RESTRICTED
WORLD TRADE WT/BOP/R/41
7April 1998
ORGANIZATION(98-1395)
Committee onBalance-of-Payments Restrictions
REPORT ONTHE CONSULTATIONS WITH NIGERIA
1. TheCommittee onBalance-of-Payments Restrictions resumed itsconsultations with the
Government ofNigeria, suspended inJuly1997, on11and12February 1998. Theconsultations were
heldunder theChairmanship ofMr.Peter R.Jenkins (United Kingdom) inaccordance withtheterms
ofreference ofArticle XVIII(12)(b) oftheGATT 1994 andtheUnderstanding ontheBalance-of-
Payments Provisions oftheGATT 1994. TheInternational Monetary Fund wasinvited toparticipate
intheconsultations inaccordance withArticle XV:2 ofGATT 1994.
2. TheCommittee hadbefore itthefollowing documents:
Report onConsultations withNigeria: WT/BOP/R/25
Notification from thePermanent Mission ofNigeria: WT/BOP/N/32 andAdd.1
Background Paper bytheSecretariat: WT/BOP/S/6 andAdd.1
Opening Statement bytheRepresentative ofNigeria
3. Theopening statement bytheRepresentative ofNigeria isattached asAnnex I.
Statement bytherepresentative bytheInternational Monetary Fund
4. Therepresentative oftheIMFstated thathewasnotinaposition toaddtowhat hadbeen
saidayearago. AnArticle IVmission wasduetovisitNigeria inApril andafterthat,should there
beaneed, theIMFcould present itsupdated viewtotheCommittee.
Discussion intheCommittee
5. OneMember recalled therecent developments intheconsultations heldwithNigeria andnoted
thatconsultations hadbeensuspended fourtimes inthelasttwoyears inorder toallow timeforNigeria
tobring itsmeasures intoconformity. During theconsultation inJuly,mostmembers hadcalled for
theeliminationofthemeasuresimmediatelyoroveramuchshortertime-framethanproposedbyNigeria.
While heappreciated thatthephase outschedule hadbeenshortened from eight tofiveyears, he
expressed theviewthatallowing Nigeria fourmoreyears, until2002, tocontinue itsuseofthemeasures
would undermine itscredibility intheWTO and,furthermore, make amockery ofthelegitimate use
ofArticle XVIII:B bycountries thatfaceasevere balance-of-payments crisis andrequire temporary
measures toweather suchfinancial storms.
6. Other members welcomed theliberalization thathadtaken place andthefactthatNigeria had
presented aphase-out plan. Nevertheless, theysupported thethrust oftheprevious statement. The
Committee hadalready determined thattherewasnounderlying balance-of-payments justification forWT/BOP/R/41
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themeasures. Eveniftherewere, themeasures inplacewould notbeinconformity withArticle XVIII
andshould beremoved inaccordance withparagraph 11ofthatArticle which wasnotmodified by
theUruguay Round Understanding onBalance ofPayments. Nigeria hadalready hadsufficient time
tophase-out itsmeasures: theyshould therefore remove themeasures immediately orjustassoon
asthiswaspractically possible.
7. Members joined incalling fortheimmediate orprompt removal ofthemeasures; onemember
pointed outthatthebalance-of-payments provisions didnotprovide forthetypeofphase-out thatNigeria
wassuggesting. Members stressed thattheywould beopposed toafurther suspension ofthe
consultations. Onemember urged theCommittee totakeamore considerate linetowards Nigeria,
andsupported theproposed fiveyeartime-table. Another suggested thatNigeria 'shealthy reserve
position pointed totheirmoving more boldly toeliminate themeasures. Thenotification ofproducts,
including kaolin, maintained forsafeguard reasons wasidentified asanissue requiring clarification,
aswasthemethodology fordismantling pre-shipment inspection. Itwaspointed outthatthese issues
could bediscussed inmore detail during theforthcoming Trade Policy Review ofNigeria.
8. Therepresentative ofNigeria saidhewasinnoposition topropose anacceleration ofthe
phase-out. Heneeded torefer thematter tohisauthorities. Herequested afurther grace period.
Several members were unable toagree tothisforthereasons given above.
9. TheCommittee thenrecessed toallow informal consultations tobeheldonhowtoproceed
further. When theCommittee reconvened, theChairman noted thatthere wasaconsensus thatthe
measureswerenotinconformitywiththebalance-of-paymentsprovisions.TheCommitteehadaddressed
thequestion astowhether Nigeria needed afurther period ofadjustment. Onecountry hadargued
foratransitional period uptotheyear2002. Other members hadtaken theposition thatthiswasfar
toolongandcould notbejustified bythebalance-of-payments provisions. Some members hadsaid
that,inthecircumstances, theywereunable toagree toafurther suspension oftheconsultation. He
asked forconfirmation ofthis. Several delegations thenconfirmed theChairman 'sunderstanding.
10. ThedelegationofNigeriapointedoutthatmanydelegationshadwelcomedtheeconomicprogress
made byhiscountry andtheremoval ofsome measures. Heasked forafurther suspension ofthe
consultations. TheChairman noted, however, thatthere wasnoconsensus onthisapproach andthat
theonlyoption available wastoconclude theconsultations without agreed conclusions asforeseen in
thepenultimate sentence ofparagraph 13oftheUruguay Round Understanding onthe
Balance-of-Payments provisions.
11. Therepresentative ofNigeria noted thathecould haveaccepted thedraftconclusions which
theChairman hadsubmitted tomembers oftheCommittee informally fortheirconsideration, viz:
"TheCommittee recognized theefforts made byNigeria inremoving additional items
from theimport prohibition listwiththeadoption ofthe1998 Budget andinshortening the
timeperiod forelimination ofallimport prohibitions maintained under Article XVIII:B from
2005to2002. Italsonoted thefavourable developments intheNigerian economy inthepast
year.
TheCommittee noted thatunder the1994Understanding, preference should begiven
toprice-based measures andthatmeasures mayonlybeapplied tocontrol thegeneral level
ofimports.WT/BOP/R/41
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TheCommittee reiterated itsconclusion, already stated in1996, thattheimport
prohibitions maintained byNigeria could notbejustified forbalance-of-payments purposes,
andthatNigeria wastherefore under anobligation toremove themeasures.
Foritspart,theNigerian delegation stated thatitwasnotinaposition torevise its
proposed phase-out schedule without further domestic consultations, leading totheannual
subsequent budgetary policies. Inthelightofthis,theCommittee requested Nigeria toremove
theremaining measures witheffect from1January 1999, andtonotify thesteps taken tothe
firstGeneral Council thereafter.
Onthebasis ofthisrequest, theCommittee agreed toconclude theconsultations.
Whilethesemeasuresremaininforce,MembersreservetheirrightsunderGATT1994."
12. Several members responded totheNigerian intervention byunderlining theirinability toagree
tothese conclusions, notleastintheabsence ofanycommitment fromNigeria touseafurther grace
period toeliminate themeasures. While regretting thattheconsultations would endwithout agreed
conclusions, theystressed theillegality ofthemeasures andthefactthatNigeria hadalready beengiven
ample opportunity tobring themeasures intoconformity withWTO rules. Onemember noted that
there wasnolegalbasis foracontinuation ofthemeasures andthatthese therefore should nolonger
beamatter forconsideration bytheCommittee. Itwasalsopointed outthatitwould bepossible to
continue theexamination ofthematter inother fora,suchastheGeneral Council. Members reserved
theirrights.
13. TheChairmansaidthat,intheabsenceofagreedconclusions,hewouldberecordingthedifferent
views expressed intheCommittee, inaccordance withparagraph 13oftheUnderstanding onBalance-of-
Payments Restrictions. Hedrew theconsultations toaclose.WT/BOP/R/41
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ANNEX I
Statement bytheRepresentative ofNigeria
1. Mr.Chairman, Iwish, onbehalf ofmydelegation, tothank youonceagain fortheopportunity
thathasbeengiven toNigeria toamicably resolve theproblems related tothetrade-restrictive measures
thatwere putinplace forbalance-of-payments reasons.
2. Youwillrecall thatatthelastconsultation withNigeria inJuly1997, theCommittee welcomed
thesubmission ofatimeschedule byNigeria. However, itopposed theeight-year time-frame that
wasproposed. Accordingly, sincemydelegation wasnotinaposition topropose ashorter timeperiod,
theconsultations werepostponed toenable itbrieftheNigerian authorities onthedevelopment. Nigeria
wasalsorequested toconsult withinterested members inthecourse ofNovember 1997. However,
thiswecould notdoasaresult ofthe1998 Budgetary Process which tookplace atabout thesame
time. Thisdevelopment wasdulyconveyed tothisCommittee.
3. Mr.Chairman, Iwishtoinform youthataseries ofconsultations havetaken place atvarious
levels ofgovernment, theresult ofwhich isthefive-year time-schedule which wearehappily presenting
today. Asademonstration ofourcommitment tothenewproposal, twooftheitems slated for1998
under thefive-year time-schedule havealready beenremoved from theImport Prohibition Listwith
effect from 1January 1998. These are:
- live,chilled orfrozen poultry andeggs(excluding day-old chicks);
- beerandstout;
- barley andmalt; and
- mineral andsimilar waters.
4. Thisleaves uswithonlyfouritems onthelist.TheCommittee willrecall thatin1997, Nigeria
hadalsoremoved twoitems: furniture andtextiles fromtheImport Prohibition List. Iamconfident
thatmembers willagree thatthese measures taken bytheGovernment ofNigeria demonstrate aclear
andunambiguous commitment totheremoval ofother items ontheListwithin theremaining period
oftheproposed time-schedule.
5. Mr.Chairman, Nigeria wasabletoachieve modest economic gains andgrowth in1997 as
follows:
(i) Gross domestic product (GDP) grew by3.8% asagainst 3.3% in1996;
(ii) Therateofinflation fellfrom 29.0% in1996 to8.5% asat31December 1997;
(iii) External reserves improved significantly toUS$7.7 billion from US$4.1 billion in
1996. However, Nigeria stillhastheproblem ofexternal debtservice tocontend with;
(iv) Theexchange ratewasrelatively stable;
(v) Therealinterest ratewaspositive forthefirsttimeinmany years; and
(vi) TheGovernment 'sfiscal operations recorded amoderate deficit ofN5.0billion as
against asurplus ofN38.0billion in1996.WT/BOP/R/41
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6. Nigeria isfullycommitted toliberalizing allsectors oftheeconomy. Inthisregard, the1998
Budget contains several policy measures aimed atachieving thatobjective. Inparticular, alllaws
inhibiting competition incertain sectors oftheeconomy liketelecommunications, electricity generation,
exploration ofpetroleum, export refineries, coalandbitumen exploration, andhotel andtourism are
being reviewed. Additionally, several public sector enterprises aretobeprivatized andcommercialized,
through apolicy of"guided privatization". Under thispolicy, public enterprises willbeprivatized
oneaftertheother soastodraw onvaluable experiences andlessons thatwillguide theimprovement
oftheprogramme.
7. Inanother development, theGovernment hasalsointroduced measures aimed atcomplementing
andreinforcing thecustoms andportsreforms embarked uponintherecent past. Necessary equipment
isnowbeing putinplace attheNigerian ports tocarry outdestination inspection. Tothisend,the
Asycuda system isbeing introduced forthecomputerization oftheports which willfacilitate timely
clearance ofmerchandise being imported intoNigeria. TheGovernment willalsoinstall theHyco-Scan
X-rayScanningInspectionSystematNigerianportssoastofacilitaterapidscanningofpackages,freight,
vehicles, entire containers andtrucks. Similarly, intheon-going portreforms, pre-shipment inspection
ofgoods isbeing gradually phased out.
8. Inthelight ofthemodest achievements thathave been recorded aswellastheon-going
liberalization oftheNigerian economy, there istheneedforcaution toensure thatthegains made are
consolidated. Theproposed five-year time-schedule, therefore, aimsatensuring thattheremoval of
therestrictive trade measures isproperly andcarefully managed soasnottoreverse themodest
achievements ofthepast. Equally important istheneedtoallow timeforthenecessary institutional
capacity-building, inorder tocopewiththeon-going liberalization oftheeconomy.
9. Finally, Mr.Chairman, letmereaffirm Nigeria 'scommitment totherules andprinciples of
themultilateral trading system. We,however, callonmembers toshow understanding ofthepeculiar
circumstances oftheNigerian economy andco-operate withmydelegation towards concluding these
consultations atthissession.
10. Thank youforyourkindattention.
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