WT/TPR/S/35 Trade Policies Review
Page 32
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) Overview
1. Despite rapid economic growth during the last two decades and some progress towards
diversification, Botswana's economic base remains narrow, as indicated in Chapter I, with one third of
GDP and 80% of export earnings coming from minerals.  The Government, considering that a slow-
down in mineral-led growth is inevitable, has intr oduced policies aimed at diversifying the economic
structure;  this change in policy emphasis is set out in the current development plan (NDP8) and the
draft New Industrial Development Policy.
2. On the international trade side, perhaps the most fundamental change has been the gradual
opening of the economy of Botswana and the Southern  African region to the pressures of international
competition.  The main reasons for this growing exposure stems from Botswana's participation in
regional and multilateral trade negotiations, including the renegotiation of the SACU Treaty,
negotiations in SADC, and the implementation by the Southern African Customs Union of the WTO
Agreements.
3. Increased competition resulting from lower trade barriers has been reinforced by more
efficient transportation which enables foreign goods to reach southern African markets more cheaply
and thus increase import competition.  The combined effect of tariff reductions, lower transportation
costs and productivity gains by foreign suppliers makes it essential that domestic policy be directed
towards high productivity growth and increased competitiveness.
(2) Measures Directly Affecting Imports
4. Most imports into Botswana from outside the SACU area are subject to the common external
tariff, which is determined by the South African authorities largely in the light of the Republic's
industrial policies.1  However, most imports into Botswana are subject to preferential trade
arrangements; imports from other SACU partners enter duty free, while the free-trade agreement withZimbabwe also gives goods which meet local-content requirements duty-free access.  An additional
specific duty is imposed on most luxury items.
(i) Documentation and customs clearance
5. Goods imported commercially from outside the SACU area must be declared on an import
bill of entry while those from the other SACU member countries have to be declared on a transfertraffic form (Form CCA 1).  Personal importations have to be declared on a baggage declaration form.
It takes approximately 10-15 minutes to clear a passenger and 10-45 minutes to clear commercial
goods.  Goods entering the SACU area may be decl ared at the first port of entry into the union, or
may be removed in bond from the port of entry to a bonded warehouse in Botswana, where they are
cleared for home consumption.
6. For goods in transit through Botswana, transit forms must be completed at the port of entry.
Copies of these must be subsequently returned to the port of entry by the port of exit to confirm that
the goods have actually left the country.
                                                     
1See WTO (1998), particularly Chapter III.Botswana WT/TPR/S/35
Page 33
7. Certain goods, such as domestic pets and animal s, plants, firearms, animal products and boats,
require import permits and/or health certificates.  Some agricultural products are also subject toimport restrictions (Chapter IV).
8. An importer who is not satisfied with a customs decision can appeal in Court against such a
decision.  It takes 90 days to bring an appeal into action from the date of the decision to seize the
goods. Other appeals may take up to one year.  Any importer also has the right of appeal to the
Minister of Finance and Development Planning ag ainst a penalty fine imposed on him/her provided
the fine exceeds P 1,000 and the right is exercised within three months from the date of imposition of
that fine.  Over the past five years, there have been only four cases of appeal against Customs
decisions, two of which have been overturned.
(ii) Tariffs
9. Botswana does not accord most-favoured-nation (MFN) tariff treatment to all countries.
Countries that do not qualify ar e those that are not WTO Members.2   However, since the SACU
common external tariff does not provide for differential MFN and non-MFN rates, in practice thesame tariffs are applied to imports from thes e sources as from other non-SACU suppliers.
10. As a member of SACU, Botswana applies th e Common External Tariff for the SACU area.
Table III.1, based on information supplied by South Africa, summarizes average nominal levels of
MFN tariffs by ISIC industry group as at mid-1997.  As noted in the report on South Africa, progress
has been made in recent years in simplifying the tariff structure;  nearly three fourths of all tariff lines(at the HS eight-digit level) bear ad valorem  rates.  More than half of these (44% of all lines) are duty
free, with other ad valorem  rates ranging up to 57.5%.  However, mixed duties apply to 72 lines
(including certain fishery products, prepared foods, footwear and preparations of agricultural
products);  specific rates cover 227 lines in the areas of agricultural, food, and petroleum products.
Formula or compound rates now apply to some 34 lines at the eight-digit level.
3  98% of tariff lines
(excluding lines bearing petroleum products) in the common external tariff are bound under the WTO
Agreement.
11. Customs and excise duties are set by South Africa and are automatically applied throughout
SACU.  The tariff structure enforced thus does not reflect the specific circumstances of Botswana's
economy, but rather South Africa's production struct ures and priorities.  Thus, imports competing
directly with South African products tend to be relatively heavily taxed in Botswana, while products
imported as inputs into South Africa may be taxed relatively lightly.  Botswana has the right, under
the SACU Agreement,  to levy additional duties on imports (including those from South Africa) to
protect its infant industries.  However, this right has only twice been exercised, for a brewery in the
1970s and a soap factory in the 1980s.  Both companies failed, and had to be rescued, because they
were unable to compete with imports even with the cover of the protective tariff.  As a consequence,
consumers paid the higher prices imposed by the tariffs;  the revenue went into the SACU commonrevenue pool, and the Botswana Government received back only a small proportion of the additional
revenue under SACU revenue sharing rules.
                                                     
2Those are also the countries that do not grant MFN treatment to Botswana.
3WTO (1998), Table III.2WT/TPR/S/35 Trade Policies Review
Page 34
Table III.1
Tariff escalation and tariff ranges, 1997
Tariff 1997
ISIC Product and processingNumber
of
linesSimple
averageRange
(%)Standard
deviationCoefficient of
variation
All tariffs 7,814 15.1 0-72 17.8 1.18
1 Agriculture
 - raw materials 279 5.6  0-35 8.9 1.59
2 Mining and quarrying
 - raw materials 106 1.4  0-18 3.4 2.47
311 Food products
 - 1st stage of processing 65 12.4  0-30 11.8 0.95
 - semi-processed 47 10.9   0-50 12.0 1.10
 - fully processed 283 15.6  0-55 13.6 0.88
312 Food manufacturing
 - 1st stage of processing 24 4.5  0-22 9.0 1.99
 - semi-processed 2 0.0  0-0 0.0 ..
 - fully processed 54 10.6  0-30 10.3 0.97
313 Beverages
314 Tobacco manufactures
 - fully processed 9 35.6  0-45 16.5 0.46
321 Textiles
 - 1st stage of processing 48 5.8  0-60 13.3 2.29
 - semi-processed 1,569 32.7  0-39 8.3 0.25
 - fully processed 347 41.7  0-72 26.2 0.63
322 Clothing
 - fully processed 163 59.0  0-72 23.0 0.39
323 Leather products
 - 1st stage of processing 1 0.0  0-0 .. ..
 - semi-processed 28 7.4  0-15 7.1 0.96
 - fully processed 20 26.3  0-30 8.3 0.31
324 Footwear
 - fully processed 48 24.9  0-45 15.2 0.61
331 Wood products
 - 1st stage of processing 5 0.0  0-0 0.0 ..
 - semi-processed 34 6.3  0-18 7.3 1.17
 - fully processed 33 15.3  0-30 10.6 0.69
332 Furniture except metal
 - fully processed 34 20.8  0-24 3.9 0.19
341 Paper products
 - 1st stage of processing 19 0.0  0-0 0.0 ..
 - semi-processed 81 8.4  0-22 5.1 0.61
 - fully processed 38 9.5  0-22 8.5 0.90
342 Printing
 - fully processed 43 7.9  0-20 8.3 1.04
351 Industrial chemicals
 - 1st stage of processing 53 4.1  0-19 6.4 1.55
 - semi-processed 855 4.8  0-36 8.0 1.68
 - fully processed 24 6.3  0-17 6.7  1.06
352 Other chemicals
 - 1st stage of processing 5 4.0  0-10 5.5 1.37
 - semi-processed 83 4.4  0-25 6.7 1.53
 - fully processed 223  7.1  0-35 9.3 1.32
Table III.1 (cont'd)Botswana WT/TPR/S/35
Page 35
Tariff 1997
ISIC Product and processingNumber
of
linesSimple
averageRange
(%)Standard
deviationCoefficient of
variation
353 Petroleum refineries
 - 1st stage of processing 7 4.3  0-15 7.3 1.71
 - semi-processed 6 7.3  0-14 5.9 0.80
 - fully processed 20 5.3  0-20 7.3 1.38
354 Petroleum and coal products
 - 1st stage of processing 7 3.6  -10 4.8 1.33
 - semi-processed 8 8.3 0-20 9.9 1.21
 - fully processed 2 17.0 17-17 0.0 0.00
355 Rubber products
 - 1st stage of processing 2 0.0 0-0 0.0 ..
 - semi-processed 32 13.0 0-19 6.1 0.47
 - fully processed 79 17.2 0-45 13.7 0.80
356 Plastic products
 - fully processed 41 12.3 0-28 9.4 0.77
361 Pottery and china
 - fully processed 15 11.3  0-30 13.0 1.15
362 Glass and products
 - semi-processed 26 5.0  0-17 5.7 1.15
 - fully processed 81 9.0  0-20 6.7 0.75
369 Non-metallic mineral products
 - 1st stage of processing 2 0.0  0-0 0.0 ..
 - semi-processed 13 0.3  0-4 1.1 3.61
 - fully processed 76 5.4  0-23 8.3 1.55
371 Iron and steel products
 - 1st stage of processing 9 0.0  0-0 0.0 ..
 - semi-processed 210 4.5  0-15 3.9 0.87
372 Non-ferrous metal
 - 1st stage of processing 7 0.0  0-0 0.0 ..
 - semi-processed 197 3.2  0-15 5.3 1.68
 - fully processed 1 0.0  0-0  .. ..
381 Metal products
 - semi-processed 6 1.7  0-10 4.1 2.45
 - fully processed 327 9.1  0-30 9.1 1.00
382 Non-electrical machinery
 - semi-processed 1 10.0  10-10 .. ..
 - fully processed 646 3.7  0-30 7.3 1.99
383 Electrical machinery
 - fully processed 408 6.6  0-50 9.2 1.39
384 Transport equipment
 - fully processed 243 12.3  0-57.5 16.6 1.34
385 Professional and scientific equipment
 - fully processed 229 1.2  0-32 5.4 4.33
390 Other manufactured products
 - 1st stage of processing 17 3.5  0-20 7.9 2.23
 - semi-processed 4 5.5  0-12 6.4 1.16
 - fully processed 218 8.0  0-45 11.2 1.39
400 Electrical energy
 - fully processed 1 0.0  0-0 .. ..
.. Not available.
Source: WTO Secretariat estimates.WT/TPR/S/35 Trade Policies Review
Page 36
12. Under the Tariff Rationalisation Process (TRP), South Africa's tariff is to be further
simplified:  the number of lines and tiers, and tariff peaks are to be reduced.  In general, imports ofproducts that are not manufactured and do not have a "suitable substitute" in the SACU area are to be
duty free.  Formula and specific duties are to be converted into ad valorem   rates and ordinary
customs duties will not be used where anti-dumping and countervailing actions are justified.
Insignificant specific duties and ad valorem  rates of up to 3% are generally to be reduced to zero.  In
general, ad valorem  rates of customs duty of 30% on final products, 20% on intermediate goods and
10% on primary products are regarded as levels that are not to be exceeded.
4  Therefore, following the
reform, tariff escalation will remain pronounced.  In addition, the agricultural sector, which has been
afforded protection through import control, is to be protected "primarily" by means of customs duties.
13. Because the common external tariff structure for SACU applies to all member countries, there
are few differences between Botswana and othe r SACU members, including South Africa, with
respect to trade measures such as tariffication under the WTO Agreement on Agriculture, customs
valuation, local-content requirements and rules of origin.  Botswana's WTO tariff schedule provides
for bound rates of 20% on dairy products, wheat, maize, rice, groundnuts and sunflower seeds.Uruguay Round tariff concessions for items specifically included in the Botswana schedule are to be
phased-in over a ten-year period ending in 2004 as against 2000 for other SACU members.
14. The CET contains provision for duty-free entry of certain goods which are normally subject
to tariffs, e.g. raw materials or components required for use in manufacturing, processing, finishing or
packaging goods produced for export.
5  Machinery, plant and equipment are generally either duty free
or attract very low duties.  For certain industries, there are also some industrial rebates on a limited
range of raw materials.
15. Goods provided in the context of foreign aid to the Botswana Government, or as part of
technical assistance programmes, are exempted from duties.  There are also provisions for dutyrebates on goods imported for use by the Government.
16. Registration for such rebates and control of eligible goods is the responsibility of the Customs
Department.  A bond guarantee must be lodged by the importer before registration can be effected tocover the duties on rebated goods.  It takes at least one month for refunds of duties, drawbacks and
taxes to be paid to the exporter.
17. According to the Department of Customs and Excise, tariff evasion in Botswana has recently
become an increasing problem.  Evasion takes several forms, the most common of which include:
misrepresentation of goods and therefore mis-classification;  undervaluation of goods;  diversion of
commodities entered under duty rebate to unauthorized purposes, for example, of imported goods foruse in manufacturing exports into the local market  without payment of the relevant duties;  and
smuggling goods into the country.  The goods most commonly smuggled into the Common Customs
                                                     
4Government of South Africa (1996).
5WTO (1998), Chapter III.Botswana WT/TPR/S/35
Page 37
Area are electronic goods, such as radios, television sets, calculators, etc.;  clothing in general;
bedding articles such as duvets, bed-sheets, etc.;  and food products.6
(iii) Excise duties
18. Under the SACU Agreement, common excise duti es are also generally applied throughout the
customs union.  Provision exists for some deviations from common levels subject to agreement
among the members;  however, differences in excise rates would likely give rise to significant levels
of smuggling.
19. Specific excise duties are levied on sorghum malt for making beverages, beverages and
spirits;  tobacco;  mineral products;  and chemical products.  Such duties are generally applied equally
to domestic and imported goods;  however, some duties on imported beverages are higher than on
similar products locally produced.7
20. Ad valorem  excise duties are levied on a range of manufactures, both imported and local,
mostly consumer goods.8  Most are charged at 15% of the final sales price before sales tax or VAT; a
few are lower, and a formula rate with a maximum of 20% is applied to some categories of motorvehicles.
(a) Seasonal tax
21. At present, Botswana does not have any seasonal import taxes.
(b) Sales tax
22. Botswana levies a 10% sales tax on selected goods and services excluding basic foodstuffs.
The sales tax, levied for revenue purposes and not as a protective mechanism, is applicable to both
domestically produced goods and imports, including from SACU.  Liability for the tax, collected by
the Department of Customs and Excise, lies with the manufacturer or importer.  Coverage of the sales
tax has been extended to include accommodation provided by hotels and lodges, and service sector
industries such as dry-cleaners, hair and beauty salons, newspapers and periodicals.
23. There is no value-added tax in Botswana.
(iv) Anti-dumping, countervailing and safeguard measures
24. By virtue of its membership of SACU, Botswa na is obliged to apply anti-dumping duties and
measures, as well as safeguard measures, imposed by South Africa.  Table III.2, notes all anti-
dumping actions currently in force in the SACU area.  These are mainly relevant to items produced inSouth Africa;  however, consumers in Botswana, which does not produce the majority of the items
concerned, are also subject to these measures.  Similarly, import controls imposed in South Africa for
safeguard purposes also apply to imports to Botswana (Table III.3).  No countervailing actions have
so far been taken.
                                                     
6Although there is no sales tax on such products, at certain periods these goods are restricted and
require import permits.
7WTO (1998), Chapter III.
8WTO (1998), Table III.6.WT/TPR/S/35 Trade Policies Review
Page 38
(v) Import permits
25. Import permits for goods entering Botswana directly from outside SACU are obtainable from
the Department of Commerce and Consumer Affa irs in the Ministry of Commerce and Industry.
Import permits are not required for goods produced in Malawi or Zimbabwe, with the exception of
certain agricultural products.  Permits are not transferable, and are usually granted on request;
Botswana's liberal foreign exchange regulations mean little difficulty in obtaining sufficient foreign
currency to cover transactions.  The local importer must only prove that the goods have been receivedin Botswana
9 and provide evidence of the amount due (the supplier's invoice).
Table III.2
Anti-dumping duty actions, as at 31 December 1996
ProductCountry/customs
territoryInitiationa
date ResultbBasis of
determinationc
Domestic clothes dryers Australia 18 Oct. 1996 (R) D HM
Titanium dioxide 2 July 1993 D CV
N-1,3
dimethylbutyl-N-paraphelenediamineBelgium 28 July 1995 D HM
Suspension PVC Brazil 15 Mar. 1996 P HM
Uncoated wood-free paper 12 July 1996 U
Copper tubing Bulgaria 6 Sep. 1996 U
Calcium propionate acetate Canada 9 Oct. 1992 D
Aluminium hollow-ware China, P.R. 15 Sep. 1995 D TM (Zimbabwe)
Indigo blue discharge material 14 June 1996 D Ghana
PVC pilchers 15 Mar. 1996 D TM
PTFE thread sealing tape 12 Jan. 1996 D TM (Italy)
Towels and face cloths 28 Feb. 1992 D TM
Men's, women's, boys' and girls' underwear 18 Oct. 1996 (R) D TM (Mauritius)
T-shirts, singlets, vests of cotton 11 Oct. 1991 D TM (Mauritius)
Hoes not exceeding 320 mm 25 Oct. 1991 D TM
Acetaminophenol 31 Oct. 1992 D TM
Spades, rakes, forks, picks 26 Mar. 1993 D TM
Aluminium hollow-ware Egypt 27 Oct. 1995 P HM
PVC film and sheet France 9 Sep. 1994 D HM
Suspension PVC 15 Mar. 1996 P HM
Circuit breakers 31 May 1996 U
N-1,3
dimethylbutyl-N-paraphelenediamineGermany 28 July 1995 Rej. HM
Suspension PVC 15 Mar. 1996 Rej. HM
Carbonless copy paper 5 Mar. 1993 D HM
Indigo blue discharge material Hong Kong 14 June 1996 D TM (Ghana)
Aluminium hollow-ware 15 Sep. 1995 D TM (Zimbabwe)
PTFE thread sealing tape 12 Jan. 1996 D TM (Italy)
Acetaminophenol 31 Oct. 1992 D TM
Spades, rakes, forks, picks 26 Mar. 1993 D TM
Cast aluminium, seats and tables Hungary 15 Apr. 1989 D
Garden picks India 14 July 1995 D HM
Hydrogen peroxide 22 Sep. 1995 P HM
Table III.2 (cont'd)
                                                     
9The exchange control portion of the custom s entry certificate is sufficient evidence.Botswana WT/TPR/S/35
Page 39
ProductCountry/customs
territoryInitiationa
date ResultbBasis of
determinationc
Agriculture hoe heads 22 Mar. 1996 Rej. HM
Porcelain line insulators 31 May 1996 Rej. CV
Amoxycillin and ampicillin 18 Oct. 1996 U CV
Acetaminophenol 31 Oct. 1992 D
Uncoated woodfree paper Indonesia 12 July 1996 U
Caustic soda Iran 15 Mar. 1996 Rej.
Circuit breakers Italy 31 May 1996 P HM
Hydrogen peroxide 24 Mar. 1995 D HM
Ceramic tiles 25 Oct. 1996 U
Circuit breakers Japan 31 May 1996 P HM/CV
PVC film and sheet Chinese Taipei 9 Sep. 1994 D HM
Hydrogen peroxide 24 Mar. 1995 D HM
PTFE thread sealing tape 8 Mar. 1996 Rej. HM
Calcium propionate Netherlands 7 June 1996 (R) D HM
Calcium acetate 26 July 1996 (R) D
Uncoated woodfree paper Poland 12 July 1996 U
Acrylic fibre Portugal 5 July 1996 U
Caustic soda Saudi Arabia 15 Mar. 1996 Rej.
Acetaminophenol Singapore 31 Oct. 1992 D TM (India)
Transhipment
Flat glass 15 Jan. 1993 D HM
N-1,3
dimethylbutyl-N-paraphelenediamineSpain 28 July 1995 Rej. HM
Circuit breakers 31 May 1996 U
Circuit breakers Switzerland 31 May 1996 U
Uncoated woodfree paper Sweden 12 July 1996 U
Flat glass Thailand 15 Jan. 1993 D HM
Copper tubing United Kingdom 6 Sep. 1996 U
Carbonless copy paper 5 Mar. 1993 D HM
Suspension PVC United States 15 Mar. 1996 P HM
Caustic soda 15 Mar. 1996 Rej.
Aldicarb 24 May 1996 P HM
Roller bearings 21 Aug. 1992 D HM
Polyethylene battery separator material 8 Nov. 1996 U
Calcium propionate, acetate 9 Oct. 1992 D HM
Copper tubing Yugoslavia 6 Sep. 1996 U
Aluminium hollow-ware Zimbabwe 15 Sep. 1995 P HM
a The symbol (R) is used if an investigation is opened in the context of an existing anti-dumping measure, or after an allegatio n of
a breach of an undertaking.
b D - final duty;  P - provisional duty;  U - Preliminary determination stage;  Rej. - rejection or no duty or case withdrawn.c HM Home market price.
TM Third country market price.CV Constructed value.Ghana Prices charged in Ghana.
Source: WTO document G/ADP/N/22/ZAF/Rev.1, 16 April 1997.WT/TPR/S/35 Trade Policies Review
Page 40
Table III.3
Products subject to a safeguard action (import licence), 18 June 1996
Tariff
headingProduct description Phasing-out/
Removal date
27.07 Oils and other products of the distillation of high temperature coal tar;  similar products in which the
mass of aromatic constituents exceeds that of non-aromatic constituentsEnd of 1998a
27.08 Pitch and pitch coke, obtained from coal tar or from other mineral tars End of 1998a
27.09 Petroleum oils and oils obtained from bituminous mineral crude End of 1998a
27.10 Petroleum oils and oils obtained from bituminous minerals, other than crude End of 1998a
27.11 Petroleum gases and other gaseous hydrocarbons End of 1998a
27.12 Petroleum jelly;  paraffin wax;  microcrystalline;  petroleum wax;  slack wax;  ozokerite;  lignite
wax;  peat wax;  other mineral waxes;  and similar products obtained by synthesis or by other
processes, whether or not colouredEnd of 1998a
27.13 Petroleum coke, petroleum bitumen and other residues of petroleum oils or of oils obtained from
bituminous mineralsEnd of 1998a
27.14 Bitumen and asphalt, natural;  bituminous or oil shale and tar sands;  asphalities and asphaltic rocks End of 1998 a
27.15 Bituminous mixtures based on natural asphalt, on natural bitumen, on petroleum bitumen, on
mineral tar or on mineral tar pitch (for example, bituminous mastics, cutbacks)End of 1998a
39.20.20 Polymers of propylene End of 1996a
39.21.90 Other plates, sheets, foil and strip, of plastic:  other End of 1996a
40.11 New pneumatic tyres, of rubber:  refer to industrial rebates of customs duties - 317.02 motor
vehicles (general)31.7.96b
40.11.10 - Of a kind used on motor cars (including station wagons and racing cars) ..c
40.11.20 - Of a kind used on buses or lorries ..c
40.11.30 - Of a kind used on aircraft 31.7.96b
40.11.40 - Of a kind used on motorcycles 31.7.96b
40.11.90 Other ..c
40.13 Inner tubes of rubber 31.7.96 b
 40.13.10 - Of a kind used on motor cars (including station wagons and racing cars), buses and lorries ..c
40.13.20 - Of a kind used on bicycles 31.7.96b
40.13.90 Other ..c
.. Not available.
a To be phased-out or brought into conformity with the WTO Agreement on Safeguards by the date specified.
b To be removed by the date specified.c The removal of import control was under consideration as at 18 June 1996.
Source: WTO documents G/SG/N/3/ZAF, 25 April 1995 and G/SG/N/5/ZAF, 18 June 1996.
(3) Measures Directly Affecting Exports
(i) Registration and documentation
26. An Export Declaration Form (Form CD) must be filed for all goods exceeding US$370 in
value.  Goods exported to countries outside the SACU area are declared on an export bill of entry
while those to other SACU member countries must be declared on the transfer traffic form CCA 1.Botswana WT/TPR/S/35
Page 41
(ii) Export controls
27. Most exports from Botswana do not require permits.  Exceptions are radioactive materials,
unpolished diamonds, gold, wildlife and wildlife trophies, plants, hides and skins, and agricultural
products.  To qualify for a certificate of Botswana origin, 25% of the production cost of the goods
must arise from materials produced, and labour performed, in the country.
(iii) Export subsidies and tax concessions
28. Botswana does not subsidize its exports of goods and services.  However, exporters are
entitled to a duty drawback on inputs imported for use in export production or assembly followed by
re-export. Goods stored in bonded warehouses or manufactured under bond are normally exempt from
customs duties and taxes if they are to be exported.
(iv) Preferential export markets
29. Botswana exports benefit from preferential treatment in the following markets:
- Other SACU member States:  goods from within the Union are transferred between
member States without payment of duties;
- Zimbabwe:  the Botswana/Zimbabwe Trade Agreement provides for duty-free entry
between the two countries if such goods m eet the origin criteria laid down in the
Agreement;
- European Union:  the Lomé Convention provides preferential access to Botswana  as
a member of the African, Caribbean and Pacific (ACP) group of nations.  This is ofparticular importance for Botswana's beef exports, which benefit from a duty-free
quota (Chapter IV), and also for the gr owth of non-traditional exports such as
clothing and textiles, which are not subject to quota under the Agreement on Textiles
and Clothing.
- SADC: the SADC Trade Protocol is expected to give Botswana a wider free-trade
area for its exports and to permit duty-free access from a wider area into the
Botswana market.
30. There has been considerable concern in Botswana over the proposed EU-South Africa trade
pact.  Other members of SACU have not been given access to the negotiations, even as observers,
despite the fact that such a pact would have widespread ramifications for them.  If the agreement wereto be concluded on a free-trade agreement basis, it would have a significant effect on the customs pool
revenue, which is a major source of revenue for th e smaller members of SACU.  It would also allow
South African manufacturers duty-free access to inputs from EU sources, thus disadvantaging firms
from other SACU member States.  There could also be implications for access to EU markets
currently enjoyed under the Lomé Convention, once the current convention expires.WT/TPR/S/35 Trade Policies Review
Page 42
(v) Import permits
31. Import permits for goods entering Botswana directly from outside SACU are obtainable from
the Department of Commerce and Consumer Affa irs in the Ministry of Commerce and Industry.
Import permits are not required for goods produced in Malawi or Zimbabwe, with the exception of
certain agricultural products.  Permits are not transferable, and are usually granted on request;
Botswana's liberal foreign exchange regulations mean little difficulty in obtaining sufficient foreign
currency to cover transactions.  The local importer must only prove that the goods have been receivedin Botswana
10 and provide evidence of the amount due (the supplier's invoice).
(vi) Export credit insurance
32. In recognition of the importance of export credit insurance to stimulate non-traditional
exports and diversify Botswana's export markets the Export Credit Insurance and Guarantee Company
(Botswana) Pty. Ltd. (BECI)  was created in March 199611 as a wholly owned subsidiary of the
Botswana Development Corporation (BDC).  In 1997, the Reinsurance Act was enacted and the
Government of Botswana now reinsures the political  risks assumed by BECI - commercial risks (i.e.
insolvency and default) are taken on BECI's own books.  So far, out of about 40 e xporters of non-
traditional products selling, about P 40 million of  exports per annum, 12 are now insuring with BECI.
Export credit insurance is only available through BECI and not any other company in Botswana.
(4) Measures Affecting Production and Trade
(i) Protection of intellectual property rights
33. Botswana is a member of the African Re gional Industrial Property Organisation (ARIPO)
head-quartered in Harare, Zimbabwe.  Until recently, trade marks in Botswana were protected by the
Trade Marks Act and the United Kingdom Trade Marks Act. Under the old Patents and Designs
Protection Act, only rights that were grante d in the United Kingdom or South Africa might be
re-registered in Botswana. In 1996, the Ministry of Commerce and Industry submitted draft legislationto Parliament updating Botswana's regulations on trade marks, patents and protection of industrial
design. A new Industrial Property Act was enacted in August, 1996 which was described as "an Act to
provide protection for industrial property in Botswana, and matters related thereto".  The Act covers
the registration and licensing of patents, trade marks, designs and utility certificates.
34. Copyright protection is virtually non-existent in  Botswana.  The copying of videos, software,
and television programmes for local consumption is common, though the market is small.  On the
positive side, Government offices and parastatals are said to be making an effort to utilize only
legitimately purchased copies of computer software, which is important given that the Government
constitutes well over half of the market.
35. The Government has recognized that the lack of copyright protection is a negative element in
the investment climate and has understood that the Trade-Related Aspects of Intellectual Property
(TRIPS) provisions of the Uruguay Round require it to initiate the process of drafting new legislation
                                                     
10The exchange control portion of the custom s entry certificate is sufficient evidence.
11The aim of export credit insurance is to promote exports by covering against the risk of the foreign
buyers' failure to pay either because of commercial failure or because of political or economic problems thatprevent payment (such as civil war or shortage of foreign exchange).Botswana WT/TPR/S/35
Page 43
to bring the country into conformity with TRIPS provisions on copyright, the layout design of
integrated circuits, and geographical indicators.  A new Copyright Act has been drafted and awaitsCabinet approval.
(ii) State trading and public enterprises
36. In the three decades since independence, the Government has played a dominant role in the
economy and has been the main employer.  The size of the public enterprise sector doubled in the ten
years between 1981 and 1991.  With little private-sector presence in trades and other commercialactivities, the Government found it necessary to develop and support these functions within its own
organization.  Thus, repair and maintenance operations, construction services including architectural
services, publishing, and many office services and functions were developed within the Government
sector.  Many goods and services that were provided by the Government in the early years continue to
be provided in that way, but less effectively or at higher costs than may be supplied privately.
37. Table III.4 presents an overall picture of the relative size of state-owned enterprises (SOEs) in
Botswana based on the available data.  SOEs in Bo tswana account for about 10% of GDP, while their
share in total employment is less than 6%.  However,  their shares in total investment and external debt
exceed 20%.  Nonetheless, the size of the public enterprise sector in Botswana is relatively small by
African standards.
12  The African average contribution of public enterprises in total employment
reached 23% in 1991, and averaged 14% of GDP and 27% of total investment over the period
1978-91 (World Bank, 1995).
Table III.4
Importance of state-owned enterprises in Botswana, 1981-91
(Per cent)
Years Share in GDP Share in gross
domestic investmentShare in total
employmentShare in domestic
creditShare in external
debt
19814.50 11.60 .. 3.30 9.10
19826.60 14.10 .. 5.30 10.70
19835.70 23.00 .. 8.30 8.00
19844.70 26.90 .. 7.70 9.30
19856.10 43.60 7.60 11.30 20.60
19867.70 9.50 6.20 12.50 29.00
19879.10 18.40 5.80  7.90 30.30
19889.10 28.60 6.60 7.00 27.60
19898.10 20.80 6.00  10.40 25.60
19907.70 17.70 5.70 7.50 22.20
19919.70 20.60 5.30 5.80 21.5
.. Not available.
Source: World Bank, "Bureaucrats in Business: The Economics and Politics of  Government Ownership", Oxford University
Press, 1995, Tables A1 - A10, pp. 268-309.
38. Despite public policies aimed at creating an enabling environment and encouraging private
sector development such as the Financial Assistance Policy (FAP) and the Rural Industrial Promotion
Company (RIPCO), the role of public enterprises in the economy of Botswana has increased over
time.  Stated government policies are moving towards greater focus on promoting a competitive
                                                     
12Gergis (1996).WT/TPR/S/35 Trade Policies Review
Page 44
environment (disciplined by necessary regulations), and less on ownership of business and provision
of goods and services in the public sector.  Thus, the macroeconomic outline for NDP8 states:
"A review of the size and structure of the current public service will allow for decisions to be
taken on which parts of the public service should be privatised.  Government will institute a
scheme for privatisation during NDP8.  Privati zation of some parts of Government will be
undertaken methodically through the establishment of targets.  As some parts of Government
are privatised, Government will encourage the development of new private firms in order thatthey can expand and undertake productive investment on their own.  It is through continued
private sector investment that long run economic growth can be assured."
13
(iii) Competition policy
39. The number and extent of government regulations governing the business sector have been
significantly reduced in recent years.  The Government seeks to promote private sector development
and liberalization of markets to increase competition and improve productivity.  Thus, for example,
dealing with unfair competition, Part VI of the new Industrial Property Act states that:
"any act of competition which is contrary to honest practices in industrial or commercial
matters shall constitute an act of unfair competition, and shall be unlawful.  The following, in
particular, shall be deemed to constitute acts of unfair competition:
(a) any act of such a nature as to create confusion by any means whatever with the
establishment, the goods or the industrial or commercial activities of a competitor,
(b) the making of a false allegation in the course of trade of such a nature as to discredit
the establishment, the goods, or the industrial or commercial activities of a
competitor, and
(c) the making of allegations which, in the course of trade, are liable to mislead the
public as to the nature, the manufacturing pr ocess, the characteristics, the suitability
for their purpose, or the quality of goods of a competitor."
(iv) Standards
40. Until recently, for all products produced domestically, choices of specifications and quality
assurance have been solely the responsibility of producers.  There has been no independent institution
to verify and certify the quality of products and services to ensure that safety and welfare ofconsumers are protected.  In addition, imported products either met quality standards of their country
of origin or did not meet any quality standards at all.
41. A Standards Council has been established to guide activities of the Bureau of Standards and
several testing as well as calibrating laboratories have been identified to participate in the National
Testing and Calibration Systems.  These laboratories will assist companies that do not have testing
facilities as well as to test products brought in as a result of consumer complaint.
                                                     
13Ministry of Finance and Development Planning (1996b).Botswana WT/TPR/S/35
Page 45
42. More than 40 manufacturing and service companies have received assistance to improve the
quality of their products.  A standards library has also been established and a newsletter is publishedtwice a year to increase awareness of standards and quality.  The process of establishing Botswana
Standards has been initiated and several technical committees in different areas are in the process of
being established;  priority is being given to areas which affect international trade such as quality and
environment management standards.  The setting up of national standards will complement efforts of
other institutions to diversify the economy.
(v) Price regulations and controls
43. Direct price controls are now very limited in Botswana.  The main exception is for petroleum
prices, which are still from time to time set by the Government.  Part of this price setting includes a
petroleum levy, which goes into a fund to maintain adequate reserves in Botswana against unexpected
interruptions of supply, and the storage facilities for these reserves14.  With the new political
conditions in South Africa, the need for these rese rves have now changed and are under review by the
Contingency Planning Committee.  Current rates of the levy are:  Mogas - 5 thebe/litre;  unleadedpetrol - 5 thebe/litre;  and diesel - 3 thebe/litre (1 pula = 100 thebe).
(vi) Reservation policy
44. Reservation of some economic activities for citizens has been introduced to create economic
opportunities for Botswana citizens and encourage their participation in commercial manufacturing,
construction and services activities.  New licences  are reserved for citizens and firms wholly owned
by citizens in a range of commercial activities, including: hawkers and vendors; butcheries and sale of
fresh products;  dairy;  small general trading;  petrol filling stations;  bottle stores and bars (other than
those in hotels);  taxi services;  security guard services;  general trading (except for chain stores and
franchises);  non-specialized and unsophisticated clothing and footwear shops.  Existing firms owned
by non-citizens are allowed to continue their business not involving sophisticated technologies or hightechnical skills.
45. Some industrial activities are similarly reserved, including:  school furniture;  uniforms;
ordinary cement and baked bricks;  sorghum milling;  ordinary bread baking;  burglar bars.  Certain
aspects of road contract and railway maintenance are reserved:  fencing;  maintenance of roads;
reserve, drainage and culverts;  transport and plant hire;  clearing bush;  carting gravel;  bridgepainting;  road marking, and resurfacing bitumen roads.
46. Government and parastatal building contracts for less than P 150,000 (Grade A) are reserved
for citizen contractors, with  priority to smaller firms in Grades B and C.
15  The overall reservation
policy is currently under review.
47. There are six grades under which the Central Tender Board registers contractors.  They are:
OC, A, B, C, D, and E.  In addition there are nine  codes that in turn have various sub-codes.  The
sub-code specifies which activities can be registered for under the main code.  The main codes are:
- Code 01 Building
- Code 02 Electrical
                                                     
14See section on energy, Chapter IV.
15There are five Grades altogether.WT/TPR/S/35 Trade Policies Review
Page 46
- Code 03 Civil Engineering
- Code 08 Mechanical Engineering- Code 09 Drilling Services
- Code 10 Water Engineering Services
- Code 13 fencing - Building
- Code 14 Roads - Ancillary works
- Code 15 Civil Aviation/Meteorological electronics- Grades OC (opportunity category) has a ceiling limit of P 300,000.00.  This means
that a contractor registered in this grade can tender for central government, local
government and parastatals building construction projects up to a value of
P 300,000.00 for each project.
 - Grade A has a ceiling limit of P 900,000.00.  The same meaning as above applies to
all grades, except grade E, which is the unlimited grade.
- Grade B has a ceiling limit of P 1,800,000.00.- Grade C has a ceiling limit of P 4,000,000.00.
- Grade D has a ceiling limit of P 8,000,000.00.
- Grade E is the unlimited grade, which means that projects above P 8,000,000.00 to an
unlimited value can be tendered for by contractors registered in this grade.
Currently grade OC, A and B are wholly reserved for 100% citizen-owned construction companies.
No foreign construction companies of joint ventures between citizen and foreign construction
companies will be registered in these "reserved" grades.  Joint ventures between citizen and foreign
contractors are encouraged in grades C, D and E.  Whereas joint ventures between citizen contractors
themselves is encouraged in all grades.  Central government, local government and parastatal building
contract in grades OC, A and B are reserved for 100% citizen contractors.  Grade OC, known as theOpportunity Category is the starting point for new small citizen contractors.  It has a ceiling limit of
P 300,000.00 which means the contractor can tender for projects with a value of the limit.  More than
one project can be tendered for.  Grade A has a ceiling limit of P 900,000.00 which the contractor can
upgrade to if he has the ability and capacity to do so.  Grade B has a ceiling limit of P 1,800,000.00
with the same conditions applying as for grade A.
(vii) Public procurement
48. A Local Preference Scheme, covering all levels of public procurement, was introduced in
1978.  The objective was to maximize purchases by government, local authorities and parastatals from
resident manufacturers.  The price advantage of a local firm was 40% of the "local content ratio";  the
higher the producer's local content relative to its sales revenue, the greater was its price advantage.
Local content was defined as sales revenue less imported costs and purchases from non-resident
companies (including salaries of non-citizens).  This was divided by total sales revenue, and thepercentage price advantage was 40% of this ratio.  Manufacturers had to be registered under the
scheme to qualify for the cost advantage.  Firms receiving grants under the Financial Assistance
Policy had their FAP benefits postponed if they were successful in getting public-sector business
through the Local Preference Scheme.
49. A Local Procurement Programme replaced the Local Preference Scheme in 1997.  The new
programme is intended to reserve not more than 30% of the Government's annual budget for
purchases from small- and medium-scale firms th at qualify under the Programme.  A register of
qualifying firms will be maintained, and used to determine what level of government purchases
should be bought through the Programme.  To qualify, firms must have 25% local content, and meet
at least two of the following criteria:  annual turnover between P 0.2 million and P 5.0 million;  lessthan 200 employees;  and investment in plant of between P 50,000 and P 5 million.  In addition, there
must be at least one other firm producing the same products, with different directors and shareholders.Botswana WT/TPR/S/35
Page 47
50. Manufacturers who qualify for participation in the Programme may also submit an offer for
that part of the tender which is open for international competition.  For the first three years, theProgramme will apply only to central government purchases.
(viii) Foreign investment incentives
51. The Financial Assistance Policy (FAP) is the most significant positive inducement for
investment in Botswana.16  The policy was introduced in 1982, and substantially revised for the third
time in 1995.  It applies only to manufacturing, small-scale mining, mineral processing, agricultureother than beef production, and tourism, and to sele cted linking service industries (which supply the
primary qualifying sectors). Brewers and distillers are specifically excluded.  The incentives available
for small-scale businesses (currently defined as those with investment in fixed assets of P 75,000 or
less) are confined to citizen-owned firms.  Incentives for medium- and large-scale businesses are
available to all eligible firms, irrespective of whether they are owned by citizens or by foreigners.
52. All FAP assistance is provided in the form of  non-repayable grants.  These grants are aimed at
promoting the creation of self-sustainable enterprises, with the proviso that economic and/or socialreturns to Botswana are greater than the purely financial returns to the projects assisted.  However,
qualifying businesses must have a reasonable chance of becoming financially viable.  A project must
therefore demonstrate a real economic rate of return to Botswana of at least 6%.
53. The underlying objective of the FAP has been to encourage the employment of unskilled
labour.  Types of assistance include:
- Capital grants of P 1,000 per job to be created for non-citizen-owned or joint venture
projects, and P 1,500 per job created for 100% citizen-owned projects (this grant must
not exceed certain percentages of total fixed investment, varying from 40% in urban
areas to 85% in rural areas in the west of the country), payable in advance directly to
suppliers.
- Unskilled labour grant of 80% of wages in years one and two, 60% in year three, 40%
in year four and 20% in year five, payable quarterly in arrears (unskilled labour
defined as those earning between the minimum wage and twice the minimum wage,
but those earning up to three times the minimum are eligible for that part of their
wage equal to twice the minimum wage) for the wages of citizen employees only.
- Training grant of 50% of off-the-job training and/or training costing more than
P 2,500 per trainee per year, with prior agreement, applicable to citizens only.
54. The total value of the unskilled labour and training grants over the five years should not be
more than 50% of the domestic value added over the five years.  All grants are exempt from income
tax.  The scheme is applicable both to new investment and to expansion of existing investments.
Expansion is defined in terms of increased empl oyment or volume of output.  Only businesses
deemed to increase the national income and to have a reasonable chance of becoming financiallyviable will receive assistance.
                                                     
16For more details on FAP, see the section on measures affecting production and trade in Chapter III.WT/TPR/S/35 Trade Policies Review
Page 48
55. FAP subsidies are time limited, the aim being to promote the creation of self-sustainable local
industry, to avoid the emergence of firms dependent upon indefinite subsidies, and to preventopen-ended and unsustainable government commitments.  The small-scale scheme provides a one-off
grant at the time of establishment.  The medium- and large-scale grants are paid over a five-year
period, at a declining rate.
56. Some figures illustrating the volume of FAP assistance in recent years are given in
Table III.5.
Table III.5
FAP financed projects by size, 1991-95
Number of projects Disbursements Average disbursement
per project
No. % P million % P '000
Small scale3,7769254 34 14
Medium scale301736 22 118
Large scale46169 44 1,507
Total4,123100159 100 39
Source:  Ministry of Commerce and Industry.
57. The processing and approval of applicati ons for medium- and large-scale FAP grants is
handled by various government ministries, incl uding the Ministry of Finance and Development
Planning, the Ministry of Commerce and Industry, the Ministry of Agriculture, and the Ministry of
Mineral Resources and Water Affairs.  Small-scale applications are channelled through local
Integrated Field Services officers, who work in close cooperation with relevant district and urban
councils.  FAP payments are channelled through the National Development Bank.
58. The FAP works in conjunction with other economic policies aimed at economic
diversification and employment creation, such as the Local Procurement Scheme mentioned above.
59. The Trade and Investment Promotion Agency (TIPA) was established in 1984 as a "One Stop
Investment Shop", intended to promote the country to foreign investors, and to reduce the initial
bureaucratic costs of getting a foreign-owned company established and operational.  However, the
Bank of Botswana notes that:  "it has yet to develop an effective One Stop Investment Shop as
originally envisaged.  In particular ... it does not have the necessary powers to reduce or eliminate the
considerable bureaucratic hurdles facing investors.  As a result, investors still face significant delaysand hassles ...".
17
60. The Selebi-Phikwe Regional Development Prog ramme (SPRDP), was established in 1988 in
order to diversify sources of employment in the mi ning town of Selebi-Phikwe.  The programme was
able to offer all of the benefits of the Financial As sistance Policy available elsewhere, together with a
reduction in corporation tax to 15% for 20 years, on profits from exports to countries outside theSouthern African Development Community (SADC ) region.  While the SPRDP has attracted some
export-oriented foreign investors, it has been critic ized for giving away most of the benefits that
should have occurred from such investment by "a n over-generous offering of financial inducements
that accrue mostly to foreigners".
18
                                                     
17Bank of Botswana (1994), p. 57.
18Bank of Botswana (1994), p. 60.  SPRDP was recentl y integrated into TIPA (partly because, in the
1996 budget, the corporate tax rate was reduced for all manufacturers to 15%, regardless of location).