CAMEROON: AGOA ELIGIBILITY REVIEW

UNCLAS SECTION 01 OF 05 YAOUNDE 001102


SIPDIS

DEPARTMENT FOR AF/C, DRL
DEPARTMENT FOR AF/EPS - ABREITER AND GMALLORY

DEPARTMENT PASS USTR - FOR CONNIE HAMILTON

E.O. 12958: N/A
TAGS: ETRD ECON PGOV PHUM CM
SUBJECT: CAMEROON: AGOA ELIGIBILITY REVIEW

REF: STATE 85086


1. (U) Summary: Cameroon, with a GDP of about $20.6 billion, is
the largest economy in the six-nation Central African Economic and
Monetary Community (CEMAC). It is enjoying its thirteenth
consecutive year of GDP growth, currently projected at 4.6 percent.
It has a population of 18.5 million, and a GDP/capita of $1,100.
Cameroon has enjoyed relative political stability compared to other
countries in the region, but socio-economic frustrations ignited
social unrest in 31 municipalities during February, raising concerns
about long-term stability. Political power, however, remains
concentrated in the presidency. Cameroon's diversified economy
includes oil and gas, timber, aluminum, and agriculture (41 percent
of GDP).


2. (U) Cameroon meets most elements of an open, liberal investment
climate, though corruption and enforcement of regulations remain
problematic. Cameroon achieved the Heavily Indebted Poor Countries
(HIPC) Initiative completion point in May 2006. The government
continues to reduce its ownership of economic assets through
privatization programs and is taking positive steps to address
legal, judicial, and governance problems. In June 2001, the World
Trade Organization reviewed Cameroon's trade policy and judged that
the Government of Cameroon (GRC) was making appropriate progress in
opening its market. Cameroon has an AGOA committee, although it has
not been active. Prime Minister Ephriam Inoni led a delegation of
ministers to the 2008 AGOA Forum in Washington, demonstrating
government interest in taking greater advantage of AGOA.


3. (U) Comments on Eligibility Requirements


I. Market-based Economy


A. Major Strengths Identified

-- The GRC has undertaken reforms aimed at liberalizing the
financial sector, strengthening fiscal management, and establishing
stronger regulatory agencies, specifically for telecommunications.
The banking sector has been restructured, and all banks are solvent
and supervised by an independent banking authority, the Central
African Banking Commission (COBAC).

-- The government is revising its commercial laws to remove barriers
to trade and investment and to attract more foreign investment. In
April 2008, reacting to rising prices, the government reduced import
duties for a number of staple food items. The investment code has
been made identical for foreign and domestic investors.

-- Cameroon's investment code provides fundamental guarantees to
investors, including property ownership, ability to repatriate
capital and income, compensation in case of expropriation, freedom
of movement within Cameroon, and free egress for personnel.

-- A Bilateral Investment Treaty between Cameroon and the United
States was ratified and entered into force in 1989.

-- Cameroon was granted debt service relief in 2000 by the United
States. Cameroon achieved the Heavily Indebted Poor Countries
(HIPC) Initiative completion point in May 2006. In June 2006, as a
result of a bilateral agreement and additional bilateral assistance,
fourteen Paris Club creditor nations reduced Cameroon's debt to them
from $3.5 billion to $27 million. The total package of debt relief
will reduce Cameroon's future debt service payments by about $4.9
billion in nominal terms.

-- In recent years Cameroon has adopted a number of sectoral codes
with substantial advantages for investors. They include the
Forestry Code, the Mining Code, the Gas Code and the Petroleum
Code.

-- The government made progress on its privatization goals in
2007/2008, including completion of the privatization of the water
utility. After years of state control, the GRC privatized major
parastatals including tea, rubber, shipping, sugar, cocoa, rail and
mobile phone companies. The government also has developed a
strategy for strengthening the weak transport sector by liberalizing
maritime transport, improving maritime security, and establishing an
autonomous port system.

-- Cameroon has a copyright law that incorporates many of the
provisions of the Internet Copyright Treaty and the World
Intellectual Property Organization Performances and Programs Treaty.
Cameroon is the host for the headquarters of the 14-nation West
African Intellectual Property Organization and Cameroon is a
signatory to the World Trade Organization's TRIPs agreement.

-- Despite some improvements in customs clearance procedures, port

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users report increasing delays in the port. The U.S. Customs
Service has provided technical assistance to Cameroon needed to
improve port operations.

-- In 2006, Cameroon adopted simplified bureaucratic and legal
procedures regarding the creation of new small to medium sized
companies in Cameroon.

-- At least two banks operating in Cameroon have a master guarantee
agreement with the U.S. Export Import Bank to provide loans to local
importers of U.S. products. Multinational insurance companies are
securing approval from the government and the regional insurance
authority, the Inter African Conference on Insurance Markets (CIMA)
to guarantee the risk associated with African transactions while
importing U.S. goods through Ex-Im Bank's financing.


B. Major Issues/Problems

-- Firms complain about onerous and unpredictable application of the
tax law and harsh government actions, such as blocking company bank
accounts, to compel companies to agree to compromises on tax
assessments. On paper, commercial law is adequate; however,
investors find it difficult to enforce contracts because the court
system remains slow and corrupt.

-- Cameroon's business climate remains problematic. The World
Bank's annual Doing Business Report indicated that Cameroon
regressed between 2007 and 2008 in seven out of 10 areas.

-- Although strong laws are on the books, enforcement of
intellectual property rights laws is weak.

-- Although the state-owned Camair is under liquidation, the
privatization of the airline and the national telecommunications
company has been stalled.


4. (U) Political Reforms/Rule of Law/ Anti-Corruption


I. Major Strengths Identified

-- There has been an improvement in the country's political
evolution over the past 15 years. A multiparty political system has
been in place since 1990. Cameroon has some 200 political parties,
including five represented in Parliament.

-- The press and private citizens are able to openly criticize the
government (including for corruption and mismanagement),although
some are subjected to government reprisal.

-- The GRC has put in place mechanisms for systematic payment of
state contracts, reducing room for corruption. Cameroon ratified
the UN Convention Against Corruption in February 2006, but effective
implementation is still incomplete.

-- Free legal aid centers, staffed by members of the Cameroon Bar
Association, promote awareness of civil and human rights as well as
judicial processes.

-- Cameroon continues to work with the IMF, the European Union and
other partners in an effort to improve transparency, planning and
effectiveness of government revenues and expenditures.

-- A new, unified Criminal Procedure code took effect in 2007, and
is generally considered to improve defendants' rights and, by
expanding provisions for bail while awaiting trial, is anticipated
to help reduce prison over-crowding.

-- The National Anti-Corruption Commission (CONAC) has stepped up
its activities to raise awareness about corruption.

-- Judicial proceedings against corrupt officials accelerated
through 2008, including the convictions of former parastatal heads
and the detention of former ministers. Disciplinary proceedings
against working-level officials in the police and various ministries
also increased.

II. Major Issues/Problems Identified

-- The GRC failed to comply with the December 2006 law calling for
the establishment of ELECAM, a new, ostensibly independent elections
agency by June 2008. Instead, the government extended the timeline
until January 2009.

-- Dominance of the political process by the President, his party,
and his Bulu ethnic group; electoral intimidation, manipulation, and
fraud continue to severely limit citizens' right to change their
government peacefully. In 2008, the President took advantage of his

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effectively unchecked control over all branches of government to
amend the constitution to eliminate presidential term limits,
without any meaningful public debate. Press organs that aired
critical views of the proposed amendment were harassed at times, and
three media organizations were shut down for four months.

-- National legislative and municipal elections in 2007 were widely
criticized by domestic opposition parties and civil society groups.
Election observers acknowledged some progress over previous
elections, but noted that progress was less than had been expected
and that the public remained largely disengaged from the political
process, in large part due to high barriers to participation and
widespread distrust of the integrity of the electoral process.

-- Impunity among the security forces remains a serious problem,
although the government has made significant efforts to punish
police officers involved in serious human rights violations or
corrupt practices.

-- The government has used security forces to inhibit political
activists from holding public meetings.

-- The judiciary remains corrupt, inefficient, and subject to
political influence, although it is beginning to show growing
independence and integrity in some respects. Officials in
Cameroon's security services are often poorly trained, ineffective,
and corrupt.

-- Prolonged pretrial detention, including incommunicado detention,
remains a problem.

-- Official harassment of journalists rose in 2008, especially in
the context of the constitutional amendment, the social unrest in
February, and aggressive coverage of corruption cases.

-- The use of libel laws-and the harsh handling of journalists
accused of libel-has had a chilling impact on reporting of
corruption and other abuses of public offices.

-- The Minister of Communication has made numerous public statements
with the effect of chilling journalistic freedom. The licensing
system for private media remains expensive and incomplete, leaving
many outlets operating in an uncertain legal environment.

-- Despite some positive steps and public commitments on
anti-corruption, governance in all sectors remained problematic, and
corruption is endemic.


5. (U) Poverty Reduction


I. Major Strengths Identified

-- The Government's 2008 budget included substantial increases for
priority social sectors like health, basic education, and public
works.

-- The Government continues to fulfill poverty reduction commitments
with the International Financial Institutions, and discussions are
underway on a new plan for poverty reduction through enhanced
economic growth.

-- The Government committed to providing free, universal access to
anti-retroviral treatment and HIV/AIDS testing and counseling,
though implementation remains problematic.

II. Major Issues/Problems Identified

-- Budgetary allocations and execution, especially for much-needed
investments in priority social sectors, remains problematic.

-- The government has yet to release audits on public health
spending, including for funds provided by the Global Fund for AIDS,
Tuberculosis and Malaria, despite reports that the funds were
subject to widespread corruption and embezzlement.

-- The government has significantly delayed the release of an
updated census, complicating planning and development initiatives.


6. (U) Workers' Rights/Child Labor/Human Rights


I. Major Strengths Identified


-- The labor code recognizes workers' right to strike and workers
exercised this right in practice.

-- Forced labor is prohibited under the Labor Code and the

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Constitution.

-- Cameroon has ratified ILO Conventions 182 on the worst forms of
child labor and 138 on minimum age.

-- The GRC is cooperating with the ILO on an International Program
for the Elimination of Child Labor (IPEC) inquiry on labor by
children under 14.

-- Legislation on child trafficking and slavery has been ratified
since 2005.

-- Although it is underfunded and frequently criticized, Cameroon's
National Commission on Human Rights and Freedoms is independent and
dedicated to exposing human rights abuses. The government has taken
some steps to improve its human rights record by curtailing human
rights abuses and, in some cases, arresting those responsible, but
harassment and crackdowns in the wake of the February unrest and
against opponents of the constitutional amendment resulted in
numerous human rights abuses. The Commission is finalizing a text
book for use in all schools, to educate children on human rights.

-- The GRC has institutionalized the teaching of respect for human
rights in its law enforcement institutions, graduating in 2005 its
first class of police commissioners and officers specifically
prepared to provide leadership in eliminating abusive and corrupt
practices in law enforcement.

II. Major Issues/Problems Identified

-- The Government did not effectively enforce labor laws and many of
the relevant agencies lacked the resources to do so.

-- The Government restricted workers' rights to form and join trade
unions. The law does not permit the creation of a union that
includes public and private sector workers or the creation of a
union that includes different sectors.

-- The Government continued to infringe on worker rights and
restricted the activities of independent labor organizations by
withholding or indefinitely delaying registration of independent
trade unions. The Government also continued to interfere, although
in a limited manner, with trade union activities.

-- The law does not provide workers with the right to remove
themselves from situations that endanger their well-being without
jeopardizing their employment.

-- Child labor remains a problem. Children are exploited as workers
in subsistence farms, agriculture, urban areas and in the informal
sector. An increasing number of children are engaged in domestic
work and involved in prostitution.

-- Forced or compulsory labor, including by children, is prohibited,
but illegal, forced labor, including forced child labor, was a
problem. There were reports of trafficking in persons, primarily
children, for purposes of forced labor.

-- Prison conditions remain harsh and life-threatening.

-- Security forces limit freedom of movement and assembly,
especially against political activists of the illegal separatist
Southern Cameroon's National Council (SCNC).

-- Violence and discrimination against women and child abuse
remained serious problems. Homosexual acts are illegal, and
societal discrimination and harassment from law enforcement against
homosexuals is a problem.


7. (U) International Terrorism/ U.S. National Security


I. Major Strengths Identified

-- Cameroon is part of a sub-regional initiative to fight money
laundering and illegal financing of terrorism. That initiative is
managed by GABAC, a regional organization based in Bangui, Central
African Republic, with branches in each of the sub-region's six
central African countries. In September 2005, the National
Financial Investigative Branch of GABAC became operational.

-- Cameroon's Financial Intelligence Unit, called the National
Agency for Financial Investigations (or ANIF) is operational and
collaborates closely with counterparts in the United States and
third countries.

II. Major Issues/Problems Identified


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-- Enforcement of laws and regulations pertaining to financial
transactions remains uneven, and much of the banking sector operates
without effective supervision, despite the regulatory structures in
place.

GARVEY