Nigeria 1Bilateral trade relations According to the China Customs， the bilateral trade volume between China and Nigeria in 2006 reached US＄3.13 billion， up by 10.6％， among which China’s export to Nigeria was US＄2.85 billion， up by 23.9％， while China’s import from Nigeria was US＄280 million， down by 47.3％. China had a surplus of US＄2.57 billion. China mainly exported motorcycles， machinery equipment， auto parts， rubber tires， chemical products， textiles and garments， footwear， cement， and etc. According to the Ministry of Commerce（hereinafter referred to as MOFCOM） the ， turnover of completed engineering contracts by Chinese companies in Nigeria reached US＄3.68 billion in 2006， and the volume of completed labor service cooperation contracts was US＄160 million. According to MOFCOM， the direct investment volume of Chinese non financial projects in Nigeria， which were authorized by or put on record in MOFCOM， reached US＄157 million. According to MOFCOM， Nigeria invested in 15 projects in China in 2006， with a contractual volume of US＄110 million and an actual utilization of US＄20 million. 2Trade and investment regime The main law governing investment in Nigeria is the Nigerian Investment Promotion （ Commission NIPC） Decree No.16 of 1995， which was amended in 1998. The main legislation guiding the tariff system and procedure is the Customs and Excise Management Act of 1990. The law regulating imports， excise tariff and related import bans is the Customs， Excise Tariff Decree No.4（1 March 1995） Other laws . governing investment include the Foreign Exchange（Monitoring and Miscellaneous Provisions） Decree No.17 of 1995， the Investments and Securities Decree No. 45 of 1999， and etc. The authorities administering trade and investment in Nigeria remain unchanged in 2006. The Ministry of Commerce is Nigeria s trade authority， responsible for the administration of foreign trade， domestic trade and regional trade， the making of related trade policies，and the management of trademarks，patents，anti dumping and other matters. The Nigerian Investment Promotion Commission（NIPC） is the investment authority in Nigeria， responsible for making laws and regulations to attract foreign investment， assisting foreign companies in communication with government agencies， and processing relevant formalities such as registration. 2.1Trade administration and its development 2.1.1Tariff system In 2006， the West African Economic Community（WAEC） formally launched a common tariff system， which comprises the following 4 aspects. The import tariff rate is 5％ for primary products， 10％ for semi finished products（such as raw ， materials and other industrial products） 20％ for finished industrial products， and 50％ for luxury goods. Moreover， members of WAEC continue to promote regional trade liberalization. As a member of WAEC， Nigeria has made a commitment to bringing its tariffs in conformity with the level of WAEC by the end of 2007. 18.104.22.168Textiles and tobacco raw materials In order to implement the common tariff of WAEC， tariffs levied on imported textiles and tobacco raw materials were reduced by 67％ in February 2006. For textile raw materials（including the silk worm cocoons suitable for reeling， ， unprocessed raw silk and non carded silk waste） the import tariff rate is lowered from 15％ to 5％. For non waste spun silk yarns not put up for retail sale， the tariff rate is lowered from 30％ to 10％. For waste spun silk yarns and cocoons not put up for retail sale， the tariff rate is lowered form 30％ to 20％. For greasy shorn （ wool not carded or combed， and carded or combed and carbonized） used in textile factories， the tariff rate is lowered from 15％ to 5％. For unprocessed raw tobacco （partly or wholly stemmed or stripped） and tobacco waste， the tariff rate is lowered from 15％ to 5％. And for finished tobacco products， the tariff rate is lowered from 80％ to 50％， including cigars， cigars with square toes， cigarettes， and etc. 22.214.171.124Automobiles With the implementation of common tariff of WAEC ， the Nigerian federal government will cut the import tariff for automobiles by 50％. Under the new tariff framework， the import duty rate for small cars， vans， racing cars and other passenger cars with exhaust air volume under 2500cc and classified under HS Heading of 8，703 is lowered from 40％ to 20％. For luxury vehicles with exhaust air volume above 2， 500cc， the import duty rate remains at 50％. Auto parts （regardless of exhaust air volume） imported in the form of CKD are imposed a 5％ duty rate. Buses，trucks and camions are subject to a 10％ import duty rate，tractors 5％， and complete sets of farm tractors 10％. Tractor parts imported in the form of CKD are imposed a 5％ import duty rate.（0 import duty rate for farm tractors）. Vehicles with special purpose， such as dump trucks， cranes， and fire engines， are imposed a 5％ import duty rate. Under the new tariff regulations， vehicle chassis with engines（such as tractors， small cars， trucks and other models） are imposed a 5％ import duty rate， while other auto components， such as bumpers， safety belts， brakes， gear case， non driven shaft， hubs， silencers， and exhaust pipes are imposed a 10％ import duty rate. Cars and motorbikes with 50cc~800cc exhaust air volume are imposed a 20 ％ import duty rate， and those with exhaust air volume above 800cc a 50％ import duty rate. Motorcycles imported in the form of CKD（regardless of exhaust air volume） are levied a 5％ import duty rate. Non motorized vehicles such as bicycles and tricycles are imposed a 20％ import duty rate. However， motorized or non motorized vehicles for the disabled people are free from import duties. 2.1.2Import and export administration According to the Agreement on Import Licensing Procedures of Nigeria， narcotic drugs， psychotropic substances and certain pharmaceuticals harmful to health and security remain subject to import licensing. Besides， according to the regulations set by the National Agency for Food and Drug Administration and Control of Nigeria， the importation of veterinary medicine and （ pharmaceuticals including herbal medicine） must be registered with this agency and publicized before being approved. 2.2Investment administration and its development. According to the Nigerian Investment Promotion Commission （NIPC） Decree No.16 of 1995，both Nigerians and non Nigerians are allowed to invest in all areas except the manufacturing of arms， ammunition， narcotic drugs， and psychotropic substances. Besides， foreign enterprises are allowed to set up their subsidiary companies in Nigeria to do business. An enterprise in which foreign participation is permitted shall， after its incorporation or registration， be registered with the Nigerian Investment Promotion Commission（NIPC）. A foreign enterprise may acquire shares of any Nigerian enterprise in any convertible foreign currency. Investment returns can be repatriated free of control. According to the Export Processing Zone Decree promulgated by the Nigerian government in 1991， the first export processing zone was established in Calabar located in the southeast of Nigeria. Foreign investors who make investment and set up factories in this zone can enjoy the following favorable policies.（1） The current Nigerian laws and regulations on taxation， rate payment， and foreign exchange control are not applicable to enterprises located in the zone.（2） Foreign capital for investment can be withdrawn at any time. （3） All investment profits and dividends of foreign investors can be repatriated free of control.（4） In the zone， goods can be imported and exported without import or export licenses， and products produced in the zone can be exported to the European Union or the United States without quota restrictions.（5） Factories under construction can be exempted from land rent.（6） Exclusively foreign owned enterprises are permitted in the zone.（7） Imports of machinery equipment， consumer goods， raw materials and other products related to investment projects are free from tariffs.（8） 25％ of the products produced in the zone are permitted for sale in Nigeria after being approved and paying related tariffs. （9） All the formalities of application for setting up a foreign funded plant in the zone can be processed in the authorities of the export processing zone at one time. Besides， if the foreign investment in the zone is made in manufacturing， a 25％ tax reduction will be offered. In order to encourage the agricultural production， the federal government approved new agricultural policies in March 2006 to encourage private investors to invest in agriculture and play more important roles in the agricultural production and （1）The agricultural processing industries. The main favorable policies are as follows. loan of a private investor is exempted from taxes， and the deadline for repayment of the loan can be extended for 18 months.（2） New investment in agricultural production and processing industries can be exempted from taxes for 5 years.（3） Fertilizer purchases are entitled to a subsidy of 25％ of the cost.（4） Imported agricultural processing machines and equipment parts are exempted from tariff duties. In order to improve investment environment， in March 2006， the Nigerian government launched “One stop Services” to simplify its investment procedures， and reduce time spent on processing relevant formalities. Aimed at providing convenient， efficient， quick， and open services， the One Stop Investment Center（OSIC） was set up in the Nigerian Investment Promotion Commission （NIPC）. It provides services such as incorporation registration， residence permit and work permit application and tax registration to all economic sectors（including petroleum and natural gas）. 3Barriers to trade 3.1.Tariffs and tariff administration measures 3.1.1Tariff peaks Nigeria has high tariffs and tariff peaks. For example， the tariff rate is 150％ for certain agricultural products， 98.2％ for fruits and vegetables， 75.3％ for beverages and 42.7％ for textiles and garments. 3.1.2Tariff escalation Nigeria has tariff escalation. For foodstuff and beverage， raw materials are imposed a 39％ tariff rate， semi finished products 44％， and finished products 59％. For wooden products， the tariff rate is 15％ for log， 30％ for dale and plywood， and 100％ for wooden furniture. For paper products， the tariff rate is 10％ for raw materials， 20％ for semi finished products， and 25％ for finished products. For metal products， the tariff rate is 12％ for raw materials， 19％ for semi finished products， and 25％ for finished products. Lower tariffs are applied to imported basic raw materials and means of production（including production equipment） while ， industrial products， foodstuff， consumer products and luxury goods are levied a higher level of tariffs. Such a tariff structure has considerately hindered China’s exports of higher value added products such as semi finished or finished products to Nigeria. 3.2.Import restrictions 3.2.1Import bans In January 2004， the Nigerian federal government announced on a unilateral base to impose import bans on 41 product items. In 2005， the Nigerian Ministry of Finance issued a revised list of banned import items to adjust the former list. The list covers some of China’s main export products to Nigeria， such as textile items， footwear and bags. In September 2006， in order to improve the domestic manufactures production of high quality product， the Nigerian government announced to remove the import ban on certain textile products and furniture raw materials. The textile items removed from import ban include lace materials， basic fabrics， metal yarns and carpets. No specification has been provided as regards categories of furniture raw materials. However， by the end of December 2006， no formal document had been issued in this regard. China expresses concerns over this issue， and hopes that Nigeria will keep its trade policy stable and predictable. 3.2.2Import licensing Nigeria applies special licensing requirements to certain products including petroleum products and generation units. Applications for import licenses or permits must be made three months prior to the arrival of goods at the entry point. The quantity allocated to each importer， product item or each country is stated in individual licenses and permits， and determined on the merit of each application. Such practice has brought uncertainty to China’s export to Nigeria. China expresses concerns over this issue. According to relevant Nigerian laws and rules， the Federal Ministry of Finance and the Ministry of Industry work together in the examination and issuance of import licenses for motorcycle CKD. Applicants of such import licenses must possess a production line of the complete set of motorcycles and other production facilities， and meet certain requirements including experiences in the motorcycle industry， credit ranking， annual capacity， investment capital， and number of employees. The CKD certificate is valid for 1 year， and could be renewed for another year through application and after annual audit. 3.3Barriers in customs procedures Customs procedures in Nigeria constitute major obstacles to trade with Nigeria. Importers face inordinately long clearance procedures and high berthing and unloading costs. The Nigeria government currently practices a double inspection system requiring both pre shipping inspection and 100％ on arrival inspection. Cargoes are kept waiting for clearance at the ports， some even delayed for several months. Currently at fastest it takes a week to clear goods， and normally 2 to 3 weeks， far longer than the committed no more than 48 hours. The Nigerian government announced on July 1， 2002 that it would remove the required pre shipping inspection and adopt the destination inspection system. For many reasons， however， the removal has not yet been implemented. It is required in Nigeria that all product imports must be inspected by a third party inspection agency appointed by the Nigerian government and authorized to carry out customs valuation. Chinese enterprises have complained that these inspection agencies often deliberately create difficulties for exporters and conduct customs valuation in an arbitrary manner. Such practice has seriously undermined the interests of Chinese enterprises. China hopes that Nigeria will conscientiously fulfill its obligations under the Agreement on Preshipment Inspection of the WTO. 3.4Technical barriers to trade 3.4.1Standards Organization of Nigeria Conformity Assessment Program（SONCAP） Nigeria filed a notification with the WTO on February 8， 2005 to apply mandatory SONCAP to import products such as electrical products， certain auto products and toys. SONCAP is a set of conformity assessment and certification procedures applied to certain categories of controlled products imported into Nigeria. According to the Program， non compliant products will not be able to pass Nigeria Customs. Controlled products must conform to Nigeria Industry Standards（NIS） and/or other approved international standards prior to shipment. Nigeria has started to implement SONCAP since September 2005 ， applying mandatory safety certification to certain import products， such as electrical and electronic products， auto tires， auto glass， auto parts， auto batteries， gas apparatus， toys， galvanized steel products， generators， and etc. Manufacturers or exporters must provide inspection reports issued by qualified labs in accordance with standards approved by the Standards Organization of Nigeria （ mostly international standards or standards used by developed countries）. Both of the inspection report and the application for certification should be submitted to the Standards Organization of Nigeria for processing. Generally ， a certification certificate is valid for 3 years， but needs to be reviewed annually. The Nigerian government has named INTRTEK as the only organization to conduct the SONCAP certification. Chinese enterprises have complained that certification fees charged by INTRTEK are quite high， especially for small sized exporters. The conformity assessment procedures required for import products are not applicable to domestic products of Nigeria， which are subject to a different set of mandatory conformity assessment procedures. China expresses its concern over possible discriminatory treatment between import products and domestic products when the two are applied different conformity assessment systems. 3.4.2Pharmaceuticals Registration Regulations The National Agency for Food and Drug Administration and Control of Nigeria is responsible for supervising and controlling the technical standards of processed food， beverages， medical appliances， pharmaceuticals and other chemical products （including raw materials）. The production， import， export， sale， promotion and advertisement of products including processed food， beverages， tobacco， cosmetics， pharmaceuticals and chemical products must be registered with the above mentioned agency. Some of the requirements of the agency are very strict， for example， the importation of new medicine must meet the requirements for clinic experiment certificates and registration in the original producing country and at least two developed countries. These requirements have actually constituted restriction to imports. According to the new regulations of pharmaceuticals registration issued by the National Agency for Food and Drug Administration and Control of Nigeria in June 2006， all pharmaceutical enterprises intending to register in this bureau must become members of Pharmaceutical Manufacturers Group of Manufacturers Association of Nigeria（PMGMAN） or Association of Pharmaceutical Importers of （APIN） Pharmaceutical enterprises that have not joined PMGMAN or APIN Nigeria . must complete the membership formalities before August 31 2006； otherwise their pharmaceuticals registration certificates will be revoked. 3.5Export restrictions In Nigeria， the following products are banned from export: corn， logs and wood ， boards （teak） raw hides and skin， scrap metals， unprocessed rubber and rubber lumps， culture relics and antiques， rare wildlife and its products. China questions the justifiability of the ban and expresses concern over its inconsistency with WTO rules. 4Barriers to investment No obvious policy barriers exist in the access， operation and exit of foreign investment in Nigeria， and there is no restriction on remittance of profits gained by foreign funded enterprises. Besides， foreign investment is allowed in all sectors except the production of arms， ammunition， narcotic drugs， and uniforms for army， the police， and the Customs. 100％ foreign ownership is permitted except in joint ventures in the sectors of petroleum and natural gas， where Nigeria parties shall hold controlling shares.