This record is a partial extract of the original cable. The full text of the original cable is not available.

180827Z May 06

UNCLAS SECTION 01 OF 02 LAGOS 000672 
 
SIPDIS 
 
USDA FOR FAS FAA/AREA DIRECTOR RANDALL HAGER, 
USDA FOR FAS ITP/PATRICIA SHEIKH, THOMAS POMEROY, 
ACCRA FOR ECON/CHRIS LANDNBERG 
USTR FOR AFRICA AFFAIRS LAURIE-ANN AGAMA 
TOFAS 008 
 
E.O. 12958, PGOV N/A 
TAGS: EAGR ETRD NI
SUBJECT: IMPORT POLICY CHANGES FALL SHORT OF COMMITMENTS 
 
 
¶1.   SUMMARY:  The Government of Nigeria (GON) introduced a 
number of modest import policy changes in attempt to improve 
its trade policy regime. These include: partial 
implementation of the Economic Community of West African 
States' (ECOWAS) Common External Tariffs (CET), re- 
introduction of Destination Inspection to replace Pre- 
shipment Inspection and the privatization of port 
operations.  Barely two months into the implementation, 
importers are complaining of long delays in clearing their 
goods. End Summary 
 
¶2.  In November 2005, Nigeria began partial implementation 
of the Economic Community of West African States' (ECOWAS) 
Common External Tariffs (CET) as an aspect of its overall 
regional integration efforts.  The ECOWAS CET, agreed to in 
2000 by member countries, seeks to harmonize and rationalize 
tariffs among member countries.  By adopting the CET, 
Nigeria has moved to align its tariffs with those of other 
ECOWAS member states and reduced tariff bands from twenty to 
five.  The five tariff bands are zero duty on capital goods, 
machinery, and medicines such as anti-retroviral drugs and 
other medicines not produced in the country; 5 percent on 
imported raw materials; 10 percent on intermediate goods; 20 
percent on finished goods; and 50 percent duty on goods in 
industries that the GON wants to protect.  To protect infant 
industries, the GON added the additional tariff band of 50 
percent as a protective measure for manufacturers of 
finished consumer products particularly value-added 
agricultural products. 
 
-------------------- 
Agreement Compliance 
-------------------- 
 
¶3. Despite being a long-standing member of the WTO, Nigeria 
continues to maintain import bans on a range of products 
especially value-added agricultural products. The pace of 
liberalization has been slow because several politically 
influential actors in the agricultural consumer products 
arena continue to fiercely oppose outside competition. 
 
¶4. Despite of the ECOWAS CET, several food and agricultural 
products are banned, while others face significantly high 
duties.  Banned items include: Wheat flour, sorghum, 
vegetable oil, poultry products, pork products, beef 
products, mutton, lamb, and goat meat, biscuits, noodles 
(including spaghetti), fruit juice in retail packs, millet, 
fresh fruit, etc.  Products, such as rice, wines and tobacco 
are subject to high levels of protection from international 
competition. 
 
¶5. Excellent market opportunities exist for U.S. products 
such as poultry, vegetable oil, corn, and high value food 
products.  However, import bans and high tariffs constrain 
significant trade in those sectors. 
 
¶6. Nigeria's high tariffs and import bans, moreover, comes 
at the expense of Nigerian consumers and economic activity. 
High duties create incentives for tariff avoidance, under- 
invoicing and smuggling.  For instance, because rice imports 
to Benin Republic attract only 35 percent duty (about $200 
per ton price advantage over imports through Nigerian 
ports), Nigerian importers and their sea bound shipments to 
Benin, then smuggle them overland into Nigeria. 
 
------------------- 
Reforming The Ports 
------------------- 
 
¶7. Nigeria past operation has been slow, disorganized and 
expensive. The lack of quality port management has hampered 
both exportation and importation. Effective January 1, 2006, 
the GON abolished its pre-shipment inspection scheme and 
instead introduced Destination Inspection Scheme (DI) to 
streamline import procedures. However, importers complain 
the new scheme has and significantly improved the system. 
Lack of transparency and arbitrary customs procedures 
continues to cause delays. For example, importers complain 
it often takes approximately 30-60 days for containerized 
shipments to clear customs, costing high demurrage charges. 
 
¶8.  Under the new scheme, goods destined for Nigeria's ports 
are inspected at the point of entry rather than at the point 
of shipment, which was prior practice.  The GON gave a grace 
period up to March 30, 2006 to allow all import transactions 
concluded in 2005 to clear customs under the old system. The 
Nigeria   Customs   Service   (NCS)   is   responsible   for 
implementing  the new scheme.  The Central Bank  of  Nigeria 
(CBN),  in  a circular (TED/AD/150/2005) dated December  28, 
2005, stated the Government had entered into agreements with 
three  scanning companies to manage.  These companies  would 
scan  all containers for the purpose of proper valuation  of 
imports  for  duty  payment. The  details  of  each  service 
provider  together  with the designated zones  are  outlined 
below: 
 
Authorized Service Providers 
---------------------------- 
 
COTECNA INSPECTION LIMITED 
10, Engineering Close 
Off Idowu Taylor Street 
Victoria Island 
Lagos 
Tel:      234-1-4617121/3 
Fax:      234-1-4617124 
E-mail: info@cotecna.com 
Contact:  Contract Manager 
ZONE: Apapa and Tin Can Seaports, Kano and Abuja Airports, 
Jibiya and Banki Posts. 
 
SOCIETY GENERALE DU SURVEILLANCE (SGS) 
Plot 999C, Danmole Street 
Intercontinental Plaza, 4th Floor 
Victoria Island 
Lagos 
Tel: 234-1-2623042 
Fax: 234-1-2622976 
E-mail: Philip-bank@sgs.com 
Contact: Contract Manager 
ZONE: Onne and Port-Harcourt Seaports: Port-Harcourt 
Airport and Idiroko border post. 
 
GLOBALSCAN SYSTEM LIMITED 
5B, Oko-Awo Close 
Off Adetokumbo Ademola Street 
Victoria Island 
Lagos 
Tel: 234-1-2625392 
Fax: 234-1-2624542 
E-mail: globalscansystem@yahoo.com 
Contact: Managing Director 
ZONE:  Warri and Calabar Seaports; Ikeja Airport and 
Seme Border Post 
 
¶9.   The CBN further stated that, Form 'M' submission and 
processing shall be based on the Port of Destination as 
outlined above.  According to the CBN, importation shall 
remain restricted to only the ports listed above. 
 
---------------- 
Port Concessions 
---------------- 
 
¶10.  As a part of the government's privatization program, 
the Nigeria Ports Authority has commenced the implementation 
of its port concession policy.  Under the policy, the GON 
still owns the ports but the private sector operators manage 
port operations.  The Nigeria Ports Authority selectively 
engages private operators in areas where it does not wish to 
operate.  Under this arrangement, the private terminal 
operators are responsible for the loading and off loading 
cargo, while the NPA will continue to perform marine 
services, provide common user facilities and technical 
oversight functions. 
 
¶11.  COMMENT: Given the high number of outstanding Trade and 
investment issues and the partial efforts by GON towards 
regional economic integration, we may need to reinvigorate 
the bilateral dialogue on trade and investment. The most 
appropriate venue would likely be the U.S. Nigeria Trade and 
Investment Framework Agreement (TIFA) mechanism. 
 
Browne