VZCZCXRO5681
PP RUEHMA RUEHPA
DE RUEHUJA #2197/01 3121234
ZNR UUUUU ZZH
P 071234Z NOV 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 4386
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 0220
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 05 ABUJA 002197 
 
SIPDIS 
 
DEPARTMENT FOR AF/W (SILSKI) AND EB/TPP/BTA 
DEPARTMENT PLEASE PASS TO USTR (BLUE, AGAMA) 
TREASURY FOR PETERS, IERONIMO AND HALL 
DOC FOR 3317/ITA/OTA/OA/BURRESS AND 
3130/USFC/OIO/ANESA/HARRIS 
 
E.O. 12598: N/A 
TAGS: ETRD ECON EFIN EAID EINV PGOV NI
SUBJECT: NIGERIA 2009 NATIONAL TRADE ESTIMATE 
 
¶1. The following information is Nigeria's 2009 National Trade 
Estimate. 
. 
Trade Summary 
------------- 
. 
¶2. The U.S. goods trade deficit with Nigeria was $30.0 billion in 
2007, an increase of $4.4 billion from $25.6 billion in 2006.  U.S. 
goods exports in 2007 were $2.8 billion, up 24.8 percent from the 
previous year.  Corresponding U.S. imports from Nigeria were $32.8 
billion, up 17.6 percent.  Nigeria is currently the 50th largest 
export market for U.S. goods.  The stock of U.S. foreign direct 
investment (FDI) in Nigeria was $339 million in 2006 (latest data 
available), down from $1.2 billion in 2005.  U.S. FDI in Nigeria is 
concentrated largely in nonbank holding companies and the wholesale 
trade sectors. 
. 
Import Policies - Tariffs 
 
-------------------------- 
. 
¶3. In September 2008, the Nigerian government issued the 2008 - 2012 
Common External Tariff (CET) Book that harmonizes its tariff with 
its West African neighbors under the Economic Community of West 
African States (ECOWAS) Common External Tariff (CET).  Nigeria has 
been partially implementing the CET since 2005.  The new tariff 
regime has five tariff bands and import duties have been reduced on 
a number of items such as rice, cigars, and manufactured tobacco. 
The five CET tariff bands are: zero duty on capital goods, 
machinery, and essential drugs not produced locally; 5% on imported 
raw materials; 10% on intermediate goods; 20% on finished goods; and 
35% on goods in specific industries that the government seeks to 
protect.   Adoption of the CET is part of the ongoing economic 
reforms aimed at improving Nigeria's trade and investment 
environment and harmonization of economic policies in the subregion. 
 There remains resistance within the Nigerian government and 
Nigerian private sector to further trade reforms. 
 
¶4. Companies state that high tariffs, nontransparent valuation 
procedures, frequent policy changes and unclear interpretations by 
the Nigerian Customs Service (NCS) continue to make importing 
difficult, expensive, and often create bottlenecks for commercial 
activities.  Some importers complain that tariffs are excessively 
high and that the Nigerian government sometimes uses arbitrary 
reference prices for valuation purposes.  This problem is aggravated 
by Nigeria's dependence on imported raw materials and finished goods 
and affects both foreign and domestic manufacturers.  Reportedly, 
many importers resort to undervaluing and smuggling to avoid paying 
full tariffs.  Transparent and proper implementation of the new 
tariff regime as contained in the new tariff book should resolve 
most, if not all the problems highlighted. 
. 
Non-Tariff Trade Barriers 
------------------------- 
. 
¶5. Though the government continues to ban certain imports, citing 
the need to protect local industries, the new tariff book 
significantly reduces the number of items on the import prohibition 
list from 44 to 26.  Items removed from the list include corn; 
sorghum; millet; wheat flour; crude vegetable oil; biscuits; sugar 
confectioneries (including white chocolate); fresh and dried fruit; 
millet; flowers (either fresh or plastic); toothpaste; envelopes; 
diaries; greeting cards; exercise books; bentonites; barites; 
calendars; cutlasses; axes; pick axes; spades; shovels; fully built 
mudguards; wheel barrows; and electric generating sound proof 
casings.  Items remaining on the import prohibition list include: 
bird's eggs; cocoa butter, powder, and cakes;; pork; beef; live 
birds; frozen poultry; refined vegetable oil and fats; cassava; 
bottled water; spaghetti; noodles; fruit juice in retail packs; 
nonalcoholic beverages (excluding energy drinks); certain textile 
products; and bagged cement (companies awarded concessions to import 
bagged cement for a limited time to bridge supply gaps will continue 
to import until the concessions lapse). 
. 
Customs Administration 
---------------------- 
. 
¶6. Nigeria practices a destination inspection policy for imports. 
Under this policy, all imports are inspected on arrival into 
Nigeria, rather than at the ports of origin.  Nigerian port 
practices continue to present major obstacles to trade.  The 
country's long list of import prohibited items coupled with 
incorrect declaration of goods by importers result in 95 percent of 
containers being physically examined.  This drastically delays the 
 
ABUJA 00002197  002 OF 005 
 
 
clearing process and exponentially increases costs.  Nigeria's 
uneven application of import and labeling regulations make importing 
high value perishable products difficult.  Disputes between Nigerian 
agencies over the interpretation of regulations often cause delays, 
and frequent changes in customs guidelines slow the movement of 
goods through Nigerian ports.  These factors can contribute to 
product deterioration and may translate into significant losses for 
importers of perishable goods.  Importers report erratic application 
of customs regulations, long clearance procedures, high berthing and 
unloading costs, and corruption. 
 
¶7. Realizing that delays at the ports significantly increases the 
cost of doing business in Nigeria, the Nigerian government plans to 
implement 48-hour cargo clearance at the ports.  Roads coming in and 
out of the ports are decaying, and over-usage results in 
around-the-clock traffic congestion.  There is no rail system 
transporting freight in and out of ports.  Despite the 48-hour 
custom clearance policy, congestion leads to ships queuing up to 
berth at cargo terminals and containers waiting to be transported 
out of the ports.  The chokepoints resulting from the lack of 
infrastructure at and around the ports affect the efficiency at 
which goods can processed through the ports for export.  Currently 
over 15 agencies are represented at the ports: in a bid to achieve 
the set target, the Nigerian government plans to withdraw all 
agencies, apart from customs, from the ports and improve the 
technical capacity of customs to handle special cargos through 
continuous training of personnel.   There are also plans to automate 
all customs payments. 
. 
Standards, Testing, Labeling, and Certification 
--------------------------------------------- -- 
. 
¶8. Rules concerning sanitary and phytosanitary standards, testing, 
and labeling are well defined, but bureaucratic hurdles slow the 
import approval process.  Regardless of origin, Nigeria requires 
that all food, drug, cosmetic, and pesticide imports be accompanied 
by certificates of analysis from manufacturers and appropriate 
national authorities; and specified animal products, plants, seeds, 
and soils must be accompanied by proper inspection certificates.  By 
law, items entering Nigeria must be labeled exclusively in the 
metric system.  U.S. producers and exporters note that relabeling 
goods to meet this requirement is expensive and limits U.S. exports 
to Nigeria.  The NCS is charged with preventing the entry of 
products with dual or multiple markings, but such items are often 
found in Nigerian markets. 
 
¶9. The National Agency for Food and Drug Administration and Control 
(NAFDAC) is charged with protecting Nigerian consumers from 
fraudulent or unhealthy products.  The agency continues to focus 
special attention on eliminating the illicit importation of 
counterfeit and expired pharmaceuticals, particularly from East and 
South Asia.  NAFDAC's limited capacity for carrying out inspections 
and testing contributes to what critics have characterized as an 
occasionally heavy handed or arbitrary approach to regulatory 
enforcement, which has sometimes led to delays in clearance of 
legitimate food imports. 
 
 
¶10. Although Nigeria has no laws governing agricultural 
biotechnology or biosafety, the government is generally supportive 
of biotechnology.  An enabling regulatory framework for 
biotechnology is in the early stages of consideration.  The Federal 
Ministry of Environment has presented draft biosafety legislation to 
the National Council on Environment, the highest decision-making 
body on environmental issues.  If approved by the Council on 
Environment, the legislation will be sent forward to the National 
Executive Council of Ministers for ratification and then, if 
ratified, to the National Assembly for its consideration.  The draft 
bill generally portrays products of biotechnology as safe for animal 
and human consumption; however, it includes a mandatory labeling 
requirement. 
. 
Government Procurement 
---------------------- 
. 
¶11. Nigeria is not a signatory to the General Procurement Agreement 
(GPA).  The government has made modest progress on its pledge to 
conduct an open and competitive bidding process for government 
procurement.  The Public Procurement Act, which was signed into law 
in June 2007, established the Bureau of Public Procurement (BPP) in 
place of the Budget Monitoring and Price Intelligence Unit.  The 
public procurement reforms are aimed at ensuring that the 
procurement process for public projects adheres to international 
standards for competitive bidding.  The BPP acts as a clearing house 
 
ABUJA 00002197  003 OF 005 
 
 
for government contracts and monitors the implementation of projects 
to ensure compliance with contract terms and budgetary restrictions. 
 Procurement above 50 million naira ($419,000) is subject to review 
by the BPP.  The 36 state governments have also agreed to pass the 
Public Procurement Act in their respective states. 
 
¶12. Foreign companies incorporated in Nigeria receive national 
treatment, government tenders are published in local newspapers, and 
a "tenders" journal is sold at local newspaper outlets.  U.S. 
companies have won government contracts in several sectors. 
Unfortunately, many companies that have won contracts have 
subsequently had difficulty in getting paid, often as a result of 
delays in the national budget process. 
 
¶13. The National Petroleum Investment and Management Services 
Agency's approval is required for all procurement in the energy 
sector above $500,000.  Approval processes are slow and can 
significantly increase the time and resources required for a given 
project. 
. 
Export Subsidies and Other Export Promotions 
---------------------------------- 
. 
¶14. Nigeria's government administers various export incentives such 
as tax concessions, export development funds, capital asset 
depreciation allowances, and foreign currency retention programs in 
addition to operating Free Trade Zones, and Export Processing Zones. 
 According to the 2008 - 2012 CET Book, most concessions, waivers or 
exemptions have been stopped; however, the Nigerian Export Promotion 
Council will continue to implement the Export Expansion Grant scheme 
to improve non-oil export performance. 
. 
Intellectual Property Rights (IPR) Protection 
--------------------------------------------- 
. 
¶15. Nigeria is a party to the World Intellectual Property 
Organization (WIPO) Convention, the Berne Convention, and the Paris 
Convention for the Protection of Industrial Property, the Patent 
Cooperation Treaty, and the Patent Law Treaty and has signed the 
WIPO Copyright Treaty and the WIPO Performances and Phonograms 
Treaty.  Legislation intended to establish a legal framework for an 
IPR system that complies with WTO obligations has been pending in 
the National Assembly for several years. 
 
¶16. The government's lack of institutional capacity to address IPR 
issues is a major constraint to enforcement.  Relevant Nigerian 
institutions suffer from low morale, poor training, and limited 
resources.  Despite Nigeria's active participation in the 
conventions cited above and growing interest among Nigerians in 
seeing their intellectual property protected, piracy is rampant. 
Counterfeit automotive parts, pharmaceuticals, business and 
entertainment software, music and video recordings, and other 
consumer goods are sold openly, and piracy of books and optical disc 
products is also a problem.  Industry reports contend that 
intellectual property infringers from other countries appear 
increasingly active in using Nigeria as a base for the production of 
pirated goods.  Efforts to combat the sale of counterfeit 
pharmaceuticals have yielded some results. 
 
¶17. Patent and trademark enforcement remains weak, and judicial 
procedures are slow and reportedly subject to corruption.  (See 
"Other Barriers" section.) 
 
¶18. Nigeria's broadcast regulations do not permit rebroadcast or 
excerpting of foreign programs unless the station has an affiliate 
relationship with a foreign broadcaster.  This regulation is 
generally respected, but some cable providers illegally transmit 
foreign programs.  The National Broadcasting Commission monitors the 
industry and is responsible for punishing infractions. 
 
¶19. Almost no foreign feature films have been legally distributed in 
the country in the last two decades.  Widespread pirating of foreign 
and domestic videotapes discourages the entry of licensed 
distributors.  In 2004, the Nigerian Copyright Commission (NCC) 
launched an anti-piracy initiative named "Strategy against Piracy" 
(STRAP).  The Nigerian police force, working closely with the NCC, 
has raided enterprises producing and selling pirated software and 
videos and that three high profile charges have been filed against 
IPR violators.  The Nigerian Economic and Financial Crimes 
Commission has also been active in IPR enforcement.  The Nigerian 
government also included pirated materials in the list of prohibited 
imports in the 2008 - 2012 CET Book (new tariff book), which has 
given NCS authority to seize pirated works if imported into the 
country. 
 
ABUJA 00002197  004 OF 005 
 
 
. 
Services Barriers 
----------------- 
. 
¶20. Foreign energy services suppliers are confronted with a number 
of barriers in Nigeria, particularly with respect to movement of 
personnel.  Nigeria imposes quotas on foreign personnel based on the 
issued capital of firms.  Such quotas are especially strict in the 
oil and gas sector and may apply to both production and services 
companies.  Oil and gas companies must hire Nigerian workers unless 
they can demonstrate that particular positions require expertise not 
found in the local workforce.  Positions in finance and human 
resources are almost exclusively reserved for Nigerians.  Certain 
geosciences and management positions may be filled by foreign 
workers with the approval of the National Petroleum Investment and 
Management Services (NAPIMS) agency.  Each oil company must 
negotiate its foreign worker allotment with NAPIMS.  Significant 
delays in this process and in the approval of visas for foreign 
personnel present serious challenges to the energy industry in 
acquiring the necessary personnel for their operations. 
. 
Investment Barriers 
------------------- 
. 
¶21. Investment in the petroleum sector is limited to existing joint 
ventures or production-sharing agreements.  Foreign investors may 
buy shares of any Nigerian firm except firms on a "negative list" 
(such as manufacturers of firearms, ammunition, and military and 
paramilitary apparel).  Foreign investors must register with the 
Nigerian Investment Promotion Commission after incorporation under 
the Companies and Allied Matters Decree of 1990.  The Decree 
prohibits nationalization or expropriation of a foreign enterprise, 
except when necessary to protect the national interest. 
 
¶22. Potential investors must contend with poor infrastructure, 
complex tax administration procedures, confusing land ownership 
laws, arbitrary application of regulations, corruption, and crime. 
The sanctity of contracts is often violated and Nigeria's court 
system for settling commercial disputes is weak and sometimes 
biased. 
 
¶23. Foreign oil companies are under significant pressure to increase 
procurement from domestic firms.  The Nigerian government, through 
the Nigerian Content Division (NCD) of the Nigerian National 
Petroleum Corporation (NNPC), set a target of 45 percent local 
content for oil related projects by 2006 and 70 percent by 2010.  In 
many cases, sufficiently trained personnel and physical 
infrastructure do not currently exist to meet the government's local 
content targets.  Although some domestic firms possess adequate 
technical expertise, managerial and financial capabilities are often 
lacking.  Legislation to codify various levels of Nigerian content 
in specific petroleum activities is pending in the National Assembly 
and would have a major impact on oil services companies operating 
and may reduce oil production if enacted. 
 
¶24. The vast majority of natural gas flaring in Nigeria is done in 
older, onshore and near offshore oilfields.  Those fields are 
typically operated by international oil companies working in a joint 
venture arrangement with the state oil company as the majority 
partner.  Funding for joint venture operations, maintenance, and 
equipment upgrades comes from joint venture partners in proportion 
to their equity ownership.  Over the past several years, the 
Nigerian government has failed to fully fund its share of the joint 
venture costs, reducing the ability of the operating partners to 
install new anti-flare technology in these older oilfields. 
. 
Other Barriers 
-------------- 
. 
¶25. The Nigerian government has made efforts to eliminate financial 
crimes such as money laundering and advance fee fraud (also known as 
"419 fraud," named after the relevant section of the Nigerian 
Criminal Code).  In May 2007, Nigeria was admitted into the Egmont 
Group of Financial Intelligence Units.  In June 2006, the Financial 
Action Task Force removed Nigeria's name from the list of 
noncooperating countries and territories in the fight against money 
laundering and other financial crimes. 
 
¶26. International monitoring groups routinely rank Nigeria among the 
most corrupt countries in the world, with the latest Transparency 
International rating being121 down from 147 in 2007 out of 180 
countries.  Despite this downward trend, Nigeria's corruption levels 
remains high and its main anti-corruption institution, the Economic 
and Financial Crimes Commission (EFCC) has faltered recently in its 
 
ABUJA 00002197  005 OF 005 
 
 
reputation and commitments on the issue.  Some U.S. suppliers 
believe they lose sales when they refuse to engage in illicit or 
corrupt behavior.  Other U.S. exporters say Nigerian businessmen and 
officials understand that U.S. firms must adhere to the U.S. Foreign 
Corrupt Practices Act, and they believe that the law's restrictions 
help minimize their exposure to corruption. 
 
SANDERS