WORLD TRADE ORGANIZATION
ORGANISATION MONDIALE DU COMMERCE
ORGANIZACIÓN MUNDIAL DEL COMERCIOWT/TPR/M/96/Add.1
26 March 2002
(02-1559)
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.1
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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: A written response will be provided later.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: A written response will be provided later.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: A written answer will be provided later.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: A written answer will be provided later.
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: A written answer will be provided later.Q 6: What measures have been put in place to cu rb corruption in Malawi’s public administration?
A: A written response will be provided later.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?WT/TPR/M/96/Add.1
Page 4
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.
Q 9: Could you please expound on the Government’s effort to enhance domestic resource
mobilization?
A: A written response will be provided later.
EUROPEAN UNION
Q 1: 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 allegednegative 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 Medium
Term 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 subjected
to economic instability with its trading partners.  The speed of economic liberalization did not allow
domestic industries time to cope with the aggressive foreign competition.  In some instances delays indonor flows and non-fulfilment of donor commitments have exacerbated the pressure on the fiscal
deficit.
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 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 real wages which can partly explain the declinein imports to GDP ratio.WT/TPR/M/96/Add.1
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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 to
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 holdbasis.  Foreigners wishing to invest will obtain land on lease hold basis which is best suited for
conduct of business.  Apparently there has been a misunderstanding 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 rather than land matters.
UNITED STATES OF AMERICA
Q 1: 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 governmentincluded 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 istherefore 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.
JAPAN
Q 1: Declining Trade Ratios.  Please provide Malawi ’s analysis of the reasons for such 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 real wages which can partly explain the declinein imports to GDP ratio.WT/TPR/M/96/Add.1
Page 6
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 diplomaticprivileges 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: With respect to ensuring transparency and accountability in public procurement practices,
Government has finalized a Bill which will be presented in Parliament at the next sitting.
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: A written response will be provided later.Q 4: What are the bases for optimism regarding the envisaged substantial increase in the FDI in
Malawi’s tourism sector?
A: A written response will provided later.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 by enhancing competition
through new entrants.  Currently, there are three new retail banks including the Finance Bank, Fincom
Bank, First Merchant Bank, and four finance houses, one merchant bank, one new building society,
one discount house, and several insurance companies.  Government has also sold its 60 per centshareholding in Commercial Bank to STANBIC.
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: A written answer will be provided later.
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: A written answer will be provided later.WT/TPR/M/96/Add.1
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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?
A: Government has come up with a medium term strategy to invigorate agricultural production, a
copy of which will be made available to WTO secretariat.
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: The Starter Pack scheme ceased and has since been succeed by the Targeted Input Program
(TIP).  The TIP program is under continuous review and is targeting the very poor only.  In order notto create the dependency syndrome, the scale of the programme has been reduced.
Q 11: When is it planned to operationalise th e proposed One-Stop-Shop Investment Promotion
Agency?
A: One stop- stop shop is operational.
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 block under the
Abuja Treaty to the formation of the African Uni on.  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 organizati ons 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 active
member in the two organizations and is therefore able to push for harmonization and closecooperation 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 ?WT/TPR/M/96/Add.1
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A: A written response will be provided later.
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 Uni on.  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 organizati ons 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 active
member in the two organizations and is therefore able to push for harmonization and closecooperation 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 delegation notes the error and will work with  the secretariat to correct it to read “Malawi,
being a least developed country, is a beneficiary of the EBA initiative as well as the ACP/EU
partnership Agreement and, qualified starting from 17
th August, 2001 to export to USA under
AGOA".
THE WTO SECRETARIAT QUESTIONS
Q 3: (paras 40-45) We note the importance of mainstreaming trade into Malawi’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: A national workshop scheduled for 18th February 2002 will among other things agree on the
work program that will highlight the activities that Government will undertake to make full use of
donor support for trade related areas.  At the same time Government will ensure that there is no
duplication of technical assistance.  The workshop will also look at the membership/composition of
the 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: A written response will be provided later.WT/TPR/M/96/Add.1
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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 will inform the secretariat to effect the necessary
correction.
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 secretariat will be informed accordingly.
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 will be
forwarded to the WTO Secretariat.
Q 8: (para 14) The report states that “Domestic 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 from 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 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 10: (para 46, 47) We note that minimum or refere nce 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: 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 theWT/TPR/M/96/Add.1
Page 10
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 w ith pre-shipment as soon as the reforms have been
completed.
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?
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 regional
work as a means to overcome some of the problems related to the implementation of the TBT
Agreement in developing countries with scarce resources.
A: A written answer will be provided later.
Q 13: (para 61) We also appreciate that Malawi is using international standards and we welcome
the efforts made by the Malawi Government to increased harmonisation of standards within the
SADC region.
A: A written answer will to be provided later.Q 14: (para 63) Could Malawi please inform whet her mandatory standards or relevant parts of
them are based on international standards?
A: A written answer will be provided later.Q 15: (para 63) We would also like to know if Ma lawi accepts equivalent technical regulations of
other WTO members?
A: Yes, Malawi does.Q 16: (para 65) Does Malawi accept certification from any European testing organization?  And
does it accept suppliers’ declaration of conformity?
A: A written answer will be provided later.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: A written response will be provided later.
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 hasdrafted a Public Procurement Act to be implemented this year ( 2002).  This draft legislation specifies
open tender as the main procurement method.WT/TPR/M/96/Add.1
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Q 19: (para 78) What are the requirements and procedures for foreign companies to be included on
the list of approved suppliers?
A: A written answer will be provided later.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: The Government undertakes to provide the documents to the secretariat later.
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: Government undertakes to provide the documents later.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: Malawi as an LDC cannot give a definite timetable at this time regarding the implementation
of the TRIPS Agreement.  However the issue of capacity is still outstanding and government will be
seeking technical assistance
Q 23: Please indicate which type of inventions are excluded from patentability under the Malawi
patent law.
A: A written answer will be provided later.Q 24: (para ) 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: A written answer will be provided later.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 tradeadministration 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 alsoenhanced 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 radio
communication system, electronic validation, training.  A full financial and technical requirements
will be provided later.WT/TPR/M/96/Add.1
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What measures does Malawi have in place to co nsult 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.  TheMalawi 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.  A comprehensive technical needs will be provided later.
UNITED STATES OF AMERICA
Q 1: Trade Policy Formulation and Implementation …( National Working Group on Trade Policy)
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 now 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 ofthe 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 – Absence of Malawi Diplomatic Mission in Geneva.  Has
the reference center and the non-resident initiative been effective in this regard?  Does Malawi havesuggestions 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 Fund created 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:  Regional Agreements – Effect of COME SA Free Trade Area launched on November 1, 2000.
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).WT/TPR/M/96/Add.1
Page 13
Q 4: 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 and will be
forwarded to the WTO Secretariat.
Q 5: 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 provided
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 all
industries?  Please  explain whether duty drawback is operated in accordance with Annex II of the
SCM Agreement?
A: A copy of the Export Incentives Act will be provided at a later date.  The Export Incentive
Act allows one type of incentive, duty drawback on raw materials used in the production of exports,
and any taxes incurred on goods intended for exports.
Q 6: Customs Valuation and Best Customs Practices. …”Notification of the legislation and
Checklist will advance efforts of the WTO Committee 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: Malawi Government Procurement Regime  and observer status obtainable under the
Plurilateral Agreement on Government Procurement.
Comment:  Malawi has noted the observation by the United States of America regarding the
Plurilateral Agreement on Government Procurement.
Q 8: Export Assistance – Assistance by the Malawi Export Promotion Council (MEPC)A: MEPC’s assistance to exporters is restricted technical assistance only.  This include
identification of markets, and provision of export market information.  Recently the Council has setup a business information bureau for the business sector to access business information.
Q 9: Export Processing Zones – Incentives for Export Oriented Companies vs Firms producing for
domestic market.  What type of incentives are offe red 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: Export Promotion and Finance – Export Guar anteed fund aimed at 100% loan finance.
Determination of interest rates.
A: Government is consulting on the modalities of charging interest rates.
Q 11: The Investment Promotion Act (1991) – how does it promote and facilitates investment?
A: The Investment Promotion Act mainly seeks to streamline investment approval and
procedures through MIPA facilitation.WT/TPR/M/96/Add.1
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Q 12: The Secretariat’s reports notes that a more liberal regime and efforts to attract investment
including the formation of the Malawi Investme nt 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 investmentflows?
A: Despite the existence of an enabling environm ent the level of FDI to Malawi remains low for
several reasons including poor economic infrastructure, persistent unfavourable 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 to redress the existing constraints
by among other things carrying out the privatization program, pursuance of a macroeconomicstabilization 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.
Q 13: The secretariat’s report notes that the main  ministries involved in setting and implementing
trade related policies are Commerce and Industry;  Finance and Economic Planning;  and
Agriculture and Irrigation.  Several other Ministries and government bodies are responsible for
policies 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 in
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 block under the
Abuja Treaty to the formation of the African Uni on.  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 organizati ons 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 closecooperation in areas where it sees necessary in consultation with all members.
Q 2: Paragraph 7 states that PSI is contracted to SGS until March 2003 when it is expected that
such services will cease.  Please advise if Malawi plans to modernize its admin istration of the customs
valuation program once the services of SGS terminates in 2003?
A: As pointed out earlier reforms are already on-going but more financial assistance is required.WT/TPR/M/96/Add.1
Page 15
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 oftime.  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.
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 telecommunicationservices 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.
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.
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 the
important questions of trade policy?
A: A national workshop scheduled for 18
th February 2002 will among other things agree on the
work program that will highlight the activities that Government will undertake to make full use of
donor support for trade related areas.  At the same time Government will ensure that there is no
duplication of technical assistance.  The workshop will also look at the membership/composition  of
the National Working Committee to coordinate the activities of the Integrated Framework (IF).WT/TPR/M/96/Add.1
Page 16
HONG KONG, CHINA
Q 1: We note that Malawi’s membership of o verlapping regional and bilateral arrangements with
different geographic coverage trade liberalization agendas, trading rules and goals has made itstrade regime complex and inconsistent and hence distorts trade and incentive patterns in an
unpredictable manner.  We would like to know if Mala wi 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 block under the
Abuja Treaty to the formation of the African Uni on.  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 organizati ons 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 memberin 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: It is mentioned that imports subject to mandatory standards are inspected where there are
reasonable grounds for suspected non-compliance.  We would be interested to know more about thecircumstances under which Malawi authorities would perform inspections on such grounds
A: A written response will be given later.Q 3: We appreciate the effort made by Malawi to liberalize the non-basic telecommunication
services and the plan to issue a third mobile li cence.  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 servicesare 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 have created market access of  some kind in EU and U.S.
There are delays in the removal tariff and non-tariff barriers under the regional arrangements of
COMESA and SADC;  Countries in the region produce largely similar products.  The decline in the
regional export  promotion effort.
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?WT/TPR/M/96/Add.1
Page 17
A: As part of the effort to reduce the marginalisation of the Malawi economy in the market
trading system Malawi needs international support in terms of financial and technical assistance
including capacity building in the following areas:-trade policy analysis;  Human resource
development; Institutional support to private sector and trade support institutions.  A comprehensive
technical and financial needs requirements will be provided later.
JAPAN
Q 1: SADC and COMESA – Please explain utilizes th ese regional arrangement for expansion of its
trade?  From the view point of Malawi, how ar e they useful to the expansion of its trade?
A: Both regional groupings provide market access to Malawi.
Q 2: Malawi is heavily dependent on agriculture, especially tobacco.  Japan is of the view that
Malawi should 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, horticultural products, mining and tourism.
Q 3: 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 increase its exports largely in textile and clothing.
Q 4: 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 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 5: 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 productsunder the bound tariffs.
A: A written response will be provided later.Q 6: The report states that the extent to which non-transaction values, such as “guide” prices, are
used for customs valuation in Malawi is not clear.  If Malawi still maintains a minimum price system,
Japan requests Malawi to provide its notification to WTO.WT/TPR/M/96/Add.1
Page 18
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 oftime.  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.
Q 7: According to the Report, 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.
A: A written response will be provided later.
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: IF- 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.  Supplyside constraints have not been addressed fully.
Malawi appreciates that the country has been select ed to participate in the pilot project.  However,
implementation has not yet commenced to enable us 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 stated ear lier, 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 wereembarked upon in 1994, customs operations are being computerized, training in valuation and
classification has been enhanced.  In February 2000, Government formed the Malawi RevenueWT/TPR/M/96/Add.1
Page 19
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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