1994.  The WAEMU adds aneconomic integration component to the West
African Monetary Union (WAMU) and
incorporates its provisions.  As a result of the
introduction of the Common External Tariff(CET) by Senegal in 2002, the simple average
of customs duties actually applied has been
lowered from 37 per cent in 1994 to 14.7 per
cent in 2002.
4. The current context of Senegal’s
economic reform is a poverty reduction and
growth facility (PRGF) drawn up on the basis
of the Poverty Reduction Strategy Paper
(PRSP).  This document was prepared under
the guidance of the Government of Senegal andapproved by the IMF in 2002.  Under the
Highly Indebted Poor Countries (HIPC)
Initiative, Senegal benefited from a reduction of
its debt in 2000.  External debt servicing has
been brought down to 8 per cent of exports.
5. The PRSP notes that poverty affects
two adults in three.  The relatively high rates of
economic growth during the period 1995-2002
did not lead to any tangible progress in this
respect because of the high rate of
demographic growth (2.8 per cent per annum),as well as varying and disappointing
performances by the rural economy;  around
50 per cent of the population lives in rural
areas, where access to basic social services is
still unsatisfactory.  A recovery in the ruraleconomy is one of the priority objectives in the
PRSP.
6. For the period 2003-2005, the PRSP
forecasts that economic growth will be drivenby investment and exports, particularly as
regards agriculture, fisheries, textiles and
clothing, handicrafts and tourism.  The
authorities hope to derive greater benefit from
the market access given under the WTO, thePartnership Agreement between the ACP and
European Union (EU) countries, and a number
of regional agreements.
7. It should be noted that a significant
share of economic activity (industrial and
business activities and other services), as wellas trade, is in the informal sector.  Economic
and trade data are therefore not wholly
reliable.WT/TPR/S/119 Trade Policy Review
Page viii
(ii) Monetary and exchange policy
8. The Central Bank of West African
States (BCEAO), which is a specialized
autonomous institution of the WAEMU, defines
monetary and exchange policy in countries
belonging to the Monetary Union.  Itdetermines monetary policy in order to
maintain the currency’s external rate of cover
at a satisfactory level and to support economic
activities in member countries without
inflationary pressure.
9. The pursuit of a common financial
policy by member countries of the Monetary
Union calls for financial discipline on the part
of each country, which maintains its owndecentralized economic policy.  The WAEMU
has introduced a Convergence, Stability,
Growth and Solidarity Pact which is
collectively monitored.  Each of the WAEMU
member States has been subject to this Pact
annually since 2000.  According to the
WAEMU Commission, Senegal is in a goodposition because it meets seven of the eight
convergence criteria, particularly as regards
control of government spending.
10. Since 1999, the CFA franc has
shadowed the euro, which replaced the French
franc.  Exchange transactions, capital
movements and payments of any kind may only
be made through authorized intermediaries.
Supporting documentation is required for anycapital outflow, except towards the WAEMU.
(iii) Trade and balance-of-payments
structure
11. The trade structure has not changed a
great deal since the last review of trade policy
in 1994.  Around 70 per cent of Senegal’s
exports are primary products (cotton, fisheries
products, groundnut oil, horticultural products)
or fuel.  The European Union (EU) is the
leading destination for exports of primary
products.
12. Although Senegal does not produce
hydrocarbons, it imports them in crude form for
refining in order to supply domestic andneighbouring markets.  The most important
exports of manufactures are chemicals (12 per
cent of the total) as a result of the processing of
phosphates into phosphoric acid and fertilizer,
which mainly go to India.
13. Food products account for around
30 per cent of total imports.  Most of these
products – rice, wheat, sugar, food
preparations, milk and cream in particular – go
to feed the urban population.  Food crops suchas millet and sorghum are consumed on the
spot in rural areas.  Office, transport and
telecommunications machinery and equipment
are another important category of imports,
mainly from Europe and Asia.
14. Senegal has a chronic deficit in trade
in goods, which is partly offset by earnings
from exports of services (tourism and
transport) and transfers from Senegalese
workers abroad.  The deficit in the trade
balance became even more acute in 2002 whenthe increase in imports (CFAF38.1 billion) was
larger than that in exports (CFAF29.9 billion),
even though the rate of growth in exports was
higher.  An improvement in the financial
transactions account, due in particular to anincreased flow of private capital, led to an
overall surplus of CFAF107.1 billion in the
2002 balance of payments.
(2) 
FOREIGN TRADE REGIME
(i) Multilateral
15. Senegal is one of the founding members
of the WTO, continuing the relationship
initiated with the GATT 1947 in 1963.  Senegal
grants at least most-favoured-nation (MFN)treatment to imports from WTO Members.
16. In 2001, Senegal became a least-
developed country (LDC).  It intends to take
advantage of stronger support from its
development partners, especially as regards
debt reduction, market access and otherinitiatives under the Uruguay Round and the
Doha Agenda taken to integrate LDCs in the
multilateral trading system, as well as technical
cooperation under the Integrated Framework.Senegal WT/TPR/S/119
Page ix
17. During the Uruguay Round, Senegal
bound all its agricultural tariff lines at 30 per
cent; the Senegalese authorities indicate,
however, that they reserve the right to
introduce “other duties and taxes” of up to
150 per cent.  In 1996, Senegal concluded therenegotiation of its non-agricultural tariff
concessions, which led to binding of all the
tariff lines concerned at a ceiling of 30 per
cent, with some exceptions, for which Senegal
undertook to reduce the rate gradually to15 per cent by 2005.  Although the tariffs
actually applied on some agricultural tariff
lines exceed the customs duties bound at 30 per
cent due to the application of a national
surcharge on certain products, together withthe Common External Tariff (CET) and several
supplementary WAEMU duties, the Senegalese
authorities consider that this extra amount is
part of the “other duties and taxes”.
18. As of July 2001, Senegal has been
implementing the Customs ValuationAgreement and has requested a waiver in order
to maintain “reference values” for over
29 products (inter alia, refined vegetable oil,
food preparations, alcoholic beverages and
cigarettes) of non-WAEMU origin.  Thisprovision complements an import verification
programme (PVI) for imports exceeding
CFAF1 million (around €650).  The Senegalese
authorities explain the application of minimum
values by the need to protect domesticproduction and the absence of operational
mechanisms for anti-dumping, countervailing
and safeguard measures.
19. Senegal undertook specific
commitments under the GATS during the
Uruguay Round for services related to tourism,
distribution, business, recreation, sports and
culture, as well as transport.  Commitments
were made in 1997 on telecommunications
services and, in 1998, on financial services.
The limits indicated in the Schedule on thesupply of services through commercial
presence (mode 3) are more restrictive than the
regime currently applicable to foreign
investors.  Senegal has not assumed any
commitments concerning the supply of servicesthrough the presence of natural persons,
including their temporary admission.
20. As an LDC, Senegal benefits from the
transitional provisions allowed under
Article 66 of the TRIPS Agreement in order todelay full application of the Agreement until
2006 (except for Articles 3, 4 and 5).  The
regime in place in Senegal is that of the revised
Bangui Agreement of the African Intellectual
Property Organization (OAPI), which enteredinto force in February 2002, with the exception
of its provisions on layout-designs
(topographies) of integrated circuits and new
plant varieties owing to the lack of competence
in these areas.  The protection of intellectualproperty rights is the responsibility of the
national authorities, their police forces and
judicial systems.  Senegal is facing some
problems in this respect due to the lack of
human and financial resources available.
21. Senegal’s participation in the
multilateral trading system is below the
authorities’ expectations.  There have been few
notifications since 1998 and there are gaps in
the understanding of members’ obligations and
the benefits which Senegal could derive fromthe system.  There is also a risk that Senegal
and the WAEMU member countries will find
themselves on the margins of the negotiations
under the Doha Agenda. Annex II.1 of this
Secretariat report contains a draft technicalassistance programme for Senegal, which
would be the WTO’s contribution to the pilot
programme of the revised Integrated
Framework.  This WTO Secretariat report, like
the Annex, will be included in the diagnostictrade integration study drawn up in this
context.
(ii) Regional
22. Senegal’s trade policy mainly consists
of implementing the common trade policy of the
WAEMU.  Senegal is also a member of theEconomic Community of West African States
(ECOWAS), whose timetable for trade
liberalization has not been respected but which
plays an important role in settling disputes at
the subregional level.WT/TPR/S/119 Trade Policy Review
Page x
23. The objective of the WAEMU is the
creation of a common market and it has
already harmonized excise duty and value-
added tax (VAT) as well as introducing a
common regulatory framework for anti-
competitive practices, which includes aCommunity Anti-Dumping Code.
24. According to IMF estimates, only
one third of intra-WAEMU trade is duty free.
In addition to the barriers that still hamperdevelopment of trade, this modest level of
subregional integration can be explained by the
low level of income, the lack of development of
the industrial fabric in WAEMU member
countries, the importance of agriculture in theireconomies, and the high level of self-sufficiency
achieved except as regards imported products
such as rice, which is not one of the region’s
comparative advantages.
25. The adoption of an operational
common agricultural policy (CAP) appears tobe imminent.  The objective would be to
promote development of the agricultural sector
in the WAEMU countries by diminishing
competition from products imported from
countries outside the WAEMU.  Although tariffprotection of agricultural products under the
CET is already higher than that for
non-agricultural products, consideration is
being given to increasing the CET.
(iii) Interregional
26. Senegal is one of the African,
Caribbean and Pacific (ACP) countries with
which the European Union signed a
Partnership Agreement in 2000, whose non-reciprocal preferences are the subject of a
waiver approved by the WTO Members.  The
WAEMU countries are currently negotiating a
regional economic partnership agreement
(REPA) with the EU, which would eventually
come into force as of 2008.  Consideration is
also being given to the option of joining theEU’s Generalized System of Preferences
(GSP).  As an LDC, since March 2001 Senegal
has benefited from the more favourable
treatment granted under the EU’s GSP by the
“Everything But Arms” initiative.(3) 
TRADE POLICY
27. Senegal’s tariff has been entirely based
on the WAEMU’s Common External Tariff
(CET) since 25 July 2002.  The CET places
customs duties into four major categories:
essential goods (0 per cent);  staple goods,including basic raw materials, capital goods
and specific inputs (5 per cent);  intermediate
goods and inputs (10 per cent);  and final
consumer goods (20 per cent).  In addition to
the CET, Senegal and the other members of theWAEMU also apply permanent supplementary
duties consisting of the statistical charge (RS)
and a community solidarity levy (PCS) on
imports from countries outside the WAEMU,
amounting to 2 per cent;  a PCS of 0.5 per centis also levied for the ECOWAS.  Revenue from
the RS and both PCS are refunded to the
WAEMU and the ECOWAS.  No timetable has
been set for the abolition of the supplementary
duties.
28. Senegal has also introduced a special
import tax (TCI), which is a mechanism to
protect agricultural products introduced by the
WAEMU for sugar (through equalization),
wheat flour (10 per cent) and refined vegetable
oil (10 per cent), whereas crude oil intendedfor refining and groundnut oil and mixtures of
oils containing at least 60 per cent of
groundnut oil are exempt.  This measure is one
of the tariff and non-tariff barriers to imports of
refined vegetable oil, whose objective is toprotect the domestic oil mills belonging to
SONACOS, a State enterprise that is currently
being privatized.
29. Outside the WAEMU, temporary
surcharges apply to imports of onions,
cigarettes, potatoes, bananas, millet and
sorghum of any origin.  According to the
Senegalese authorities, the purpose of these
surcharges is to protect the local subsectors
and prepare them for the opening up of the
domestic market to competition.  Nevertheless,no timetable has been fixed for their abolition,
even though the authorities intend to do so.
30. The combined effect of the application
of MFN customs duties, supplementary dutiesSenegal WT/TPR/S/119
Page xi
(RS and PCS) and import surcharges means an
increase in the simple average of duties
actually applied amounting to 14.7 per cent.
The escalation of MFN duties, which are lower
if the CET alone is taken into account,
therefore increases because of the existence ofthe surcharges.  Agro-industrial products
receive higher actual levels of protection than
those indicated by the nominal rates.
31. Since 2000, MFN customs duties have
applied to imports of goods of any origin, with
the exception of goods covered by the
WAEMU’s transitional preferential tariff
regime, local products and traditional crafts of
ECOWAS origin.  Under the WAEMU’spreferential regime, total exemption from MFN
customs duties has applied to local products
and traditional crafts since 1996 and to
originating industrial products since 2000 - at
December 2002 2,240 products were included
– provided that the producing enterprises have
been approved and subject to presentation of acertificate of origin.  A 5 per cent reduction is
given to enterprises producing originating
industrial products but not approved.  The
certification of enterprises is the responsibility
of the WAEMU Commission, but as of 2006 itwill become the responsibility of national
authorities under a timetable set in the
WAEMU rules of origin mechanism introduced
in 2003.  This will ease the origin criteria for
industrial products.
32. Excise duty and VAT are levied on
imports into Senegal. VAT is fixed at 18 per
cent, except for goods exempted by common
agreement among WAEMU members.  Senegalapplies, inter alia, excise duty at 15 per cent on
refined oil, whereas groundnut oil and oil
containing at least 60 per cent of groundnut oil,
which are of national interest, are exempt.
According to the Senegalese authorities, this is
for social reasons.  This is also why so-called
“economic” cigarettes are subject to exciseduty of 15 per cent, whereas “premium”
cigarettes are subject to 30 per cent.
33. Senegal totally revised its government
procurement policy by adopting a newGovernment Procurement Code in May 2000,although it still maintains a policy of
preference for domestic enterprises.  The new
Code inter alia simplifies procedures, ensures
greater transparency, rapidity and efficacy of
procedures, provides new dispute settlement
procedures and new sanctions against personscommitting offences in the course of tendering
for or executing government procurement
contracts.
(4) 
INVESTMENT POLICY
34. The main investment-related elements
of the PRSP are, on the one hand, expanding
investment opportunities by privatizing State
enterprises and promoting major public works
by the President (for example, Dakar’s newinternational airport), and, on the other,
creating a climate that is conducive to setting
up enterprises in Senegal.
35. There has been progress in the
privatization of State enterprises since 1996
and 12 State enterprises now have privatecapital, including the national airline and the
national fixed telecommunications operator.
This effort is being pursued in 2003 when it is
planned to sell SONACOS, a State enterprise
that processes groundnuts, as well as hotelsand SENELEC, the national power company.
Nevertheless, 32 enterprises still remain in the
semi-public sector.
36. In principle, all sectors of the economy
are open to foreign investment, although access
to telecommunications, mining and petroleum
is subject to sectoral codes.  National treatment
is granted subject to reciprocity and Senegal
has concluded investment treaties andagreements for this purpose with 10 trade
partners.
37. The investment climate is undermined
by a number of problems relating to
administrative procedures, labour regulations
and a lack of infrastructure.  It should also benoted that energy costs are among the highest
in West Africa and there are frequent
shutdowns, two factors which lessen the
competitiveness of industries.WT/TPR/S/119 Trade Policy Review
Page xii
38. In order to promote investment, in
April 2002 the Government adopted a strategy
to develop the private sector, focusing on
simplifying the regulatory framework and
better functioning of the judicial system, as well
as facilitating access to financing through amore efficient financial sector.  Senegal has
ratified the seven uniform acts on commercial
companies adopted to date by the Organization
for the Harmonization of Business Law in
Africa (OHADA).
39. The National Agency for the Promotion
of Investment and Major Public Works (APIX)
was established in July 2000.  The APIX is
responsible for approvals under the InvestmentCode and the free export enterprise regime,
which give enterprises a number of tax benefits.
The APIX has set up a single window to allow
investors rapidly to complete the administrative
formalities required in order to become
established in Senegal.
40. Since the first review of Senegal’s
trade policy in 1994, the Investment Code has
not been amended, but the authorities are
considering extending its sectoral coverage to
“new technologies” to allow such investors totake advantage of the tax benefits and
guarantees allowed under the Code.  The main
tax benefits under the Investment Code have
been notified to the WTO and concern in
particular exemption from duties and taxes onthe import of machinery and equipment needed
to set up production units and any inputs that
are not available on the domestic market,
together with exemption from domestic taxes
for fixed periods.
41. The free export enterprise regime dates
from 1996 and has also been notified to the
WTO.  The two main criteria for benefiting
from this regime are that the enterprise should
engage in an activity in either the agricultural
or industrial sector and that its export potentialshould amount to at least 80 per cent of its
turnover.  The main advantages granted are the
same as those under the Investment Code,
together with a reduced corporation tax of
15 per cent instead of 35 per cent.42. Although these are significant
measures taken to offset the disadvantages of
setting up enterprises in Senegal, their
effectiveness can be questioned because they
create a less transparent and more complex
economic climate, are not conducive to goodgovernance, deprive Senegal of budget
resources, and encourage expansion of the
informal sector by small- and medium-sized
enterprises that are not eligible.  The revenue
foregone as a result of exemptions from importduty under the various regimes was estimated
at CFAF56 billion in 2002 (around
€37 million), thereby lowering customs revenue
by 19 per cent.
(5) 
SECTORAL POLICIES
43. Since 1994, the Government of Senegal
has undertaken gradually to eliminate policies
on intervention in the agricultural sector.  The
main achievements are the liberalization of
cereal prices and of the rice subsector, as well
as the elimination of quantitative import andexport restrictions.  Liberalization of the
groundnut, cotton, sugar and tomato
concentrate subsectors is still awaited.
44. It should nevertheless be noted that
certain constraints on the import of
agricultural products still exist:  the maximum
level of MFN customs duties under the CET
(20 per cent);  the imposition of a TCI on
imports of sugar, groundnut oil, soyabean andcolza vegetable oil, and wheat flour from
countries outside the WAEMU; and the
“temporary surcharges” on imports of onions,
cigarettes, potatoes, bananas, millet and
sorghum of any origin.  The high taxation ofbasic foodstuffs raises prices on domestic
markets and reduces the purchasing power of
households, which also has an impact on
poverty.  This situation could worsen if the
adoption of a CAP by the WAEMU leads to an
increase in the CET on agricultural products.
45. Fisheries products account for around
30 per cent of export earnings and Senegal also
receives royalties from the EU and European
ship owners fishing in its waters under the
fishing agreement renewed in 2002.  TheSenegal WT/TPR/S/119
Page xiii
development of this sector is mainly sustained
by the free export enterprise regime, under
which the majority of approved enterprises are
in the fishing industry.
46. As far as Senegal’s mineral wealth is
concerned, only phosphate, attapulgite and
building materials are exploited on a large
scale.  A new Mining Code is being adopted in
order to improve the conditions for prospecting
and exploitation and to accelerate theutilization of minerals discovered.  The
building of two of the President’s major
projects – the standard-gauge railway and the
mineral port at Bargny – would serve as a
support infrastructure.  The Senegaleseauthorities also hope to boost investment in
petroleum prospection and exploitation under
the Petroleum Code.
47. Senegal has long followed an import
substitution policy, like other developing
countries, and has used the country’s budgetresources in order to create an industrial
sector that focuses on large State enterprises
protected from competition by border
measures.  The importance of this policy has
declined since the launching of the post-devaluation programme as a result of
privatization and the opening up of Senegal’s
trade regime through the adoption of the
WAEMU’s CET.
48. The support policies available to
enterprises financed by private capital are
those related to investment and several
structures for aid to the private sector.  The
Senegalese authorities intend to introduce aSME Charter providing numerous facilities in
respect of taxation and market access.
49. In the services sector, tourism – the
second most important export – is facing a
number of problems that hamper its
development.  In order to resolve these, theGovernment intends to adopt a Tourism Code
and introduce new incentives for investment.
Nevertheless, unless the basic problems are
resolved, these measures risk being just as
ineffective as those already in place.50. Value-added services in the
telecommunications sector are among
Senegal’s most dynamic economic activities
and offer prospects for the future due to the
modern infrastructure and the cable link with
Europe and the United States.  The Senegaleseauthorities consider that Senegal has one of the
most efficient and least costly communications
networks in sub-Saharan Africa.  The opening
up of this sector to competition under the GATS
should help Senegal to derive greater benefitsfrom its value-added services.  The timetable
for opening up this sector has been accelerated
and the operator’s long-standing monopoly of
fixed telephony will end in 2004.  Mobile
telephone services started in 1998 with thegranting of two GSM licences.
51. Senegal’s banking sector is considered
to be healthy after having undergone a
significant crisis in the 1980s, which greatly
decreased loan opportunities in the economy.
The banking sector is subject to the WAEMU’scommon regulations and has recovered, but the
level of bankerization remains low;  6 per cent
of the population has a bank account.  The
sector is one of those for which Senegal
assumed commitments under the GATS, whichshould encourage foreign investment.  In order
to offset the lack of loans for the private sector
and limit the banking risk, the Government of
Senegal has introduced several financing
support programmes.
(6) 
OUTLOOK
52. In the medium term, Senegal’s
economic performance should continue to
benefit from the substantial efforts made sincethe last review of its trade policy, and which
are continuing, in relation to structural reform
and development of human capital in the
context of the PRSP.  The rural economy
remains vulnerable, but the State’s withdrawal
should allow farmers to develop products that
are better adapted to the requirements ofdomestic, regional and international markets.
The domestic economy has opened up to keener
competition, both on the part of new domestic
economic operators and international trade.
The continued existence of protection measuresWT/TPR/S/119 Trade Policy Review
Page xiv
for certain activities is to be regretted,
particularly when they decrease household
purchasing power, as well as the systematic use
of subsidization policies for investment, exports
and targeted sectors.  The fact remains that
there has been significant liberalization sincethe last review of Senegal’s trade policy in
1994.