Statement by Deputy U.S. Trade Representative Michael Punke at the WTO Trade Policy Review of Madagascar
July 14 and 16, 2015
*For the Record*
Thank you, Chair. The United States would like to welcome Minister Rabesahala and his entire delegation on the occasion of Madagascar’s third WTO Trade Policy Review.
We appreciate the Government of Madagascar and the WTO Secretariat’s reports. Each describes the various challenges that Madagascar must overcome and the questions it must address in order to achieve more effective participation in the global trading system, and to use trade as an instrument for realizing greater economic growth and development. I would also note our appreciation for the written replies to our questions submitted in advance of this review and we will give careful consideration to the responses.
Since the last trade policy review, we recognize the challenges that Madagascar has continued to face with respect to the negative economic repercussions of the socio-political crisis that lasted from 2009 to 2013. Despite the successful resolution of this crisis, culminating in the return to democracy and political pluralism in 2014, this five-year period of instability has left an enduring mark on Madagascar’s economy, including a slowdown in GDP growth—indeed, the government’s report notes that between 2009 and 2013, growth averaged only 0.9 percent—low levels of investment in transport infrastructure, including road and rail; reduced government services; and stubbornly high unemployment, with over 90 percent of Madagascar’s population living in poverty.
We agree with the Secretariat’s Report that restoring infrastructure and combating severe poverty are two of the most pressing issues Madagascar faces in 2015, and we commend the new Government for preparing and implementing a National Development Plan covering the period of 2015 to 2019 to address these issues.
Madagascar’s political crisis of 2009 had a profound, negative, and lasting impact on U.S.-Madagascar bilateral trade. Prior to the crisis, U.S. imports from Madagascar stood at $324 million in 2008, 85 percent of which entered under African Growth and Opportunity Act (AGOA) trade preferences—almost exclusively apparel products. The crisis, however, precipitated the loss of AGOA and with it, important duty-free U.S. market access for Madagascar’s textiles and apparel sector. The loss of AGOA led to the closure of at least 40 apparel and textile factories, the loss of an estimated 30,000-100,000 jobs, and the loss of millions of dollars in potential exports and foreign investment. As a result, the share of Malagasy exports to the United States plummeted from almost 18 percent in 2007 to 8.5 percent in 2014, as noted in the Secretariat’s Report.
We commend Madagascar’s return to democracy and political pluralism as witnessed by the establishment of a democratically elected government in January 2014, and are pleased that Madagascar regained its AGOA eligibility in June 2014 as a result. With the approval of its AGOA Apparel Visa System in December 2014, Madagascar has already started exporting articles of apparel to the United States. We are committed to working with Madagascar not only to help it make greater use of the benefits of AGOA to increase bilateral trade, but also to help it improve its capacity to boost regional trade and make the most of the opportunities afforded by its membership in the WTO.
However, as the Secretariat’s Report points out, Madagascar’s participation in the multilateral trading system remains limited. We encourage Madagascar to continue to work towards establishing a transparent trade policy process that will allow for more active engagement in the multilateral trading system and more follow-up on multilateral issues. We want to recognize Madagascar’s progress to date on implementing the WTO agreements, including the Customs Valuation, SPS, and TBT agreements. Madagascar’s efforts to improve notification requirements and to update WTO notifications are particularly noteworthy, and we encourage Madagascar to continue these efforts, especially with respect to TBT notifications.
We recognize and commend Madagascar’s efforts to improve its customs services in order to streamline the number of procedures required and reduce the time to trade across borders, as noted in the Secretariat’s Report. We note that progress has been made on implementing the single electronic window and the move towards paperless customs clearance procedures. Yet, as the Secretariat’s Report points out, more work can be done to streamline documentation and physical control, particularly for exports. In addition, we agree with the Secretariat’s Report that fees associated with imports or export clearances should reflect the services provided, and we therefore encourage Madagascar to ensure that fees be limited in amount to the approximate cost of services rendered.
We note that the establishment of a national trade facilitation committee in Madagascar could help improve coordination among various border agencies. We agree with the Secretariat’s Report that a lack of coordination contributes to border delays and overall border costs that reduce Madagascar’s competitiveness. The WTO Trade Facilitation Agreement (TFA) would set the stage for more efficient customs and border procedures and coordination in Madagascar, and we encourage Madagascar to ratify and implement the agreement as soon as possible. The TFA is widely recognized as having broader development benefits in addition to promoting regional integration, private-sector investment, and export promotion. The United States stands ready to work with Madagascar to ensure its timely implementation of the agreement.
To conclude, the United States recognizes the unique challenges Madagascar faces as it moves forward toward national reconciliation. We agree that efforts to reform trade policy to meet Madagascar’s development objectives must be underpinned by improvements to its socio-political environment. The United States stands ready to work with Madagascar, and appreciates the opportunity to participate in this review of Madagascar’s trade policy. We look forward to our dialogue with the government, both within the WTO and on a bilateral basis.
Thank you, and we wish you a successful Trade Policy Review.