VZCZCXYZ0007
OO RUEHWEB

DE RUEHAN #0227/01 0670656
ZNR UUUUU ZZH
O 080656Z MAR 07
FM AMEMBASSY ANTANANARIVO
TO SECSTATE WASHDC IMMEDIATE 4443

UNCLAS ANTANANARIVO 000227 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR AF/E MBEYZEROZ 
STATE PASS TO USTR FLISER AND PCOLEMAN 
 
E.O. 12958: N/A 
TAGS: ETRD AGOA ECON PGOV MA
SUBJECT: President's 2007 Report on AGOA - Madagascar 
 
REF. STATE 22438 
 
¶1.  Per reftel, Post provides the following input on Madagascar for 
the President's 2007 Report on AGOA. 
 
MARKET ECONOMY/ECONOMIC REFORM/ELIMINATION OF BARRIERS 
--------------------------------------------- --------- 
 
¶2.  Madagascar continues to implement its program of macro-economic 
and structural reforms, including fiscal reforms and privatization 
of state-owned companies under the guidance of the World Bank and 
the IMF.  In 2007, Madagascar's MCC Scorecard for "Economic Freedom" 
is passing in four of six categories.  Inflation improved at the end 
of 2006 but remains above year-on-year targets, and by most accounts 
fiscal management remains inadequate.  In mid-2006 Madagascar signed 
on to a new IMF Program and is thus benefiting from substantial 
technical assistance to improve these indicators.  Several U.S. 
Treasury Advisor missions were completed in 2006 to build capacity 
in these areas of weakness; a Budget Resident has worked in the 
Finance Ministry since February.  The Export Processing Zone (EPZ), 
mainly in the textile and apparel sector, is a main source of 
foreign direct investment.  The December 12, 2006 extension of the 
third-country fabric provision of AGOA breathed new life into 
Madagascar's apparel sector; a production increase of at least 20 
percent is expected for 2007. Large-scale private foreign investment 
is occurring in the mining and petroleum sectors. The GOM created 
the Economic Development Board - Madagascar (EDB-M) in 2006 to 
promote trade and facilitate investment.  The GOM has taken 
significant steps to liberalize trade and there are no specific 
barriers to U.S. trade and investment.  The difficulties of the U.S. 
Seaboard Corporation in Madagascar since entering a partnership to 
operate wheat milling facilities are noteworthy.  During 2006, 
Malagasy government authorities did not adequately communicate with 
Seaboard representatives to address their concerns.  Madagascar is a 
member of the World Intellectual Property Organization (WIPO) and is 
a signatory to the WTO TRIPS agreement on trade-related aspects of 
intellectual property.  Two government offices share responsibility 
for the protection of intellectual property rights.  Enforcement of 
intellectual property rights is limited by a shortage of trained 
personnel, legal capacity and resources. 
 
Political Pluralism/Rule of Law/Anti-corruption 
--------------------------------------------- -- 
 
¶3.  The GOM continues to post a positive record on the rule of law, 
political pluralism, and the safeguarding of due process rights.  By 
all accounts of national and international observers, the December 
3, 2006 presidential election was free, fair, and transparent. 
BIANCO, the independent anti-corruption office, continues to tackle 
the long term challenge of overcoming a culture of corruption.  The 
fight against graft and an insistence on integrity remain top 
presidential priorities.  As the first country to sign a compact 
with the U.S. Millennium Challenge Corporation, Madagascar has a 
specific incentive to increase transparency and accountability. 
 
Poverty reduction 
----------------- 
 
¶4.  The GOM inaugurated a new development policy in 2006 called the 
Madagascar Action Plan (MAP) which replaces the Poverty Reduction 
Strategy Paper (PRSP).  Donors and partners endorse the objectives 
and overall strategies of the MAP, while qualifying it as very 
ambitious.  Madagascar qualified for debt reduction under the Highly 
Indebted Poor Countries Initiative in 2004 and the Multilateral Debt 
Relief Initiative in 2005.  The GOM committed to allocate the 
resources freed by debt relief to priority areas such as health, 
education, roads, and direct support to communities. 
 
 
Human rights 
------------ 
 
¶5.  The Government generally respected the human rights of its 
citizens; however, there were problems in some areas.  Prison 
conditions were harsh and life threatening.    Suspects often were 
held for periods that exceeded the maximum sentence for the alleged 
offenses, and lengthy pretrial detention remained a serious problem. 
 Some government officials limited freedom of speech and of the 
press, and journalists practiced self-censorship. Women continued to 
face some societal discrimination, and child labor, including forced 
labor, is a problem.  There were reports of trafficking in women and 
girls.  During the year, the Government took major steps to combat 
trafficking and child labor. 
 
Labor 
----- 
 
¶6.  The Constitution of Madagascar and the Labor Code grant workers 
in the private and public sectors the right to establish and join 
labor unions, and to bargain collectively.  Madagascar is a member 
of the International Labor Organization and regularly attends ILO 
conferences.  Unions freely join and participate in international 
bodies and may form federations.  Discrimination against union 
organizers is prohibited but enforcement of labor regulations is 
hampered by lack of government resources, particularly in EPZs. 
 
Child Labor 
----------- 
 
¶7. Madagascar continues to make progress in implementing its 
commitments under international child labor conventions. In June 
2004, the GOM increased the minimum age for employment from 14 to 15 
and provided substantial increases in fines from those who violate 
child labor laws.  In 2000, Madagascar signed the ILO Convention on 
the minimum age for industrial work, and the ILO Convention 182 
against the worst forms of child labor in 2001. 
 
AGOA Outreach/Technical assistance 
---------------------------------- 
 
¶8. The Mission, through its Economic and Commercial Section and 
USAID, assists the Malagasy administration (customs, trade, and 
industry departments), EPZ companies and businesses on AGOA issues. 
In February, an advisor from the East and Central Africa Global 
Competitiveness Hub helped three Malagasy-owned factories prepare 
for the Magic Trade Show in Las Vegas.  The same consultant traveled 
to the show with the producers to assist in their contacts with 
prospective buyers.  The February visit of AUSTR Liser brought into 
sharp focus the opportunities within apparel after the December 12 
extension, but also in other AGOA product categories.  The quarterly 
commercial bulletin published by the Commercial Section sensitizes 
the business community on AGOA and trade issues. 
 
 
MCGEE