Optimism and worry as Seychelles readies for WTO

24 Nov

Flag-map_of_the_Seychelles.jpgThe Indian Ocean archipelago of the Seychelles is pinning its hopes of economic recovery on its expected membership of the World Trade Organisation, but the impending move is also causing jitters for local businesses.

After 18 years of negotiations, the tourist destination — famed for its white sandy beaches and luxury hotels — is set to join the global trade body by the end of April 2014, said Cillia Mangroo, head of the finance ministry’s trade division.

For the authorities of the island nation, membership equals commercial security.

“Being a member of the WTO, for a small country like Seychelles, provides the opportunity to have a body that can defend their rights in case of a trade dispute with another country,” said Charles Morin, the islands’ chief negotiator.

Aside from pulling in tourists and honeymooners, the main export is canned tuna to the European Union. The EU is also the country’s main trading partner, taking 61 percent of exports and the source of 30 percent of imports.

The Seychelles also exports copra — coconut kernels that are ground down to extract oil — and furniture to Asia and Africa.

Ahead of joining the 159 member bloc, officials in Victoria has been busy signing bilateral agreements with Canada, Mauritius, Oman, Switzerland, and, more recently, the EU and Thailand. According to the WTO, the country has been particularly committed to cutting export subsidies to zero.

Worries for local businesses
But not everyone in the small nation of just 90,000 inhabitants is convinced of the benefits of casting off trade barriers.

“Architects, engineers and lawyers are worried about the opening up of the market, because once the Seychelles becomes a member of the WTO, any business can come and invest in the country,” said Marco Francis, president of the country’s chamber of commerce. There are fears too for the country’s poultry and pig farmers, already badly struggling since the authorities began to open the market, including allowing meat imports from Brazil.

“I fear that the country’s entry into the WTO will result in the end of such farming… and that could put the country’s food security at risk,” Francis added. He said many livestock breeders have also closed shop because the Seychelles does not have the means to make “mass rearing such as Brazil and China.”

Francis hopes that a list of “protected” products will be reserved for key Seychelles companies, arguing Victoria should retain a monopoly on traditional fishing.

But the government will not budge, arguing that WTO accession is key to putting the economy back on track after skirting close to bankruptcy during the peak of the financial crisis.

Becoming a member “will help us attract the right direct investment,” Mangroo added.

In a statement issued at the conclusion of bilateral negotiations in late October, the European Commission said it believed accession “would be the last step on the process of economic reform and development of the Seychelles”.

The International Monetary Fund (IMF) ends in December its five-year programme of assistance to Seychelles, an austerity plan that has resulted in a major restructuring of the debt, privatisation and slashing the government staff.

At the end of 2008, the Seychelles faced a balance of payments crisis and liquidity problems. Its public debt reached 130 percent of gross domestic product (GDP), inflation stood at 37 percent and GDP grew by just 0.1 percent.

The following year, prices soared by over a third while GDP tumbled by 9.6 percent.

For 2013, the IMF now expects the Seychelles to post growth of 3.3 percent and inflation of 4.9 percent.

Victoria should also have cut public debt to 70 percent of GDP, and hopes to see this ratio fall to 50 percent by 2018.


One Response to “Optimism and worry as Seychelles readies for WTO”

  1. www.newsafrica.co.uk November 24, 2013 at 11:17 pm #

    Reblogged this on http://www.newsafrica.co.uk and commented:
    Is Seychelles ready ?

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