GUINEA-BISSAU: INPUT FOR 2006 PRESIDENT'S REPORT

UNCLAS DAKAR 000605 SIPDIS SIPDIS DEPT FOR AF/EPS, EB/TPP/BTA, DRL/PHD, INR/AA AND AF/W AID/W FOR AFR/WA TREASURY FOR SONIA RENANDO ACCRA FOR USAID/WARP PARIS FOR POL - D'ELIA PARIS PLS PASS USOECD E.O. 12958: N/A TAGS: ETRD ECON PHUM PU SUBJECT: GUINEA-BISSAU: INPUT FOR 2006 PRESIDENT'S REPORT ON AGOA REF: STATE 026707 ¶1. Below is Embassy Dakar's submission for the 2006 President's Report on the African Growth and Opportunity Act (AGOA) for Guinea-Bissau. Begin text: Status: AGOA eligible. AGOA Trade and Investment: In 2005 Guinea-Bissau did not export under AGOA and its GSP provisions, though its total exports to the United States reached USD 2 million. Market Economy/Economic Reform/Elimination of Trade Barriers: The Government supports continued transition to a market economy. It no longer dominates the commercial sector and has abolished state marketing boards, privatized some companies and ended price controls. Restrictions on foreign operators in the cashew production sector were lifted in 2004. Rule of Law/Political Pluralism/Anti-Corruption: Presidential elections in June and July 2005 led to a peaceful transfer of power to Joao Bernardo "Nino" Vieira. Shortly after his inauguration, President Vieira replaced Prime Minister Carlos Gomes Junior of the African Party for the Independence of Guinea-Bissau and Cape Verde (PAIGC),the largest party in the National Popular Assembly, with Aristides Gomes. The PAIGC leadership cried foul on constitutional grounds and took the case to the Supreme Court, which sided with Vieira. The national court system continues to function, albeit with serious resource constraints. The Government launched a campaign against public corruption and arrested the director of the state Electric and Water Company, sentenced the former director of the Institute of Assistance to Emigrants to three years in prison, and is investigating other cases of corruption under the Kumba Yala regime. Customs receipts are placed directly into a treasury account; fuel import duties are collected at one controlled port of entry; and the Ministry of Finance must clear on all disbursements to ministries and public bodies. To increase transparency and gain donor confidence, the GOGB allows the UNDP and donors to participate in the Treasury Committee, which implements the day-to-day fiscal management on the basis of a strict cash rationing system. Poverty Reduction: Guinea-Bissau is finalizing its National Poverty Reduction Strategy paper (DENARP),which is expected to become the basis of the medium-term economic and social policies. In cooperation with UNDP, the GOGB will seek donor assistance in implementing these policies at a round table conference planned for 2006. International financial institutions sent delegations to Guinea-Bissau in early 2006 to assess the stability of the Government as a precursor to reopening broader assistance efforts. Labor/Child Labor: The constitution grants all civilian workers the right to form and join trade unions. The right to strike and protection against retribution is guaranteed. Guinea-Bissau has not ratified Convention 182 on the worst forms of child labor. Guinea Bissau lacks the pool of skilled labor required for increased exports of certain skill-intensive products. The lack of educated workers also discourages investment in the country. End text. JACKSON