AGOA ELIGIBILITY REVIEW - SENEGAL

UNCLAS SECTION 01 OF 03 DAKAR 002473 SIPDIS SIPDIS DEPT FOR AF/EPS - JANET POTASH, DRL/AE, G/TIP AND AF/W DEPT PLEASE PASS USTR FOR CONNIE HAMILTON E.O. 12958: N/A TAGS: ETRD ECON PHUM AGOA SG SUBJECT: AGOA ELIGIBILITY REVIEW - SENEGAL REF: STATE 163056 Embassy Dakar is pleased to provide information for Senegal's AGOA eligibility review. The following information is based on the template provided and has also been provided via e-mail to AF/EPS. Country: SENEGAL Current AGOA Status: Eligible Country Background Summary: Senegal has an estimated population of 11.7 million. 2005 GNI was $8.2 billion; GNI per capita was $710.0. Senegal had GDP growth of 6.2 percent in 2005 following a similar rate in 2004. Projections for 2006 indicate significantly lower growth, due in part to high global fuel prices, local energy distribution problems, an underperforming fisheries sector, and major congestion in Dakar. During 2005, annual inflation was 2.5 percent, and government debt manageable. Senegal reached its Heavily Indebted Poor Countries (HIPC) Completion Point in April 2004, triggering debt rescheduling by most bilateral and multilateral donors, with a potential for a total of $488 million (net present value) in debt stock reduction. HIPC criteria for Senegal include enhanced governmental spending on primary education, improved health care and sounder governmental finances. Senegal enjoys the benefits of long-term democratic stability, including a free press and active opposition. President Abdoulaye Wade won the presidency in free and peaceful elections in 2000. Senegal has been a vocal supporter of U.S. anti-terrorist actions, and does not engage in activities that undermine U.S. national security or foreign policy interests. Senegal does not engage in gross violations of internationally recognized human rights. Senegal faces severe challenges in providing adequate education and social services for its growing population. Comments on Eligibility Requirements ¶I. Market-based Economy ¶A. Major Strengths Identified -- Since 1994, the Government has implemented a series of economic policy reforms to enhance competitiveness by dismantling monopolies, liberalizing markets and privatizing state-owned industries. -- Senegal's investment code provides for equitable treatment of foreign and local firms. Free transfer of capital and profits is guaranteed. The Government is pursuing additional reforms to ensure transparency and a level playing field in procurements and infrastructure projects under competitive bidding procedures. -- Foreign private entities are permitted to establish and own businesses and to engage in most forms of remunerative activity. There is no restriction on 100 percent ownership of businesses by foreign investors in most sectors. Senegal has attempted to attract foreign investment with a liberal investment code. -- The Investment Promotion Agency (APIX) works to improve service to investors, including offering a single window (or one-stop shop) for government services. This agency is becoming more effective over time. APIX has completed an action plan for simplifying administrative procedures for private investment, based on World Bank recommendations. APIX administers a Presidential Committee on Private Investment, which identifies problem areas and suggests regulatory fixes. -- Senegal is a member of WIPO and of the Bern Copyright Convention, and is working to update its IPR code. The Government is cooperating with Microsoft on a software legitimization campaign. In 2006, the USG sponsored a regional workshop in Dakar to highlight the growing problem of counterfeit pharmaceuticals. -- The Government lowered the corporate tax rate to 25 percent effective January 2006. ¶B. Major Issues/Problems Identified -- In 2006, Senegal's energy delivery system was severely disrupted, with routine, short-lived power interruptions throughout the county. The promised privatization of Senelec, the electricity parastatal, is not on track, and the firm had difficulty remaining current on payments to power generation companies. The county's sole refinery ceased operations, pending its re-nationalization and the formulation of a new operational plan. -- Additional judicial reforms are essential for Senegal to increase private investment. The number of days it takes to start a business in Senegal increased in 2006 from 57 to 58. In 2005, the Government sold the national peanut-processing parastatal to a consortium of private investors, but the groundnut sector remains stagnant. -- Senegal's fishing agreement with the European Union ended in April 2006 and a renegotiated agreement has not yet been signed. The local fisheries sector is seriously depressed. -- The Government does not plan to institute a direct pass-through of the total rise in fuel input cost to consumers. -- Senegal needs to address serious shortcomings in its pension system. DAKAR 00002473 002 OF 003 II. Political Reforms/Rule of Law/Anti-Corruption ¶A. Major Strengths Identified -- Senegal has a pluralistic democratic political system. Opposition political parties operate freely. Freedom of expression is protected. -- Senegal has a diverse and lively press, although it practices self-censorship on some sensitive political and security issues. -- The legislative elections of April 2001 were free and fair, and resulted in the first parliamentary majority for the Senegalese opposition; legislative and local elections held since October 2001 were widely regarded as free and fair. -- Presidential and legislative elections are scheduled for February ¶2007. -- The armed forces are generally professional and disciplined. They traditionally remain aloof from politics and are firmly under civilian control. -- Audits of state-owned companies and agencies, begun in 2000 after President Wade's election, have resulted in judicial proceedings against government officials. The President raised the judges' salaries after the latter protested in 2002 and 2005 over poor pay and working conditions. -- Freedom of religion is guaranteed in Senegal, which is a secular state. -- The Government supports an alternative business dispute resolution center. -- The Government has enacted legal reforms to provide greater protection for women and children. ¶B. Major Issues/Problems Identified -- The judiciary is subject to executive influence and pressure. Lengthy pre-trial detention is a problem. The Government of Senegal has considered reviving criminal charges against former Prime Minister Idrissa Seck, provisionally released earlier in the year after being charged with corruption-related crimes. -- Credible allegations of corruption have been made concerning government procurement, dispute settlement, regulatory and enforcement agencies. President Wade has himself admitted to possible public corruption within his government, including allegations against the former Prime Minister and former and serving Ministers. -- Corruption can range from large-scale customs fraud, including false invoice declarations, to bribe taking by inspectors and public safety officials. Corruption in the judiciary is also a problem. III. Poverty Reduction ¶A. Major Strengths Identified -- The Government continues to allocate national budgetary outlays according to its former Poverty Reduction Strategy Paper (PRSP). It is developing a new Strategy for Accelerated Economic Growth, calling for export-driven growth and additional emphasis on expanding agricultural output. -- A World Bank program provides capacity-building and training for Senegal's judiciary. The U.S. Department of the Treasury also provided training in anti-money laundering and terrorism finance issues. ¶B. Major Issues/Problems Identified -- Senegal's proposed "Return to Agriculture Program" to discourage illegal migration and increase rural incomes remains ineffective, and agricultural productivity continues to fall, relative to other African countries. IV. Workers' Rights/Child Labor/Human Rights ¶A. Major Strengths Identified -- The Government generally respects the rights of its citizens. The Government rejected calls from some intellectuals to introduce Shari'a and reaffirmed the separation of state and religion. -- The Government has enacted laws increasing the legal protection of women and children, and ratified ILO Convention 182 on the worst forms of child labor in 2000. -- The labor code recognizes the right of workers to form and join trade unions, and any group of workers in a similar trade or the same profession may create a union. Similarly the right to strike is recognized but restricted. The new Constitution, adopted in 2001, undermines the right to strike by stipulating that a strike must not infringe upon the freedom to work or jeopardize the enterprise. -- Senegal has recently passed laws to protect children from pedophilia, pornography, prostitution and trafficking. The Minister of Women and Family was recognized in 2005 as a "Trafficking Hero" for her dedication to fighting trafficking in children and the leader of a Senegalese NGO was a Trafficking Hero in 2006. In October 2006, President Wade and the World Bank organized a Presidential Council on street children. -- The Government has taken significant steps to curtail human rights abuses by the military and gendarmerie. Most private and public sector workers in the formal economy are DAKAR 00002473 003 OF 003 organized and bargain collectively. -- Senegal has remained a stable democracy since its independence. Good governance and respect for human rights are policy priorities. ¶B. Major Issues/Problems Identified -- Prison conditions and lengthy pre-trial detention continue to be problematic. The Government has taken major steps to eliminate human rights abuses by the military in Casamance counter-insurgency operations. The conflict today includes petty banditry. -- The Government must approve the existence of a trade union. The Government has the authority to dissolve and disband trade unions by administrative authority, and broad powers to requisition workers from private enterprises and public services. The ILO has raised questions regarding Senegal's full adherence to worker rights, particularly with regards to the right of association. -- While there are legal regulations concerning workplace safety, government officials often do not enforce them. The ILO has been critical of the process by which the Government registers trade unions. -- Police at times tortured and beat suspects during questioning and arbitrarily arrested and detained persons, including one report of torture in 2006. This is not a government policy but an act of individual police officers acting on their own. -- Anti-union sentiment within government is strong. -- Many children live on the streets and work as beggars, vendors, or prostitutes, some under force or duress. Girls as young as eight work up to 12 hours per day, seven days per week as domestics. -- The law prohibits the sale of persons, abduction, and hostage taking; there are reports of women and girls trafficked for work or prostitution. ¶V. International Terrorism/U.S. National Security ¶A. Major Strengths Identified -- Senegal participates in UN peacekeeping operations in the Democratic Republic of the Congo, Cote d'Ivoire, Liberia and Sudan. Senegal also has civilian police and gendarmes in Bosnia-Herzegovina and Haiti. -- Senegal has been a leading African supporter for the U.S.-led global coalition against terrorism. President Wade proposed an African pact against terrorism and, as the leader of a country that is 95 percent Muslim, has taken a strong pro-U.S./anti-terrorist position. Senegalese Islam is generally moderate. ¶B. Major Issues/Problems Identified None. Jackson