Republic ofCôte d'Ivoire WT/TPR/S/2
Page 69
V. TRADE POLICIES AND PRACTICES BYSECTOR
(1) Introduction
1. Theimportant changes inIvorian tradepolicy began in1994. Bymaking imports more costly,
thechange intheparity oftheCFAfrancallowed aseries ofmeasures toliberalize imports anddomestic
andforeign trade tobeimplemented.
2. TheState'scontrol overproduction, domestic marketing andexport prices oftenmakes itfully
responsible foranypricerisk,whether foragricultural orenergy products. Theeffect ofsuchasystem
hasbeenthatprice fluctuations onglobal markets, especially forcoffee andcocoa, havehadamuch
greater impact ontheState'sfinances thanontheprivate sector. Fixed producer prices arealsoliable
torestrict theeffects ofdevaluation onfarmers 'incomes. Price control forservices isusually
accompanied bylimited opportunities forcompetition. Since 1994, theprices ofcertain manufactured
products (forexample, cement) havebeenliberalized.
3. Ingeneral, theprivate sector isresponsible formarketing andexporting inCôte d'Ivoire.
Forexample, marketing anddomestic retailing (coffee, cocoa, petroleum products, electricity), aswell
asexport services (transport, packing, maintenance, storage, financing, insurance, etc.)arecarried
outbytheprivate sector, often under contracts guaranteed independently ofglobal price trends.
According totheauthorities, private capital hasledtomore efficient organization ofeconomic sectors
andmore rapid transfer oftechnological developments.
4. Agricultural products forexport (coffee andcocoa, wood) aresubject tohighexport taxeswhich
finance more than40percentofCôted'Ivoire 'sbudget. Theagricultural sector isthefoundation
oftheIvorian economy, amounting toalmost onethirdofGDP andhalfoftotalexports.
5. Food crops (more than16percentoftotalimports), especially theproduction ofrice,could
benefit fromthedevaluation andthepresent liberalization offoreign anddomestic trade. Thechange
inrelative prices compared withimports hasgreatly stimulated theproduction ofmaize, cassara and
other foodcrops following thechange inparity, andalarge decrease inimports offoodproducts is
expected. Côted'Ivoire 'sfoodproduction could alsobenefit toalesser extent fromthecommitments
made intheUruguay Round Agreements toreduce export subsidies. Inaddition, according tothe
authorities, netexports ofprocessed foodproducts havesignificantly increased following thedevaluation
andcould benefit from thenewrules onsubsidies; thisisthecaseforbeverages, preserved foods,
oilseeds andtheirproducts andsugar. Forthese products, devaluation hasgreatly increased theprice
ofimports andconsequently made Ivorian products more competitive onmarkets within thefranczone.
6. Refining oilandgenerating electric power together account for15percentofGDP; imports
ofcrude petroleum amount toalmost 20percentoftotalimports, while exports ofrefined products
contribute approximately 5percentofexport earnings. Recent discoveries arelikely tobring about
asignificant change inCôted'Ivoire 'sforeign trade inpetroleum products. Themajority ofenergy
production andmarketing inCôted'Ivoire iscarried outbytheprivate sector according toascaleof
prices negotiated withtheauthorities.
7. Theremainder oftheindustrial sector isdiversified, butithasnotexperienced anysignificant
growth since1987. Production inthetextiles, tanning, wood products andconstruction material sectors
hasundergone amarked decline, ashastheelectricity industry andtransport. Since the1960s, the
existing enterprises havebeenoperating within theframework ofanimport substitution policy and
haveoften maintained theirposition bymeans oftaxandVAT exemptions, highcustoms duties and,
frequently, non-tariff barriers totheentry ofcompetitive products. Theliberalization ofimports inWT/TPR/S/2 Trade Policy Review Mechanism
Page 70
anumber ofsectors thathadpreviously beenprotected from anyform ofcompetition should allow
Ivorian industry asawhole tolower production costs.
8. Service industries arediversified andaccount foralmost one-third oftheIvorian GDP. The
mostimportant activities areconstruction, transport, financial andprofessional services (forexample,
packing, maintenance). Côted'Ivoire isanetimporter ofservices, mainly comprising airtransport,
professional, insurance andfinancial services. Thecostofservices incorporated inagricultural and
manufactures exports, forexample, transport, packing, professional andfinancial services andenergy,
isacrucial aspect ofthecompetitiveness ofCôted'Ivoire 'sexports.
(2) Agriculture, fisheries, forestry andrelated industries
9. Agriculture accounts formore thanonethirdofthenational income andoccupies twothirds
ofthelabour force. Approximately 37percentofagricultural crops areexported. Theagri-business
sector currently contributes around 5percentofGDP and18percentofexport earnings. Customs
barriers toagricultural inputs havegreatly decreased, andsometimes beenlifted, andcorrespond to
anaverage figure of17percentforallagricultural products (Table AV.2). Theaverage import duty
of25percentonprocessed foodproducts (Table AV.3) indicates acertain tariff escalation.1
10. Despite ratification oftheUruguay Round Agreements, there arestillquantitative restrictions
onsome products. During thenegotiations, Côted'Ivoire undertook tobindalltaxes andcharges on
imports ofagricultural products.
11. Thesustained economic growth experienced during theperiod 1965-80 waspartly duetothe
growth inagricultural products andtothepresence ofnatural resources suchastropical woods.
Agricultural growth wasmostmarked inthecoffee andcocoa sectors and,toalesser extent, inwood,
cotton, palmoil,palmkernels, coconuts, rubber, sugar, pineapple, bananas, riceandplantains. Growth
wastherefore accompanied bycropdiversification, andalsobylarge-scale deforestation.
12. Food crops forexport developed partly asaresult ofapolicy oftaxincentives forforeign
investment, often combined withdirect State participation. Industries which developed inthisway
focused onexport; import barriers meant thatthewhole ofthedomestic market forcertain products
wasguaranteed. During the1970s, theStateholding intheagri-business sector expanded considerably.
Themain activities aretheprocessing ofcoffee, cocoa, sugar production, oilmills, theprocessing
ofcereals andmilled products, beverages, pineapple canneries, tomatoes, mangoes, tunaandanimal
food. Thissector accounts foralmost halfofIvorian exports ofmanufactured products.
13. Attheendofthe1980s, agriculture andtheagri-food sector bothunderwent aparticularly
difficult adjustment, involving bothexternal factors (thefallinglobal prices forrawmaterials),
macroeconomic factors (theincrease intherealeffective exchange rate)andareview oftheState's
roleinmanaging these sectors following large losses bytheAgricultural Products Price Stabilization
andSupport Fund (CSSPPA).
14. Thereform process included theannouncement ofalarge-scale privatization programme.
Followingimportliberalization,therewasareviewofthefutureofStatebodiesresponsibleformarketing
foodcrops (cassava, yams, maize) atcontrolled prices (equalization), aswellasthemilling and
processing ofpaddy riceandtheproduction ofsugar andoilseeds andtheirproducts.
1InthisChapter, processed food products aredefined according totheInternational Standard Industrial
Classification (ISIC), No.311. Unprocessed agricultural products areGroup No.111inthisClassification.Republic ofCôte d'Ivoire WT/TPR/S/2
Page 71
15. Within theframework oftheUruguay Round negotiations, Côted'Ivoire stated thatnoexport
subsidy within themeaning ofArticle 9oftheAgreement onAgriculture wasapplied inCôted'Ivoire.
Domestic support under Annex 2wasnotified: thisconcerns sericulture, rubber trees, pestcontrol,
fishbreeding andcontinental fisheries, aswellasthebuilding ofsmall boats forthenavy.
(i) Coffee, cocoa andproducts thereof (Table AV.2)
16. Following impressive growth inthe1970s, coffee andcocoa suffered fromthecollapse ofglobal
prices (Table V.1); these sectors arenevertheless stillthemost important intheIvorian economy,
withacumulative value added thatexceeded 16percentofGDP in1991. Cocoa isbyfarthemost
important sector, providing more thanonequarter ofexport revenue. Inaddition, exports ofprocessed
cocoa amount toalmost US$200 million, underlining thevitalimportance ofthissector fortheIvorian
economy. Côted'Ivoire istheworld 'slargest producer ofcocoa anditsproduction iscurrently around
33percentoftheworld total. Approximately 90percentofIvorian exports ofcoffee andcocoa are
totheEU. Themain markets aretheNetherlands andFrance.
17. TheIvorian economy asawhole wasaffected bythedecrease inexport earnings asaresult
ofthefallinglobal prices. Themostmarked reduction wasintheprice ofcoffee, which decreased
bymore than70percentbetween 1986 and1992; asaresult, thevalue ofexports ofcoffee beans
fellfromalmost US$644 million in1980toanestimated US$162 million in1993. Thefallinexport
earnings from cocoa wasmitigated byanalmost twofold increase inthevolume ofproduction
(Table V.1).
Table V.1
Coffee andcocoa, selected economic indicators, 1970-94
1970 1989 1990 1991 1992 1993a1994a
Production
('000tonnes)Coffee
Cocoa beans280
181250
401286
781199
804240
730140
770160
790
Exports
('000tonnes)Coffee
Cocoa beans...
......
...232
671199
699220
659226
810...
...
Exports
(US$ million)Coffee
Cocoa beans186
89644
793239
808183
868150
755762
......
...
Producer price
(CFAF/kg.)Robusta coffee
Cocoa beans95
80300
300100
250100
200100
20090
200275
240
Global price
(US$/tonne)Robusta coffee
Average cocoa price
NewYork/London,
forward sales (3months)915
6743,244
2,6031,212
1,2711,098
1,195962
1,0981,179
1,1192,640
1,392
...Notavailable.
aEstimate.
Source: InformationsuppliedbytheIvorianGovernment;UNCTAD(1994),1994CommoditiesYearbook,GenevaandMonthlyCommodities
Bulletin; Marchés tropicaux, several editions.
18. According tothestatistics available, itappears thattheproducer pricedidnotreflect thetrend
inglobal prices (Chart V.1).
19. Marketing ofcoffee andcocoa isregulated bytheCSSPPA. Itfixesa"reference price" on
thebasis ofprices forforward selling ofapproximately 60percentofthecoffee andcocoa harvests.
Aschedule ofprices thenfixespayments tothesector 'svarious operators according tothisreference
price. Theproducer price isdetermined bydeducting these payments fromthereference price. The
price schedule alsocomprises anamount tobeusedtoreimburse thearrears oftheStabilization Fund
("the stabilization surplus"). In1994, itamounted to13percentoftheState'scurrent budget
(Chart IV.1).WT/TPR/S/2 Trade Policy Review Mechanism
Page 72
Republic ofCôte d'Ivoire WT/TPR/S/2
Page 73
20. Inaccordance withtheprice schedule, themajor exporters market alarge partofthecoffee
andcocoa (grading, sizing, exporting, processing) inexchange foranamount proportional tothevolume
exported. Theinitial processing phase (harvesting, transporting, dehusking) ispartly carried outby
small family andcooperative enterprises.
21. Export ofcoffee andcocoa from Côted'Ivoire require an"exporter 'sauthorization" issued
bytheMinistry ofAgriculture andLivestock Resources. Inaddition, theCSSPPA stillhastogrant
authorization forrelease forexport. Thissystem allows theStatetocontrol export supply overagiven
period.
22. Each year, thelistofauthorized exporters, together withtheamounts which eachexporter
maydeliver totheCSSPPA, aredetermined bytheauthorities inagreement withauthorized exporters.
Thelatterarecomposed ofgroups which havepackaging andexport facilities, theagents ofinternational
dealers andtheCSSPPA. Themajor group, Tardivat (France), controls between onequarter and
onethirdoftheexport quotas.
23. During thesecond phase, theexporters buybackthecoffee andcocoa previously delivered
totheCSSPPA atapricenegotiated withthelatter andresell itoninternational markets. Inthisphase,
however, theprofit margin depends ontherelative prices during thebrokerage transactions.
24. Anumber ofaspects ofthemarketing process forthese products mayalsohaveaneffect on
thedistribution ofthepayments among thevarious sectors. TheCSSPPA paysexporters aguaranteed
margin, irrespective oftheintermediate costs. Anyreduction incoststherefore benefits theexporters
rather thantheState, whereas theprice riskfortheproduct exported istoalarge extent assumed by
theState: when prices fall,margins tendtoremain fixed, which usually means thattheburden oflosses
fallsoneither theCSSPPA ortheproducers (Box V.1).WT/TPR/S/2 Trade Policy Review Mechanism
Page 74
BoxV.1: Processing andmarketing ofcoffee andcocoa inCôte d'Ivoire
Since theFund wascreated in1957, theCSSPPA 'sactivities have played animportant roleinthe
performances ofthecoffee andcocoa sectors. TheCSSPPA draws upadetailed schedule ofprices
showing themargins ofallthevarious private operators -producers, collecting points, transporters,
processors, loaders/exporters, insurers, portagents, etc.In1995, theproducer price forcocoa beans and
dehusked coffee berries wasstillbeing fixed bytheCSSPPA. Italsoguarantees areference price (anda
profit margin) toexporters, whose roleistosubcontract alltheintermediate services from collection in
thefield toexport. Thefarmer receives around 40percentofthereference price.
TheCSSPPA issues theauthorizations forthefinal saleatafixed price (theprice obtained), the
exporters carry outtheoperations uptoandincluding their loading quotas. Thesurplus ortheloss
correspond totheaverage difference between thereference price andtheprice obtained. Theresult of
thissystem isthattheState bears alltheprice risks andalltheproduction costs uptoaglobal ceiling.
Thedifference between thereference price andtheguaranteed price tothefarmer inCFA francs is
composed oftheguaranteed margins toalltheintermediaries (including theexporters), andthe
"stabilization surpluses" which arededucted when drawing uptheschedule ofprices. These margins
financed upto50percent oftheState'sinvestment budget inthemid-1980s. After 1987, fixed
reference prices atatime when prices were falling constituted animportant factor inthe"stabilization
losses" andthelarge accumulation ofpayments arrears bytheCSSPPA inrespect ofoperators inthis
sector, mainly banks andexporters. In1992, these arrears reached afigure ofCFAF 240billion
(US$900 million). Under theSectoral Adjustment andCompetitiveness Programme (PASCO), these
arrears were converted intosecurities. Thepresent stabilization surpluses, estimated atCFAF 95.4
billion during the1993-94 season (US$168 million), areinprinciple devoted torepaying these arrears.
Thebanking sector finances exporters through advance payments, lending against stocks, anddiscounts
against documents forexport. Advance payments allow exporters tofinance theseason bygranting
advances tosubcontractors andplanters.
Thereform oftheprice system administered bytheCSSPPA wasonly partial. Aminimum producer
price isstillineffect; theexport price continues tobeguaranteed bytheCSSPPA (andtherefore bythe
State); exporters continue tooperate within aframework ofguaranteed trade margins. Thef.o.b.
reference value guaranteed bytheCSSPPA, calculated according totheforward sales oftheharvest
(60percent), should however better reflect market conditions.
TheIvorian Government isnotatthemoment considering dismantling theCSSPPA. Reforms have been
implemented with aview toliberalizing theinternal andexternal marketing systems, inparticular by
restricting intervention bytheCSSPPA. TheGovernment 'stargets forthemarketing ofcoffee andcocoa
arethefollowing:
- Toenhance thetransparency oftheCSSPPA 'soperations, especially byopening upits
board ofdirectors toproducers, exporters, industrialists andbanks;
- toincrease the"field-side" competition sothatfarmers cansellatthebestprice either
totheCSSPPA ortoindustrialists orexporters;
- toincrease competition inthestorage sector soastoreduce production costs; and
- toimprove competition among suppliers ofinputs (forexample, insecticides, fertilizers).
Acomprehensive coffee promotion programme waslaunched bytheCSSPPA in1994 foraperiod of
fiveyears. Thisprogramme includes investment ofCFAF 32billion tokeep upplantations andprovide
sanitary products andfertilizers.
Source: Information supplied bytheIvorian Government.