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Trade Agreements Mozambique

The Republic of Mozambique is classified as a low-income and least developed country (LDC), of which about 80% of the population lives in poverty. In the World Economic Forum (WEF) Enabling Trade Index (2012), the country ranked 97th out of 132 countries that measure institutions, policies and services to facilitate trade in countries. Over the past two decades, the country`s economy has grown rapidly, with an annual growth rate of about 8%, mainly supported by the exploitation of natural resources. Despite its high growth rate and ongoing mega-projects, the Mozambican economy remains based on agriculture, accounting for 75% of the population`s employment. Its GDP is mainly based on the services, agriculture and manufacturing sectors. Obstacles to its development include ineffective import and export procedures, inadequate transportation infrastructure and services, the poor regulatory environment and physical security issues. In the coming years, the Mozambican government is committed to tackling these problems by diversifying its economy, combating corruption, investing in infrastructure development and improving trade facilitation (Bertelsmann Foundation 2014, WTO 2009). Mozambique is open to foreign trade, which accounts for more than 132% of the country`s GDP (World Bank, 2018). It is a member of the WTO and the South African Development Community (SADC) and has signed trade agreements with Malawi and Zimbabwe. In February 2018, Mozambique joined the EUROPEAN-SADC EPA UNION, signed in June 2016 by Botswana, Lesotho, Namibia, South Africa and Swaziland. The country also signed the African Continental Free Trade Agreement.

The government is trying to reform its trade rules to improve its business climate and promote exports. Tariffs remain high and there are many non-tariff barriers in the country (for example. B slow customs clearance procedures). The country mainly exports natural resources (coke and coal, aluminum, electrical energy, hydrocarbons, titanium, precious stones), tobacco and sugar. Mozambique imports hydrocarbons, metal products (aluminium), electric energy, vehicles, boats, food (rice, wheat and fish), cements and medicines. Mozambique`s main customers are India, the Netherlands, South Africa, China, Hong Kong, Singapore and Poland. Its main suppliers are South Africa, China, the United Arab Emirates, the Netherlands, India, Singapore, Portugal and the United States. By 2020, Mozambique could become one of the world`s largest exporters of natural gas (the country is Africa`s third largest reserve) thanks to the discovery of new reserves. The proposed construction of natural gas-fired power plants and the construction of a new dam are expected to increase the country`s electricity exports to neighbouring countries. Export infrastructure (railways, deep-water ports, liquefied natural gas facilities) is also under construction and will support natural gas and coal exports to Asia. The deficit has narrowed sharply since 2016 due to a drop in imports, but has fallen from $498 million in 2017 to $973 million in 2018 (World Bank).

In 2018, exports of goods amounted to $5.2 billion (up 10% from 2017), while imports amounted to $6.79 billion (up 18%) has been achieved. Services imports increased to $4.14 billion , or 40%, from $4.00 per cent While exports reached only USD 673 million (WTO). Increased imports of capital goods for reconstruction projects and liquefied natural gas, as well as lower demand for coal and aluminum from India and China, are expected to worsen the country`s trade balance.