United nations ConferenCe on trade and development A N G O L A K R O W E M A R F Y C I L O P E D A R T United nations ConferenCe on trade and development A N G O L A K R O W E M A R F Y C I L O P E D A R T ii TRADE POLICY FRAMEWORK: ANGOLA NOTES The views expressed in this publication are those of the authors and do not necessarily reflect the views of the Government of Angola or of the United Nations Secretariat. The designations employed and the presentation of the material do not imply the expression of any opinion on the part of the United Nations concerning the legal status of any country, territory, city or area, or of authorities or concerning the delimitation of its frontiers or boundaries. Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a reference to the document number. A copy of the publication containing the quotation or reprint should be sent to the UNCTAD Secretariat at: Palais des Nations, 1211 Geneva 10, Switzerland. This publication has not been formally edited. References to dollars are United States dollars. In tables, figures enclosed in square brackets are negative. For further information on the Trade Negotiations and Commercial Diplomacy Branch and its activities, please contact: Ms. Mina Mashayekhi Head Trade Negotiations and Commercial Diplomacy Branch Division of International Trade in Goods and Services, and Commodities Tel: +41 22 917 56 40 Fax: +41 22 917 00 44 www.unctad.org/tradenegotiations UNCTAD/DITC/TNCD/2015/5 Copyright United Nations 2016 All rights reserved ACKNOWLEDGMENTS iii ACKNOWLEDGEMENTS The Angolan Trade Policy Framework was prepared at the request of the Ministry of Trade of Angola by an UNCTAD team led by Mina Mashayekhi, Head, Trade Negotiations and Commercial Diplomacy Branch, Division on International Trade in Goods and Services, and Commodities (DITC), UNCTAD. The team was composed of Edward Chisanga and Thomas Mathew, economic affairs officers of the Trade Negotiations and Commercial Diplomacy Branch, DITC, UNCTAD. Insightful comments received from Mr. Farmhouse Prado, Director of International Cooperation, Ministry of Trade of Angola, as well as other relevant stakeholders are gratefully acknowledged. Cover design and desktop publishing by Laura Moresino-Borini. iv TRADE POLICY FRAMEWORK: ANGOLA ACRONYMS AND ABBREVIATIONS ACP African, Caribbean and Pacific States ADB African Development Bank AGOA African Growth and Opportunity Act ANIP Agência Nacional de Investimento Privado (National Private Investment Agency) APS Angola Payment System ATM automatic teller machine COMESA Common Market of Eastern and Southern Africa DFQF duty free and quota free EAC East African Community EBA Everything but Arms ECCAS Economic Community of Central Africa States EDEL Empresa de Distribuição de Energia Eléctrica ENE Empresa Nacional de Energia Eléctrica EMIS Inter-bank Services Company FDI foreign direct investment GATS General Agreement on Trade in Services GDP gross domestic product GNP gross national product GSP Generalized System of Preferences ICT information and communications technology IEPA interim economic partnership agreement IPRs intellectual property rights ITES information technology enabled services ITU International Telecommunications Union LDC least developed country LNG liquefied natural gas LPG liquefied petroleum gas NBA National Bank of Angola MDGs Millennium Development Goals MFN most favoured nation NTB non-tariff barriers NTM non-tariff measures OECD Organization for Economic Cooperation and Development OPEC Organization of Petroleum Exporting Countries R&D research and development S&D special and differential treatment S&P’s Standard and Poor’s SADC Southern African Development Community SME small and medium-sized enterprise SPS sanitary and phytosanitary measures SWOT strengths, weaknesses, opportunities and threats TBT technical barriers to trade TIFA Trade and Investment Framework Agreement TRIP trade-related intellectual property right UNCTAD United Nations Conference on Trade and Development WTO World Trade Organization EXECUTIVE SUMMARY v EXECUTIVE SUMMARY This study was prepared at the request of the Government of Angola in order to assist the country in elaborating a trade policy framework. The main challenge facing Angola in participating in international trade is the continued over-reliance on exports of one commodity, petroleum, which accounted for 99 per cent of total merchandize exports of $62.4 billion in 2014 and manufactured goods accounting for only 0.1 per cent. Rather than shrink, the proportion of exports of primary commodities has increased in the past 20 years. While it has diversified its export market from traditional developed countries, namely the European Union and the United States of America, to China, Angola has not correspondingly diversified its exported products. The central question remains how the country can improve its trade portfolio for economic diversification. Angola’s economy has been growing progressively over the last 20 years. Between 2004 and 2009, growth was in the range of 15–20 per cent but there is no evidence that that growth supported export diversification to a large extent. Now growth has declined from about 18 per cent in 2008 to about 2 per cent in 2014, and this performance may adversely affect export diversification efforts. The study examines Angola’s participation in international trade and its existing trade policy, and seeks to recommend some areas of policy changes that may help the Government to improve its trade performance and bring about inclusive development. As regards merchandise trade, the study identifies several sectors that could be usefully explored for the country’s export diversification efforts, particularly through accelerated agro-based industries development. These include coffee, tea, fruits, fruit juice, vegetables, maize, cassava, sugar cane, cotton, floriculture, sawdust briquettes, fisheries, palm oil and natural rubber. Some of these sectors have been important in improving export performance of some developing countries such as Malaysia in palm oil and Viet Nam in coffee. Other recommendations centre on improving capacities with supportive services infrastructures, and regulatory and institutional framework, improving and strengthening trade related fundamentals. As regards trade services, the study identifies some key services sectors in which reforms and improvement in the supply side would be necessary to boost trade. These include the energy, financial, construction, tourism, telecommunications and transport services. For example, it calls for improved quality of transportation and increased supply of road cargo transportation. For telecommunications services, it calls for raising funds to create a broadband infrastructure in order to connect all urban and rural geographic regions of the country and establish connections with the regional infrastructures supporting the development of telecommunications. For tourism services, it calls for development of the Angolan tourism services through quality products, incorporating the regional, cultural and natural diversity and to stimulate and facilitate the consumption of Angolan tourism products in the national, intraregional and international market. CONTENTS vii CONTENTS Notes ................................................................................................................................................................ii Acknowledgements ..........................................................................................................................................iii Acronyms and abreviations ...............................................................................................................................iv Executive summary ...........................................................................................................................................v I. PARTICIPATION IN TRADE ......................................................................................................................1 A. Overview ................................................................................................................................................2 B. Trade performance and trends ...............................................................................................................4 1. Trends in Angola’s trade in goods .....................................................................................................4 2. Exports and imports .........................................................................................................................4 3. Share of trade in GDP.......................................................................................................................5 4. Exports of manufactured goods .......................................................................................................6 4.1. Composition of exports in goods by sector ...............................................................................6 4.2. Exports in goods by destination ................................................................................................7 5. Imports .............................................................................................................................................7 6. Regional trade ..................................................................................................................................7 II. TRADE POLICY ENVIRONMENT AND INSTRUMENTS ...........................................................................9 A. Institutional framework .........................................................................................................................10 B. Existing trade policies and trade instruments .......................................................................................11 C. Trade policies by sector .......................................................................................................................11 1. Agriculture ......................................................................................................................................11 2. Industry and manufacturing ............................................................................................................12 3. Trade policy tools ...........................................................................................................................13 3.1. Tariff regime ............................................................................................................................13 3.2. Use of export tax ....................................................................................................................13 3.3. Non-tariff barriers ....................................................................................................................13 3.4. Market access conditions for top imports from Angola ............................................................14 4. Services sector ...............................................................................................................................15 4.1. Comparing trade in goods and services ..................................................................................16 4.2. Exports and imports of services ..............................................................................................16 III. STRATEGIES FOR ADVANCING DEVELOPMENT OF THE SERVICES SECTORS ...............................17 A. Overview ..............................................................................................................................................18 B. Angola and the United Nations Millennium Development Goals ............................................................18 C. Policy reform ........................................................................................................................................18 D. Investment ...........................................................................................................................................19 E. Services sector ....................................................................................................................................20 1. Enhancing growth and performance in the services sector .............................................................21 2. Building a master plan for Angola ...................................................................................................21 3. Strengthening established service sectors ......................................................................................22 4. Energy sector .................................................................................................................................22 4.1. Electricity ................................................................................................................................22 4.2. Oil and natural gas ..................................................................................................................25 5. Water sector ...................................................................................................................................27 6. Financial sector ..............................................................................................................................28 6.1. Market overview ......................................................................................................................28 6.2. Regulatory and institutional framework ....................................................................................30 viii TRADE POLICY FRAMEWORK: ANGOLA 6.3. Strengths, weaknesses, opportunities and threats in the financial services sector ...................31 7. Construction sector ........................................................................................................................32 7.1. Market overview ......................................................................................................................32 7.2. Regulatory and institutional framework ....................................................................................33 7.3. Strengths, weaknesses, opportunities and threats in the construction services sector ............33 8. Tourism sector ................................................................................................................................34 8.1. Market overview ......................................................................................................................34 8.2. Regulatory and institutional framework ....................................................................................34 8.3. Strengths, weaknesses, opportunities and threats in the tourism services sector ....................35 9. Telecommunications sector ............................................................................................................35 9.1. Market overview ......................................................................................................................36 9.2. Regulatory and institutional framework ....................................................................................36 9.3. Strengths, weaknesses, opportunities and threats in the telecommunications services sector .38 10. Transport sector .............................................................................................................................38 10.1.Market overview .....................................................................................................................38 10.2.Regulatory and institutional framework ...................................................................................40 F. Maturing future services sectors...........................................................................................................42 1. Agriculture services ........................................................................................................................42 2. Mining-related services ...................................................................................................................42 G. National efforts and policies to support Angolan small and medium-sized enterprises in the services sectors .............................................................................................................................42 H. National trade policies for the expansion of key services sectors ..........................................................44 1. WTO General Agreement on Services Trade ...................................................................................44 1.1. GATS trade liberalization of services and Angola’s GATS commitments ...................................44 1.2. Doha Round of negotiations ....................................................................................................44 2. SADC regional negotiations ............................................................................................................46 3. COMESA–EAC–SADC Tripartite Free Trade Agreements ................................................................46 4. Sequencing and coordination of commitments under various trade agreements .............................47 5. Way forward ...................................................................................................................................48 I. Recommendations for national consultations .......................................................................................49 IV. TRADE POLICY FRAMEWORK ..............................................................................................................51 A. Overview ..............................................................................................................................................52 B. Strengths, weaknesses, opportunities and threats ...............................................................................52 C. Trade policy vision and objectives ........................................................................................................54 1. Selected sectors and subsectors with potential for further development .........................................54 2. Agriculture ......................................................................................................................................55 3. Accelerated development of agro-based industries ........................................................................59 4. Fisheries .........................................................................................................................................60 5. Palm oil industry .............................................................................................................................60 6. Natural rubber industry ...................................................................................................................61 D. Implementation of the trade policy framework ......................................................................................61 E. Improving and strengthening trade-related fundamentals .....................................................................61 1. Macroeconomic improvement .......................................................................................................61 2. Infrastructure development ..............................................................................................................lxii 3. Investment......................................................................................................................................lxiii 4. Use of science and technology .......................................................................................................64 5. Promotion of sustainable agriculture and agro-based development ................................................64 6. Upgrading traditional agriculture/commodity sectors .....................................................................64 7. Diversifying into non-traditional commodities .................................................................................65 CONTENTS ix 8. Promoting and expanding the industrial and manufacturing base ...................................................65 9. Upgrading human capital................................................................................................................66 10. Establishing an effective competition and consumer policy .............................................................66 11. Adherence to social compliance .....................................................................................................67 12. Expanded use of trade-related measures .......................................................................................67 F. Economic partnership agreement negotiations between SADC and the European Union .....................68 1. Enhancing productive capacities under AGOA ................................................................................69 2. Ensuring national consensus ..........................................................................................................70 3. Private sector participation in trade negotiations .............................................................................70 4. Building and strengthening capacity in trade negotiations ..............................................................70 5. Acquisition of trade data skills and access to trade information.......................................................70 6. Public–private sector dialogue and developing entrepreneurial spirit ...............................................71 7. Trade promotion .............................................................................................................................71 8. Mainstreaming gender in trade policy .............................................................................................71 G. General services recommendations .....................................................................................................71 1. Energy services recommendations ................................................................................................72 1.1. General ...................................................................................................................................72 1.2. Power and hydroelectric sector ...............................................................................................73 1.3. Oil and natural gas ..................................................................................................................74 2. Financial services recommendations ...............................................................................................74 3. Construction services recommendations ........................................................................................74 4. Tourism services recommendations ................................................................................................75 5. Telecommunications services recommendations ............................................................................75 6. Transport services recommendations .............................................................................................76 I. Trade policy framework implementation plan ........................................................................................76 Endnotes ........................................................................................................................................................77 Tables Table 1. Current balance of payments as a share of GDP, 2009–2013 ..............................................................2 Table 2. Contribution of sectors to GDP, 1980–2012 ........................................................................................3 Table 3. Exports in goods by sector, 1995–2013 ..............................................................................................6 Table 4. Exports in goods by destination, 2013 ......................................................................................................7 Table 5. Share of imports by source, 2014 .............................................................................................................7 Table 6. MFN applied and MFN bound average tariffs, 2009 ...............................................................................13 Table 7. United States market access: MFN and preferential tariff rates of imports from Angola, 2009 ............14 Table 8. European Union market access: MFN and preferential rates of imports from Angola, 2009 ...............15 Table 9. China market access: MFN and preferential rates of imports from Angola, 2010 ................................15 Table 10. Main functions served by the master plan ........................................................................................21 Table 11. Indicative overview of banks operating in Angola .............................................................................32 Table 12. Regional traffic network ...................................................................................................................38 Table 13. Type and location of platforms and their territorial classification ........................................................41 Table 14. Sectors for liberalization ...................................................................................................................45