WORLD TRADE ORGANIZATION
ORGANISATION MONDIALE DU COMMERCE
ORGANIZACIÓN MUNDIAL DEL COMERCIOWT/TPR/M/96/Add.2
22 April 2002
(02-2279)
Trade Policy Review Body
6 and 8 February 2002Original: English/
               anglais/
               inglés
TRADE POLICY REVIEW
MALAWI
Minutes of Meeting
Addendum
Chairperson:  H.E. Mr. Pekka Huhtaniemi (Finland)
This document contains the advance written questions, and replies provided by the delegation
of Malawi.1
__________________________________________________________________________________
Organe d'examen des politiques commerciales
6 et 8 février 2002
EXAMEN DES POLITIQUES COMMERCIALES
MALAWI
Compte rendu de la réunion
Addendum
Président:  S.E.  M. Pekka Huhtaniemi (Finlande)
Le présent document contient les questions écrites communiquées à l'avance et les réponses
fournies par la délégation malawienne.1
__________________________________________________________________________________
Órgano de Examen de las Políticas Comerciales
6 y 8 de febrero de 2002
EXAMEN DE LAS POLÍTICAS COMERCIALES
MALAWI
Acta de la reunión
Addendum
Presidente:  Excmo. Sr. Pekka Huhtaniemi (Finlandia)
En el presente documento figuran las preguntas presentadas anticipadamente por escrito,
junto con las respuestas facilitadas por la delegación de Malawi.1
                                                     
1 In English only./En anglais seulement./En inglés solamente.WT/TPR/M/96/Add.2
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ADVANCE WRITTEN QUESTIONS BY MEMBERS, AND RESPONSES
BY THE DELEGATION OF MALAWI
I. ECONOMIC ENVIRONMENT
DISCUSSANT
Q 1: What is current size and impact of the Malawi’s external debt on its trade relations and on its
efforts to transform  the country’s economy?
A: The current debt stands at US D 2.6 billion.  However, Malawi is now eligible for the Highly
Indebted Poor Countries (HIPC) Programme and a to tal of USD 1.0 billion will be cancelled over a
period of three years.  Debt repayment, both on pr incipal and interest, has been a big constraining
factor on the budget and our effort to transform the country’s economy.  The relief under the HIPC
arrangement will give some breathing space.  Malawi has not defaulted on external trade payment due
to debt servicing. In this way, it could be said that debt has not directly constrained our tradingrelationship with other trading partners.  The size could not be quantified.  However, the debt situation
has an impact on the government operations and support institutions which carry out export trade
activities.
Q 2: How does the Malawian Government propose to address the challenge that 65.3 percent of its
population lives below the poverty datum line.
A: The Malawi Government is designing and implementing several programmes and strategies
aimed at addressing the challenge that 65.3 percent of its population lives below the poverty line.
These programmes and strategies include the Poverty Alleviation Programme (PAP), the Safety Nets
Programme (SNP), the Poverty Reduction Strategy Pa per (PRSP) and the Poverty Monitoring System
(PMS).
The Poverty Alleviation Programme (PAP) was instituted in 1994 as the main strategy for
addressing poverty in Malawi.  It emphasizes the need to raise national productivity through
sustainable broad-based economic growth and socio-cultural development.  Some of the notable
programmes under PAP include Free Primary E ducation, Malawi social Action Fund (MASAF)
funded community projects, the European Uni on Micro-Projects, the Sustainable Livelihoods
Programme and the rural Housing Project.
The overall goal of Malawi’s Safety Nets Programme (SNP) is to improve the livelihoods of
the most vulnerable and marginalized groups in society by enabling them to enhance their
productivity.  The programme aims at strengthening the participation of the poor and vulnerable in
economic growth and national development.  It also serves as a means of boosting the rural economy
so as to increase rural income and employment opportunities.
At the moment, the Government is finalizing the Poverty Reduction Strategy Paper (PRSP).
This will be the key instrument for policy direction.  It will form the basis for future Government
activities and provide a guiding framework for Government’s development partners.  Its overall goal
is to achieve sustainable poverty reduction through social, economic and political empowerment of
the poor.
In order to monitor the impact on poverty of the different Government programmes and
initiatives, a Poverty Monitoring System (PMS) was established.  It was developed as an instrument
for collecting and disseminating information on the poverty situation in Malawi and evaluating the
impact of policies and programmes at the national and local level.WT/TPR/M/96/Add.2
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Q 3: What has been the impact on the economy and on foreign relation of Malawi’s transition to
multiparty democracy in the early 1990.
A: Before the advent of political pluralism, Malawi pursued foreign policies tailored to suit the
preferences of the dictatorial and autocratic leadership, which unfortunately had put her in bad light
on the international scene.
The dawn of multiparty democracy in 1994 saw Malawi adopting a new foreign policy with
an increasingly proactive role in the internati onal arena. Among its guiding principles were the
following:
• Sovereign equality of States, democracy, respect of human rights as essential requirements for
socio-economic development as well as the well-being of all people.
• Equal rights, justice, protection of human ri ghts and fundamental freedoms, promotion of
principles of good governance, transparency and accountability as the core embodiment ofMalawi’s democratic dispensation.
• Subscription to and guidance by the convention of the Organisation of African Unity (OAU)
and the United Nations (UN) in the conduct of international affairs.
• The promotion and maintenance of international peace and security and good neighbourly
relations.
• The reform of the international economic order.
• The promotion of economic cooperation and regional integration.
It is not surprising, therefore, that due to emphasis on democracy, respect of human rights and
the rule of law, Malawi has gained sympathy from a wide range of cooperating partners.  Coupledwith her open door policy, Malawi has forged ties with many countries including those in the Eastern
Europe and Asia.  This has further helped to boost trade and investment.
With market liberalization and sound economic policies which Malawi has adopted, there has
been some inflow of Foreign Direct Investment, not to mention the unprecedented levels of local
participation in the economy by Malawians.
On foreign relations, apart from having more cooperating partners and divergent bilateral and
multilateral levels of cooperation, Malawi has played an increasingly proactive role in theinternational arena since 1994.  In her commitment to international peace and security, Malawi has
been actively involved in initiating and facilitating contact and dialogue among different warring
factions in some of Africa’s long running conflicts.
Q 4: Could you please expound on the Government’s effort to enhance the rate of growth of the
country’s economy and effort to mainstream trade in  the country’s development agenda, with the view
to achieving sustained economic growth and alleviation of poverty?
A: The rate of growth of the economy and mainstreaming of trade will be attained through:
(a) Pursuing sound fiscal and monetary policies through improved public expenditure management
and reduction in government borrowing.  This will result in low and stable exchange rates.
The independence of the Reserve bank of Malawi will be increased through a review of the ReserveBank of Malawi Act.  (b) Improvement of access to credit through review of regulatory and
institutional framework and encouragement of new financial institutions to increase competition.
(c) Broadening and diversification of the export base.  This includes exploiting the tourism, mining
and agro-processing sectors, moving away from traditional primary products like tobacco to other
non-traditional products that have more value added, and identification of targeted manufacturingindustries that have strong backward and forward linkages textiles and clothing.  (d) Improvement of
rural infrastructure and utilities.WT/TPR/M/96/Add.2
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Q 5: What has been the impact, in quantitative term s, of the anti smoking lobby in the US, EU and
elsewhere, on Malawi’s foreign exchange earnings  and how does the Government intend to address
the consequent shortfall in foreign exchange?
A: The consequence for the anti-smoking lobbies in the US and EU markets which are the main
destinations for the Malawi tobacco have contributed to the reduced tobacco prices at the auctionfloors which has resulted in declining foreign exchange earnings for the country.  It should, however,
be acknowledged that no in depth analysis has made in this regard to specifically single out the impact
of the anti-smoking lobby alone and quantified in value terms particularly that other factors as well
influence the price of tobacco in the market.  Prices, quality, quantity, demand are among the factors
affecting foreign exchange earnings.  Any changes in the supply-demand equation of the crop will
have positive or negative repercussions on the economy.  Much as we have observed a downward
trend in foreign exchange earnings over the past four years, we can not pull out the effect of theantismoking lobby alone.  Admittedly, this has affected prices but also has litigation in the United
States, company mergers, carryover stocks, supply and demand, quality etc.
However, in light of this antismoking lobby, Government is in the process of compiling an
Action Plan for introducing additional engines for economic growth which will assist Government’s
effort to diversify the economic base to mining, tourism, manufacturing, production, and agro-processing of high value crops.  The creation of  favourable macro-economic environment was seen as
a pre-requisite to the development of the manufacturing sector.  The sub-sector of interest are the
textile and garments, pharmaceutical, rubber products and timber industry.  A deliberate investment in
tourism by Government was also seen as a stim ulus to quick- start this particular industry.
Q 6: What measures have been put in place to cu rb corruption in Malawi’s public administration?
A: In 1994, Malawi changed from one party to multiparty politics.  Resulting from this, a new
Constitution was adopted.
Chapter 3 of the constitution of Malawi, Section 13(o) and Section (m) state that Government
should adopt policies and legislation that will:  (a) introduce measures which will guarantee
accountability, transparency, personal integrity and financial probity and which by virtue of theireffectiveness and transparency will strengthen co nfidence in public institutions, and (b) promote law
and order and respect for society through civic education, by honest practices in government.
To meet these constitutional commitments, Parliament passed Bills that became laws.  Basing
on the laws, the government of Malawi established a number of governance institutions including the
following:
● the Office of the Ombudsman;
● the National Compensation Tribunal;
● the Human Rights Commission;
● the Law Commission; the Malawi Electoral Commission;  and
● the Anti-Corruption Bureau.
The corrupt Practices Act No 18 of 1995 established the Anti-Corruption Bureau in 1995.
The Bureau began its operations in 1998.
In fighting corruption, the Bureau employs a three pronged attack which are:
● Civic Education;
● Corruption Prevention;  and
● Investigations and Prosecution.WT/TPR/M/96/Add.2
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Civic Education involves dissemination of information on the evil and dangerous effects of
corrupt practices on society; and enlisting and fostering of public support against corrupt practices.
This is achieved through presentations, lectures, seminars, workshops, radio programmes, drama,
cartoons, production and distribution of educational and promotional materials, the Anti-Corruption
Bureau newsletter and working with other institutions.
Corruption Prevention involves undertaking necessary measures for the prevention of
corruption in public and private bodies, including, measures for: examining the practices and
procedure of public bodies and private bodies in order to facilitate the discovery of corrupt practices
and secure the revision of methods of work or pr ocedures which in the opinion of the Bureau may be
prone or conducive to corrupt practices…;  advising public bodies and private bodies on ways and
means of preventing corrupt practices, and on changes in methods of work or procedures of such
public and private bodies compatible with the effective performance of their duties, which the Bureauconsiders necessary to reduce the likelihood of the occurrence of corrupt practices
Under investigation, the Bureau investigates many public officers who are or have been
alleged to have been in corrupt practices.  These range from clerks to Principal Secretaries and
Ministers.
It is worth mentioning here that the Bureau is empowered to investigate any offender
regardless of status.
In the years that the Bureau has been operational, it has dealt with corruption in the Public
Sector as well as private sector.  The cases that have been brought to court have included politicians,
and other high profile personalities.  So far there has been no interference.
Q 7: How effective is the Cash Budget system in instilling accountability and financial discipline in
the Government budgeting system?
A: The cash budget system was instituted to ensure that expenditures are made in accordance
with available resources.  As an expenditure control tool, it has been noted that by its own, it is not
adequate in controlling expenditures.  Government has since introduced other expenditure control
measures such as Credit Ceiling Authority whereby Ministries/Department are only able to spend upto credit ceiling amount held with their commercial banks.  Government then reimburses the
Commercial Banks on daily basis.  Government has also introduced a Commitment Account System
which gives Ministries a three month funds allocation information to allow them plan for their
commitments.  This assists in ensuring that there are no arrears building up in the system
.
Q 8: How does the Government propose to address the problem of constantly growing inflationary
pressures on the economy?
A: With the assistance of the IMF, Government is working on an economic program that ensures
that the Government’s fiscal deficit is set at an acceptable percentage of GDP commensurate with the
country’s growth objectives. It may be noted that co nstantly growing inflationary pressures are largely
caused by Government excessive public borrowing to finance its expenditure.  To reduce public
borrowing, Government has embarked on the following:  Increasing and maintaining aggressiveness
in revenue collection, broadening revenue collection base, and ensuring financial prudence in line
government ministries and departments.
Q 9: Could you please expound on the Government’s effort to enhance domestic resource
mobilization?
A: To enhance domestic revenue collection, Government established the Malawi Revenue
Authority (MRA) in 1999, an institution outside government, with private sector remuneration toWT/TPR/M/96/Add.2
Page 7
collect revenues with improved administrative efficiency. Government has also legislated a Bill to
extend surtax to wholesale and retail stages.  Surtax was being collected at manufacturing stage only.
This is aimed at expanding the tax base.  MRA is undergoing an intensive organizational restructuring
to improve efficiency and public image
EUROPEAN UNION
Q 1:  (para 20-23) We would be interested in  receiving some more details on the structural
adjustment programmes.  What were there results and how did the Government of Malawi react to the
alleged negative effects?
A: Malawi has been implementing Structural Ad justment programs since 1981, with the support
from the World Bank and the International Monetary Fund and other donors.  Some of the programs
included:
(1) The Enhanced Structural Adjustment Facility – basically a macroeconomic
stabilization program implemented with support from the IMF;
(2) The Economic and Capital Markets Development Adjustment Credit (ECMAC)
which aimed at financial sector reform and development of the capital markets,
review of the Reserve Bank Act;
(3) Entrepreneurship Development and Dr ought Recovery Program (EDDRP) which
aimed at fiscal restructuring including increasing budgetary allocation to the social
sectors;
(4) Fiscal Restructuring and Deregulation Program (FRDP) – This is an on going
program which has encompassed issues of privatization, civil service reform, and the
expenditure prioritization and resource allocation framework, the so called MediumTerm Expenditure Framework (MTEF).
The results of the structural adjustment programs have been mixed.  The liberalization of the
economy and sectoral reforms have resulted in price-decontrols, rationalization of the tax system, and
enhancement of competition and the promotion of production efficiency.  However, as Malawi
opened up, the economy has been overwhelmed by the influx of imports and has also been subjectedto economic instability with its trading partners.  The Agricultural sector has also been greatly
affected in terms of food security and export earnings.  The speed of economic liberalization did not
allow domestic industries time to adjust and cope with the aggressive foreign competition.  In some
instances delays in donor flows and non-fulfilment of donor commitments have exacerbated the
pressure on the fiscal deficit.  To address so me of these problems brought in by the SAPs,
Government is putting in place programmes and strategies such as the Poverty Alleviation
Programme, the Safety Nets Programmes, diversification programme and the Poverty ReductionStrategy.
Q 2:  (para 4) What are, in Malawi’s view, the reasons for the decline in trade in goods from 97% of
GDP in 1994 to 74% in 1999?
A: The declining total trade to GDP ratio is an area that requires further investigation.  With
respect to the fall in exports to GDP ratio, it is important to note that Malawi has faced decliningterms of trade for the major export crop tobacco which accounts for over 60 per cent of export
earnings.  Since 1994 Malawi has been affected by a decline in disposable income which can partly
explain the decline in inputs to GDP ratio.  Mala wi being an agricultural based country, factors such
as drought, changes in the world commodity prices have greatly impacted on GDP
Q 3:  (para 20) The report states that “Despite Malawi’s efforts to attract FDI, inflows remain
relatively small”.  Would the GoM agree that one obstacle to private investments is Malawi’s recently
formulated National Land Policy?  According to this policy foreigners are no longer allowed toWT/TPR/M/96/Add.2
Page 8
acquire land on a freehold basis.  In addition, foreign citizens currently in possession of freehold
estates will have to obtain Malawi citizenship within  the next seven years in order to retain their free
ownership.  Such policy will rather contribute to prevent than encourage the already low inflow of
FDI in Malawi.  Alternatively, what other options would foreign investor have in Malawi?
A: Malawi Government does not agree that the recently National Land Policy is an obstacle to
private investment.  Land in Malawi is broadly divided into three categories namely customary land,
public land and private land. Private land consist of free-hold and lease hold.  The two broadly contain
the same legal rights but it is against principle for foreigners to acquire land on free hold basis.
Foreigners wishing to invest will obtain land on lease hold basis which is best suited for conduct of
business.  Apparently there has been a misunderst anding of the relationship between Foreign Direct
Investment (FDI) and the existing Land Policy.  It is important to note that FDI levels have always
been low due to other factors other than land matters.
UNITED STATES OF AMERICA
Q 1:  (para 4) The Secretariat’s report notes that Malawi is finalizing its PRSP in collaboration with
its multilateral donors, which is expected to be approved by Parliament in 2001.  The strategy focuses
on improving fiscal discipline, governance, and public sector efficiency.  How has the government
included trade in its PRSP?
A: While the PRSP has not yet been approved by Parliament, there are plans to finalize the
approval process before the 2002/2003 Budget fo rmulation process which starts in March 2002.
Government has also noted that trade strategy issues are not adequately covered in the PRSP and is
therefore taking necessary actions to correct the situation.
Q 2: The Secretariat’s report notes that while Malawi has made substantial progress in many
areas to reform its economy, deve lopment continues to be heavily constrained by a number of key
factors, such as inadequate infrastructure, misall ocation of human resource s, fiscal mismanagement,
lack of accountability, weak institutions, and poor governance.  What does Malawi think it needs to
overcome these problems?
A: The issue of attaining macroeconomic stability remains Government priority economic goal.
In this regard, Government continues to explore m easures for containing budgetary pressure.  Further
more there are various efforts to address institutional capacity constraints through own efforts as well
as with financial and technical assistance from Cooperating partners.  A committee has been set-up to
address infrastructure issues, the on-going Civil Service reforms is addressing the proper allocation of
human resource, there is an Economic management Team which looking at monetary and fiscal
policies, and on the same note, a Medium Term Expe nditure Framework has been instituted to ensure
expenditure prioritization and proper resource allocation.  Additionally, Government has beenfollowing a cash budget system that aims at ensu ring fiscal prudence.  Further, Government has
adopted a consultative process in the shaping of the county’s socio-economic and political
development.  In terms of promotion of transparency and governance, Government has put in place
institutions such as the Anti-Corruption Bureau, the Human Rights Commission, the Office of the
Ombudsman, the Law Commission etc. to deal with such matters.
Q 3:  (para. 5) The Secretariat’s report notes that Malawi’s continued dependence on a few primary
commodities poses particular challenges for the Gover nment. What is Malawi doing to try to increase
its export diversification?
A: Malawi has been and continues to undertake export diversification efforts aimed at mitigating
the eminent risk in over reliance on a few export commodities namely tea, tobacco and sugar. The
export diversification efforts entail identification and promotion of new products with export
potential. Focus is on high-value products through value adding processes particularly on the agro-WT/TPR/M/96/Add.2
Page 9
industry, textile and clothing and horticultural products.  Focus is also made on mining and tourism
Efforts are made to enhance supply capacities and meet standard requirements
JAPAN
Q 1:  (p.vii, paragraph 4) The report states that despite liberalization, Malawi’s trade in goods fell
from 97% of the GDP in 1994 to 74% in 1999. Please provide Malawi’s analysis of the reasons forsuch decline of Trade in goods.
A: The declining total trade to GDP ratio is an area that requires further investigation.  With
respect to the fall in exports to GDP ratio it is impor tant to note that Malawi has faced declining terms
of trade for the major export crop tobacco which accounts for over 60 per cent of export earnings.
Since 1994, Malawi has been affected by a decline in disposable income which can partly explain the
decline in imports to GDP ratio.  Malawi being an agricultural based country, factors such as drought,
changes in the world commodity prices have greatly impacted on GDP.
II. TRADE AND SECTORAL
DISCUSSANT
Q 1: When does the Government intend to rationalize the wide spread use of exemptions and
concessions in Malawi’s trade regime ?
A: Government recognizes that the wide spread use of exemptions in trade regime could be
subject to abuse.  In this regard, Government has already set up a Committee to develop criteria that
qualifies goods.  This work is expected to be completed by July 2002.  The aim is to rationalize the
entire tariff book to remove inconsistencies in tariff applications and to avoid cases where same goods
are treated differently.  It is important to note that some of the exemptions are due to diplomatic
privileges and obligations from international treaties.
Q 2: What measures have been put in place to enhance transparency and accountability (as well
as compliance with WTO national treatment and Most Favored Nations principles) in Malawi public
procurement system?
A: Malawi is neither a member of nor observer to the Plurilateral Agreement on Government
Procurement.  Malawi has created a Government Contracting Out unit which is transparent. It has
drafted a Public Procurement Act to be implemented this year (2002).  This draft legislation specifiesopen tender as the main procurement method.
All government Ministries and Departments us e open tendering procedures when procuring
goods, works and consultancy services of value above MK 100,000. where goods of less value are
procured, not less than five quotations from private firms are obtained.  The request for quotations is
done in writing.  The received quotations are opened by the Ministry’s or department’s InternalProcurement Committees (IPCs) in the presence of any member of the public or bidders’
representative who choose to attend.  The quotations are randomly selected from the Government’s
list of approved suppliers which was developed through the open tendering system and which is
updated annually.  An inter-ministerial team of experts in procurement does selection of the suppliers
to be on the approved list professionally
Q 3: How is the 5-year Tourism Strategic Development Study intended to address the policy,
institutional, infrastructure and other deficiencies in the tourism sector in Malawi?
A: In view of the policy, legal and infrastructural deficiencies that impede the development of
tourism in Malawi, the Tourism Strategic Development Study proposes the development of tourism inWT/TPR/M/96/Add.2
Page 10
a coherent manner through the formulation and implementation of rational series of distinct and yet
inter-related programmes for the sector. The programmes will be aimed at generating socio-economic
development.
The Study proposes that tourism in Malawi can only stimulate future growth if key policy
changes are made. The Study recommends the following:
● A stated commitment by the Government of Malawi to the development of the tourism sector
and assuring the provision of adequate financial support required in the development of the
initial infrastructural services;
● The Creation of an improved international awareness of Malawi as an exclusive and leading
eco-tourism destination in Africa;
● The placement of an emphasis on capacity building and strengthening the institutional
structure of the tourism sector;
● The reviewing of tourism investment incentives in consultation with the Ministry of Finance
and the private sector; and
● The strengthening of the relevant private-sector associations involved in tourism and
improving co-ordination and co-operation between the Ministry of Tourism and the private
sector.
With regard to the legal framework, the Study has pointed out that there is an underlying need
to place Malawi tourism sector on a sound legislative footing.
An amendment of the existing Hotels and Tourism Act has been proposed.  A proposal has
also been made to review the tourism regulati ons concerning the establishment and operations of
tourist services such as tour operators and travel agents as well as the issuing of permits operatingstandards for tourism related facilities and ground handling.
With regard to deficiencies being experienced in the infrastructure, the Tourism Strategic
Development Study has emphasized the urgent need of solving these problems which are constraining
the future development of the sector in Malawi.  The major proposals are that (a) Air Malawi Limited
should actively negotiate with strategic partners to resume its direct flights to Europe (in particularLondon) in order to utilize the existing traffic rights;  (b) Government should prioritise economic
activities such as the rehabilitation of road networks;  (c) Government should construct and renovate
international airports at the lake shore and other areas of great tourism potential.
Q 4: What are the bases for optimism regarding the envisaged substantial increase in the FDI in
Malawi’s tourism sector?
A: The basis for optimism regarding the envisaged increase in direct investment in the Malawi
tourism sector lies on the fact that the tourism sector remains largely untapped.  A deliberate productdevelopment strategy aimed at transforming this status quo has been proposed in the Strategic
Tourism Development Plan.
The overall objective of the integrated product development and marketing strategy in its
initial phase is to specifically position Malawi in selected major tourist generating markets as a
principal eco-tourism destination in Africa.
It is envisaged that the overall development of the national tourism sector will focus on low to
medium-volume and high-yield segments of market demand through the implementation of a careful
environmentally sensitive and sustainable tourism development strategy.
Strategic and phased out development and professional marketing of specifically designated
eco-tourism lodges within areas of outstanding natural beauty in Malawi are envisaged for potentialWT/TPR/M/96/Add.2
Page 11
tourists from South Africa, UK, Germany, Holland, Australia, the Benelux Group and Scandinavian
countries.
Q 5: What accounts for the continued dominant role of the twin financial giants;  National Bank of
Malawi and the Commercial Bank of Malawi, despite the liberalization of the financial sector?  How
does Malawi propose to address this situation ?
A: While the two banks are dominant, Government is addressing the issue by enhancing
competition through new entrants.  Currently, there are three new retail banks including the Finance
Bank, Fincom Bank, First Merchant Bank, and fo ur finance houses, one merchant bank, one new
building society, one discount house, and several insurance companies.  Government has also sold its
60 per cent shareholding in Commercial Bank to ST ANBIC.  It may, however, be noted that the two
banks have been operating in Malawi for a long time.
Q 6: Given the adverse impact on the economy of the biomass resources, are there any plans to
develop alternative sources of fuel energy?
A: Yes, present biomass utilization is having adverse effect on the environment and continued
use of the resource base for energy purpose could increase the current problems.  The shift, therefore,
is to identify and develop alternative sources of fuel energy, which are cheap and on a sustainable
basis.
Malawi is endowed with other Renewable Energy Sources (RES) including good sunshine
throughout the year for photovoltaic and photo-thermal applications, reasonable wind speeds for water
pumping, a number of perennial rivers with hydr o-power potential, reasonably large population of
domesticated animals for biogas application a nd hot-springs for geothermal power generation.
Malawi has not taken advantage of these developments due to a number of barriers which includetechnical, economic, financial, institutional and social-cultural.
The Government of Malawi recognizes these barriers and through support from donors and its
own resources has taken a number of steps to remove these barriers and promote the use of other
Renewable Energy Sources.  Some of the programmes put in place include:
● The national Sustainable and Renewable Energy Programme which aims at increasing access
to and ensuring efficient use of renewable energy technologies in Malawi across sections of
the rural, peri-urban and urban population and also to ensure that renewable energy contribute
significantly towards the country energy mix.
● DANIDA Support Programme to Renewable Energy in Malawi.  This was a Danish support
programme whose aims was to develop and demonstrate institutional models for sustainable
deployment and maintenance of renewable energy technologies on a fast track basis.
● The Global Environmental Facility Support Programme which aims at developing and
utilizing environmentally renewable energy technologies especially the solar energy.
● Rural Electrification Programme.
● The Biomass Energy Conservation Programme which aims at enhancing capacities and
commitments of government and development organizations to plan and implement
integrated biomass energy conversation.
Despite these programmes, Government has a lot to do and where funds permit continues to
carry out important and complex activities in the energy sector.  These include:
● Development and promotion of Wind energy.
● Development of Biomass briquetting.
● Development and promotion of Biogas.
● Development and promotion of Gel fuel.WT/TPR/M/96/Add.2
Page 12
● Development of Mini and macro hydropower generation.
● Promotion of solar energy for lighting, cooling, water heating and entertainment and
telecommunication.
More financial and technical assistance is required to advance the above activities.
Q 7: What is the explanation of the drastic decline in fish production between 1980s and 1990s?
How does Government intend to enhance public participation in this industry?  How does
Government propose to enhance the contribution of fisheries sector to Malawi’s GDP?
A: Fish production in Malawi increased from 51,000 tones to 80,000 tones or about half of the
national potential in the period 1980-90 and it was estimated that slightly more than a third of Lake
Malawi’s production potential of 86,000 tons was used.  However, in recent years, catches have
stabilized at around 70,000 metric tones.
Lake Malawi has very high fish potential in terms of biomass estimates, however, the amount
of fish caught by fishermen is low.  The low catch is a response to poor management by the semi-
commercial fishermen and decrepit supporting infrastructure.
The other problem is that fish landing points are scattered along the Lake Malawi’s shores
with poor access and thus making it difficult to transport fish to the urban and rural areas.  The other
reason why production dropped is due to the withdrawal from marketing fishing gear by theDepartment of fisheries, and the closure of net manufacturing by the Blantyre Netting Company.  This
resulted in decline of fishing efficiency during the period in question.
Failure to increase production in deeper waters had increased the pressure on in-shore
fisheries.  Lack of fish processing facilities, including ice plants, have made it considerably difficult
for small-scale fishers to preserve their fish and thus take it to market in good condition.
The objective of the Department of Fisheries is to move fishing activities offshore and
increase fishing efficiency to increase production by 2,400 tons/year.  The intention was to introduce
up to 50 fully equipped fishing boats and 200 improved plank boats to replace dugout canoes and sold
to groups of fishermen on credit.  This intention has not yet been achieved.
In an effort to enhance fish production and thereby increase the contribution the sector can
make to Malawi’s GDP, the Government has taken measures to rejuvenate commercial fishing.  The
pair trawl fishery was introduced following 30 y ears of neglect.  In 1989, MADELCO an only big
Commercial fishing company was successfully rejuvenated through support from government.
Nordic Development funds were used to provide a new 17-meter multi-purpose deep-water and fish
landings to the company.  Malawi Government has also encouraged people to undertake fish farming
through construction of fish ponds and dams.
However, there is still need for increased financial and technical assistance in order to
increase fishing boats, gears, processing plants, and marketing.
Further, increased production could be achieved  through enhanced investment by public and
private participation in exploiting untapped resources  in the deeper and open waters of Lake Malawi.
When investment is enhanced, fish production will increase and thus necessitating export and thereby
increasing the contribution this sector can make to the country’s GDP.
Q 8: Given that agriculture accounts for 90% of Malawi’s export earnings and also given that the
sector provides a source of livelihood for the majority of the rural population, how does Government
propose to invigorate this sector so as to increase its contribution to the country’s GDP?WT/TPR/M/96/Add.2
Page 13
A: In a bid to invigorate the agricultural sector in Malawi, Government is accelerating a broad
based agricultural production policy focusing on improving food self sufficiency and nutritional status
of the population, expanding and diversifying agricultural and livestock product exports, raising farm
incomes of producers and promotion of economic growth while conserving natural resources.
To achieve the above, the Ministry of Agriculture and Irrigation, in 1995,prepared the
Agricultural and Livestock Development Strategy and Action Plan (ALDSAP) which outlines the
strategy government is pursuing.  In general terms, ALDSAP outlines product strategies and their
relations including technology generation and dissemination, sector-wide strategies which are aimed
at providing the necessary policy, legislative and institutional framework and support to the product
strategies, and the role of regional cooperation in the agriculture sector in Malawi.
Additionally, the strategy outlines the four main thrusts to be accomplished.  These are:
(a) increased agricultural productivity coupled with diversified range of products which is critical tofood self sufficiency and improved nutrition;  (b) repeal of Special Crops Act allowing participation
of smallholder farmers in growing high value export commodities;  (c) expanded livestock activities
and productivity;  and (d) raising farm incomes through improved marketing and pricing policies.
Q 9: When does the Government plan to adopt a more rational land tenure system, given that the
communal land ownership system cons trains agricultural development?
A: Government adopted a new land policy in January, 2002 to address this issue.
Q 10: What safeguards are there to ensure that the Starter-Pack Initiative does not create a
dependency syndrome in the country’s subsistence farming community?
A: First and foremost, the Government has scaled down the programme from a unilaterally input
distribution programme during 1998/ 99 and 1999/2000 seasons to a Targeted Input Programme (TIP)
in 2000/2001 and 2001/2002 seasons distributing inputs to the vulnerable groups only.  The number
of targeted beneficiaries for 2002/2003 is, however, likely to increase slightly from previous seasons
due to an increase in vulnerability among ma ny Malawians farming communities owing to the
2001/2002 country wide food crisis.  Being an exit strategy, the Government plans to incorporate this
into the wider National Safety Net Programme, whic h is aimed at supporting the marginalized of the
society through such strategic programmes as Food for Work, Public Works and Malawi Social
Action Fund.
Secondly, the Government is reviewing its policies and strategies affecting the agricultural
input sector with an aim of revitalizing and revamping the sector
Thirdly, Government is pursuing a number of medium to long term measures aimed at
enhancing productivity of the sector mainly through reviewing policies and strategies affecting supply
of inputs (fertilizer, seeds and pesticides), availability of credit to farmers, pricing and marketing ofagricultural inputs and outputs, technology development and dissemination, and reviewing of the
productivity enhancement initiatives such as introduction of low cost soil fertility interventions.
Q 11: When is it planned to operationalise th e proposed One-Stop-Shop Investment Promotion
Agency?
A: One-stop-shop started operating in April 2001.  However, capacity building is required to
enhance its operational capacity.WT/TPR/M/96/Add.2
Page 14
Q 12: When does Malawi plan to open a Mission in Geneva?
A: The Government recognizes that nothing can replace permanent representation in Geneva if
Malawi has to effectively and meaningfully integrate into the multilateral trading system and take
advantage of the opportunities arising there from.  In this regards, government is seriously looking
into the matter to have the office opened soon.
Q 13: In Malawi assessment, how can the multilateral trading system framework effectively
contribute to the achievement if its national trade policy objectives?
A: By guaranteeing market access, flexibility and predictability in application of rules and
capacity building.
Q 14: How does Malawi propose to reconcile the conflicting tariff liberalization schedules and
other commitments as a consequence of it s overlapping membership of SADC and COMESA ?
A: Regional grouping such as COMESA and SADC are being seen as building blocks under the
Abuja Treaty to the formation of the African Union.  SADC will be fully transformed into an FTA
by 2010, while COMESA intends to transform into a customs union by 2004 and a monetary union
by 2025.  Malawi, therefore sees these two organi zations as complementary though we acknowledge
the possibility of complication in implementation in such areas as rules of origin to name one.  In
recognition of this possible complication, member states of COMESA and SADC have mandated the
two organizations to explore in detail areas where harmonization may be necessary.  To this end, a
joint task force has been set to identify areas for possible harmonization.  Malawi, is an active
member in the two organizations and is therefore able to push for harmonization and close
cooperation in areas where it sees necessary in consultation with all members.
Q 15: Given Malawi’s strong trading relationship with South Africa, what is the impact of SACU on
Malawi’s economy ?
A: Malawi has, indeed, strong trading relations wi th South Africa and trade is, hitherto, largely
governed by a bilateral trade agreement between the two countries.  Within the SACU group, Malawi
export trade is principally with South Africa.  More than 25% of the country’s total imports are
sourced in South Africa.  Trade with the other four  members of SACU is minimal.  Thus, there is no
significant impact of SACU on Malawi’s economy.
EUROPEAN UNION
Q 1:  (para 73 as well as WT/TPR/S/96, p. 24 para 47) The EC welcomes regional integration in
Southern and Eastern Africa under COMESA and SADC.  However, as it is mentioned in both
reports, overlapping memberships result in red-tape, complicated procedures for private sector and
confusion as to further liberalisation (CET under COMESA vis-à-vis FTA obligations under SADC
and bilateral agreements).  How does Malawi intend to address these issues in the coming years?And is Malawi, as a member of both organisations and as a signatory of both FTAs, in a position to
push for harmonisation and close co-operation of these two regional integration schemes?
A: Regional grouping such as COMESA and SADC  are being seen as building block under the
Abuja Treaty to the formation of the African Union.  SADC will be fully transformed into an FTA
by 2010, while COMESA intends to transform into a customs union by 2004 and a monetary unionby 2025.  Malawi, therefore sees these two organi zations as complementary though we acknowledge
the possibility of complication in implementation in such areas as rules of origin to name One.  In
recognition of this possible complication member states of COMESA and SADC have mandated the
two organizations to explore in detail area where harmonization may be necessary.  To this end, a
joint task force has been set to identify areas for possible harmonization.  Malawi, is an activeWT/TPR/M/96/Add.2
Page 15
member in the two organizations and is therefore able to push for harmonization and close
cooperation in areas where it sees necessary in consultation with all members.
Q 2:  (para 84) With regard to this paragraph we would like the Government of Malawi to consider
correcting their statement on the EBA. Malawi is  not a beneficiary of the EBA under the ACP/EU
partnership arrangement.  As you know EBA is fully integrated into the GSP regulation.  EBA is anon-reciprocal initiative enabling free market access to the EU market for all products except arms.
A: The error is noted and Malawi, therefore, requests the WTO Secretariat to correct it.
Report by the Secretariat
Q 3:  (paras 40-45) We note the importance of ma instreaming trade into Ma lawi’s policy framework:
What are the activities of the Government to make full use of donor support for trade-related areas,
and specifically the IF?  Will there be a task-force/co-ordinating mechanism in place to mainstream
the IF activities?
A: Under the lead of the World bank, a Diag nostic Study and Country Economic Memorandum
are expected to be developed to spearhead the IF activities in Malawi.  Based on the findings of the
Diagnostic Study and the Country Economic Memorandum, a recommendation including specific
activities/projects for technical assistance will be developed.  We are of the view that the activities
identified will include long term capacity building, infrastructure, and policy reform.
It may be noted that a national workshop scheduled for 18
th February 2002 will among other
things agree on the membership/composition of th e National Working Committee to coordinate the
activities of the Integrated Framework (IF).
Q 4:  (para 46-47) We would be grateful if the GoM could provide data which separately identifies
the share of Malawi’s trade with the COMESA and the SADC.  In particular, we would like to know
how the share of trade altered over time.
A: Malawi’s share of Trade with COMESA and SADC (%)
1996 1997 1998 1999 2000
SADC: Exports: 21.5 23.0 18.4 20.3 18.2
Imports: 46.3 41.7 58.3 47.7 52.9
COMESA: Exports: 14.0 11.8 6.8 13.9 15.6
Imports 16.1 15.0 22.2 16.6 13.3
Source: NSO and Ministry of Commerce and Industry.
Q 5:  (para 78) We suggest the following correction in this paragraph referring to the Cotonou
agreement:  As the Cotonou Agreement does not dete rmine the period for full  implementation of WTO
compatible trading arrangements, “within 12 years” should be replaced trough “within a transitional
period”.
A: The correction is noted and Malawi hereby request the WTO Secretariat to effect the
necessary correction.WT/TPR/M/96/Add.2
Page 16
Q 6:  (para 80) In terms of correctness, we suggest another minor change in the text.  The fourth
sentence should read: “Moreover, the recent EBA initiative which grants additional preferences to
least-developed countries, from March 2001.”
A: The suggestion is accepted and the WTO Secretariat is hereby requested to effect the change.
Q 7:  (para 9) Could Malawi please supply more details of the trade facilitation measures it will be
implementing under the Regional Integration Facilitation Forum?
A: A Draft annual work program has been prepared highlighting all activities and has been
forwarded to the WTO Secretariat.
Q 8:  (para 14) The report states that “Domesti c producers may seek relief against competing imports
by applying for duty rebates on imported inputs.” Would Malawi be so kind to confirm whether the
products that are put together wholly or partially fr om these ‘inputs’ are for an overseas or domestic
market.
A: They are for both domestic and export markets.
Q 9: Could the Government of Malawi please info rm about its intentions to reform the rather
complicated and unbalanced tariff structures including tax concessions and exemptions?
A: Government recognizes that the wide spread use of exemptions in trade regime could be
subject to abuse.  In this regard Government has already set up a Committee to develop criteria thatqualifies goods.  This work is expected to be completed by July 2002.  The aim is to rationalize the
entire tariff book to remove inconsistencies in tariff applications and to avoid cases where same goods
are treated differently.  It is important to note that some of the exemptions are due to diplomatic
privileges and obligations from international treaties.
Q 10:  (para 46, 47) We note that minimum or re ference prices are applied for certain second-hand
goods, such as motor vehicles, where used-car values are used and an absolute minimum value set at
US$3,000.  There seem to be indications that Malawi  uses “guide prices” or “domestic values” for
customs valuation purposes.  As Malawi has notified to the WTO the full implementation of the WTO
Agreement on Customs Valuation, the EU would be  interested in receiving details on how this
agreement is implemented.  Could Malawi please cl arify its position with regard to minimum values,
in particular how it sees the consistency of “absolut e minimum values”, “guide prices”, or “domestic
prices” with the WTO Agreement on Customs Valuation.
A: Malawi does not apply minimum prices for second- hand goods, for example motor vehicles.
Malawi does not also have an absolute minimum value set at USD 3,000.
Malawi signed a Pre-Shipment Inspection (PSI) contract with a Geneva based company
known as SGS in 1995. At the on set of this contract, goods of FOB value of USD 3,000 were
subjected to PSI scheme. This was not a minimum value set by customs for any goods includingvehicles.
Malawi uses the transaction value as the basis for valuing goods for customs purposes.
Malawi follows strictly the WTO Customs Valuation Agreement methods when valuing goods.
Q 11:  (para 55) Does the Government of Malawi have any intentions to eliminate the provision
allowing the use of anti-dumping measures to offset trade partners’ currency depreciation?WT/TPR/M/96/Add.2
Page 17
A: Malawi’s current anti-dumping legislation contained in the customs and Excise Act and the
Fourth Schedule of the Customs Schedule is being reviewed, with the objective to bring it in
conformity with WTO requirements.
Q 12:  (para 60) The EU is pleased to see that the Malawi Standards Board is a member of ISO and
that it is actively working in regional standards related activities.  We see great merit in regionalwork as a means to overcome some of the problems related to the implementation of the TBT
Agreement in developing countries with scarce resources.
A: Malawi has noted with appreciation the comment made by the European Union. It may,
however, be corrected that it is the Malawi Bureau of Standards that is the member of ISO not the
Malawi Standards Board.
Q 13:  (para 61) We also appreciate that Malawi is using international standards and we welcome the
efforts made by the Malawi Government to incr eased harmonisation of standards within the SADC
region.
A: Malawi has taken note of the comment.
Q 14:  (para 63) Could Malawi please inform whet her mandatory standards or relevant parts of them
are based on international standards?
A: Yes, they are based on international standards.Q 15:  (para 63) We would also like to know if Malawi accepts equivalent technical regulations of
other WTO members?
A: Yes, Malawi accepts technical regulations from WTO Members as long as they are certified
by a Standard Body which is aligned to international standards governing bodies.
Q 16:  (para 65) Does Malawi accept certification from any European testing organization?  And
does it accept suppliers’ declaration of conformity?
A: Malawi accepts certification from any EU testing organisation that has been designated.  At
the moment, no testing organisation from Europe has been designated.  Malawi accepts declaration of
conformity if supported by National Standards Body.
Q 17:  (para 65) Could Malawi please explain further the denial for certificate of products that have
less than half of their shelf-life remaining?  What products are covered?
A: The denial of certificates may be done depending on the type of product and the lead time for
distribution and end use.  Food products and pharm aceuticals are good examples.  There is a strong
recommendation to regulate and enforce acceptability of shelf-life.
Q 18: Could the GoM please inform how transpar ency is ensured in Malawi’s procurement
practices.
A: Malawi is neither a member of nor observer to the Plurilateral Agreement on Government
Procurement.  Malawi has created a Government Contracting Out unit which is transparent.  It has
drafted a Public Procurement Act to be implemented this year ( 2002).  This draft legislation specifies
open tender as the main procurement method.
All government Ministries and Departments us e open tendering procedures when procuring
goods, works and consultancy services of value above MK 100,000. where goods of less value areWT/TPR/M/96/Add.2
Page 18
procured, not less than five quotations from private firms are obtained.  The request for quotations is
done in writing.  The received quotations are opened by the Ministry’s or department’s Internal
Procurement Committees (IPCs) in the presence of any member of the public or bidders’
representative who choose to attend.  The quotations are randomly selected from the Government’s
list of approved suppliers which was developed through the open tendering system and which isupdated annually.  An inter-ministerial team of experts in procurement does selection of the suppliers
to be on the approved list professionally.
Q 19:  (para 78) What are the requirements and procedures for foreign companies to be included on
the list of approved suppliers?
A: The only requirements for foreign firms are business registration with the Registrar of
companies for goods and equipment, and registration with National Construction Industry Council
(NCIC) for any construction works and engineering consultants. There are no any requirements formanagement consultants.
Q 20:  (para 79) Could Malawi please provide the WTO Secretariat with the rules and/or laws
governing the procurement and the composition of  the Medical Buying Committee and the Central
Medical Stores?
A: Since the Public Procurement Act is still not yet approved by parliament. Government uses
the Interim Procurement Guidelines which it developed in 2000.  A copy has been provided to the
Secretariat.
The laws/regulations governing the composition and activities of the procurement of the
Medical Buying Committee to which the Medical Stores serves as a Secretariat are stipulated in the
Interim Procurement Guidelines compiled by the Government Contracting Out Unit (GCU).
Q 21:  (para 82) We would be grateful if Malawi could also forward the texts of the proposed Public
Procurement Act and the Corrupt Practices Act to the WTO Secretariat.
A: Malawi has forwarded the Draft Public Procurement Act and the Corrupt Practices Act to the
WTO Secretariat as requested.
Q 22:  (para 119) We note that Malawi is doing its best to fulfil its obligations under TRIPS, but is
desperately short of expertise and resources.  As a least-developed country Malawi benefits from the
special and differential treatment in TRIPS Agr eement implementa tion afforded by Article 66.1.
Nevertheless, in the perspective of the implementation of the TRIPS agreement by 1
st January 2006 it
would be appreciated if Malawi could inform us of any concrete steps (timescale) to be undertaken in
order to achieve this objective.
A: It is difficult to indicate at this stage due to financial resource constraints. However
Government will continue seeking financial and technical assistance.
Q 23: Please indicate which type of inventions are excluded from patentability under the Malawi
patent law.
A: Section 18 of the Patents Act, CAP. 49.02 provides that the Registrar may refuse an
application for a patent if the invention is frivolous and contrary to well established natural laws; if
use of invention would be contrary to law or morality; or where the invention is a substance capableof being used as food or medicine; if it is a mere mixture of known ingredients or the invention is a
process producing such a substance.WT/TPR/M/96/Add.2
Page 19
Inventions relating to food or medicine or processes for producing the same or inventions
capable of being used as or as part of surgical or curative devices may, on application by an interested
person, be subject to grant of a non-voluntary licence in order to ensure availability to the public at the
lowest possible prices while ensuring the patent’s opportunity to drive reasonable economic return
from the invention.
Q 24:  The report states that Malawi is working on food safety measures. It would be interesting to
know if safety standards for pharmaceuticals will be also addressed in this context.
A: No.  It may be noted that ensuring the safety of pharmaceuticals is an integral part of the
provision of pharmaceutical services in Malawi as regulated by the Pharmacy Medicines and Poisons
Board (PMPB) through its own Act of Parlia ment (Pharmacy Medicines and Poisons Act.
Cap. 35.01).  However, deficiencies in capacity need to be addressed in order to provide an effective
and efficient enforcement service. This calls for financial and technical assistance.
Q 25: We would welcome additional information on any measures taken recently by Malawi to
reduce and simplify its import and export procedures, and to introduce modern customs and trade
administration procedures such as pre-arriva l processing of consignments, risk assessment
procedures, and submission of data by electronic means.
A: In order to improve simplification on imports and exports procedures, Malawi established an
independent institution called Malawi Revenue Authority responsible for customs and excise and tax
administration.  It implemented the ASYCUDA and automation of customs processes and also
enhanced training of customs officers.
With regards to financial and technical assistance, Malawi would need financial assistance for
procurement of equipment such as computers and transit goods monitoring systems and radiocommunication system, electronic validation, training.
Q 26: What measures does Malawi have in place to consult the trading community – including
importers and exporters, shippers, freight forwarders and agents, SMEs – on customs and trade
facilitation rules and procedures and ways of improving them?
There is a national working group on trade policies which comprises of the public and private
sector and discuss many issues including issues relating to trade facilitation rules and procedures.  The
Malawi Revenue Authority also organises quarterly meetings with the business community.
Q 27: What are Malawi’s principal needs in respect of technical assistance in the field of trade
facilitation/simplification of customs, import and export procedures?
A: Capacity building in terms of policy analysis, institutional development at public and private
sector levels.  Training in valuation, HS classification, rules of origin and enforcement, risk
management.
UNITED STATES OF AMERICA
Q 1:  (para 7) The Secretariat’s report notes that the national Working Group on Trade Policy (which
resulted from the merger of the two groups) advises the Government, through the Principal Secretary
of Commerce and industry, on all legislative and polic y issues relating to trade, including regulatory
provisions and policy reforms. In addition, it prov ides a framework for monitoring and evaluating the
implementation of Malawi’s trade arrangements and fo r ensuring conformity with agreed rules. It is
also to facilitate consultation and cooperation among private and public sector parties to promote
trade. The Group is to regularly commission and review technical reports prepared by the national
Task Force on Trade policy. Membership comprises high level representatives from the public andWT/TPR/M/96/Add.2
Page 20
private sectors as well as academia and donor community. The group is privately funded, including
donors. The Government is attempting to improve the coordination of trade policy, which, until now,
has been dispersed over several ministries, with  no overriding authority.  How is the new system
working?
A: Prior to the setting up of the National Working Group on Trade Policy there was limited
participation by private sector in arriving at government positions on trade policy.  As a result, the
private sector did not own the policy reform programs.  The new arrangement, in which the private
sector is taking the lead, has facilitated public private sector dialogue and has enhanced ownership of
the programs as this is done in full consultation with the private sector in all negotiations.  The
Ministry of Commerce and Industry holds ultimate responsibility for trade policy.
Q 2:  (Trade-related technical assistance) The Secretariat’s report notes that Malawi’s participation
in the multilateral trading system has been hampe red by the absence of diplomatic representation in
Geneva and has relied heavily on the reference center and the WTO non-resident initiative for
information on day to day activities of the WTO. Has the reference center and the non-resident
initiative been effective in this regard. Does Malawi have suggestions on how these programs can be
improved?
A: Malawi finds for example the Geneva Week to be of value but insufficient on its own.  The
Geneva week could be improved as follows:
(i) Involve a three-week period in late autumn each year, in which annual reports of subsidiary
bodies would be presented and discussed;
(ii) A more participative approach could replace the Geneva Week process. The non-resident
participation in these annual agenda setting session could be funded from a Trust Fundcreated for this purpose, including funds originally dedicated to Geneva Week;
(iii) The non resident initiative should be entitled to funding for participation in agenda setting
sessions;
(iv) Alternatively, the non residents should be given the choice of attending either Geneva Week
or some week of actual WTO meetings relevant to their areas of interest.
Q 3:  (para 49) The Secretariat’s report notes that the Free Trade Area under COMESA was
launched on November 1, 2000. there been any effect from this?
A: There has been a noticeable increase in intra- COMESA trade.  Malawi export trade opened up
with Egypt (tobacco), Democratic Repub lic of Congo (Sugar), Kenya (Sugar).
Q 4:  (para. 66) The secretariat’s report notes that Malawi is a member of the Regional Integration
Facilitation Forum (RIFF).  What specific trade facilitation measures under the RIFF does Malawi
plan to implement?
A: A Draft annual work program has been prepared  highlighting all activities.  A copy has been
forwarded to the WTO Secretariat.
Q 5:  (para. 37) The Secretariat’s report notes that Malawi’s customs legislation allows duty and tax
concessions in the form of suspension, rebates, remission and refunds.  Could you please provide
details on the export incentives Act?  Does the Export Incentives Act provide other export incentives
besides drawback?  If so, could you please provide further details?  Do the incentives apply to allindustries?  Please  explain whether duty drawback is operated in accordance with Annex II of the
SCM Agreement?
A: The Export incentives Act provides for tw o incentives namely, duty drawback on imported
materials used for production of export products, and a 12 percent tax allowance on export proceeds.WT/TPR/M/96/Add.2
Page 21
The duty drawback incentive is applicable to indu stries provided they registered with the Malawi
Export promotion Council.  The tax incentives excludes the traditional exports like tobacco, tea and
sugar.
A copy of the Export Incentives Act has been provided to the WTO Secretariat.  The
incentives are used to propel development and stimulate exports.
Q 6:  (Customs Valuation) The Secretariat’s re port notes that Malawi is implementing the WTO
Agreement on Customs Valuation.  The US believe s that implementation of  the Agreement is an
important step towards meaningful customs reform  techniques considered to be “best Customs
practices”, and also diminishes discretionary practices in the valuation area that often serve as a
starting point for corruption.  We understand that  Malawi has notified its domestic implementing
legislation.  We encourage Malawi to also notify the WTO Checklist to the Committee on Customs
valuation.  Notification of the legislation and the Checklist will advance efforts of the WTOCommittee to operate as a constructive problem-solving body.
Comment:  Malawi has noted the observation by the United States of America regarding the
Best Customs Practices.
Q 7:  (para. 85) The Secretariat’s report notes that Malawi is neither a member of, nor observer to,
the Plurilateral Agreement on Government Procurement (GPA).  The united states notes thatMalawi’s procurement regime currently has many GPA compliant provisions and features, and
acquiring observer status would provide Malawi a first-hand understanding of not only the process
and substance of the GPA, but also the tangible benefits that accrue to member countries.
Comment:  Malawi has noted the observation by the United States of America regarding the
Plurilateral Agreement on Government Procurement.
Q 8:  (para.96) The Secretariat’s report notes that the Malawi export promotion Council (MEPC)
provides “technical assistance’ to registered exporters.  Is this the only kind of assistance MEPC
provides? If not, could you please provide further information.
A: Malawi Export Promotion Council’s assistance to exporters is restricted to technical
assistance only.  The assistance include identification of markets, training of exporters, provision ofexport market information, trade facilitation and product development.  Recently the Council has set
up a business information bureau for the business sector to access business information.   
Q 9:  (para. 101) The Secretariat’s report notes that the Malawi Export Processing Zones provide
‘more generous incentives to export-oriented companies than to firms producing for domestic
market’.  What type of incentives is offered to export-oriented companies (direct/indirect) located in
these zones?
A: The incentives being offered are duty free importation of capital and raw material, and zero
corporate tax.
Q 10:  (para. 105) The Secretariat’s report no tes that an export guarantee fund providing 100% loan
finance is currently being considered.  Can you please explain how the interest rates will be
determined under the program?
A: Government is consulting on the modalities of charging interest rates.Q 11:  (para. 106) The Secretariat’s report notes that the Investment Promotion Act of 1991 promotes
and facilitates investment.  How does it do so?WT/TPR/M/96/Add.2
Page 22
With respect to the programs/incentives identified below, we remind Malawi that under article 25 of
the Agreement on Subsidies and countervailing Measures, all Members to the WTO have agreed to
notify all subsidy programs meeting the definition of a subsidy, as provided in the Agreement, to the
WTO committee on Subsidies and countervailing Measures.  The notification should be specific
enough to enable other members to evaluate the trade effects and to understand the subsidy program.Members shall ensure that the notification contain the following information:
(i) Form of the subsidy (grant, loan, tax)
(ii) Subsidy per unit or total amount or annual budgeted for that year
(iii) Purpose of the subsidy
(iv) Duration of the subsidy
(v) Statistical data providing assessment of the trade effects of the subsidy
Please indicate whether these, or any of Malawi’s other subsidy programs have been duly notified.If not, please indicate whether Malawi plans on no tifying these and any other subsidy programs to the
committee.
A: The Investment Promotion Act mainly seeks to streamline investment approval and
procedures through MIPA facilitation.  Malawi does not have any subsidy programme.
Q 12:  (para. 2) The Secretariat’s reports notes that a more liberal regime and efforts to attract
investment including the formation of the Malawi  Investment Promotion Agency and various tax and
other financial incentives, foreign direct investment (FDI) inflows remain erratic and relatively low:
inflows (concentrated in manufacturing, constructi on and distribution) declined from US$70 million
in 1998 to US$51 million in 2000.  What is Malawi doing to try to increase direct foreign investment
flows?
A: Despite the existence of an enabling environmen t, the level of FDI to Malawi remains low for
several reasons including poor economic infrastructure, persistent unfavorable macroeconomic
environment, a small domestic market, and constraints in the availability of inputs locally. In order to
increase the level of FDI inflows the government is actively seeking ways to redress the existing
constraints by among other things carrying out the privatization program, pursuance of amacroeconomic stabilization program, exploring ways of greater private sector involvement in
infrastructure provision (e.g. Build –own- transfer , Build-own-operate) and carrying out intensified
investment promotion activities.  Malawi is also  concluding Investment Promotion and protection
Agreements with a number of countries.
Q 13:  (para. 6) The Secretariat’s report notes that the main ministries involved in setting and
implementing trade related policies are Commerc e and Industry;  Finance and Economic Planning;
and Agriculture and Irrigation.  Several other Ministries and government bodies are responsible forpolicies in certain subsectors, such as tobacco, mi nerals, timber, fishing, and tourism.  Private sector
input on trade related policies is facilitated by the new National Working Group on Trade Policy and
its National Task Force.  This is intended to improve private-sector and trade policy coordination,
until now dispersed over several ministries, none with overriding authority.  How does this Work?
A: Government and private sector through the national Working Group on Trade Policy propose
policies which are passed on to Ministry of Commerce and industry for onward submission to cabinet
for approval.
CANADA
Q 1: Paragraph 47 states that Malawi’s membership of overlapping regional and bilateral
arrangements makes its trade regime more complex and that it distorts trade and incentive patterns inWT/TPR/M/96/Add.2
Page 23
an unpredictable manner and could entail inconsistent obligations being undertaken by Malawi.
Please advise what steps Malawi plans to undertake to rationalize and simplify its trade regime?
A: Regional grouping such as COMESA and SADC are being seen as building blocks under the
Abuja Treaty to the formation of the African Union.  SADC will be fully transformed into an FTA
by 2010, while COMESA intends to transform into a customs union by 2004 and a monetary unionby 2025. Malawi, therefore sees these two organi zations as complementary though we acknowledge
the possibility of complication in implementation of such areas as rules of origin just to name one. In
recognition of this possible complication, member states of COMESA and SADC have mandated the
two organizations to explore in detail areas where harmonization may be necessary.  To this end a
joint task force has been set to identify areas for possible harmonization.  Malawi, is an active
member in the two organizations and is therefore able to push for harmonization and close
cooperation in areas where it sees necessary in consultation with all members.
Q 2:  Paragraph 7 states that pre-shipment inspection is contracted to Société Générale de
Surveillance (SGS) until March 2003 when it is expected that such services will cease.  Please advise
if Malawi plans to modernize its administration of the customs valuation program once the services of
SGS terminates in 2003, and, if so what steps it plans to take ?
A: The circumstances that necessitated the procurement of pre-shipment inspection services are
that in 1991 government embarked on reforms to str eamline rates of duty and strengthen institutional
capacity for the facilitation of legitimate trade and revenue collection.  The reforms were embarked
upon to remove deficiencies that were affecting the proper function of the revenue collecting
institutions.  Since the capacity had gone down, government decided to procure the services of a PSI
company to assist in capacity building in the form of  training of customs officials in the determination
of the accuracy and truth of declarations for customs valuations purposes.  Since the reforms were
embarked upon in 1994, customs operations are being computerized, training in valuation and
classification has been enhanced.  In February 2000, Government formed the Malawi Revenue
Authority as part of institution strengthening. In view of these reforms which are going on well, it is
the intention of government to do away with pre-shipment as soon as the reforms have been
completed.
Q 3: Para 47 states that the extent to which non-transaction values, such as guide prices are used
for customs valuation in Malawi is not clear.  Does Malawi plan to clarify when non-transaction
values, such as guise prices, are used and, if so how?
A: See question 4 below.
Q 4: Para 47 states that it has been suggested that tariffs are not necessarily applied directly to
import costs because of the use of domestic values  for customs valuation.  Please provide additional
information as to how and when the transaction value declared by an importer is rejected in favour of
a value determined by SGS.  Also please advise if Malawi has a system in place to provide for an
importer’s right to an explanation in writing from customs administration as to how the customs value
was determined, in accordance with the Cu stoms Valuation Agreement (Article 16)?
A: Malawi does not use minimum guide values.  It uses transaction method (price paid adjusted
for insurance, handling charges, and transport.  However in cases where the accuracy of the
transaction is not acceptable the second and third method of valuing goods are used i.e. the value of
identical goods imported over a certain period or value of similar goods imported over a period of
time.  That is why the government of Malawi sought the services of pre-shipment inspection company
to help in determining the accuracy of the transaction values.WT/TPR/M/96/Add.2
Page 24
Q 5: Para 68 states that Malawi did not participate in the most recent WTO negotiations on
telecommunications services.  Does Malawi intend to make commitments on basic telecommunication
services in negotiations under the GATT?
A: Negotiations in trade services are on-going and Malawi will make its position known on basic
telecommunications in services in due course.
Q 6: Para 78 state that the Government was in the process of selecting a foreign strategic partner
to partially privatize Malawi Telecom until the privatization process was suspended.  Please advise
on whether the privatization process will be re-instated and if yes, whether the partial privatization of
30% of Malawi Telecom will be completed?
A: Privatization has been reinstated and government will soon make a decision on the outcome
of the bids it has received both foreign both and domestic investors.
Government Report
Q 8: Para 76 states that to facilitate investment promotion by reducing bureaucracy delays, the
Government wishes to establish a One-Stop-Shop Investment Promotion Agency.  Please advise
whether this Agency has been established?
A: Yes it has been established in April 2001.  However, capacity building is required to enhance
its operation.
Q 9: Para 82 states that the capacity building is at the core of Malawi’s needs to integrate into the
world economy, and that it welcomes the IF for trad e related technical assistance.  Please advise if
Malawi has identified its short term TRTA need s pending the longer term diagnostic process to be
undertaken under the IF?  Also, please describe how Malawi is preparing to participate in the IF
process and whether Malawi has been able to engage the private sector and civil society in theimportant questions of trade policy?
A: Under the lead of the World bank, a Diagnostic Study and Country Economic Memorandum
are expected to be developed to spearhead the IF activities in Malawi.  Based on the findings of the
Diagnostic Study and the Country Economic Memorandum a recommendation including specific
activities/projects for technical assistance will be developed.  We are of the view that the activitiesidentified will include long term capacity building, infrastructure, and policy reform.
It may be noted that a national workshop scheduled for 18
th February 2002 will among other
things agree on the membership/composition of th e National Working Committee to coordinate the
activities of the Integrated Framework (IF).
HONG KONG, CHINA
Q 1: (p. xi para. 27, p. 24, para. 47) We note that  Malawi’s membership of overlapping regional and
bilateral arrangements with different geographic coverage trade liberalization agendas, trading rulesand goals has made its trade regime complex and inconsistent and hence distorts trade and incentive
patterns in an unpredictable manner.  We would like to know if Malawi has plans to rationalize such
problems so as to enhance consistence of its trade regime?
A: Regional grouping such as COMESA and SADC are being seen as building blocks under the
Abuja Treaty to the formation of the African Union.  SADC will be fully transformed into an FTAby 2010, while COMESA intends to transform into a customs union by 2004 and a monetary union
by 2025.  Malawi, therefore sees these two organi zations as complementary though we acknowledge
the possibility of complication in implementation of such areas as rules of origin just to name one. InWT/TPR/M/96/Add.2
Page 25
recognition of this possible complication, member states of COMESA and SADC have mandated the
two organizations to explore in detail areas where harmonization may be necessary.  To this end a
joint task force has been set to identify areas for possible harmonization.  Malawi, is an active
member in the two organizations and is therefore able to push for harmonization and close
cooperation in areas where it sees necessary in consultation with all members.
Q 2:  (p.52, para. 64)  It is mentioned that imports subject to mandatory standards are inspected
where there are reasonable grounds for suspected non-c ompliance.  We would be interested to know
more about the circumstances under which Malawi authorities would perform inspections on such
grounds
A: In cases of inconsistencies of the results of similar goods inspected overtime.  It may be noted
that there are rules which are non discriminatory which provide the criteria for performing
inspections.
Q 3: (p. 86, para. 81)  We appreciate the effort made by Malawi to liberalize the non-basic
telecommunication services and the plan to issue a thir d mobile licence.  We would like to know more
about the liberalization plan in this regard and the details of foreign participation in the further
liberalization.  Moreover, we would like to know if Malawi would consider binding the existing
regime in telecommunication in its schedule of commitments
A: Privatization has been reinstated and government will soon make a decision on the outcome
of the bids it has received both foreign both and domestic investors.  Negotiations in trade in services
are on-going and Malawi will make its position known on basic telecommunication services in due
course.
NORWAY
Q 1:  We understand that trade with neighbouring countries has decreased while trade with the EU
and U.S. has increased.  What are the main reasons for this new trend in trade flows and how do you
see trade development in the near future?
A: The availability of preferences has created market access of  some kind in EU and US.  The
decrease in trade with neighbouring countries has been due to delays in the removal of tariff and non-tariff barriers, decline in the regional export promotion effort and most neighbours essentially produce
similar goods for export.
Q 2: In the report by the Government it is stated that sustained financial and technical assistance
as well as capacity building would assist in redu cing marginalisation.  Would the Malawi authorities
please inform us about which technical assistanc e they think is most important for the future?
A: As part of the effort to reduce the marginalisation of the Malawi economy in the multilateral
trading system Malawi needs international support in terms of financial and technical assistanceincluding capacity building in the following areas:  trade policy analysis;  human resource
development;  institutional support to private sector  and trade support institutions, regulatory reforms
and supply capacities.
JAPAN
Q 1:  (p. viii, para. 9 and 10) Malawi is a member of SADC and COMESA.  Please explain how
Malawi utilizes these regional arrangement for the expansion of its trade?  From the view point of
Malawi, how are they useful to the expansion of its trade?
A: Both regional groupings provide market access to Malawi.WT/TPR/M/96/Add.2
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Q 2: (p. x, para. 21, and p. 66, para. 1)  Malawi is heavily dependent on agriculture, especially
tobacco.  Japan is of the view that Malawi shou ld make efforts towards departing from the economic
and trade structure which relies on tobacco.  Please explain how Malawi tackles its export
diversification .
A: Malawi is currently concentrating its effort in engaging in the production of other high value
products namely textile and clothing, agro-processi ng horticultural products, mining and tourism.
Q 3:  (p. 10, para. 24)  Japan heard that since last year, Malawi has become a beneficiary of the U.S.
Africa Growth and Opportunity Act ( AGOA).  We would like to know for which products Malawi
expects to increase its exports to the U.S.
A: Malawi expects to focus its exports in textile and clothing, rice, sunflowers seeds and
sunflower oil, cotton seeds, cut flower. Peanuts, fish, garlic fresh, peas, paprika, beans, green tea etc.
Q 4:  (p. 36, para. 7)  The report states that Malawi requires pre shipment inspection (PSI) on almost
all imports.  Does Malawi have any intention to maintain this requirement in the future?  Is it
considering eliminating or relaxing of this requirement?
A: The circumstances that necessitated the procurement of pre-shipment inspection services are
that in 1991 government embarked on reforms to str eamline rates of duty and strengthen institutional
capacity for the facilitation of legitimate trade and revenue collection.  The reforms were embarkedupon to remove deficiencies that were affecting the proper function of the revenue collecting
institutions.  Since the capacity had gone down, government decided to procure the services of a PSI
company to assist in capacity building in the form of  training of customs officials in the determination
of the accuracy and truth of declarations for customs valuations purposes.  Since the reforms were
embarked upon in 1994, customs operations are being computerized, training in valuation andclassification has been enhanced.  In February 2000, Government formed the Malawi Revenue
Authority as part of institution strengthening. In view of these reforms which are going on well, it is
the intention of government to do away with pre-shipment as soon as the reforms have been
completed.
Q 5:  (p. 42, para. 21)  Malawi has bound all tariff in agriculture products.  However, tariffs on non-
agricultural products were bound on less than 1% of its tariff lines, thereby making the overall
coverage of its tariff lines at only 17%.  Japan request Malawi to expand the coverage of its non-
agriculture products under the bound tariffs.
A: Malawi has taken note of Japan's request.
Q 6:  (p. 49, para. 47) The report states that the extent to which non-transaction values, such as
“guide” prices, are used for customs valuation in Ma lawi is not clear.  If Malawi still maintains a
minimum price system, Japan requests Malawi to provide its notification to WTO.
A: Malawi does not use minimum guide values. It  uses transaction method (price paid adjusted
for insurance, handling charges, and transport.  However in cases where the accuracy of the
transaction is not acceptable the second and third method of valuing goods are used i.e. the value of
identical goods imported over a certain period or value of similar goods imported over a period of
time.  That is why the government of Malawi sought the services of pre-shipment inspection companyto help in determining the accuracy of the transaction values.
Q 7:  (p. 54, para. 72 and 73) According to the Repo rt, imports of certain products, such as certain
fruits, tobacco-leaf, sweet and Irish potatoes, flower bulbs, seeds for sowing tea, and rubber seeds,
are prohibited.  Please explain in detail the reasons for such prohibition, as well as the legal basis,
for each respective product.WT/TPR/M/96/Add.2
Page 27
A: It is not true that the government of Malawi prohibits importation of any of the products
mentioned in the question above.  According to the Laws of Malawi governing importation of these
products, the government permits their importation as long as they meet certain specified
phytosanitary standards, which are essentially aimed at protecting the Malawi agriculture from
infestations of certain pests and diseases, which may come along with imports.
INDIA
Q.1: We would request the delegation of Malawi to  give us their views concerning the operation of
the IF in general and the pilot project in particular and the benefits it has gained?
A: In general IF has not been very successful.  Our understanding of the IF was that it was going
to address needs identified by Malawi in the country needs assessment report.  Some of the needs
were partially addressed in form of training and establishment of a Reference center.  Supply side
constraints have not been addressed fully.
Malawi appreciates that the country has been selected to participate in the pilot project.
However, implementation has not yet commenced to enable Malawi give an assessment of its
benefits.
ZAMBIA
Q 1:  How does Malawi rationalize its many bilateral trade deals?  Is there no room for conflict?
What about institutional capacity to implement these?
A: Malawi’s bilateral trade agreements (BTA) take into account the objectives of regional
arrangements (COMESA and SADC). Bilateral trade agreements are fast track arrangements for
regional integration.
With respect to institutional capacity, as stat ed earlier, all efforts are being made to seek
various forms of assistance to enhance institutional capacity.
Q.2:  Malawi, is on recorded to have implemented the customs valuation agreement yet still maintains
a Pre-shipment Inspection  regime.  How can the two positions be reconciled?  Is not the PSI a
contradiction of the very same CVA?
A: The circumstances that necessitated the procurement of pre-shipment inspection services are
that in 1991 government embarked on reforms to str eamline rates of duty and strengthen institutional
capacity for the facilitation of legitimate trade and revenue collection.  The reforms were embarked
upon to remove deficiencies that were affecting the proper function of the revenue collecting
institutions.  Since the capacity had gone down, government decided to procure the services of a PSI
company to assist in capacity building in the form of  training of customs officials in the determination
of the accuracy and truth of declarations for customs valuations purposes.  Since the reforms were
embarked upon in 1994, customs operations are being computerized, training in valuation andclassification has been enhanced.  In February 2000, Government formed the Malawi Revenue
Authority as part of institution strengthening. In view of these reforms which are going on well, it is
the intention of government to do away with pre-shipment as soon as the reforms have been
completed.
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