72718 v1 World Trade Indicators 2009/10 Mozambique Trade Brief Trade Policy In 2008, to cope with the food crisis, Mozambique Mozambique has staged a remarkable recovery established an agreement with Vietnam to import following 16 years of civil war that ended in the early 400,000 tons of rice each year for the next three years. 1990s, successfully embarking on a program of trade Furthermore, due to high commodity prices, the reforms. As a result, it has one of the most open trade government suspended duties on imports of fuel and regimes in Africa as reflected in its MFN Tariff Trade food. Restrictiveness Index (TTRI)1 of 5.7 percent, well below both the Sub-Saharan Africa (SSA) and low- income country group averages of 11.3 percent and External Environment 11.6 percent, respectively. Based on the TTRI, it ranks Mozambique’s Market Access TTRI4 including 65th out of 125 countries (where 1st is least restrictive). preferences is 0.8 percent, reflecting favorable market The agricultural sector remains more protected (6.8 access when compared to the SSA (3.9 percent) and percent) than the non-agricultural sector (5.5 percent). low-income (5.6 percent) averages. The weighted Mozambique has five tariff bands (0, 2.5, 5, 7.5, and 20 average overall rest of the world tariff (including percent) with the highest tariff rate applied to basic preferences) faced by its exports is 2.3 percent, with its food products such as meat, fish, fruits, vegetables, agricultural exports facing much higher tariff barriers beverages, and clothing. Mozambique also applies (12.4 percent) than its non-agricultural products (0.5 surtaxes on imports of sugar, cement, and certain percent). Mozambique’s currency, the metical, galvanized steel products and imposes an export tax of appreciated by 6 percent against the U.S. dollar in 18 percent on raw cashews.2 The country’s latest nominal terms in 2008, making exports more average MFN applied tariff is 10.3 percent, a expensive in foreign currency terms. noticeable decline from its value of over 15 percent in the mid 1990s. The maximum MFN applied tariff, Mozambique belongs to the 15-member Southern excluding alcohol and tobacco, is 20 percent. Although African Development Community (SADC) whose Mozambique has bound tariffs on all agricultural Trade Protocol, which was signed in 1996 and came products at a ceiling rate of 100 percent under its into force in 2000, culminated in the launch of a free Uruguay Round commitments, bindings on non- trade area in August 2008. As negotiations between agricultural products are very limited (only 19 tariff the seven-country SADC Economic Partnership lines have been bound at either 5 percent or 15 Agreement (EPA) group and the EU towards a percent)3, resulting in a trade policy space, as measured comprehensive EPA could not be completed prior to by the wedge between bound and applied tariffs (the the December 2007 deadline, Mozambique signed an overhang), of 84.5 percent. Regarding its commitment “interim� agreement with the EU in June 2009. The to liberalizing services trade, Mozambique ranks 120th country continues to negotiate a comprehensive EPA (out of 148) on the GATS Commitments Index. with the EU as part of the SADC EPA group. Behind the Border Constraints Unless otherwise indicated, all data are as of August 2009 Mozambique remained in the bottom 30 percent of and are drawn from the World Trade Indicators 2009/10 international business environments in 2009, being Database. The database, Country Trade Briefs and ranked 135th out of 183 countries, in the Ease of Trade-at-a-Glance Tables, are available at Doing Business index. In addition, Mozambique http://www.worldbank.org/wti. scores 2.29, on a scale of 1 to 5, on the Logistics Performance Index (LPI), a measure of the extent of If using information from this brief, please provide the trade facilitation in the country, in line with the low- following source citation: World Bank. 2010. income average but below the SSA average of 2.35. It “Mozambique Trade Brief.� World Trade Indicators ranks 110th (out of 150) in the world and 22nd (out of 2009/10: Country Trade Briefs. Washington, DC: World 39) in the SSA region (with South Africa leading the Bank. Available at http://www.worldbank.org/wti. World Trade Indicators 2009/10 Mozambique Trade Brief regional group). Among the LPI subcategories, the constant. It is weighted by import values and import country’s best performance is in lowering domestic demand elasticities of trading partners. logistics costs and ensuring the timeliness of 5. Bank of Mozambique, 2008, 2009. shipments in reaching their destination, while its weakest performance is in the ability to track and trace shipments. References African Economic Outlook. 2009. “Mozambique.� Trade Outcomes African Economic Outlook. May 27, 2009. . 2008 following a 2.1 percent fall in 2007, driven in part Bank of Mozambique. 2009. External Statistics—Balance of by increases in imported capital goods for ongoing Payment—2009-03-31. . titanium from the Moma mining project, but European Commission. 2009. “Economic Partnership dampened by a fall in aluminium exports owing to Agreements: Mozambique Joins EU-SADC Interim energy shortages, exports grew at 6.8 percent EPA in Maputo, Mozambique (15 June 2009).� following an 8.2 percent fall in 2007. Exports will European Commission. June 17, 2009. continue to register positive growth of 2 percent in . In nominal terms, trade grew at 16.5 percent in 2008 more than twice the growth rate of 5.9 percent in Food and Agriculture Organization of the United Nations 2007. Import growth was 20.2 percent in 2008, a sharp (FAO). 2008. “Policy Measures Taken by Govern- acceleration from the 7.6 percent growth rate in 2007, ments to Reduce the Impact of Soaring Prices— and export growth accelerated to 11.8 percent from Africa—Mozambique.� FAO. December 15, 2008. 3.7 percent in 2008. Goods exports grew at a higher . rate of 10 percent in 2008 compared to 1.3 percent in International Monetary Fund (IMF). 2009. International 2007, but are expected to contract by 31 percent in Financial Statistics. IMF. August 2009. 2009. National statistics5 show that goods exports had . already declined by 36 percent in nominal U.S. dollar SADC Today. 2009. “Implementation of SADC Trade terms in the first quarter of 2009 compared to the Protocol on Track.� . that of goods exports in 2008, with services exports Southern African Development Community (SADC). increasing by 21 percent compared to 18.7 percent in 2008. “Final Communiqué of the 28th Summit of 2007. Services export growth is, however, expected to SADC Heads of State and Government.� SADC. slow to 9.3 percent in 2009. FDI flows into the August 2008. . targeted at projects on aluminium, gas and electricity The Economist Intelligence Unit (EIU). 2009. Country exports to South Africa. Report—Mozambique. EIU. July 2009. . World Trade Organization (WTO). 2009. “Trade Policy Notes Review—Mozambique.� WTO. June 30, 2009. 1. TTRI calculates the equivalent uniform tariff that . import shares and import demand elasticity. 2. WTO, 2009. 3. WTO, 2009. 4. MA-TTRI calculates the equivalent uniform tariff of trading partners that would keep their level of imports