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IdentifierCreatedClassificationOrigin
05LILONGWE175 2005-02-24 14:43:00 UNCLASSIFIED Embassy Lilongwe
Cable title:  

MALAWI UPDATE FOR PRESIDENT'S AGOA REPORT

Tags:   ETRD EFIN MI AGOA 
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					  UNCLAS LILONGWE 000175 

SIPDIS


STATE FOR AF/S ADRIENNE GALANEK
STATE FOR AF/EPS MARY FLEMING
DEPT PLEASE PASS TO USTR
DOC FOR 4510/ITA/MAC/ANESA/OA

E.O. 12958: N/A
TAGS: ETRD EFIN MI AGOA
SUBJECT: MALAWI UPDATE FOR PRESIDENT'S AGOA REPORT

REF: STATE 24616



1. Following is Embassy's update for the President's AGOA
Report, as requested in reftel. Embassy has also submitted
this update via e-mail to AF/EPS Mary Fleming.



2. Status: AGOA eligible, including for textile and apparel
benefits.



3. AGOA Trade and Investment: Malawi's exports under AGOA
were valued at $27.6 million in 2004, representing 46
percent of total exports to the United States. Most new AGOA-
related economic activity in Malawi has been in the textile
and apparel sector.



4. Market Economy/Economic Reform/Trade Barrier Elimination:
The government has made a basic commitment to the principles
of market economics. It encourages both domestic and foreign
investment in most sectors of the economy, without
significant restrictions. The government continued to make
progress in 2004 with its privatization program, under which
it has sold off 64 of 110 companies targeted since 1996.
Early in 2004, the International Monetary Fund (IMF) halted
its Poverty Reduction and Growth Facility because of
government overspending; after the installation of a new
administration in May, fiscal discipline was quickly
restored with help from an IMF Staff-Monitored Program.



5. Rule of Law/Political Pluralism/ Anti-Corruption: Malawi
held a peaceful presidential and parliamentary election in
May 2004. International observers considered the election to
have been free but have criticized its fairness. Malawi has
an independent but overburdened judiciary. The government's
Anti-Corruption Bureau (ACB) has actively pursued public and
private corruption since the new administration took office
in May 2004, but its record for winning convictions has yet
to be established.



6. Poverty Reduction: Since 1981, Malawi has undertaken
economic structural adjustment programs supported by the
World Bank, IMF, and other donors. Malawi met HIPC debt
relief criteria in December 2000 and has since developed its
PRSP, which was launched in 2002. While Malawi continues to
work with these institutions and to use the PRSP as the
central planning document for government budgeting, a
historic lack of fiscal discipline weakened growth and
macroeconomic instability, limiting poverty reduction.



7. Labor/Child Labor/Human Rights: Malawi's labor laws cover
the majority of the ILO's core labor standards. Workers have
the right to form and join trade unions. Unions must
register with the Ministry of Labor, but this is largely a
formality. A lack of capacity in the government and the
unions reduces the effectiveness of worker rights
protections. On child labor, Malawi's Constitution and
employment laws comply with the ILO Convention 138 and
Convention 182, but resource constraints - both human and
financial - hamper enforcement. A 2000 Malawi Demographic
and Health Survey estimated that 27 percent of Malawian
children aged 5-14 were working - two-thirds without pay.
The incidence of child labor on tea estates and tobacco
farms is particularly high. The public-private Child Labor
Task Force expanded its membership among labor, private
sector, and NGO organizations. In 2004, the task force
developed and implemented a national Code of Conduct on
Child Labor and placed child labor officers in each district
of the country. Malawian children are trafficked to other
Southern African countries and to Europe for purposes of
forced labor and commercial sexual exploitation. There were
some reports of the police beating and otherwise abusing
detainees and using excessive force in handling criminal
suspects. Lengthy pretrial detention was a serious problem.



8. U.S. Mission Outreach: In 2004, the U.S. Mission and the
Southern Africa Global Competitiveness Hub trained the
Malawi Handicrafts Association on identifying U.S. market
opportunities and meeting U.S. buyers' product requirements.