EU Statement at the Trade Policy Review of the Republic of Malawi, 09 October 2024

PRINT

EU Statement at the Trade Policy Review of the Republic of Malawi, 09 October 2024

09.10.2024 EU mission to the WTO in Geneva - Press and information team

Statement delivered by Deputy Permanent Representative, Hiddo Houben

I would like to welcome the Delegation of the Republic of Malawi, led by Her Excellency Ambassador Caroline Bwanali Mussa, and to thank the Discussant, Ambassador Nadia Theodore of Canada for her introductory remarks.

Exactly thirty years ago the people of Malawi opted for a system of multiparty democracy and they deserve to be thoroughly commended for and continuing this path without interruption since then.

Malawi faces enormous challenges as a least-developed country that is land-locked and has a rapidly growing population. The number of simultaneous development challenges must appear overwhelming: to alleviate poverty, to grow an economy that is marked by subsistence agriculture, to reduce vulnerability to climate and other shocks, and to finance increased costs for key imported commodities like fertilisers and energy. Malawi's record in this regard has unfortunately been mixed, as it has underperformed even the average of sub-Saharan Africa. In recent years it has seen declining exports, low savings and investment rates, and even anegative per capita GDP growth.

These issues have been exacerbated by a weakening integration into global value chains, which is such a priority for the African continent, and which has further contributed to foreign exchange shortages and stunted productivity gains. With the recent Extended Credit Facility granted by the IMF in November 2023 providing some temporary relief, there is now an opportunity for Malawi to rethink its development strategy and the growth model that has faltered during the period under the review.

In the context of this 4^th Trade Policy Review, we therefore want to heartedly commend a reformed development model. Malawi must urgently implement reforms that stabilise its macroeconomic foundations and foster a more conducive business environment through inclusive consultations in legislative processes that impact investment.

In this regard, the EU notes the strategic importance of Malawi's long-term development goals as set out in its national development plan "Vision 2063". The EU acknowledges the importance of trade and industrialisation for achieving inclusive and sustainable growth. Continued investment in infrastructure and industrial capacity, along with diversification of agriculture and addressing structural challenges, is essential for meeting the plan's objectives.

The EU fully appreciates Malawi's efforts to stabilize its macroeconomic situation and remain on track with its IMF commitments. Sound fiscal policy and transparency are crucial to address Malawi's foreign exchange challenges and to create a solid foundation for sustainable economic growth and development, benefiting both domestic and international stakeholders.

The EU commends Malawi on the enactment of several key laws to encourage investment and innovation, such as those covering intellectual property, plant breeders' rights, and trademarks.

The EU encourages Malawi to join the Minerals Security Partnership Forum, which aims to enhance the resilience and sustainability of mineral supply chains, while underlining the importance of local value addition. Membership would not only strengthen Malawi's position in the global minerals market, but also promote responsible sourcing practices. In addition, it would foster sustainable development in the mining sector, by offering opportunities for technical assistance to the Malawian Authorities.

The EU urges the Malawian authorities to capitalise on the potential for energy exports, particularly through the upcoming Mozambique-Malawi Interconnector project, which will provide crucial access to the South African Power Pool.

Turning now to more specific WTO business, we appreciate Malawi's commitment to the multilateral trading system and its constructive engagement in the WTO. This includes its role as the Chair of the Working Group on Trade, Debt and Finance, participation in the Informal Working Group on Trade and Gender, and being the LDCs' focal point for trade in services.

We recognise Malawi's improved WTO notification record, particularly in the areas of SPS and TBT. However, as several notifications are still pending, we urge Malawi to make further progress in fully complying with its transparency obligations. Good notifiers make good WTO Members.

The EU encourages Malawi to improve its business environment and the investment climate, and to increase transparency regarding land registration and legislation adopted to regulate business. In this regard, Malawi's participation in the Investment Facilitation for Development Agreement to promote a more transparent and investment-friendly environment is welcomed. The EU invites Malawi to ratify the phase 1 Agreement on Fisheries Subsidies, which is a personal priority of the DG of the WTO, as well as to engage in the discussions on e-commerce.

Furthermore, we encourage Malawi to consider joining the services domestic regulation Joint Statement Initiative and undertake the domestic regulation disciplines in the reference paper, in line with the flexibilities afforded for the LDCs within it. This step would bring along clear benefits for the services economy and trade by applying these good regulatory practices.

Regarding our bilateral relationship, Malawi continues to benefit from duty-free quota-free access to the EU market with the EU remaining the main destination for Malawi's exports.

The EU appreciates cooperation with Malawi under theEU Global Gateway initiative, our strategic framework for bilateral cooperation in areas such as green and resilient economic transformation, democracy, economic governance, human development and social inclusion.In the 2021-2024 period, the EU has set aside over EUR 352 million for this purpose.

We note that Malawi is a strong advocate of regional cooperation, being a member of the Southern African Development Community (SADC) and the Common Market for East and Southern Africa (COMESA), and having ratified the African Continental Free Trade Area (AfCFTA) in 2021. The EU would appreciate further information regarding Malawi's plans to join the AfCFTA's Guided Trade Initiative (GTI), which has the potential to facilitate trade, particularly in agricultural commodities, and would contribute to Malawi's economic diversification goals.

In our written questions, the EU has raised a number of issues, inter alia as regards fossil fuel subsidies, in light of commitments under the Sustainable Development Goals. We are also interested in Malawi's plans for the energy transition with a view to enhancing sustainability and regional integration.

Mr Chair, the EU is committed to supporting Malawi in achieving its development goals and fostering a fair and transparent trading environment.

On behalf of the EU, I look forward to constructive dialogue with Malawi during this 4^th Trade Policy Review. Thank you very much.