TANZANIA: TRADE AGREEMENT COMPLIANCE AND

UNCLAS DAR ES SALAAM 001633 SIPDIS SIPDIS DEPT EB/PP/MTA FOR EKOCH, AF/EPS THASTINGS, AF/E FOR BYODER PASS TO USTR FOR HIRSH COMMERCE TCC/4110 FOR BVAUGHAN AND MROLLIN USDA ITP/FAS FOR BERTSH E.O. 12958: N/A TAGS: ECON ETRD TZ SUBJECT: TANZANIA: TRADE AGREEMENT COMPLIANCE AND MONITORING REPORT REF: A. STATE 152063 ¶B. STATE 027693 ¶C. STATE 024938 ¶1. The monitoring of trade agreements and responses to foreign trade barrier complaints are handled by the Embassy's Economic and Commercial section, whether the questions or complaints are lodged by U.S. companies, USAID implementing partners, potential U.S. investor companies or individuals. There are no other trade agencies at post. The regional office of the Foreign Commercial Service (FCS) and the Foreign Agricultural Service FAS) are located in Nairobi, Kenya; post consults with both FAS and FCS by telephone and e-mail regularly concerning both trade compliance issues and trade barrier complaints. Point of Contact -------------- ¶2. The coordinator and point of contact (POC) for post's periodic compliance reporting who has responsibility to ensure that trade complaints are reported promptly to relevant Washington agencies is: Pol/Econ Officer, Maureen B. Latour, Ph. 255-22-266-8001 x4253, e-mail: LatourMB@state.gov. Trade Agreements -------------- ¶3. Tanzania is a member of the World Trade Organization (WTO) and the World Intellectual Property Rights Organization (WIPO) and is treaty compliant within those multilateral organizations. Tanzania is eligible under the African Growth and Opportunity Act (AGOA) for duty-free consideration of Tanzanian exports entering the United States. In 2005, USD 33 million worth of Tanzanian AGOA eligible products were imported into the U.S. The Government of Tanzania (GOT) has not signed any bilateral trade agreements with the United States. ¶4. In recent months, however, the United States Trade Representative office (USTR) has approached the trade ministers of the three East African Community (EAC) countries--Tanzania, Kenya and Uganda--to discuss the possibility of agreeing to a Trade and Investment Framework Agreement (TIFA) with the EAC. The Minister of Trade and Industry of Tanzania, Nazir Karamagi, expressed his interest in a TIFA at a June 5 meeting with Deputy USTR Karan Bhatia, although Minister Karamagi observed that the EAC itself might not be empowered to sign international agreements on behalf �0A;of its member states. Tanzania is currently in consultations with the other EAC member countries on possible ways to implement a regional TIFA. IPR Success Story -------------- ¶5. A recent success story was the conclusion of a four-year long intellectual property rights violation (trademark) case lodged in May 2001 by Kiwi European Holdings. B.V. on behalf of its subsidiary, the U.S. firm, Sara Lee Household Company, against a Tanzanian importer who was marketing shoe polish manufactured in Shanghai, China labeled as "Kiwi," a registered U.S. trade mark. The counterfeit shoe polish was sold throughout Tanzania at one-third of the actual price; the Sara Lee Household Company estimated losses of nearly USD 2 million until a court injunction halted the sales. Throughout the time period (2001 to 2005),post worked closely with the company to monitor the progress of the litigation through the Tanzanian court system. Finally in June 2005, the High Court of Tanzania, Commercial Division, ruled in favor of the Sara Lee Household's parent company--Kiwi European Holdings. B.V. The importer and wholesale vendor of the counterfeit "Kiwi" products was ordered by the court to pay all court costs, damages and losses to the company. Other Trade Issues -------------- ¶6. A non-tariff barrier issue is currently under discussion between the Tanzanian Bureau of Standards (TBS) and a U.S.-based retail food importer ("American Garden") concerning the quality of TBS tests to measure the minimum iodine level in packaged salt as required by Tanzanian food regulations. The U.S. company complained to post's Commercial section that the present TBS testing system does not accurately measure the iodine levels in its product, and shipments of the firm's packaged salt were refused entry into Tanzania. Since the company brought this problem to post's attention in early 2006, EconOff and staff have met with relevant GOT and TBS officials to explore how to either improve the test procedures or to accept an alternate iodine detection test that would prove the U.S. company's salt products meet standards required by Tanzania's regulations. Post will pursue these discussions until an acceptable agreement is reached. Ongoing Trade Monitoring Efforts -------------- ¶7. The Embassy's proactive efforts to monitor trade compliance on the part of the Tanzanian government include regular reviews of the Government Gazette and relevant press sources for information concerning any proposed changes in laws or implementing regulations that could create either tariff or non-tariff trade barriers for U.S. companies. In addition, in preparation for updating the annual Country Commercial Guide and the Investment Climate Statement reports, post thoroughly reviews progress in and/or problems with trade compliance. Based on the previous year's report, trade compliance and trade barrier concerns are investigated, verified, and, if needed, noted in the Investment Climate Statement. ¶8. Embassy officers meet regularly with GOT trade officials as well as East African Community (EAC) Customs Union officials to discuss relevant bilateral and multilateral trade issues. In particular, the Embassy takes every opportunity to press the GOT Ministry of Industry and Trade and EAC officials to lower the EAC Customs Union tariff on imported used clothing. In 2005, Tanzania, Kenya and Uganda agreed within the EAC Customs Union on a steep tariff increase on used clothing from 25 to 45 percent. Post continues to request that the Tanzanian government take a proactive stance within EAC Customs Union discussions and urge the other members states to reduce the used clothing tariff to the former rate of 25 percent or lower. ¶9. The Embassy holds periodic seminars for U.S. businesses and other stakeholders on topics such as corporate law or IPR law in Tanzania or on eligibility criteria under AGOA. In 2005, post invited over 100 U.S. businesses, affiliates and other stakeholders to a one day seminar entitled: "Understanding and Enforcing Corporate Law in Tanzania." In May 2005, in cooperation with the USAID East and Central African Trade Hub in Nairobi, post organized a two-day AGOA regional workshop in Dar es Salaam ("Changing Tanzania's AGOA Story") that attracted nearly 120 government leaders, business persons and bankers and generated practical methods to increase Tanzanian exports to the United States. Comment -------------- ¶10. With the just concluded trip of Tanzania's President Jakaya Kikwete to the United States (September 17 to 29) that included a delegation of 55 Tanzanian business persons and GOT trade officials, the prospects of serious U.S. investments in Tanzania is on the rise. In line with our Mission Program Performance (MPP) goals, post has outlined plans for FY 2007 to better inform U.S. businesses working in Tanzania as well as potential U.S. investors, concerning Tanzania's commercial laws and regulations, the trade agreements the GOT is already party to, as well as the prospect of a regional Trade and Investment Framework Agreement with the EAC countries. DELLY