RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/80/Rev.1
20 February 2001
(01-0825)
Trade Policy Review Body Original:  French
TRADE POLICY REVIEW
MADAGASCAR
Report by the Government
Revision
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Madagascar is
attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Madagascar.Madagascar WT/TPR/G/80/Rev.1
Page 3
TABLE OF CONTENTS
Page
I. INTRODUC TION ................................................................................................................. .....4
II. TRADE POLICIES AND PRACTI CES.....................................................................................4
A.GENERAL ECONOMIC AND TRADE POLICY OBJECTIVES .......................................................4
1. General economic po licy objec tives............................................................................4
2. General trade poli cy objectives ...................................................................................5
B.SECTORAL TRADE POLICY OBJECTIVES ................................................................................6
1. Agriculture.................................................................................................................. .6
2. Forestry..................................................................................................................... ...6
3. Tourism...................................................................................................................... ..7
4. Fisheries.................................................................................................................... ...7
5. Energy....................................................................................................................... ...7
6. Mining ....................................................................................................................... ..8
7. Electr icity.................................................................................................................. ...8
8. Petroleum.................................................................................................................... .9
9. Telecommunications....................................................................................................9
10. Crafts ...................................................................................................................... .....9
11. Industry.................................................................................................................... ..10
12. Transport................................................................................................................... .11
C.GENERAL DESCRIPTION OF THE IMPORT AND EXPORT REGIME ..........................................12
1. Imports...................................................................................................................... .12
2. Exports...................................................................................................................... .13
3. Trade in servic es........................................................................................................13
D.LEGAL AND REGULATORY TRADE POLICY FRAMEWORK ...................................................13
1. National laws and regulations governing the implementation of trade
policy ......................................................................................................................... 13
2. Formulation and review  of trade policies ..................................................................15
3. Multilateral, regional and bilateral trade agreements ................................................15
E.IMPLEMENTATION OF TRADE POLICY .................................................................................17
1. Trade policy measures ...............................................................................................17
2. Trade liberaliza tion programme.................................................................................18
III. ECONOMIC REFO RM PROGRAMME .................................................................................18
IV. IMPORT AND EXPO RT TRE NDS.........................................................................................19
A.IMPORTS .............................................................................................................................19
B.EXPORTS ............................................................................................................................19
C.TERMS OF TRADE ...............................................................................................................20
D.TRADE BALANCE ................................................................................................................20
V. CONCLU SION................................................................................................................... ......20WT/TPR/G/80/Rev.1 Trade Policy Review
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I. INTRODUCTION
1. The Republic of Madagascar, the fourth largest island in the world, is 1,600 km long,
580 km wide and has a coast line of 5,000 km.  Its surface area is 587,041 km2, with 4 per cent of
arable land, 40 per cent of forests and 10,800 km2 of irrigated land.
2. Madagascar is located in the south-west of the Indian Ocean, 350 km from the coast of
south-eastern Africa.  The climate is predominantly tropical and displays marked contrasts:temperate on the plateaus, hot and humid in the east, subtropical in the west, and tropical and dry in
the south.  It has variable rainfall and there are frequent cyclones in the east and south-east.
3. With its biological diversity and exceptionally high rate of endemism (80 per cent for its
fauna and 90 per cent for its flora), it has a very rich subsoil containing various minerals.
4. The population is currently estimated at 15 million, with 80 per cent in rural areas.
5. With an annual per capita income of US$260, it falls into the category of the least-developed
countries (LDCs).
II. TRADE POLICIES AND PRACTICES
A. 
GENERAL ECONOMIC AND TRADE POLICY OBJECTIVES
1. General economic policy objectives
6. In the context of its structural adjustment programme, Madagascar has applied a controlled
budgetary policy (reduction of the budget deficit), a pr udent financial policy (control of inflation and
of the expansion of the money supply) and sectoral reforms (privatization, liberalization,
independence of the Central Bank), which have led to an increase in private savings and credit to the
economy and, consequently, to a growth in investment.  In Madagascar, the interest rate is a
monetary policy instrument in the hands of the Central Bank and it is therefore flexible.
7. In 1997, economic growth outstripped the population growth of 2.8 per cent, and reached
4.7 per cent in 1999 owing to an increase in propert y investments and a substantial growth in trade,
in service sectors, such as telecommunications and tourism, and in the industrial free zones.
8. The State has withdrawn from the production and distribution sector in order to devote itself
more to its supervisory role, thereby attaching greater importance to the social field and putting in
place infrastructures that are needed for the development of the private sector.
9. To this end, it will continue to support the State/private-sector cooperation platforms and
will create a favourable environment for investment and trade.
10. The Government, through the Technical Committee for Public Sector Reform (CTRP), has
reformed the civil service and initiated efforts for improving the quality of the public sector.
11. In order to improve the quality of the local workforce, the Government has set up a ministry
responsible for vocational training and technical education.
12. The Government has removed all barriers to the setting up of a healthy and fair competitive
environment.  It will ensure that there is equality  of opportunity for all players involved in economicMadagascar WT/TPR/G/80/Rev.1
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activity and will establish a structure to settle trade disputes.  A more liberal property policy is also
being introduced.  Finally, the protection of property and persons is one of the State's priorities.
13. In order to improve tax revenue and progressively reduce the dependence on customs
revenue, the administration has adopted a number of measures such as broadening the VAT base
while controlling inflation, introducing excise duty, re stricting exemptions, increasing controls in the
granting of special tax and customs regimes and reorganizing the tax and customs administration in
order to increase the tax ratio by three GDP percentage points.
14. After a substantial depreciation in the Malagasy franc following the floating of the currency
in 1994, relative exchange rate stability has been established since 1995.  This rate is freely
determined by the market (Interbank Foreign Exchange Market-MID).  The Central Bank may
intervene in this market with the sole aim of smoot hing any fluctuations in the Malagasy franc.  All
restrictions on exchange and on current external transactions have been abolished.  The opening offoreign currency accounts is authorized, as are foreign currency loans.
15. The free floating of the Malagasy currency enabled exports to grow and imports to be kept
under control, thereby reducing the external current account deficit.  In order to support exports, the
installation of industrial zones and free zones has been encouraged.  Air transport has also beenliberalized.
2. General trade policy objectives
16. Madagascar's new trade policy is oriented towards the implementation of the liberal policy
adopted by the Government.
17. In this context, the objectives are as follows:
- The establishment of healthy and fair competition;- consumer protection;
- the promotion of international trade with particular emphasis on export activities
("Made in Madagascar") through diversification of products and export markets;
- the exploitation of possibilities offered by regional and international organizations;
- the broadening of the platform for ongoing collaboration with the private sector;
and
- making commercial activities more professional.
18. In general, the chief objective of the trade policy of the Republic of Madagascar is to
contribute to poverty reduction:  to allow the commercial and private sectors to be the driving force
in economic growth.WT/TPR/G/80/Rev.1 Trade Policy Review
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B. SECTORAL TRADE POLICY OBJECTIVES
1. Agriculture
19. Given that the rural population accounts for 80 per cent of the total population, Madagascar's
economic revival depends initially on the development of the primary sector.  Taking this into
account, the Government has established the Rural Development Action Plan (PADR), the chief
objectives of which are as follows:
- To redefine and improve the efficiency of the institutions and players involved in
the implementation of agricultural policy;
- to identify the key infrastructures and other investments for which the Government
must be directly or indirectly responsible;  and
- to redefine and/or clarify the roles and responsibilities of all the players involved in
rural development.
20. The marketing periods for certain agricultural products for export are managed by the
Ministry of Trade in collaboration with the local authorities according to the location of markets in
rural areas, with a view to having quality products on the market.
2. Forestry
21. Forestry-based economic activity is aimed at:
- Meeting domestic household needs;  and
- supplying forestry products for the domestic and foreign markets.
22. To this end, one of the four main guidelines of Malagasy forestry policy is to enhance the
sector's economic performance, comprising the following objectives:
- Satisfying the growing local demand for better quality products;
- enhancing product value-added in the interests of the national economy;- exploiting a wider range of wood species;- recovering and making use of hitherto neglected by-products;- promoting non-wood products;
- standardizing products;
- regulating forestry exports;- strengthening processing structures;- improving marketing circuits;  andMadagascar WT/TPR/G/80/Rev.1
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- developing eco-tourism.
3. Tourism
23. Tourism is one of the most important sources of foreign exchange for the country.  Having
an environment that is rich in fauna and flora, Madagascar has all the necessary assets for
developing tourism.  In this sector, the Malagasy Government has set as its main objective the
sustainable development of high-quality tourism based on the following guiding principles:
- Contribution to the national strategy for poverty reduction by the creation of jobs
and activities that generate income;
- development of tourism with due regard for the environment, socio-cultural values
and national heritage;
- development of high quality tourism;- contribution, as far as possible, to the foreign trade balance through the promotion
of international tourism;  and
- encouragement of regional initiatives at the south-west Indian Ocean level.
4. Fisheries
24. Being an island, Madagascar is surrounded by sea, which is rich in fishery resources.
Currently, the main source of foreign currency in this area is shrimps.  This has led the Government
to develop different forms of fishing, namely trad itional, small-scale and industrial.  The Malagasy
Government has also set itself the following objectives:
- To optimize the economic and social impact of fisheries;
- to ensure sustainable development of the fisheries sector;- to rationalize the exploitation of fishery resources;  and
- to step up surveillance of Malagasy territorial waters.
25. Under this policy, the Government has adopted competitive, transparent and non-
discriminatory measures for granting and withdrawing shrimping licences.
26. The Ministry of Fisheries and Fishery Resources is implementing a fisheries control and
surveillance programme in collaboration with all the partners concerned.
5. Energy
27. The principal sources of energy in Madagascar are wood and coal.  The continuing use of
these, however, is a threat to the environment.  In order to provide energy for all the Malagasy
people and conserve the environment at the same time, the Government has fixed as overallobjectives in this sector the sustainable supply of high-quality energy at universally affordable
prices, as well as the gradual extension of  services to the whole of the population.
28. In this field, three fundamental principles underpin the action to be taken:WT/TPR/G/80/Rev.1 Trade Policy Review
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- To rationalize the conditions of supply, production, distribution and consumption of
energy with due regard for the long-term interests of the country;
- to respect fundamental environmental balances and encourage rational management
of rural districts in areas of forestry operations for energy use;  and
- to enable the rural and urban population to have access to a  modicum of energy
services.
6. Mining
29. Mining is a key sector in Madagascar's development strategy.  The  country has an
abundance of mining resources, including chromium, gold and precious stones.  The mining policy
in Madagascar is contained in the new Mining  Code and a law on large-scale investments will
shortly be enacted, establishing a more attractive tax regime for investors.  The general principles
governing this sector are liberalization and withdrawal of the State.
30. This policy, in line with the Government's economic reform programme and defining the
respective roles of the State and private sector, calls for investment by mining operators, while
clearly spelling out their rights and obligations.
7. Electricity
31. The overall objectives of government policy for the electricity sector are to ensure a
sustainable high-quality supply at reasonable prices as well as the gradual extension of services to
all.
32. In order to attain these objectives, the Government has undertaken a thorough reform of the
electricity sector.  This reform has the following strategic priorities:
- Liberalization and promotion of this sector, with the introduction of competition;
- transparent regulation of the sector, with special emphasis on pricing systems which
encourage efficiency and quality of the service;
- establishment of environmentally friendly standards for plant and services;- promotion and development of local energy sources, in particular renewable ones;
and
- decentralization of electricity infrastructure and services in rural areas with private
sector support.
33. This reform was embodied in Law No. 98-032 reforming the electricity sector in
Madagascar, which was enacted on 20 January 1999.  The Law contains provisions ensuring security
for private investments and allowing private operators to participate without discrimination under a
system of licensing or concessions issued by the State on the basis of competitive tendering or of
spontaneous bids.Madagascar WT/TPR/G/80/Rev.1
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8. Petroleum
34. The government has embarked on reform of the petroleum sector with a view to:
- Opening the sector up to private operators and creating a favourable framework for
a competitive environment;
- supporting basic infrastructural investment in order to increase the efficiency of
petroleum operations and attract private operators and investors;  and
- institutional capacity building for supervising and controlling the sector.
35. Law No. 99-010 governing downstream petroleum sector activities, enacted on
17 April 1999, embodies this reform.  The Office Malgache des Hyrocarbures  (Malagasy
Hydrocarbons Bureau) was set up, with responsibility in particular for supervising standards relating
to quality and plant as well as competition.
9. Telecommunications
36. Liberalization in this sector has favoured the advent of private mobile telephone operators,
producing an average growth rate in this sector of 11 per cent in 1998 and 1999.  As in the case of
electricity, spatial coverage of the networks remain s restricted only to the urban centres with great
economic potential.
37. The Malagasy Government has established a policy for liberalizing the telecommunications
sector and opening it up to local and foreign competition by adopting the following measures:
- Reform/restructuring of the sector;
- promotion of private initiatives by establishing the infrastructures necessary for
investment;  and
- increased public access to the telecommunication service.
38. The policy for development of the sector is the responsibility of the Ministry of Posts and
Telecommunications.
39. The Office Malgache d'Étude et de Régulation des Télécommunications  (OMERT) is
responsible for granting licences and authorizations for service providers and suppliers of terminals
and auxiliary services.
40. There is free investment in this field and all investors are treated equally.
10. Crafts
41. Madagascar has immense potential for the export of craft products, with an abundance of
raw materials of animal, vegetable and mineral origin, as well as recycled material.
42. The objectives of the craft sector are as follows:
- To increase the craft industry's contribution to GDP to 18 per cent;WT/TPR/G/80/Rev.1 Trade Policy Review
Page 10
- to encourage this area of activity to become part of the formal sector and increase
exports;
- to bring a professional dimension to the craft industry;  and- to set up professional associations.
43. Accordingly, the following actions have been undertaken:
- Setting up the Espace Promotion de l'Artisanat  (Craft Promotion Forum) with the
task of informing, guiding, supporting and assisting any operator and seeking to
register craftsmen in order to enhance their awareness and encourage them to moveout of the informal sector;
- setting up the Conseil régional de l'artisanat  (Regional Crafts Council) in each
provincial administrative centre and establishing the Conseil national de l'artisanat
(National Crafts Council);
- raising craftsmen's awareness with a view to their integration into professional
circuits;
- training craftsmen in specific fields in order to improve the quality of craft products;- facilitating electronic trading by Internet;- promoting craftsmen by giving support, advice and assistance and creating contacts
between craftsmen and national and international operators;  and
- setting up a pilot professional association in certain regions;- producing and distributing marketing aids such as brochures, catalogues, etc.;  and- revising the customs nomenclature.
11. Industry
44. The industrial sector unquestionably plays a key role in the national economy as a whole as
the engine of economic and social change, and it is considered to be one of the main growth sectors
as it generates both employment and income.
45. In view of Madagascar's potential and comparative advantages, the industrial sector's share
of GDP is targeted to reach 16 per cent in 2002 and 20 per cent in 2005.
46. In order to attain this objective, the industrial development strategy focuses on four goals:
- Strengthening the existing local industrial capacity in order to underpin growth and
diversification of production and exports;
- establishment of new infrastructure to attract investment;
- promotion of domestic and foreign private investment;  andMadagascar WT/TPR/G/80/Rev.1
Page 11
- development of cleaner industry.
47. The ongoing activities carried out by the Ministry of Industrialization and Crafts which are
to be pursued concern:
- Reform of the free zone regime;
- promotion of industrial zones and industrial buildings;
- introduction and implementation of Fr amework Law 99-021 of 19 August 1999 on
industrial pollution management and abatement policy;
- setting up and strengthening of the Espace Promotion des Investissements
(Investment Promotion Forum);
- creation of specialized training centres in the various industrial sectors;- strengthening of mechanisms for cooperation with the private sector;
- setting up of a programme for the restructuring and upgrading of export enterprises;
and
- promotion of partnerships and joint ventures.
12. Transport
48. The Malagasy Government has progressively withdrawn from this sector and is pursuing the
privatization of transport services.  It also envisages adopting policies calling for all the appropriate
institutional and regulatory modifications that will make it possible to:
- Give priority to rehabilitating transport that has a direct impact on the development
of economic and tourist activities and on rural development;
- rebalance intermodal distribution by promoting alternative means of transport;
- maintain freedom of pricing;- introduce organization and management mechanisms to support transport
infrastructures, while increasing the capacity for mobilizing local resources;  and
- develop a framework for partnership between the central government, regions,
beneficiary communities, the private sector and associations with regard to
investment and infrastructure management.
Road transport49. The State has adopted a road charter and will do everything possible to apply it.  It has also
set up a road maintenance fund (FER) and will involve the private sector in infrastructure
management.  In this field, Government measures will comprise:WT/TPR/G/80/Rev.1 Trade Policy Review
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- The adoption of a rural transport policy;  and
- the acceleration of the restoration or construction of roads for opening up remote
areas, thereby giving access to markets and helping to reduce the isolation of
individuals and communities.
Air transport
50. The State has set up Aviation Civile de Madagascar  (ACM), which is a regulatory body for
air transport.  Liberalization in this sector will be followed by the privatization of Air Madagascar.
51. The focus of Government action will be on rehabilitating, renewing and modernizing
existing infrastructure and maintaining secondary airports and meteorological stations.
Maritime transport
52. The Malagasy maritime transport companies have been privatized and the management of
secondary ports has been placed in the hands of private operators.  The rehabilitation andmodernization of existing infrastructure also form part of the State's priorities.  As a parallel
measure, the development of river transport is also envisaged.
Rail transport
53. In this field, the objective is to rehabilitate infrastructure in line with the priority investment
programme to be defined.  The State has already withdrawn from the sector and the franchising of
the sole Malagasy railway company, RNCFM, is under way.
C. 
GENERAL DESCRIPTION OF THE IMPORT AND EXPORT REGIME
54. In the context of implementation of the structural adjustment policy which the country has
been undertaking since the late 1980s, numerous measures have been adopted concerning foreign
trade:
- Dismantling import licensing systems and other non-tariff barriers;
- gradually eliminating tariff duties affecting intra-regional trade;- applying three non-zero rates of 5 per cent, 15 per cent, and 25 per cent, vis-à-vis
countries that are not members of the IO C and COMESA, with a weighted average
of 15 per cent;
- removing all restrictions affecting exports from Madagascar, with the exception of a
small negative list;  and
- eliminating all restrictions affecting trade in services.
1. Imports
55. The promulgation of Ordinance No. 88-015 of 1 September 1988 on foreign trade signalled
the beginning of a vast programme of economic reform for Madagascar.  With the introduction of
the Liberalized Import System (SILI) in 1992 and the issue of Decree No. 96-777 ofMadagascar WT/TPR/G/80/Rev.1
Page 13
3 September 1996 which completed the liberalization of imports in Madagascar, local operators are
no longer required to have special cards to be able to import goods.  The necessary action was also
taken to implement the Kyoto Convention so as to modernize, streamline and speed up customs
clearance procedures.  Licensing and prior authorizations have been abolished and importers are ableto obtain freely the foreign currency needed for conducting their operations.  The purchase and sale
of foreign currency are undertaken freely between  the operator and the local bank at a rate of
exchange negotiated between them.  The opening of foreign currency accounts is now also
authorized following the issue of Decree No. 95-082 of 24 February 1995 and there is no longer any
restrictive ceiling for those travelling abroad, and there is no longer any limit on the number of exitsper year.  However, a negative list still exists for reasons of health, safety and protection of the
environment.
2. Exports
56. The issue of Decree No. 95-346 of 9 May 1995 completed the liberalization of exports of
Malagasy products with the exception of a small list concerning products subject to priorauthorization with a view to rational management of the national heritage, or prohibited under
international conventions to which Madagascar is a party, such as CITES.
57. In addition, contrary to the situation before liberalization, export activities may be
undertaken by any natural or legal persons provided they respect the regulations in force.  Moreover,
export operations are exempted from duties and charges.
58. Finally, international transactions are negotiated freely between economic operators to
enable the latter to have wide-ranging freedom in their activities.
3. Trade in services
59. Air transport, financial services, consultancy work, tourist activities and telecommunications
have already been liberalized.  A law regulating the insurance sector has just been promulgated.
D. 
LEGAL AND REGULATORY TRADE POLICY FRAMEWORK
1. National laws and regulations governin g the implementation of trade policy
60. The Constitution is the supreme legal text, followed by laws, ordinances, decrees and orders.
The Constitutional Court rules on the constitutionality of trade legislation after the latter has been
examined in the Council of Ministers.
61. Trade policy is defined in the poverty reduction strategy paper (PRSP).
62. The President of the Republic has the power to negotiate and conclude international
agreements, which are ratified by the National Assembly.  He may delegate this power to a Minister
or to a member of the Executive.
63. The laws governing trade are:
- The import and export regulations (Decree No. 92-424);
- Law No. 97-024 of 1997 Instituting a National Regime for the Standardization and
Certification of Products, Goods and Services;  andWT/TPR/G/80/Rev.1 Trade Policy Review
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- the Law on Tourism.
64. Laws on competition and on consumer protection are currently being examined by the
Executive.
65. In addition to these laws, there are regulations concerning investments, the financial and
banking sector, customs tariffs, services and intellectual property, business transparency, trading
companies and arbitrage.
66. The enhanced security provided for commercial investments is reflected in the establishment
of a modernized, computerized Trade Tribunal to facilitate faster handling of cases.
67. The promulgation of Ordinance No. 88-005 concerning the banking and financial sector
marks the beginning of reforms in the area of pa yments.  The privatization of the two State banks,
the BFV and the BTM, has ended the State monopoly in this sector.  This has encouraged the arrivalof foreign banks such as UCB (Banque Commerciale Mauricienne), Crédit Lyonnais/BNI, Banque
Nationale de Paris/BMOI, Société Générale/BFV, Bank of Africa/BTM, BSM and SBM.  It should
be mentioned that Madagascar has joined the SW IFT network, an international network for the
transfer of funds and financial information, and the arrival of Western Union and the agreement
between the latter and the Caisse d'Epargne is bound to develop financial institutions in Madagascar,to which may be added the project for the development of financial institutions (PRODIF).  Law
No. 95-030 authorizes the establishment of offshore banks and the practice of leasing.  The Central
Bank has also been given a new, autonomous status.  A Banking and Financial Supervision
Commission (CSBF) has been set up with the aim of ensuring compliance with regulations and
competition in the financial sector.
68. Madagascar currently applies a floating exchange rate in accordance with Order
No. 2.972/95 of 13 June 1995.  The value of the Malagasy franc in relation to the differentcurrencies is determined freely according to supply and demand on the Interbank Foreign Exchange
Market (MID), in which the key players are the primary banks and the major companies.  There are
also approved foreign exchange offices.  Capital inflows and current transactions have also been
liberalized.
69. The Investment Code has been abolished and replaced with the General Taxation Code.
Only investments in the context of the free zone currently require prior authorizations.  At the
Ministry for the Development of the Private Sector and Privatization, there is a business
development facilitation centre ( Centre de Facilitation de Création d'Entreprise  - CFCE), which
takes care of formalities surrounding the creation and registration of companies.  Its aim is to reduce
the processing time.
70. Foreign investments are no longer subject to regulatory restriction.  The law no longer
applies a share purchase ceiling for local or foreign investments.  Foreign and national investments
are subject to the same terms and conditions.
71. Exit visas have already been abolished for nation als and foreign residents, and conditions for
obtaining a residence visa and work permit have been eased for foreigners.  It is currently possible toobtain a temporary visa at Ivato airport for a single entry valid for 7 to 30 days.  Short-stay and
multiple-entry visas may be obtained from Malagasy embassies and consulates abroad.  As regards
residence permits and work permits, the length of time taken to process each case has been reduced
to approximately two weeks and businessmen are eligible for preferential treatment.  The Malagasy
Government  is, however, prepared to ratify  the COMESA Protocol on the free movement of
persons.Madagascar WT/TPR/G/80/Rev.1
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2. Formulation and review of trade policies
72. The Ministry of Trade and Consumer Affairs is responsible for formulating Madagascar's
trade policy and implementing it in cooperation with other departments such as the Ministries of
Finance and the Economy, Budget and Developmen t of the Autonomous Provinces, Industrialization
and Crafts, Industry, Energy and Mining, Agriculture , Private Sector Development and Privatization,
Transport and Meteorology, Posts and Telecommunications, Tourism, Justice, Livestock Farming,
Fisheries, the Central Bank and the Technical Secretariat for Adjustment.
73. The private sector in Madagascar is widely associated with the elaboration and application
of trade policy via platforms for cooperation through the Reflection Committee on Competitiveness(CRC), representing major professional groupings, as well as professional associations.
74. The Ministry of Trade and Consumer Affairs, which regulates foreign trade, is responsible
for handling questions connected with the WTO and other multilateral trade questions.
75. Madagascar's trade policy is geared towards the implementation of commitments made
pursuant to WTO Agreements.
76. In this context, the Malagasy authorities end eavour to ensure conformity with the various
WTO agreements.
3. Multilateral, regional and bilateral trade agreements
77. The Republic of Madagascar, having opted for a liberal economy, has devoted itself to
creating the necessary conditions for its harmonious integration into the global economy by thediversification of its trade relations.  Hence, multilateral, regional and bilateral agreements have been
concluded.
Multilateral agreements
78. Madagascar acceded to the General Agreement on Tariffs and Trade (GATT) on
30 September 1963.
79. By signing the Final Act of the Uruguay Round and the Marrakesh Agreement Establishing
the World Trade Organization (WTO) on 15 April 1994, Madagascar became an original Member on17 November 1995.
80. Madagascar enjoys the advantages granted to developing countries for the implementation
of a number of WTO commitments.  However, it is encountering difficulties in implementing the
WTO Agreements and decisions because of a lack of institutional and human capacity.
81. Madagascar grants MFN treatment at least to all its trading partners.  The aim of the
Malagasy authorities is to implement all obligations arising from the commitments made at the
multilateral level by drawing up appropriate laws and regulations.
82. Madagascar is a member of the United Nations.WT/TPR/G/80/Rev.1 Trade Policy Review
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Regional agreements
83. Madagascar belongs to three regional groups:  the Common Market for Eastern and
Southern Africa (COMESA), the Indian Ocean Co mmission (IOC) and the ACP-EU Partnership
Agreement.
84. Madagascar's regional cooperation policy follows the recommendations of the Cross-Border
Initiative (CBI), now the Regional Integration Facilitation Forum (RIFF), designed to facilitate
regional integration in Africa.
(a) COMESA
85. The aim of this Organization is to:
- Promote cooperation and development of its member countries in all areas of
economic activity;  and
- strengthen the process of economic integration of the region.
86. The members have adopted a programme for the elimination of tariffs, which has been
applicable in nine (9) countries, including Madagascar, since October 2000.
(b) IOC
87. The IOC was set up to promote economic, social, cultural and other forms of cooperation
between the five islands of the Indian Ocean, namely Madagascar, Comoros, Mauritius, Réunion and
the Seychelles.
88. In the area of trade, the implementation of the Integrated Regional Programme for the
Development of Exchanges (PRIDE) since 1995 is ai med at the development of inter-island trade by
stimulating the private sector through the removal of barriers to trade.
(c) ACP-EC Partnership Agreement
89. Madagascar is a signatory to the Lomé C onvention, which became the ACP-EU Partnership
Agreement in February 2000.
90. This Agreement was concluded with a view to promoting and accelerating the economic,
cultural and social development of the ACP States.  Its main objective is poverty reduction.
91. Products originating from ACP countries will continue to qualify for tariff preferences on
the European Market up to 2007.
Bilateral agreements
92. Madagascar has concluded trade and cooperation agreements at the bilateral level with a
view to promoting trade relations on the ba sis of Most-Favoured-Nation (MFN) treatment.
93. The period from 1961 to 1985 was marked by the proliferation of agreements concluded
between Madagascar and its partner countries.  A total of 39 agreements were signed, namely:
- One between Madagascar and the Gulf States;Madagascar WT/TPR/G/80/Rev.1
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- two between Madagascar and members of the IOC;
- three between Madagascar and Asian countries;- six between Madagascar and African countries;  and- 27 between Madagascar and European countries.
Trade agreement currently being concluded:
- Algeria – Madagascar.Trade agreements under negotiation:- Mauritius - Madagascar;- India - Madagascar;
- Iran - Madagascar;
- Russia - Madagascar;- Turkey - Madagascar.
Memorandum of Understanding between Madagascar and Namibia signed in October 2000.Other agreements94. Madagascar is a beneficiary country of the Generalized System of Preferences (GSP).  It
also signed the Agreement setting up the Common Fund for Commodities (CFC), Africa Bill.
E. 
IMPLEMENTATION OF TRADE POLICY
1. Trade policy measures
(a) Customs tariff structure
95. In order to meet the requirements of a liberal economy, Madagascar has been reforming the
tariff system since 1988 in the context of the Structural Adjustment Programme.
96. The 1998 tariff comprised some 69 rates of duty;  the country has now regrouped these into
four categories:  50 per cent, 15 per cent, 25 per cent and 30 per cent with a weighted average of
17 per cent.
97. In its Letter of Intent sent to the IMF in June 1999, the Malagasy Government announced its
wish, in the context of the 2000 budget, to reduce the number of rates of customs duty to three in
conformity with the RIFF objectives.
98. The maximum external tariff rate (customs duty + import tax) has also been progressively
reduced:  from 80 per cent in 1988 to 30 per cent since 1997.WT/TPR/G/80/Rev.1 Trade Policy Review
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99. An excise duty is applicable to imports.
100. It should be noted that the COMESA Common Ex ternal Tariff will be instituted as of 2004.
(b) Customs valuation
101. The Republic of Madagascar currently applies the GATT Customs Valuation Code.
(c) Preshipment inspection
102. Madagascar had a preshipment inspection contract with the Société Générale de
Surveillance (SGS) for all imported goods, from 1983 to 1990, and until February 2001 with Bivac
Veritas.
2. Trade liberalization programme
103. Since 1988, Madagascar has been implementing a programme of progressive liberalization
of trade.
104. Import and export licences have been abolished.
105. Consultancy work, tourism, financial services, air transport and telecommunications have all
been liberalized.
106. In the context of its structural adjustment programme, Madagascar has undertaken, on a
reciprocal basis, to observe the timetable for tariff reduction set out in the 1996 Law on Finance  vis-
à-vis  the IOC and COMESA countries.
107. To this end, Madagascar and Mauritius have been applying the zero per cent rate to their
trade in originating goods in the context of the IOC since 1 January 2000.
108. As regards COMESA, nine countries including Madagascar have joined the free-trade area
since 31 October 2000.  
III. ECONOMIC REFORM PROGRAMME
109. For the next three years, the Government's programme will focus on reducing poverty,
i.e. increasing the standard of living of the popu lation.  Improving the standard of living, however,
depends on development which, in its turn, is the result of a high rate of sustainable growth.  In order
to achieve this, the Government will adopt a strategy based on stimulating supply in a stablemacroeconomic context.
110. The low rate of growth recorded to date is disproportionate to the country's resources.  In
order to stimulate supply, the Government should mobilize not only all economic players but also all
available resources in sectors such as tourism, mining, the manufacturing industry, fisheries and
agriculture, and this must be done in a rational manner.
111. The medium-term objective is a growth rate of 15 per cent per year for tourism, over 5 per
cent per year for mining, 9 per cent per year for manufacturing industry and 5 per cent for
agriculture.Madagascar WT/TPR/G/80/Rev.1
Page 19
112. In order to achieve these objectives, a substantial amount of investment is needed.  The
Government must therefore create an environment which will stimulate foreign direct investment,
taking account of the lower level of domestic savings.
113. As regards the macroeconomic context, improvement of public deficits, control of inflation
and the pursuit of a cautious monetary policy are the main focuses of the reform.
IV. IMPORT AND EXPORT TRENDS
A. IMPORTS
114. It must be recognized that Madagascar's imports of various products have increased greatly
since the liberalization of trading activities.
Imports by product group (quantity)
(net tonnes)
1996 1997 1998 1999Product groupQuantity % Quantity % Quantity % Quantity %
Raw materials 169,915 14.5 209,105 19.2 303,528 24.9 239,955 21.5
Energy 834,352 71.1 668,652 61.4 676,690 55.6 628,626 56.3
Capital goods 26,344 2.2 32,190 3.0 33,286 2.7 35,229 3.2
Foodstuffs 111,807 9.5 126,895 11.7 161,086 13.2 169,854 15.2
Consumer goods 31,260 2.7 51,886 4.8 42,925 3.5 42,093 3.8
TOTAL 1,173,678 100 1,088,727 100 1,217,516 100 1,115,757 100
Source: Customs declarations.
Imports by product group (c.i.f. value)
(millions of FMG)
1996 1997 1998 1999Product groupQuantity % Quantity % Quantity % Quantity %
Raw materials 491,425.3 20.1 701,304.8 24.1 780,779.9 25.7 600,996.7 19.5
Energy 650,826.1 26.7 600,750.3 20.6 558,309.5 18.3 734,969.4 23.8
Capital goods 663,899.4 27.2 743,621.7 25.6 790,386.3 26.0 834,883.4 27.1
Foodstuffs 195,464.5 8.0 244,695.1 8.4 260,284.9 8.6 311,040.4 10.1
Consumer goods 438,390.1 18.0 619,551.8 21.3 653,796.7 21.5 600,874.8 19.5
TOTAL 4,440,005.4 100 2,909,923.6 100 3,043,557.2 100 3,082,764.7 100
Source: Customs declarations.
B. EXPORTS
115. Exports of traditional export products (coffee, vanilla, cloves, cocoa) have fallen:
- in 1997:  -9.16 per cent;
- in 1998:  +10.77 per cent;
- in 1999:  -11.6 per cent.
116. Exports of non-traditional products (meat, sugar, cotton fabrics, shrimps) have increased:
- In 1997:  22 per cent;
- in 1998:  27.6 per cent;  and
- in 1999:  26.5 per cent.WT/TPR/G/80/Rev.1 Trade Policy Review
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117. The growth in exports of fish products (shrimps, lobsters), which represent on average
16 per cent of the total value of exports, should be emphasized.
Exports by product group (quantity)
(net tonnes)
1996 1997 1998 1999Product groupQuantity % Quantity % Quantity % Quantity %
Raw materials 229,181 59.1 213,224 61.5 266,326 63.7 133,687 60.2
Energy 57,284 14.8 48,023 13.8 75,847 18,.1 16,601 7.5
Capital goods 1,636 0.4 1,548 0.4 1,525 0.4 887 0.4
Foodstuffs 94,837 24.4 79,707 23.0 68,044 16.3 63,239 28.5
Consumer goods 4,949 1.3 4,480 1.3 6,228 1.5 7,644 3.4
TOTAL 387,887 100 346,983 100 417,969 100 222,058 100
Source: Customs declarations.
Exports by product group (f.o.b. value)
(millions of FMG)
1996 1997 1998 1999Product groupQuantity % Quantity % Quantity % Quantity %
Raw materials 371,009.0 30.5 327,096.1 28.7 309,541.5 24.3 455.,270.7 24.5
Energy 39,448.0 3.2 40,881.6 3.6 53,802.9 4.2 33,147.7 1.8
Capital goods 13,961.0 1.1 15,353.6 1.3 103,765.5 8.1 36,184.5 1.9
Foodstuffs 677,123.0 55.7 485,667.4 42.6 534,079.8 41.9 945,114.6 50.8
Consumer goods 114,161.0 9.4 270,067.0 23.7 272,577.8 21.4 390,547.7 21.0
TOTAL 1,215,702.0 100 1,139,065.8 100 1,273,767.5 100 1,860,265.2 100
Source: Customs declarations.
C. TERMS OF TRADE
118. From 1993 to 1995, there was an improvement in the terms of trade, from 19.7 per cent to
10.4 per cent.
119. Since 1996 the terms of trade have deteriorated, which can be explained by the fall in the
prices of export products in relation to the increase in the price of imports.
D. TRADE BALANCE
120. The evolution of foreign trade between 1991 and 1997 shows an increasing deficit in the
trade balance (from –134.6 to –211.5 billion SDR).
V. CONCLUSION
121. Since 1980 Madagascar has been undertaking a vast programme of economic reform with
the gradual introduction of a market economy.  This new direction gives a dominant role to private
sector promotion.
122. Accordingly, the reshaping of trade policy is focusing on the following points:
- Withdrawal of the State from economic activity;Madagascar WT/TPR/G/80/Rev.1
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- the introduction of free pricing;
- liberalization of trade;
- adaptation of Madagascar's laws and regulations to the new economic environment;
and
- promotion of the private sector.
123. The rule of law, good governance and transparent, predictable and non-discriminatory
institutional structures have been established.
124. The Malagasy Government has shown that it is determined to open up its economy, by fully
participating in initiatives and agreements on the promotion of multilateral, regional and bilateral
trade, in order to enjoy the resulting advantages.  The Malagasy authorities have continued theircooperation and regional integration efforts in the context of poverty reduction strategies.
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