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Country Commercial Guides for FY 2000: Malawi Report prepared by U.S. Embassy Lilongwe, released July 1999    Note*

CHAPTER VI. Trade Regulations and Standards

Trade Barriers

41. The Government of Malawi is working to reduce and/or eliminate various tariff and non-tariff barriers. Malawi operates a liberal import and export-licensing system with restrictions largely based on health, safety and national security reasons. All Current Account transactions are fully liberalized. Since September 1998, Malawi has maintained a managed-float/free-access system of foreign exchange.

Trade Licenses

42. Trade licensing covers thirteen import and four export commodities. Import licenses are required for military, naval, air force or police uniforms; radioactive substances; mist nests for wild birds; wild animals, trophies and products of such animals; live fish; compound products for use as animal feed (with exceptions); live poultry and eggs; meat (with exemptions); dieldrin; aldrin; and salt. Goods in transit, used personal and household effects, temporary imports by bona fide tourists, goods less than MK 2,000 in value, sample products, and advertising materials are exempted from import licensing.

43. Export licenses are required for implements of war other than arms and ammunition; petroleum products; wild animals, trophies and products of such animals; maize and maize-based cereal. The Ministry of Commerce and Industry issues import and export licenses. It frequently reviews the lists of goods subject to licensing. Licenses are valid for six months, but may be extended.

Trade Taxes

44. The Government's policy to shift taxes from international to domestic sources is gradually reducing domestic protection through tariffs. Import duties vary according to product and country of origin. As a member of the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA), Malawi grants reciprocal preferences to member states of these organizations. Malawi has bilateral trade agreements with South Africa and Zimbabwe, both of which allow duty-free entrance of Malawi products. In 1998, the Government eliminated export taxes on tobacco, sugar, tea and coffee. Malawi's 15% and 10% duties on industrial machines, designated raw materials, and intermediate goods were reduced to 10% and 5% respectively. In July 1999 it reduced the maximum import tariff rate from 30% to 25% and eliminated customs duty on aviation fuel. It further reduced tariff rates from 10% to 5% and 5% to zero% on some intermediate goods and raw materials.

Customs Valuation

45. The Government has a contract with Societe Generale de Surveillance S.A. (SGS) to carry out, in the country of supply, pre-shipment inspection (PSI) of the quality, quantity, classification, value and related services of all imported goods, except:

--- Goods with an f.o.b. value not exceeding USD 2,000. Partial shipments below this value limit are subject to inspection if the total value of the goods under the contract covering such shipments exceeds USD 2,000.

--- Goods involving no payment for their import into Malawi

--- Government imports of goods intended for military or paramilitary use.

--- Live animals; fresh, chilled or frozen fish and meat; fruits, vegetables, eggs; scrap metals; newspapers and periodicals; goods granted remission of duty; precious and semi-precious stones; precious metals; antiques; postal parcel shipments; commercial samples; goods destined for Export Processing Zones (EPZ's) and bonded factories; and petroleum products.

46. The contract, in effect since June 1996, has a WTO PSI agreement appended to it. It has clear guidelines, procedures and standards with which importers, suppliers and SGS must comply in order to speed up the inspection process. Pre-shipment inspection will result in either a Clean Report of Findings (CRF) or a Discrepancy Report (DR). A CRF is required for importers in Malawi to clear goods through customs and for exporters to collect payment.

Import/Export Documentation

47. According to customs regulations, the following documents can be demanded by customs officials:

--- Transport by Road Vehicle: A complete list of the goods carried; copies of all waybills; and copies of consignment notes.

--- Transport by Aircraft: Manifests of the cargo signed by an authorized person at the point of departure; lists of the passengers and crew; lists of any goods on board which are accompanying passengers (i.e. baggage); the clearance, if any, from the last foreign port; and the aircraft's journey log book.

--- Transport by Train: Copies of invoices, waybills, delivery and advice notes, and other documents for goods which will be entered at that port; lists of all goods carried on the train other than the cargo.

--- A "Clean Report of Findings" from the SGS affiliate in the exporting country.

Temporary Entry

48. Under Malawi law, the Controller of Customs and Excise is authorized to allow the temporary importation of goods. The Controller may impose conditions on temporary importation -- such as mandatory re-export -- and may allow entry "for such period as he thinks fit" and "for such purposes as he may approve." Temporary entry is customarily authorized when goods are in transit to other countries, or when goods are accompanying tourists.

Standards

49. The Malawi Bureau of Standards (MBS), a member of the International Bureau of Standards, promotes conformity with internationally accepted standards. MBS prescribes and enforces product standardization in Malawi. All products manufactured locally for export must obtain an MBS certification before export. Hotel and catering services are also subject to MBS reviews.

Free Trade Zones/Warehouse

50. Legislation for the establishment of export processing zones (EPZ's) came into force in December 1995. All companies engaged exclusively in manufacture for export may apply for EPZ status. As of April 1999 Malawi had approved twenty firms for EPZ status, of which twelve were operational. A Manufacturing Under Bond (MUB) scheme offers slightly less-attractive incentives to companies that export some, but not all, of their manufactures. (See para's 57 to 59.)

Membership in Free Trade Arrangements

51. Malawi is a member of the World Trade Organization (WTO) and the two regional blocs: the Southern African Development Community (SADC) and the Common Market of East and Southern Africa (COMESA). Under the COMESA Treaty, all goods may be traded among member states under preferential treatment as long as they satisfy the requisite rules of origin. SADC has yet to obtain the endorsement of the requisite two-thirds of its member countries for ratification of a Trade Protocol to establish a free trade area by the year 2004. Despite Malawi's membership in these organizations, inter-regional trade has not been a strong component of Malawi's exports.

52. Customs Contact Information:

-- Controller of Customs
-- Department of Customs and Excise
-- Private Bag 20, Blantyre
-- Tel: (265) 782-533
-- Fax: (265) 784-921