LESOTHO: DRAFT 2008 NATIONAL TRADE ESTIMATE

UNCLAS SECTION 01 OF 02 MASERU 000574

SIPDIS

SIPDIS

DEPT FOR AF/S, AF/EPS, EB/TPP/BTA;
PASS TO USTR/GBLUE;

E.O. 12958: N/A
TAGS: ETRD ECON EFIN LT
SUBJECT: LESOTHO: DRAFT 2008 NATIONAL TRADE ESTIMATE

REF: STATE 119765

MASERU 00000574 001.2 OF 002



1. In response to reftel, post submits the following revised
text for the 2008 National Trade Estimate. The "tracked
changes" version of this text has been sent by e-mail directly
to USTR.

LESOTHO

IMPORT POLICIES

Tariffs

Lesotho applies the SACU Common External Tariff. Additional
charges include clearing fees ranging from M750 to M1,000
(approximately $110 to $140). Lesotho is a Member of the WTO,
the Southern Africa Development Community (SADC),and the
Africa, Caribbean and Pacific-European Union (ACP-EU) Cotonou
Trade Agreement. With seven of its fellow SADC member states,
Lesotho is a participant in the ongoing negotiations on a
SADC-EU Economic Partnership Agreement (EPA).

Non-Tariff Barriers

Lesotho applies a permit system for all imports from non-SACU
members. The system is applicable to all consignments imported
by individual consumers and investors. Manufacturers are
accorded preferential treatment through which a "Blanket Permit"
is allowed with a validity of 12 months and an additional grace
period of 3 months.

In recent years, the Government of Lesotho (GOL) has undertaken
agricultural sector structural reforms including the removal of
price subsidies and import controls on maize and wheat produce
in favor of market-determined prices. The 1967 Agricultural
Marketing Act, however, continues to control the importation of
bread, legumes, sugar, eggs, meat, dairy products, fruits, and
vegetables. The government does apply subsidies to maize, milk,
beans, and other grains and agricultural inputs during poor
harvest seasons. Currently, the government provides a 30%
subsidy on agricultural inputs and a 20% subsidy on grains as a
response to the 2006/2007 drought and subsequent crop failure.

With the exception of eggs, sugar and legumes, the import
restrictions allow a limited exemption for consumer purchases
outside the country. The Department of Marketing under the
Ministry of Trade and Industry, Cooperatives and Marketing
monitors the level of production of these commodities and issues
import licenses in the event of short supply. However, national
production has never met local demand. As a result, import
permits are issued as a matter of course. Non-automatic
licenses apply to import used clothing. In practice, no
licenses for used clothing are issued, constituting a de facto
ban.

The Ministry issues permits for the import of used vehicles from
outside the SACU area.

STANDARDS, TESTING, LABELING AND CERTIFICATION

Lesotho does not have a national standards body. The Standards
and Quality Assurance section of the Ministry of Trade and
Industry, Cooperatives and Marketing functions as the focal
point for standards and quality assurance. No national
standards have been developed to date. Industries in Lesotho
have traditionally relied on the South African Bureau of
Standards for voluntary standards facilities and quality
assurance schemes. Local exporters have relied on traditional
export markets and have developed their standards according to
technical and quality requirements of importing countries,
importing firms, or international standards.

Lesotho participates in a regional program on Standardization,
Quality, Accreditation and Metrology for the SADC. The program
aims to harmonize standards for adoption by all member states.
Efforts are also underway to develop a regional accreditation
authority.

GOVERNMENT PROCUREMENT

Lesotho is not a signatory to the WTO Agreement on Government
Procurement.

In 2007, the Government adopted new public procurement
regulations. Standard government procurement in Lesotho is
conducted through open competition. However, some preferences
are given to locally-owned companies in the government bidding
process. Procurement regulations require the government to
advertise online in order to conform to SACU and WTO standards.
Lesotho's Ministry of Trade and Industry encourage foreign
companies to bid on public tenders as joint ventures with local

MASERU 00000574 002.2 OF 002


firms.

INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION

Lesotho's Industrial Property Order (1989),Copyright Order
(1989) and the Industrial Property Regulations (1989) are the
basis for legal protection of intellectual property rights.
Patents, valid for 15 years from the date of application, have
rarely been issued in Lesotho, but trademark protection is
widely sought and granted. Lesotho is a member of WIPO, the
Berne and Paris Conventions, and the Regional Intellectual
Property Organization, and is a party to the Patent Cooperation
Treaty and the Madrid Protocol.

SERVICES BARRIERS

Foreign participation is not restricted in the service sector.
The banking and telecommunications sectors are largely
controlled by foreign ownership, in particular by South African
institutions. Trade in services is guided by the WTO General
Agreement Trade in Services (GATS).

The Trading Enterprises Order of 1996 restricts foreigners from
participating in small trading activities that are reserved for
nationals only. These include butcheries, barbershops, general
cafes, and hair salons.

INVESTMENT BARRIERS

Lesotho welcomes foreign investment. Foreign investors have
participated in the country's privatization program without
discrimination. According to the International Finance
Corporation, however, it takes 73 days to start a new business
in Lesotho - a consequence of significant bureaucratic
impediments and inefficiencies. In response, the government of
Lesotho has embarked on a private sector development initiative
with the aim of improving the nation's investment climate. The
private sector development initiative will be implemented
through funding from the Millennium Challenge Corporation and
the World Bank.

ELECTRONIC COMMERCE

The government of Lesotho adopted Lesotho's National Information
and Communication Technology Policy in 2005. This introduced a
regulatory framework for electronic commerce into Lesotho's
legal system. The Ministry of Communications, Science, and
Technology is responsible for its implementation.

Electronic commerce has not widely penetrated the country due to
the low speed and high expense of Internet access. Telecom
Lesotho, the sole fixed line Internet service provider, also
holds a monopoly for international Internet access. There is no
national exchange point, and peering is via South Africa, using
expensive bandwidth for intra-national communication. Telecom
Lesotho objects to the use of wireless connections by local
Internet providers.

OTHER BARRIERS

Corruption

Business people state that solicitation of bribes in connection
with government services does not occur. The government has
received international accolades for its prosecution of
multinational companies for corruption related to the awarding
of contracts for construction of the Lesotho Highlands
Development Project. In cases that have been upheld by the
Lesotho Court of Appeals, the former Chief Executive of the
Lesotho Highlands Development Authority (LDHA) and three
multinational corporations have been convicted for fraud and
bribery.

The government has established a Directorate on Corruption and
Economic Offenses that continues to prosecute cases regarding
embezzlement and bribery in government departments and the
private sector.
ANDERSON