SENEGAL: INPUT FOR 2006 PRESIDENT'S REPORT ON

UNCLAS SECTION 01 OF 03 DAKAR 000604

SIPDIS

SIPDIS

STATE FOR AF/EPS, EB/TPP/BTA, DRL/PHD, INR/AA AND AF/W
STATE PLS PASS USTR
AID/W FOR AFR/WA
TREASURY FOR SONIA RENANDO
USDOC FOR 4510/OA/PMICHELINI, AROBINSON-MORGAN/KBOYD
USDOC FOR 3131/CS/ANESA/OIO/BORR/GLITMAN/MSTAUNTON
ACCRA FOR USAID/WARP
PARIS FOR POL - D'ELIA
PARIS OPLS PASS USOECD

E.O. 12958: N/A
TAGS: ETRD EAGR ECON PHUM SG
SUBJECT: SENEGAL: INPUT FOR 2006 PRESIDENT'S REPORT ON
AGOA

REF: STATE 026707


1. Embassy Dakar's submission for the 2006 President's
Report on the African Growth and Opportunity Act (AGOA)
for Senegal follows.

MARKET ECONOMY /ECONOMIC REFORM/TRADE LIBERALIZATION
-------------- --------------

2. Senegal's market-based economy is heavily dependent on
agriculture, with over 60 percent of the population
depending on it. Principal foreign earnings derive from
remittances, fish, phosphates, tourism, peanuts and
services. The economy grew by 5.1 percent in 2005.
During the year, Senegal finalized the privatization of
SONACOS, the national peanut-processing parastatal.
Privatization of the electricity parastatal, Senelec,
remains halted pending improvements to its balance sheet.
The GOS is in negotiations with an Indian syndicate and
with Chinese investors on divesting the government's
majority interest in Industries Chimiques du Senegal
(ICS),a phosphate processor and the country's largest
industrial concern.


3. Senegal developed an Accelerated Growth (AG) Strategy
aimed at achieving at least a 7.5 percent growth rate for
2006-2015. Coordinated by Senegal's Investment Promotion
Agency (APIX),the AG strategy encourages public-private
partnerships in the agro-industry, fishery, tourism,
textile and information technology sectors. In 2005, the
GOS also established Senegal's Agency for Export Promotion
ASEPEX); however, as of March 2006, it is not yet fully
operational. Foreign investors still face an unstable
regulatory environment and weak commercial law enforcement
due to a lack of resources and specialized judicial
expertise.


4. In July 2005, Dakar hosted the Fourth AGOA Forum to
promote diversified and expanded trade between Africa and
the U.S. Public and private sector representatives of the
37 AGOA eligible countries attended the three-day Forum.
Discussion topics included U.S. market access for high-
value specialty products, energy development and oil
exploration in Sub-Saharan Africa and AGOA customs
requirements.


5. The Animal, Plant and Health Inspection Service
(APHIS) continued to assist West Africa's agriculturalists
to address Sanitary and Phyto-Sanitary (SPS) issues and to
organize regional harmonization of SPS measures. At the
regional level, Senegal participated in the submission of
two Pest Risk Assessments (PRAs) for papayas and mangos to
APHIS in Accra. At the national level, three PRAs for
cherry tomatoes, asparagus and melons were submitted to
APHIS in Dakar and are still waiting approval. The
waiting time for approval is estimated to be from 18
months up to five years. In order to decrease the
approval waiting time, APHIS will send an expert from
Senegal's DPV (Plant Health Service) to APHIS' Center for
Plant Health Science and Technology (CPHST) in Raleigh,
North Carolina in 2006 as a Cochran Fellow.


6. In November 2005, USAID launched the West African
Trade Hub (WATH) - Dakar: a resource center that provides
assistance to West African businesses, government, and
regional organizations to improve trade systems, boost
exports and manage 15 regionally embedded AGOA resource
centers. In February 2006, WATH organized a
business/HACCP training session for regional seafood
exporters from The Gambia, Senegal, Cape Verde, and
Mauritania; organized a private showing in Boston, New
York, and Miami of fish and seafood produced by seven
different West African companies; managed a booth
presentation at the International Boston Seafood show in
March; and is facilitating negotiations between a
Senegalese tuna processing company and a potential
American distributor.


7. In early 2006, USAID launched the Support for
Accelerated Growth and Increased Competitiveness (SAGIC)

DAKAR 00000604 002 OF 003


program to increase trade with North America under AGOA,
Europe and Africa. SAGIC will increase exports in
priority sectors, develop public-private partnerships
(PPPs,) and support policy reforms to improve the business
environment.


8. Senegal continues to work within the West Afriacn
Economic and Monetary Union (WAEMU or UEMOA),upholding
the Common External Tariff (CET) for regional trade of
goods and services.

OPENNESS TO FOREIGN INVESTMENT/COMMERCIAL DISPUTES
-------------- --------------

9. Senegal's investment code provides basic guarantees
for the repatriation of profit and capital and equality of
treatment. It also specifies tax and customs exemptions
according to the size of the investment, classification of
the investor, and location. In recent history, there have
been no major expropriations. Senegal is a member of the
International Center for the Settlement of Investment
Disputes under the Washington Convention. The GOS accepts
binding foreign arbitration of investment disputes and
foreign creditors receive equal treatment under Senegalese
bankruptcy law in making claims against liquidated assets.
The Senegalese Civil Code provides national treatment and
non-discrimination against foreign-owned business'
property rights.


10. The U.S. Chief of Mission, with strong support from
USAID/Senegal, chairs the Private Sector Working Group,
which worked intensively this year to strengthen the
business enabling environment in Senegal. This group
elaborated a set of common policy messages that donors are
communicating in their dialogue with the GOS. USAID also
carried out important preliminary work to assess the
business environment by conducting a survey of the
American business community and an analysis of economic
growth stakeholders.


11. The Millennium Challenge Corporation (MCC) is
reviewing Senegal's USD 1.2 billion proposal to build an
industrial platform 25 miles east of Dakar to promote
economic growth and alleviate congestion in the capital,
where 80 percent of Senegal's industry is based.

RULE OF LAW/POLITICAL PLURALISM/ANTI-CORRUPTION
-------------- --

12. Senegalese authorities have initiated reforms to
strengthen rule-of-law, transparency, and anti-corruption
programs. With Support form the U.S. Department of
Homeland Security, Senegalese Customs has initiated an
action plan to combat fraud. Senegal is also taking steps
to improve the legal and judicial environment, including
enhanced training for magistrates and commercial law
practitioners, establishment of an arbitration court, and
new recovery and enforcement procedures consistent with
OHADA. Senegal is a signatory to the UN Anti-Corruption
Convention.

POVERTY REDUCTION
--------------

13. Having received debt forgiveness status in 2004 for
completing the Heavily Indebted Poor Countries (HIPC)
program and debt-forgiveness from the international
financial institutions in 2005, Senegal has developed a
post-HIPC plan to generate poverty reduction priorities
over the next five years. Of the CFA 43.1 billion (USD
78.4 million) collected from HIPC savings, the GOS
allocated CFA 4.1 billion (USD 7.5 million) and CFA 4.4
billion (USD 8 million) to improve operating expenditures
for education and health, respectively. The remaining CFA
34.5 billion (USD 62.7 million) will be invested in the
construction of schools and health centers, infrastructure
and agriculture projects, and credit programs targeting
women in rural areas.

HUMAN RIGHTS/LABOR/CHILD LABOR
--------------

14. Senegal is a vibrant democracy with no history of

DAKAR 00000604 003 OF 003


coup d'etats or military government. Separatist activity
in the southern Casamance region has declined, with the
signing of a truce on December 30, 2004. Human rights
organizations expressed concern about the July 2005 arrest
of former Prime Minister Idrissa Seck arrest on state
security and embezzlement charges. Seck released in
February 2006 but may yet face illegal enrichment charges.

JACKSON