Sacu-lesotho wt/tpr/S/aaaa Page Annex 2 kingdom of lesotho contents
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- Trade and Investment regimes
(4) OutlookLesotho's annual economic growth is expected to be 3-4% over the next few years30, i.e. well below the GDP growth rate of 7.5% per year needed to reach the Millennium Development Goal of halving the incidence of poverty by 2015.31 This is despite increased construction activity due to scaled up public investments, including via the MCC compact. Lesotho is to accelerate the pace of its structural reforms, with a focus on promoting private-sector development, as stipulated in its Vision 2020 and PRS. The main risks to Lesotho's economy include the negative impact of the persistent drought on agriculture and the deterioration of the external environment. A further slow-down in South Africa's economic growth, and developments in the global regime for trade in textiles, in particular the erosion of trade preferences on the United States market32, will greatly affect Lesotho's export sector. Moreover, the uncertainty of SACU revenue poses a challenge to fiscal management, as these receipts account for the bulk of government revenue33; hence, the authorities recognize the need to strengthen fiscal policy. Trade and Investment regimesGeneralLesotho has been a SACU member from the inception of SACU, and thus most of its trade policies have been shaped at the SACU level. On issues not covered by the SACU Agreement, Lesotho's trade-related policies are mainly the responsibility of the Ministry of Trade and Industry, Cooperatives and Marketing (MTICM). This overall responsibility is undertaken in coordination with all government ministries and departments. To facilitate regular consultations, the Ministry has set up a number of forums where all government ministries are represented. These include the National WTO Network Forum, which brings together all ministries and departments as well as the private sector and academia to consider policy on WTO-related matters, and the Inter-Ministerial task team, which is responsible for dealing with industry problems. Other ministries and agencies involved in trade‑related policy making include the Ministries of Finance and Development Planning, Foreign Affairs and International Relations, Agriculture and Food Security, and the Central Bank of Lesotho. The 2002 SACU Agreement provides for a national body to be established in each member country to be in charge of SACU issues (including tariff changes) at the national level and to make recommendations to the Customs Union Commission (Main Report, Chapter II(2)(ii)). The wider business community has also become more involved in trade policy making in Lesotho.34 A National Steering Committee (NSC) was established in February 2002 as part of the Government's poverty-reduction strategy, and pursuant to the Integrated Framework for Trade‑Related Technical Assistance (IF). As an LDC, Lesotho has a number of IF-related initiatives. The NSC comprises the Principal Secretaries of the Ministries of Trade and Industry, Cooperatives and Marketing, Finance and Development Planning, Foreign Affairs and International Relations, and senior representatives of the Lesotho Chamber of Commerce and Industry, the Lesotho Council of NGOs, the Lesotho Manufacturers' Association, Lesotho Association of Exporters, Association of Lesotho Employers, National University of Lesotho, the Mohloli Chamber of Business, and the national office of the United Nations Development Programme (UNDP). Under the NSC, an IF Task Force was established, also led by the MTICM with the participation of the Ministries of Foreign Affairs, Finance and Development Planning, the National University of Lesotho, the Lesotho National Development Corporation (LNDC), the Central Bank, and the Chamber of Commerce, as well as the UNDP national office. Under the Task Force, a Trade Sector Working Group for Lesotho's Poverty Reduction Strategy Paper (PRSP) was set up to address pro-poor trade policies and strategies for the PRSP process. With specific reference to intellectual property issues (see Chapter III(4)(iv)), an inter-ministerial subcommittee on TRIPS-related issues has been established under the National WTO Network Forum. Lesotho's overall trade vision is to achieve a pre-eminent position in the sub-region, and in Africa, as an investment destination of choice, and be competitive in the multilateral trading system while maintaining the highest consumer protection standards. Lesotho hopes to achieve this through development of policies conducive to promotion of entrepreneurial skills and transfer of appropriate technology, and through smart partnership of the public and private sectors. Pursuant to this overall objective, Lesotho seeks "to create and maintain a more equitable and enabling environment for industrial, agri-business and commercial development". In this regard, the MTICM undertakes to: formulate, and monitor the implementation of appropriate commercial, marketing, and industrial development policies, and enforce supporting legislation; establish institutional frameworks that promote foreign direct investment and domestic participation in terms of the country's commercial, marketing, and industrial activities; and foster the global competitiveness of Lesotho's economy. MTICM seeks to attain these goals by: attracting foreign investment in order to broaden the country's industrial base and improve employment opportunities for the local population; identifying and assisting local entrepreneurs and the farming community to utilize export opportunities in order to improve the country's foreign exchange earnings, and create growth in the industrial, commercial, and agriculture sectors; facilitating the creation of a conducive and appropriately regulated environment for commercial and marketing activities in order to improve the performance, and to support the growth, of local entrepreneurs and farmers; fostering Lesotho's effective participation in international and regional trade organizations and maximizing its benefits from treaties to which it is a signatory; and increasing market shares, profit margins, and on-farm income. Lesotho's main trade-related laws have remained largely unchanged since the last TPR of SACU (Table II.1). Table II.1 Main trade-related legislation, 2009
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