VZCZCXRO3359
PP RUEHMA RUEHPA
DE RUEHUJA #0533/01 0890720
ZNR UUUUU ZZH
P 300720Z MAR 09
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 5614
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 1034
RUEHZK/ECOWAS COLLECTIVE
RUEHGB/AMEMBASSY BAGHDAD 0151
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 000533 
 
SENSITVE 
SIPDIS 
 
DEPT PASS TO USTR-AGAMA 
DEPT PASS TO USAID/AFR/SD DATWOOD, ELOKEN 
& USAID/EGAT TQUILTER 
BAGHDAD FOR DUNDAS MCCULLOUGH 
TREASURY FOR PETERS, IERONIMO, AND HALL 
DOC FOR 3317/ITA/OA/KBURRESS AND 
3130/USFC/OIO/ANESA/DHARRIS 
USDA/FAS FOR CMCKINNELL & LSIMMERING 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EINV PREL PGOV NI
SUBJECT:  NIGERIA: MARCH 2009 TRADE POLICY UPDATE 
 
REF: A. ABUJA 263 
      ¶B. ABUJA 231 
      ¶C. ABUJA 88 
      ¶D. ABUJA 79 
      ¶E. 08 ABUJA 2486 
      ¶F. 08 ABUJA 2446 
      ¶G. 08 ABUJA 2360 
      ¶H. 08 ABUJA 2340 
      ¶I. 08 ABUJA 2327 
      ¶J. 08 ABUJA 2302 
      ¶K. 08 ABUJA 2223 
      ¶L. 08 ABUJA 2197 
      ¶M. 08 ABUJA 1977 
      ¶N. 08 ABUJA 1925 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR DISTRO OUTSIDE USG 
 
¶1. (SBU) Summary.  Since the unveiling of the 2008 - 2012 Tariff 
Book there have not been major improvements in Nigeria's trade 
policy (reftel M).  Nigerian government (GON) officials tell us they 
are working with the Economic Community of West African States 
(ECOWAS) to harmonize tariffs with its West African neighbors under 
the Common External Tariff (CET).  In a response to the global 
economic crisis and to ease challenges faced by local manufacturers, 
the GON announced the removal of excise duties on several products 
in February 2009, which it had put in place in the 2008 - 2012 
Tariff Book.  The reversal was to reduce the costs of production, 
and enhance the competitiveness of local producers.  The Minister of 
Commerce and Industry Chief Achike Udenwa has made several public 
statements regarding improving local manufacturing capacity and 
enhancing the performance of non-oil exports.  However, trade policy 
remains the main responsibility of the Minister of Finance because 
the GON views trade as a source of revenue by imposing tariffs and 
not a tool for development.  Ambassador met with both the new 
Ministers of Commerce and Industry as well as Finance in February 
2009 to push harder for better trade reforms (reftels A & B).  End 
Summary. 
 
¶2. (U) Current Nigerian trade policy is encapsulated in the 2008 - 
2012 Tariff Book, which is Nigeria's second attempt at harmonizing 
its tariff regime with the ECOWAS CET (reftel N).  The tariff book 
came into effect in October 2008, and reduced the number of banned 
imports from 44 to 26 items and placed all imports within five 
tariff bands of zero duty (for necessities such as medicine, books, 
and fertilizer); 5% duty (for basic raw materials); 10% duty (for 
intermediate goods); 20% duty (for finished goods); and 35% duty 
(for luxury items and finished goods in infant industries the GON 
wants to protect). 
. 
Change in Trade Policy? 
------------------------ 
. 
¶3. (U) The Tariff Book introduced excise duties on various products 
such as perfumes, cosmetics, non-alcoholic beverages, fruit juice, 
soap and detergent, beer, wines, spaghetti, noodles, alcoholic 
beverages, spirits, cigarettes, tobacco, telephone recharge card and 
vouchers, corrugated paper, toilet paper, and cleansing tissues. 
(Note:  An excise duty is a tax charged on goods produced within a 
country.  The tax is levied on the producer of the goods.  End 
Note). 
 
¶4. (SBU) In February 2009 the GON removed the same excise duties on 
products due to domestic producer complaints.  In a February 9 
meeting between the Deputy Chief of Mission and representatives from 
Proctor and Gamble, the reps complained that the excise duties were 
needlessly hurting domestic manufacturers and could potentially 
curtail continued investment in local production.  The GON reported 
that the turnabout in policy and removal was aimed at enhancing the 
competitiveness of locally produced goods vis-`-vis imported goods. 
 
. 
Minister of Commerce and Industry Speaks 
---------------------------------------- 
. 
¶5. (SBU) Since his appointment as minister in December 2008, Chief 
Achike Udenwa has stated at different fora that he will focus on 
reviving the industrial sector and improving Nigeria's non-oil 
 
ABUJA 00000533  002 OF 002 
 
 
export performance.  He said he will specifically focus on reviving 
the textile sector through a proposed 70 billion naira ($454 
million) intervention fund to be provided by the GON, and will work 
on improving the quality of Nigeria's non-oil exports, because of 
the potential for revenue from other sectors and because of the need 
to diversify the economy. 
. 
Comment 
------- 
. 
¶6. (SBU) If Nigeria expects major gains in domestic production and 
investment it must address problems in infrastructure - energy and 
transportation structures and poor electricity supply.  For 2008 
there were some positive reforms with the drop in import bans from 
44 to 26 and continued commitment to the ECOWAS CET.  However, more 
needs to be done.  The Minister has said most of the right things, 
but the key will be implementation.  The abrupt reversal in excise 
duties demonstrates that key Ministries - Finance and Commerce and 
Industry are not quite in sync on the path forward.  Trade policy 
for Nigeria rests with the Minister of Finance, who views trade as a 
source of revenue by imposing tariffs and not a tool for 
development.  At the 2009 Trade and Investment Framework Agreement 
Council Meeting in Washington on March 30, the GON may provide a 
cohesive and comprehensive road map on additional trade reforms, but 
we are not hopeful this will happen.  End Comment 
 
¶7. (U) This cable was coordinated with ConGen Lagos. 
 
SANDERS