Trade Compliance Center

GUINEA TRADE POLICY REVIEW SUMMARY - 1999

PRESS RELEASE

PRESS/TPRB/104

22 February 1999

Guinea should continue its reforms and improve Its

infrastucture to attract more investment.

Reforms introduced since 1985 have led to a significantly more

liberal economy and trade regime in Guinea, with annual GDP

growth of over 2 per cent since 1989. A new WTO report on

Guinea's trade policies and practices notes that the country's trade

balance is improving, but that Guinea should continue to implement

reforms and privatization programmes so that it can fully exploit its

economic potential.

The WTO Secretariat report and a policy statement by the

government of Guinea, will serve as the basis for two days of

discussion at the WTO's Trade Policy Review Body on 25 and

26 February 1999.

The report notes that Guinea's economy is highly dependent on the

exploitation of mineral resources - mostly bauxite - and that

minerals account for over 90 per cent of earnings from merchandise

exports. In 1996, the European Union and the United States

absorbed more than 70 per cent of Guinean exports, with alumina

going mostly to the United States and diamonds and gold to

Europe. Guinea's main suppliers are the European Union chiefly

France the United States, Cote d'Ivoire, Japan and the Economic

Community of West African States (ECOWAS).

The report notes that Guinea's import duties average 16.4 per cent

and range from a low of 2 per cent to a high of 32 per cent. There

is little variation among products and the rates show a generally

negative escalation from unprocessed products to finished goods.

The most protected goods are foodstuffs. The least taxed goods

are non-electrical machinery and transport equipment. Guinea also

applies other duties and charges such as preshipment inspection

fees, which significantly increase the import duty. A consumption

surcharge of up to 70% is also collected on both imports and

locally produced goods. Like other WTO members, Guinea bound its

tariffs on agricultural products in the Uruguay Round. Import duties

and taxes on almost all other products have not been bound.

The mining sector benefits from the highest nominal tariff

protection. Currently, the main objective of Guinea's mining policy

is to promote locally processed exports of its vast mineral

resources.

The report notes that Guinea has considerable potential for

developing its rural activities. Reforms in the agricultural sector

have led to the abolition of the marketing boards, the liquidation or

privatization of most of the State enterprises and to the elimination

of price controls.

Manufacturing activity in Guinea, already poorly developed, has

fallen further following cessation of activities of certain State

enterprises. Current constraints have failed to awaken the

enthusiasm of private investors. Development is hampered by the

high cost of finance and inputs, the difficulties of obtaining access

to credit, the lack of infrastructure, power cuts and the structure

of import duties.

The services sector, dominated by informal trade, is expanding and

accounts for more than 50 per cent of real GDP. The report notes

that while efforts have been made to liberalize the sector, the

government's commitments under the General Agreement on Trade

in Services (GATS) are limited. Informal activities, spread across all

economic sectors, reportedly account for 60 per cent of GDP and

supply 90 per cent of non-agricultural jobs outside the civil

services.

Guinea is a signatory of the Economic Community of West African

States (ECOWAS) which provides for the establishment of a

customs union, free trade in services and free movement of capital

and persons by 2005. However, the report notes that the timetable

for the implementation of those provisions, including the

establishment of the customs union is not being respected.

As a signatory to the Fourth Lom? Convention, Guinea receives aid

from the European Union (EU) and a large number of Guinean

products receive non-reciprocal preferential treatment upon entry

to the EU. Similarly, Guinean products are granted non-reciprocal

preferential access to the markets of developed countries other

than the EU in the framework of the Generalized System of

Preferences (GSP). The report notes however that the scope of

these different non-reciprocal preferential treatments is limited,

particularly by the small number of products exported by Guinea,

i.e. raw materials generally subject to zero or very low

most-favoured-nation (MFN) import duties in the importing

countries.

Intellectual property rights in Guinea are protected by a copyright

law of August 1980 and its implementing decree and the Bangui

Agreement on Intellectual Property signed by some 15 African

countries which established the African Intellectual Property

Organization (AIPO). Work is under way in AIPO to bring the

provisions of the Bangui Agreement into conformity with the

obligations of WTO Members under the Agreement on

Trade-Related Aspects of Intellectual Property Rights (TRIPS). In

the field of intellectual property, the most common infringement in

Guinea is the counterfeiting of trade marks.

The report concludes that by pursuing its reforms, including

privatization, and by redirecting public investment towards basic

infrastructure, Guinea should be able to improve the international

competitiveness of its products by reducing production costs and

attracting more private capital.

Notes to Editors

The WTO's Secretariat report, together with a policy statement

prepared by Guinea, will be discussed by the WTO Trade Policy

Review Body (TPRB) on 25 and 26 February 1999. The WTO's TPRB

conducts a collective evaluation of the full range of trade policies

and practices of each WTO member at regular intervals and

monitors significant trends and developments which may have an

impact on the global trading system. The Secretariat report covers

the development of all aspects of each of Guinea's trade policies,

including domestic laws and regulations, the institutional

framework, trade policies by measure and by sector. Since the

WTO came into force, the areas of services and trade-related

aspects of intellectual property rights are also covered.

To this press release are attached the summary observations from

the Secretariat report and a summary of the government report.

The full Secretariat and government reports are available for

journalists from WTO Secretariat on request (call 41 22 739 5019).

They are also available for the press in the newsroom of the WTO

internet site (www.wto.org). The Secretariat report, together with

the government policy statement, a report of the TPRB's discussion

and the Chairman's summing up, will be published in hardback in

due course and will be available from the WTO Secretariat, Centre

William Rappard, 154 rue de Lausanne, 1211 Geneva 21.

Since December 1989, the following reports have been completed:

Argentina (1992 & 1998), Australia (1989, 1994 & 1998), Austria (1992),

Bangladesh (1992), Benin (1997), Bolivia (1993), Botswana (1998), Brazil

(1992 & 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992,

1994, 1996 & 1998), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica

(1995), C?te d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the

Dominican Republic (1996), Egypt (1992), El Salvador (1996), the European

Communities (1991, 1993, 1995 & 1997), Fiji (1997), Finland (1992), Ghana

(1992), Hong Kong (1990, 1994 & 1998), Hungary (1991 & 1998), Iceland

(1994), India (1993 & 1998), Indonesia (1991, 1994 & 1998), Israel (1994),

Jamaica (1998), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep.

of (1992 & 1996), Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mali

(1998), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New

Zealand (1990 & 1996), Namibia (1998), Nigeria (1991 & 1998), Norway (1991 &

1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993),

Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996),

Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 &

1998), Sri Lanka (1995), Swaziland (1998), Sweden (1990 & 1994), Switzerland

(1991 & 1996), Thailand (1991 & 1995), Togo (1999), Trinidad and Tobago

(1998), Tunisia (1994), Turkey (1994 & 1998), the United States (1989, 1992,

1994 & 1996), Uganda (1995), Uruguay (1992 & 1998), Venezuela (1996),

Zambia (1996) and Zimbabwe (1994).

TRADE POLICY REVIEW BODY: GUINEA

Report by the Secretariat Summary Observations

Economic environment

Located on the west coast of Africa, Guinea is a least-developed

country (LDC), independent since 28 September 1958. Upon

achieving independence, Guinea opted for a socialist regime that

allowed the State to intervene in most economic activities. This

State intervention discouraged private initiative, and, with the

starting up of mining activities in 1975, encouraged the economy

to become dependent on bauxite mining. Guinea left the franc zone

in 1960 and created its own Central Bank with a national currency,

the Guinean franc.

The economic growth sustained by mining was slowed by the

second oil shock in 1979-80 and the fall of bauxite prices. In

response to the economic difficulties resulting from this situation,

the first reform measures were taken by the Government at the

beginning of the 1980s. The change in the political regime in 1984

favoured a certain radicalization of reforms in the direction of

economic liberalization. An Economic and Financial Reform

Programme (PREF) was adopted in 1985 with the support of the

International Monetary Fund (IMF) and the World Bank, with a view

to restoring macroeconomic and financial balances, reviving growth

and improving the living conditions of the Guinean population.

Social disturbances, increases in salaries and family allowances,

and decreases in alumina prices sporadically frustrated the

implementation of reforms. In 1996, in response to the persisting

macroeconomic imbalances, a long-term development strategy

(Guinea, Vision 2010) based on exploitation of the country's

potential by private operators was adopted. A second three-year

Enhanced Structural Adjustment Facility (ESAF) was approved by

the IMF for Guinea in January 1997.

With the exception of the 2.4 per cent and 2.9 per cent growth

rates recorded for 1991 and 1992 respectively, the various reforms

have led to an annual increase in real GDP of at least 4 per cent

since 1989. Inflation has been contained and its level has fallen

from 19.4 per cent in 1990 to 1.9 per cent in 1997. The trade

balance, which is in perpetual deficit, is improving steadily; it could

show a slight surplus in 1998 as a result of increased bauxite

exports. However, compared with other external balances, the

results of the reforms remain modest. The deficit in Guinea's

current balance, which can be attributed to the services balance,

including interest on external debt, is the main reason for the

unfavourable overall balance: Guinea's net services imports have

generally exceeded net capital flows in its favour.

The Guinean economy remains dependent on the exploitation of

mineral resources with which the Guinean subsoil abounds. Bauxite

(the main mineral resource), gold and diamonds are currently mined

on an industrial scale. These resources undergo little local

processing, but still account for over 90 per cent of the goods

export revenue. Their contribution to real GDP, however is falling.

Guinea also has considerable potential for the development of rural

activities. Manufacturing activity, already poorly developed, has

fallen following the winding up or cessation of the activities of

certain State enterprises, as current constraints on the sector

have failed to awaken the enthusiasm of private investors. The

services sector, dominated by informal trade, is progressing, and

accounts for more than 50 per cent of real GDP. Informal activities,

which are a feature of all sectors, reportedly account for 60 per

cent of GDP and supply 90 per cent of non-agricultural jobs outside

the civil service. They range from retail trade (50 per cent of

informal jobs) to vehicle repair (30 per cent of informal jobs),

including exchange activities.

In 1996, the European Union and the United States absorbed more

than 70 per cent of Guinean exports. Canada has also proved an

important outlet for Guinean products over the past years. On the

other hand, for several years Guinean exports to the

Commonwealth of Independent States have been on the decrease,

reflecting the end of the socialist era in Guinea, with the

progressive maturing of the last counter-trade contracts. Alumina

is exported mainly to the United States and Spain, and diamonds

and gold to Europe. Guinea's main suppliers are the European Union

(chiefly France), the United States, C?te d'Ivoire and Japan.

China's share of the Guinean market fell from over 10 per cent in

1993 to 2.4 per cent in 1996 owing to the redirection of Guinea's

trade towards non-socialist countries following the economic

opening up of the country. The ECOWAS countries supply around

20 per cent of Guinean imports.

Institutional framework

Under the Constitution of December 1990, the Republic of Guinea is

a pluralist democracy. The President of the Republic is the Head of

State, elected by direct universal suffrage for a term of five years,

renewable only once. Executive power is vested in the President,

who lays down the main lines of State policy and appoints the

Prime Minister and other members of the Government. The

Government defines and implements national policy. The National

Assembly exercises legislative power, and votes the laws. The

Economic and Social Council must be consulted on draft laws, plans

and programmes of an economic nature.

Since 1992, Guinea has been implementing numerous reforms of a

regulatory nature (publication of a code of economic activities) and

of an institutional nature (reform of justice) aimed at ensuring a

business environment more favourable to the development of

economic and financial activities. The Investment Code, introduced

in 1987 modified in 1995 and recently amended, aims at

encouraging national and foreign economic operators to invest in

Guinea and to contribute in this way to the achievement of the

Government's objectives, namely the creation of a suitable

environment for the development of the private sector in all areas.

The Investment Code guarantees the same rights and obligations

to private and public enterprises, whether national or foreign. It

guarantees freedom to transfer capital, income and salaries for

foreign natural and legal persons. However, in order to qualify for

the benefits offered by the Code, enterprises must belong to the

priority sectors of activity and must be approved. Among other

things they must give priority to Guinean citizens as regards jobs,

and maintain the quality and level of their investments. Like the

Investment Code, the 1995 Mining Code provides that any national

or foreign, public or private natural or legal person coming under

Guinean law and possessing the necessary technical and financial

capacity may exploit mineral substances or quarries in Guinea.

However, the semi-industrial and small-scale mining of precious

substances and the marketing of diamonds and other gems is

authorized only for Guinean natural or legal persons. Moreover, the

exploitation of mines and quarries qualifies for tax relief.

Guinea became a Member of the WTO on 25 October 1995 after

having applied the GATT de facto from 24 June 1994. Guinea

grants at least most-favoured-nation treatment to all of its trading

partners. Like other WTO Members, Guinea has adopted all the

results of the Uruguay Round and has accepted commitments in

the form of tariff bindings and measures relating to the modes of

supply of certain services. It has benefited from the treatment

granted to the LDCs, notably in the form of exemptions or delayed

implementation of certain provisions, and it should benefit in

particular from the strengthening of rules and disciplines in the

multilateral trading system. The concern in Guinea is to achieve

diversification (horizontal and vertical) of production and exports,

i.e. an increase in supply which will enable it to make better use of

its potential and existing opportunities, as well as those which

should result from continued liberalization at the multilateral level.

Guinea hopes that the technical assistance provided for under the

integrated technical assistance programme launched by the WTO

and other organizations at the High-Level Meeting held in Geneva

in October 1997 will help it to increase and diversify its production

and exports while improving their quality, to make the WTO

agreement more generally known and to increase the number of its

trading partners.

Guinea is a member of the Economic Community of West African

States (ECOWAS) for which the treaty was signed on

28 May 1975. The 1993 amendment to the Treaty provides, inter

alia, for free trade in services and the free movement of capital

and persons within the Community at the end of the five-year

period following the establishment of the customs union scheduled

for the year 2000. However, the timetable for the implementation

of this union is not being respected. Guinea has also been a

member of the Mano River Union (MRU) since 1979. The Declaration

of 3 October 1973 establishing the MRU provided for the gradual

introduction of a customs union and the promotion of community

development projects in all sectors, including services. However,

the MRU is encountering a number of difficulties in setting itself up,

and trade between the three countries is therefore marginal.

As a signatory to the Fourth Lom? Convention, Guinea receives aid

from the European Union. A large number of Guinean products

receive non-reciprocal preferential treatment upon entry to the EU.

Similarly, Guinean products are granted non-reciprocal preferential

access to the markets of developing countries other than those of

the European Union in the framework of the Generalized System of

Preferences. The scope of these different non-reciprocal

preferential treatments is limited, particularly by the small number

of products exported by Guinea, i.e. raw materials generally

subject to zero or very low MFN import duties in the importing

countries.

As of September 1998, Guinea had not been involved in any

dispute settlement procedure within the GATT, the WTO or any

other trade agreement to which it is a signatory.

Trade policy features

Trade policy instruments and their impact

The reforms carried out by Guinea since 1985 have enabled it to

significantly liberalize its economy and its trade. Quantitative

restrictions were abolished on most products, with the exception of

potatoes, whose import is prohibited from February to June each

year in order to allow local production to be sold. Other restrictions

are also maintained for health, security or moral reasons or under

international conventions to which Guinea is a signatory. Moreover,

under the Programme for the Security of Customs Revenue, the

implementation of which was entrusted in June 1996 to the Soci?t?

g?n?rale de surveillance (SGS), all imports whose f.o.b. value is at

least US$2,000 must be covered by a descriptive import application

(DDI); preshipment inspection is required if the f.o.b. value is at

least US$5,000.

The following duties and taxes are levied on imports in Guinea: an

import customs duty (DDE) of 2 per cent or 7 per cent; a fiscal

import duty (DFE) of 6 per cent, 8 per cent, 22 per cent or 23 per

cent; a clearance fee (RTL) at a single rate of 2 per cent; a

community levy (PC) of 0.5 per cent on all imports from countries

outside ECOWAS; and an "additional centime" (CA) of 25 per cent

paid to the Chamber of Commerce. Import duties are ad valorem;

however, there is a minimum levy of GF 400 per litre for wines. The

simple arithmetic mean of these import duties (excluding the PC

and CA) is 16.4 per cent, with a minimum rate of 2 per cent and a

maximum of 32 per cent. There is little variation among products

(the modal rate is 17 per cent) and the rates show a generally

negative escalation from unprocessed products to finished goods:

subject to exemptions, unprocessed products benefit from the

strongest nominal tariff protection, followed by semi-finished

goods. This should be reflected in nominal rates higher than the

effective production rates.

The most protected goods are foodstuffs, and the least taxed

goods are non-electrical machinery and transport equipment.

Preshipment inspection fees, borne directly by the importers, can

add up to about six additional percentage points to the tariff

protection level (in the absence of inspection). Special taxes

(which cannot be cumulated with other import duties and taxes)

are levied on imports under certain particular customs regimes: a

registration tax (TE) of 0.5 per cent is levied on imports carried out

by enterprises approved under the Investment Code; a storage tax

(TEN) of 1 per cent is levied on goods placed in storage; and a

transit duty (DT) of 3 per cent is levied on the goods concerned.

A consumption surcharge has also been levied on "luxury products"

since 1986. On imports, the surcharge is ad valorem and comprises

eight rates, from 5 per cent to 70 per cent. It is also levied on

locally manufactured products, such as beer and cigarettes.

However, the method of taxing local products differs from that for

imports of identical products: for example, beer produced locally is

subject to a surcharge (specific) of GF 20 per bottle of

50 centilitres or less, while imported beers are taxed at 70 per

cent. This difference in taxation generally observed provides

additional protection for local products. The Special Tax on

Petroleum Products (TSPP) is a domestic tax levied on imports of

petroleum products in addition to the DDE of 7 per cent , the DFE

of 8 per cent and the RTL of 2 per cent. It amounts to GF 355 per

litre for petrol, GF 245 per litre for diesel, GF 160 per litre for

petroleum spirit and GF 135 per litre for kerosene. Since 1 June

1996, a value added tax (VAT) of 18 per cent has been levied on

imports of local products. An additional flat-rate levy of 3 per cent

is applied to all imports carried out by natural or legal persons not

registered for VAT. The levy is charged against the tax on

industrial and commercial profits and corporation tax on behalf of

the National Tax Directorate.

Under the Uruguay Round, Guinea has bound its tariffs applicable to

imports of agricultural products (like the other Members of the

WTO). For this purpose, it adopted rates of: 40 per cent for the

import customs duty (DDE), 8 per cent for the fiscal import duty

(DFE) and 2 per cent for the clearance fee (RTL). However, DFE

rates of 22 per cent and 23 per cent are applied to products such

as rice, flour and vegetable oil. Apart from Chapters 45 (cork and

articles of cork), 47 (pulp and other cellulosic materials),

66 (umbrellas, walking sticks, etc.) and 86 (railway/tramway

locomotives, rolling stock, etc.) of the Harmonized System, import

duties and taxes on other products have not been bound. The DDE

rates have been bound at 40, 20, 30 and 25 per cent respectively

for the products in these Chapters. The DFE, TLR and TCA have

been bound at rates of 8, 2, and 13 per cent respectively for those

products. Thus, the bindings cover a limited number of products

and moreover, they leave Guinea a certain latitude owing to the

wide gap between the bound duty rates and those applied.

However, these bindings do not concern products previously

included in Guinea's Schedule CXXXVI, i.e. those for which the

rates were bound when Guinea was a colony.

For exports, a fiscal export duty (DFS) of 2 per cent is levied on all

products with the exception of mineral products and derivatives,

and coffee. The DFS is 3 per cent for gold and diamonds produced

on a small scale (or 2 per cent if such gold is exported by the

Central Bank) and GF 25,000 per tonne of scrap. A tax of US$13 is

levied per tonne of coffee. A 2 per cent tax is levied on all

re-exported products. Taxes are also collected by the Central Bank

on exports of bauxite and alumina and paid into a special account

as an advance payment on the various taxes payable by the

Guinea Bauxite Company (Compagnie de Bauxite de Guin?e - CBG)

and FRIGUIA (which produces alumina). These advance payments

are from US$8 to 9 per tonne of bauxite (they vary according to

the world price for bauxite) and amount to US$1.75 per tonne of

alumina. The tax (advance payment) on alumina is actually

collected at a rate of US$0.5 per tonne of bauxite consumed in

producing it.

Exports are subject to Descriptive Export Applications (DDE), which

replace the export licences abolished in 1986. The formalities for

obtaining a DDE take not more than three working days. Exports of

gold and diamonds produced on a small scale are carried out by the

BCRG. For the purpose of promoting exports, tax and customs

advantages are granted by the different codes in the form of

suspension of duties and taxes; temporary admission; exemption

from the tax on industrial and commercial profits for five years (in

proportion to the export turnover); and reimbursement of VAT

credits on inputs and factors of production used to manufacture

the exported goods (for the purpose, exports are zero-rated for

VAT). Moreover, in addition to the privileges common to the

various regimes under the Investment Code, further advantages

are granted to enterprises (whether exporters or not) which make

use of Guinean products representing over 50 per cent of their

intermediate consumption during the fiscal year.

Since 1986, price controls have been progressively streamlined in

Guinea. In practice, only petroleum products are regulated. These

prices, set by an interministerial technical council and kept

identical throughout the country thanks to an equalization system,

are approved for one year. The scale of charges taken into

account in forecourt prices is revised monthly. Moreover, thanks to

the reform of State enterprises in the framework of the Structural

Adjustment Programme, it has been possible to substantially reduce

State involvement in economic activities. However, the

implementation of these reforms has been slowed down over the

past five years by the lack of purchasers for certain companies.

In Guinea, intellectual property rights are protected by the Bangui

Agreement on Intellectual Property signed by some 15 African

countries and establishing the African Intellectual Property

Organization (AIPO), as well as a copyright law of August 1980 and

its implementing decree. Work is under way in the AIPO to bring

the provisions of the Bangui Agreement into conformity with the

obligations of WTO Members under the Agreement on

Trade-Related Aspects of Intellectual Property Rights. In Guinea,

the Industrial Property Service (SPI) is the national structure for

liaison with the AIPO. In the field of intellectual property, the most

common infringement in Guinea is the counterfeiting of trade marks.

Penalties have consisted in seizure of the products concerned, the

fate of which is decided by the plaintiffs (right holders). The

Guinea Copyright Office has had problems enforcing these rights

among the main users of the works concerned.

Policies by sector

The economic reforms embarked upon by Guinea under the

structural adjustment programmes in place since 1985 have

affected the different sectors of activity to varying degrees. In the

agricultural sector, these reforms have enabled the agricultural

produce marketing bodies to be abolished, most of the State

enterprises operating in the sector to be liquidated or privatized

and the price controls which applied to the main agricultural

products to be lifted. However, the objectives of the agricultural

policy currently being implemented, namely food self-sufficiency

and increased agricultural exports, have made it possible to prohibit

imports of potatoes from February to June of each year and to

apply flat-rate values to others (notably rice and certain

beverages). The average import duty on agricultural products (16.6

per cent) is slightly above the average for all imports (16.4 per

cent). Relief from duties and taxes is also granted to inputs used in

agricultural production; agricultural income is not taxable. The

State has maintained its presence in two branches: cotton, which

is still not very developed, via a project structure supervised by

the Compagnie fran?aise pour le d?veloppement des textiles, and in

the oil palm and rubber tree branch, through a State enterprise

created in 1987.

Mining is the sector which benefits from the highest nominal tariff

protection. However, the liquidation and privatization of State

enterprises have reduced Government intervention in the activities

of this sector. At present, the Soci?t? des bauxites de Kindia is the

only State enterprise whose privatization is not being considered.

The main objective of mining policy is currently to promote exports

of Guinea's vast mineral resources, after they have been processed

locally. With that in mind, a system of taxation in stages (mining

tax of zero to 10 per cent) has been introduced, with the highest

rates being applied to exports of unprocessed mineral products.

Furthermore, export duties of 2 or 3 per cent are levied on

products such as gold, diamonds and other gemstones; these

duties amount to GNF 25,000/tonne on ferrous scrap and US$8 to

9/tonne on bauxite, compared with US$1.75/tonne on alumina. Tax

and customs advantages are also provided for under the Mining

Code in favour of investment in this sector. Agreed rates (reduced

rates) for the specific tax on petroleum products are likewise

applied.

The manufacturing sector remains poorly developed, despite the

Government's disengagement from certain activities. Private sector

reluctance to take over the privatized industries can be explained

by the problems experienced in the sector. Indeed, development is

hampered by the high cost of finance and inputs, the difficulties of

obtaining access to credit, the lack of infrastructure, and the

power cuts as well as the structure of import duties (negative

escalation from unprocessed products to finished goods). These

different factors push up the cost of certain inputs and basic

services, which generally cost more in Guinea than in other

countries of the West African subregion, thereby limiting the

international competiveness of Guinean manufactured products.

Efforts have been made to liberalize the services sector, largely

dominated by informal trade. However, they have been followed up

by little in the way of commitments at the multilateral level, which

means that the irreversibility of the reforms is not guaranteed.

Guinea's bindings are limited to measures concerning modes of

supply of certain services in the field of transport, hotel services,

veterinary medicine and social services. Moreover, the monopolies

enjoyed by certain private or mixed enterprises have been

sanctioned in the supply of certain services, either de facto

(because of the small size of the market) or as a transitional step

towards future full liberalization. Thus, the Soci?t? de

t?l?communications de Guin?e (SOTELGUI), which is currently 60

per cent owned by Telecom Malaysia Berhard and 40 per cent

owned by the Guinean Government, has a monopoly over the

supply of basic telecommunication services. The autonomous port

and the airport of Conakry are managed by public or semi-private

enterprises, where the Government is a majority shareholder.

Trade policies and trading partners

As can be seen from the growth rate of the economy and the GDP

per capita for almost a decade, the reforms introduced with a view

to liberalizing the Guinean economy have begun to bear fruit.

However, it will be some time before Guinea will be able to fully

exploit its enormous potential. This is due to the lack of

infrastructure, one of the main reasons for the relatively high cost

of inputs and basic services. By pursuing its reforms, including

privatization, and by redirecting public investment towards basic

infrastructure, Guinea should be able to improve the international

competitiveness of its products by reducing production costs, and

to attract private capital. By strengthening its competition policy,

Guinea would be able to ensure that the reform of State

enterprises did not result in the transfer of monopolies originally

held by those enterprises to private companies. This threat, which

is favoured, inter alia, by the limited size of the market, appears to

be taking concrete form in certain branches of activity.

Like the other developing countries, Guinea would like the results of

the Uruguay Round to be more widely known. According to the

authorities, this is particularly necessary and urgent owing to the

fact that, not having directly participated in the negotiations,

certain aspects of these results and the scope of certain

commitments are not very well understood. This is true, for

example, for Guinea's commitments in the form of tariff bindings.

Thus, Guinea would appreciate technical assistance in this respect.

TRADE POLICY REVIEW BODY: GUINEA

Report by the Government Parts I and II

I. introduction

1. The Republic of Guinea is situated on the west coast of Africa.

It covers an area of approximately 245,000 km2 and has a

population of 7.1 million (most recent census of 1997), i.e. an

average density of 17 inhabitants per km2.

2. Annual per capita income in Guinea is US$513, which places it in

the category of the world's least-developed countries (LDCs).

3. With respect to the economic situation in Guinea, it should be

noted that the change in political regime of 3 April 1984 marked the

birth of a new system for managing the country. From the political

standpoint, the cornerstone of the system is pluralist democracy,

while from the economic standpoint it is the encouragement of

private initiative and free enterprise.

4. Until 1984, the Guinean economy, which at the time was highly

centralized, was in a difficult situation, with a negative growth

rate, an overvalued currency and a GDP of less than US$300.

5. In 1986, Guinea firmly opted for a liberal economy. With the help

of two of its main development partners, the IMF and the World

Bank, it launched a structural adjustment programme.

6. This programme essentially aimed at re-establishing

macroeconomic balances with a view to creating the necessary

conditions for sustainable economic growth in the country.

7. Specifically, the programme involved:

(i) Complete restructuring of the country's banking system, with

the creation of six private commercial banks;

(ii) change of currency, readjustment and liberalization of the

exchange rate against the main foreign currencies;

(iii) privatization of all State enterprises;

(iv) reduction in civil service personnel.

8. Following these reform measures, GDP growth rate in real terms

rose to an average of 4.4 per cent during the period 1987-1990.

9. The inflation rate fell from 71.9 per cent in 1987 to 3 per cent in

1996, and the current balance-of-payments deficit dropped from

13.4 per cent of GDP in 1988 to 8.9 per cent in 1995.

10. In 1996, the new Guinean authorities brought in following the

restructuring of the Government in July of that year, with the

appointment of the Prime Minister, set as the main targets of

Guinea's current economic policy:

(i) To achieve economic growth in real terms of about 4.9 per cent

of GDP per year (5 per cent on average for the rural sector);

(ii) to reduce the inflation rate;

(iii) to reduce the external current account deficit in order to

rebuild official reserves in a significant way;

(iv) to reduce the budget deficit;

(v) to increase primary savings;

(vi) to reduce the deficit in the current account of the balance of

payments;

(vii) to consolidate and improve the legal and institutional

framework;

(viii) to strengthen primary education and improve the quality of

educational services;

(ix) to develop human resources.

11. To that end, the Guinean Government took certain concrete

steps while at the same time seeking to promote and attract

foreign direct investment by redirecting its resources towards

priority and high value-added sectors:

(i) Adoption of a programme for ensuring the security of customs

revenue in cooperation with an independent surveillance company;

(ii) improvement of the collection of fishing fees;

(iii) increase in revenue from the special tax on petroleum

products;

(iv) control and reduction of exemptions;

(v) reduction of State expenditure by more than 30 per cent.

II. trade policies and practice

A. general trade policy objectives

12. The liberalization of Guinea's economic activities has found

concrete expression in the trade area through:

(i) Transfer to the private sector of all commercial functions

formerly exercised by the State;

(ii) creation of structures for private sector support and promotion;

(iii) continued implementation of the programme to build up export

facilitation infrastructures;

(iv) integration of trade into the production process with active

private sector participation;

(v) determination and improvement of trade regulations;

(vi) adaptation of Guinean laws and regulations to bring them into

line with the new requirements of the multilateral trading system

resulting from the WTO Agreements.

13. Generally speaking, the main objective of Guinea's trade policy

is to develop the trade sector in the country in order to make it a

leading instrument of support for the production sector (industry,

agriculture, crafts, etc.) and to enable it to play its full role as an

engine of growth and economic development.

14. To that end, the Guinean Government will pursue its efforts to:

(i) Guarantee and preserve complete liberalization of the trade

professions;

(ii) ensure the maintenance of a policy of free prices and

competition;

(iii) streamline the formalities for setting up enterprises;

(iv) promote crafts and tourism;

(v) broaden the foundations of the structure permitting permanent

consultations with the private sector.

B. Sectoral trade policy objectives of Guinea

1. Agriculture

15. The principal objective of the Guinean Government's policy in

the field of agriculture is to rapidly ensure food security for all of

the country's populations and to supply foreign markets with export

goods that are competitive from the point of view of quality,

quantity and price.

16. To that end, the Guinean Government launched, in 1986, a

vast programme for the development and modernization of

agriculture with the active participation of the private sector and

the support of its main bilateral and multilateral development

partners.

17. This programme, which is still under way, essentially aims at:

- Improving production methods in rural areas to increase the

output of farmers;

- introducing systems for financing agriculture in rural areas;

- improving agricultural sector output by creating and managing

pilot plantations and nursery production, with subsidization of the

purchase of selected seedlings by farmers;

- restoring and extending the rural dirt road network;

- promoting the use of agricultural inputs.

2. Energy

1. The policy of the Guinean Government in this sector targets at

comprehensive coverage of energy demand throughout the country

in the best possible conditions.

2. To that end, the following measures are planned:

- Rehabilitation of existing production, transport and distribution

facilities and creation of new units, while at the same time ensuring

a regular supply of spare parts;

- updating of studies under the Production and Transport Master

Plan with a view to revising the national investment programme in

that sector;

- improvement of technical, commercial and financial management

in the sector;

- improvement of the current institutional framework by

establishing the necessary legal and financial conditions for

introducing the different types of private energy production;

- development of a rural electrification programme;

- continuation of the campaign to promote new and renewable

forms of energy.

3. Industry

3. The Government's objectives in this sector focus mainly on

reviving its programme for the industrialization of the country,

beginning with support for private operators.

4. This policy will involve:

- Helping certain industrial units that have already been privatized

or that are currently being privatized to revive their activities;

- streamlining of the formalities for setting up new enterprises;

- creating serviced industrial zones in the main regions of the

country;

- creating a framework for establishing relations between Guinean

and foreign operators.

4. Mining

5. The mining sector has long been the driving force of the Guinean

economy, accounting alone for more than one third of the

country's GDP. In view of its potential and the prospects for

exploiting that potential, this sector will be called upon to play an

increasingly important role in the country's economy.

6. The Government's objectives in this area include:

- The strengthening and restructuring of existing enterprises such

as the Compagnie des Bauxites de Guin?e (CBG), the Soci?t?

Friguia, the Soci?t? des Bauxites de Kindia (SBK), the Soci?t?

aurifaire de Guin?e (SAG), and the Projet diamants kimberlitiques;

- the adoption of a more favourable institutional, legal and financial

framework (Mining Code, creation of a single window for mining

investors, the Centre de Promotions et de D?veloppment Minier

(CPDM);

- the medium- and long-term implementation of major mining

projects such as:

- an integrated aluminium factory project with a capacity of

200,000 T/year;

- the Dian Dian alumina and bauxite complex with a capacity of

1,000,000 T/year;

- the Nimba Simandou project and the Transguinean Railway with a

deep-water port at Conakry, capacity 50,000,000 T/year.

7. It must be pointed out that the above-mentioned projects

require considerable capital mobilization involving several hundreds

of millions of US dollars, and that this, in itself, is one of the major

objectives of the Guinean Government in its effort to achieve

sustainable development for the country.

5. Fishing and livestock production

8. Here, the objective is to maximize the economic and social

benefits for the country of exploiting its fisheries and pastures.

This takes account of the need to safeguard the balance of the

ecosystem and the sustainability of the exploitation of resources

while seeking to increase the contribution of fishing and livestock

to food security, job creation, improving the income of fishermen

and breeders and boosting the State revenue.

9. Accordingly, the Government is seeking to:

- Introduce an efficient system for the planning and rational

management of resources by strengthening the monitoring and

protection of fishing zones and by conducting research;

- step up its combat against epizootics and develop a livestock

food supply base;

- strengthen basic infrastructures and improve the value added of

fishing and livestock products;

- support the export of fishing and livestock products and the

investments made in that respect, and improve the value added of

fishing products;

- encourage the emergence of economic operators in the areas of

small-scale fishing, industrial fishing, aquaculture and breeding;

- decentralize and improve the monitoring and surveillance of

Guinean territorial waters.

6. Services

(a) Banks

10. The reorganization of the Guinean banking system was among

the Government's priorities in launching the major economic reforms

in 1986.

11. In the context of these reforms, banking activities were

liberalized, the national banks were closed and the BCRG

restructured and restored to its status of bank of issue,

responsible for controlling and monitoring the entire Guinean

banking system.

12. Since then, six private commercial banks have been set up and

are currently operating in Guinea.

13. The main objectives of the Government in this area remain:

- Further consolidation of the country's banking and financial

system;

- deployment of the banking system towards the interior of the

country with a view to introducing more secure means of payment

(cheques, transfers, cards, etc.) throughout the national territory;

- more comprehensive supervision of the banking and financial

system, including mutual and rural credit networks;

- assistance with the introduction of mechanisms to facilitate

investment and provide the necessary financing;

- creation of a financial market as a tool for providing enterprises

with long-term savings.

(b) Transport, communications and telecommunications

14. The Government's objectives in this area are to ensure

infrastructure maintenance and rehabilitation, and access to

efficient transport, communication and telecommunication

networks.

15. The reaction of the private sector to the complete liberalization

of activities in these areas has been very encouraging. Private

road transport throughout the country has developed considerably.

16. The general objectives are the following:

Air transport:

- Rehabilitation of the main airports of the country's interior by the

installation of new airport facilities;

- restructuring of the national airline, Air Guin?e, with the

privatization of part of its capital;

- development of the activities of the Conakry International Airport

through the implementation of its master plan aimed at doubling

traffic to and from Conakry by the year 2000.

Maritime, river and land transport:

- Improvement in the organization of road traffic in the city of

Conakry (road signs, marking out of stops, safety);

- development of the road network by restoring the dirt and paved

roads and asphalting the trunk roads;

- construction of bridges on the Fatala and the Niger;

- restructuring and privatization of the Soci?t? g?n?rale de

transport guin?ens (SOGETRAG);

- computerization of the management of the country's vehicle fleet

and the system for the delivery of transport documents (driving

licences, registration documents, transport authorizations, etc.) as

well as the management of statistical data on road accidents;

- construction of new bus stations at Conakry and in the interior of

the country;

- organization of cross-border road transport with a view to

subregional integration;

- rehabilitation of the first 36 kilometres of the Conakry-Niger

railroad with a view to constructing a dry port in the outskirts of

Conakry at mileage point PK 36/38, and restoring a passenger train

on that segment;

- maintenance in working order of the 662 kilometres of railroad

between Conakry and Kankan (second largest town) and extension

of that line up to the Nimba and Simandou mountains

(Transguinean Railway) with a view to combining passenger and

freight transport with heavy mineral transport.

Telecommunications:

34. The liberalization of the telecommunications sector in Guinea

has brought about significant progress with the rapid and dynamic

take-over by the private sector of activities freed by the State,

for example:

- Setting up of the Soci?t? des t?l?communications de Guin?e

(SOTELGUI) (60 per cent private and 40 per cent State) and the

Office de la poste guin?enne (OPG);

- granting of operating licences for value added services (cellular)

to three other private operators, TELECEL, SPACETEL and

WIRELESS.

35. The objectives are:

- The installation of a short-wave radio emission centre for national

and international coverage and a maritime radio station;

- installation (coastal station) of a frequency management centre

and an official network for the administration;

- installation of 500,000 telephone lines by the year 2010;

- resumption of postal financial services (savings bank, national

and international payment orders);

- development and improvement of postal services.

(c) Tourism

36. In addition to its considerable potential in the fields of mining,

energy and agriculture, Guinea also has much to offer in the field of

tourism. Nonetheless, tourism remains one of the least developed

activities in Guinea.

37. Thus, the development of tourism is one of the Government's

priorities. Its main objectives in this area are:

- To lay the foundations for a proper takeoff of the Guinean tourist

industry by developing an integrated tourist package with an

improved image of Guinea as a destination, encouraging

professionals in the sector to invest in Guinea, training human

resources and developing a tourist code;

- encouraging and facilitating the private-sector development of

tourist sites and access roads throughout the country.

(d) Crafts

38. The Government's promotional activities in this area consist in:

- Encouraging initiatives for the creation of trades chambers;

- developing and implementing a handicrafts code;

- implementing a policy aimed at encouraging the creation of craft

villages;

- organizing sales exhibitions of Guinean crafts both at home and

abroad.

C. General description of the import and export regime

39. With the State's withdrawal from all economic activities, trade

has been completely liberalized. Import and export operations have

been facilitated and transferred to the private sector.

1. Imports

40. The import licences required during the State trading period

were abandoned in 1986 and replaced by Descriptive Import

Applications (Demandes descriptives d'importations DDI).

41. DDIs are required for the import of goods with an f.o.b. value

of at least US$2,000. Goods whose f.o.b. value exceeds US$5,000

are subject in addition to preshipment inspection of quantity,

quality and price.

42. Goods whose value is less than US$2,000 are not subject to

DDIs, but to an Import Description (Descriptif d'importation DI)

and are not subject to preshipment inspection.

43. As in all other countries, the import into Guinea of products

that are hazardous to human health is prohibited. The import of

strategic goods linked to State security is subject to a special

authorization (firearms, ammunition, explosives, etc.).

(ii) Exports

44. As in the case of imports, export licences, which had been

mandatory, have been abandoned and replaced by Descriptive

Export Applications (Demandes descriptives d'exportation DDE).

Thus, all Guinean goods exports, whatever the destination, have

been liberalized since the beginning of the major reforms in 1986.

D. Legal and regulatory trade policy framework

1. Domestic laws and regulations governing the

implementation of trade policy

45. Before 1985, Guinean trade was essentially conducted by the

State through state trading enterprises and through a barter

system for imports and exports with its former Eastern European

partners.

46. In 1986, Guinea's new trade policy based on complete

liberalization of trading activities in the country was defined in a

keynote address by the Head of State.

47. The Constitution is the supreme law in Guinea. Legislative

power is vested with the National Assembly which votes on the

laws. The President of the Republic promulgates and ratifies the

laws, and is also vested with the authority to negotiate and

conclude international agreements. He may delegate that authority

to a minister or to any other member of the Executive.

48. Where there is a need to amend legislation in order to bring it

into conformity with the provisions of an agreement, it is the

National Assembly that votes on the law authorizing such an

amendment.

49. In Guinea, as in a number of other countries, trade policy is

implemented by several institutions and executive bodies of the

Government.

50. It is the Minister for the Promotion of the Private Sector,

Industry and Trade, as the main person in charge of Guinea's trade

policy, who submits, where necessary, bills pertaining to trade. The

laws governing trade are:

- Law on the Control of Goods;

- Law on Free Competition and Pricing Policy;

- Law on Weights and Measures;

- Law on the Code of Economic Activities;

- Law on Tourism.

2. Formulation and review of trade policies

51. The Ministry for the Promotion of the Private Sector, Industry

and Trade is in charge of the planning, formulation, implementation

and administration of Guinea's trade policy. Trade laws drafted by

the Ministry (in cooperation with other ministries) are submitted to

the Legislative for consideration and a vote.

52. It is the Ministry for the Promotion of the Private Sector,

Industry and Trade that prepares trade policy measures in

consultation with:

- The private sector as represented by its different support and

promotion bodies (Chamber of Commerce, Industry and Crafts of

Guinea, Guinean National Council of Employers, Guinean Traders'

Association, Guinean Foreign Investors' Club, National Union of

Guinean Industrialists, etc.); and

- the other competent institutions: Ministry of the Economy and

Finance (National Customs Directorate), Ministry of Planning and

Cooperation, Ministry of Agriculture, Water and Forests.

17. In Guinea, private sector participation in the development of

trade policy takes place through structures created with the State

for consultations on various aspects of the national economy

(Advisory Committee on Prices, for example).

(i) Bilateral, multilateral regional and preferential trade

agreements

18. Having opted for a liberal economy, Guinea has long been

seeking to create the necessary conditions for harmonious

integration into the world economy by developing its trade relations

and diversifying its trading partners.

19. The Government's main objective in this respect is to create an

environment favourable to the development of Guinea's

participation in international trade while ensuring increased market

opportunities for Guinean products abroad.

20. To that end, Guinea has concluded the following agreements:

- Agreement Establishing the WTO;

- the Lom? Convention between the ACP and the EU;

- the ECOWAS Treaty;

- the Mano River Union.

21. Guinea is a signatory to the Fourth Lom? Convention between

the European Union and the ACP countries, under which it exports

goods to the Community market free from customs duty and other

charges on a non-reciprocal basis.

22. As an original Member of the WTO, Guinea attaches to its

Membership the importance it deserves. Guinea hopes that the

WTO Agreements will serve as a basis for increasing the share of

developing countries in general and LDAs in particular in world

trade, in the framework of a new rules-based multilateral trading

system.

23. The Guinean economy depends largely on its exports of mining

products. Guinea sincerely hopes that the rules deriving from the

Uruguay Round Negotiations will benefit its economy and that the

downward trend in the benefits linked to the Generalized System of

Preferences (GSP) will be reversed.

24. As one of the LDCs and a beneficiary of the GSP, Guinea hopes

that all its exports, including mining products, will continue to

benefit from the tariff concessions (duty-free status or

considerably reduced duty) in the developed and developing

countries.

25. Guinea is also a founding member of the Economic Community

of Western African States (ECOWAS). However, this Organization

is currently suffering from an unstable geographical context in the

subregion. Accordingly, its vocation as an integration body is

overshadowed by the concern for stability and the maintenance of

peace in the area. The same is true for the Mano River Union. In

the face of these realities, Guinea's objective is to ensure that

economic priorities urgently resume their place at the forefront of

subregional concerns. To that end, Guinea has sought to revive

the political will needed to restore the raison d'?tre of these two

groupings and their vocation as economic integration bodies.

26. It should also be noted that Guinea has concluded standard

bilateral trade agreements with a certain number of countries.

These agreements provide for most-favoured-nation treatment and

do not grant any particular tariff preferences. The countries in

question are Guinea-Bissau, China, Tunisia, Egypt, Turkey, C?te

d'Ivoire, Mali and Ukraine.

27. In April 1997, Guinea concluded a trade and tariff convention

with Morocco providing for total exemption from tariffs and taxes

with equivalent effect for certain Guinean and Moroccan products

traded between the two countries, taken from Schedules 1 and 2.

The products covered by this convention are those originating

entirely in one of the two countries or having undergone a degree

of processing of 40 per cent or less.

28. Guinea was also among the first countries to accede to the

Global System of Trade Preferences (GSTP) and also signed the

Agreement Establishing the Common Fund for Commodities as well

as the International Coffee Agreement.

(1) Implementation of trade policy

3. Trade policy measures applied by Guinea

(a) Customs duties

29. A few years ago, in order to meet the requirements of a liberal

economy, Guinea embarked on a thorough reorganization of its

customs system and its tariffs.

30. The import duties and taxes currently in force are:

- The import customs duty (droit de douane d'entr?e - DDE) at a

normal rate of 7 per cent and a reduced rate of 2 per cent;

- the fiscal import duty (droit fiscal d'entr?e - DFE) at a rate of 8

per cent (except on rice, for which there is a flat rate of GF 58,752

per tonne, and flour and vegetable oil for which the normal rate is

23 per cent and the reduced rate is 6 per cent);

- the clearance fee (redevance pour traitement de liquidation -

RTL) of 2 per cent;

- the surcharge for the consumption of certain so-called luxury

items, at rates of 20 per cent, 30 per cent, 40 per cent, 60 per

cent and 70 per cent according to the nature of the product.

31. Apart from the above duties and taxes, Guinea also levies the

internal taxes listed below on certain products. Some of these

taxes are also levied on national production. They are:

- Value added tax (VAT) at a rate of 18 per cent;

- Special Tax on Petroleum Products (TSPP) of GF 355 per litre of

petrol, GF 245 per litre of diesel and GF 160 per litre of oil;

- Registration Tax (TE) at a rate of 0.5 per cent (investment code

regime);

- Storage Tax (TEN) at a rate of 1 per cent;

- Transit Duty (DT) at a rate of 3 per cent;

- Additional Centime (CA) for the Chamber of Commerce at a rate

of 0.25 per cent;

- ECOWAS Community Levy (PC) at a rate of 0.5 per cent.

32. The documents required for customs transactions are the Tax

Statement (BDT) delivered by the government supervisory body,

the SGS, the purchasing invoice, the bill of lading or airway bill, the

DDI, the certificate of origin and, where applicable, the

phytosanitary certificate.

(b) Customs valuation and preshipment inspection

33. The customs valuation procedure currently in force in Guinea is

based on the Brussels Definition of Value i.e. the normal price of

the goods or the price which they would fetch at the time of

registration of the detailed declaration and at the place of

introduction into the customs territory.

34. In June 1996, Guinea signed a contract with the Soci?t?

g?n?rale de surveillance (SGS) for the preshipment inspection of all

goods imported in the framework of the operation known as the

Programme for the Security of Customs Revenue (Programme de

s?curisation des recettes douani?res PSRD). The SGS controls

the quantity, quality and price of the goods and determines the

customs value and tariff heading, monitors the settlement and

recovery of duties and taxes, and handles the documentary and

physical follow up of the suspensive arrangements and of customs

duty exemptions.

4. Current trade liberalization programme

35. One of the first measures taken by the Government in 1986,

the year of the great economic reforms in Guinea, was to liberalize

trade. All of the state trading enterprises (131 at the time) were

closed down, import and export licences eliminated, all trading

functions transferred to the private sector, the State banks

closed, import and export restrictions removed, and structures for

the support and promotion of the private sector introduced

(Chamber of Commerce, Employers' Federation, trades

associations, etc.). At the same time, steps were taken to

rationalize tariffs with a view to facilitating import and export

activities. The complete computerization of customs services as

well as port services at Conakry and the liberalization of the

exchange rate of the Guinean Franc against foreign currencies also

contributed to facilitating trade activities.

36. In order to strengthen its trade liberalization efforts, the

Guinean Government promulgated a law on competition and

freedom of prices. This law aims to monitor any infringements of

free trade practices, such as agreements, mergers, take-overs,

withholding of stocks, monopolies and oligopolies.