I. COMMERCIAL OVERVIEW

OVERVIEW OF IMPORT MARKET

IN 1994 GABON WILL BE ADJUSTING TO THE SHOCK OF A FIFTY PERCENT
DEVALUATION OF THE CFA, THE FIRST CHANGE IN THE CFA PARITY IN
NEARLY FIFTY YEARS.  ACCORDING TO THE IMF, THE DEVALUATION WILL
RESULT IN A ONE HUNDRED PERCENT INCREASE IN IMPORT PRICES IN CFA
TERMS.  OVERALL, AUTHORITIES ARE PROJECTING THAT REAL GDP WILL
DECLINE BY ONE PERCENT IN 1994.  THE DEVALUATION IS EXPECTED TO
SHIFT THE COMPOSITION OF IMPORTS AWAY FROM CONSUMER GOODS (REAL
PRIVATE CONSUMPTION IS EXPECTED TO FALL BY 15 PERCENT) IN FAVOR
OF INVESTMENT GOODS.  PRELIMINARY IMPORT FIGURES FOR THE FIRST
THREE MONTHS OF 1994 SHOW A GREATER THAN EXPECTED DECREASE IN THE
VALUE OF IMPORTS, AS GABONESE CONSUMERS HAVE RAPIDLY SHIFTED AWAY
FROM TRADITIONAL SUPPLIERS IN FAVOR OF LOWER COST SOURCES IN
SPAIN, NORTH AFRICA, AND ASIA.  U.S. CONSUMER GOODS ENJOY A
STRONG REPUTATION FOR VALUE AND MAY BE ABLE TO TAKE ADVANTAGE OF
THIS TREND AS WELL.

TOTAL GABONESE IMPORTS IN 1993 DECREASED 8 PERCENT FROM US DOLS
867 MILLION TO US DOLS 826 MILLION. GABON'S INDUSTRIAL BASE IS
SMALL AND UNDEVELOPED, AND THUS ITS LARGEST IMPORTS CONSIST OF
MACHINERY, TRANSPORT EQUIPMENT, AND METAL AND METAL PRODUCTS.
THESE THREE CATEGORIES ARE CLOSELY LINKED WITH GABONESE
INFRASTRUCTURE PROJECTS AND THE MINING AND OIL INDUSTRY. GABONESE
IMPORTS CONSISTED PRIMARILY OF MACHINERY AND MANUFACTURED GOODS
(25 PERCENT), TRANSPORTATION EQUIPMENT (20 PERCENT) AND METAL
PRODUCTS AND EQUIPMENT MOSTLY FOR THE CRUDE OIL SECTOR.  THE
SMALL REDUCTION OF TOTAL IMPORTS IN 1993 RESULTED PRIMARILY FROM
REDUCED IMPORTS OF EQUIPMENT FOR THE MINING SECTOR.

1993, GABONESE IMPORTS FROM THE UNITED STATES OF MANUFACTURED
GOODS CONSISTED OF MACHINERY AND EQUIPMENT (US DOLS 80.0 MILLION)
MOST OF THEM WERE TRANSPORTATION EQUIPMENT AND METAL PRODUCTS.
GABON'S OVERALL TRADE SURPLUS WITH THE UNITED STATES IN 1993 WAS
US DOLS 997.3 MILLION.  IN 1993, IMPORTS FROM THE U.S. INCREASED
11 PERCENT FROM US DOLS 75.7 MILLIONS TO US DOLS 84.0 MILLION.

THE UNITED STATES HAS TRADITIONALLY HAD A TRADE DEFICIT WITH
GABON AND 1993 WAS NO EXCEPTION.  U.S PRODUCTS REPRESENTED 10.5
OF TOTAL GABONESE IMPORTS; FRANCE SUPPLIED 48 PERCENT.  SINCE THE
BULK OF U.S. IMPORTS FROM GABON RELATE TO THE OIL INDUSTRY, THEIR
VALUE TENDS TO FLUCTUATE WITH THE LEVEL OF ACTIVITY IN THE
PETROLEUM SECTOR. IN 1993 CRUDE OIL PRODUCTION TOTALED 15.5
MILLION TONS AND IS EXPECTED TO INCREASE TO 17.0 MILLION TONS BY
1997. IMPORTS FROM GABON, WHICH CONSISTED ALMOST ENTIRELY OF
CRUDE OIL, WERE US DOLS 1,081.3 IN 1993.

BRIEF SYNOPSIS OF COMMERCIAL ENVIRONMENT

DESPITE ITS SMALL POPULATION (1,000,000 INHABITANTS) AND ITS
FINANCIAL DIFFICULTIES, GABON CONTINUES TO BE ONE OF THE RICHEST
COUNTRIES IN SUB-SAHARAN AFRICA WITH A PER CAPITA INCOME OF US
DOLS 3,900. GABON'S ECONOMY IS HEAVILY DEPENDENT ON OIL, WHICH
ACCOUNTS FOR ALMOST 34 PERCENT OF GDP, ABOUT 65 PERCENT OF
GOVERNMENT REVENUE, AND 90 PERCENT OF EXPORTS.   OIL PRODUCTION
INCREASED FROM 13 MILLION TONS, IN 1991 TO OVER 15.5 MILLION TONS
IN 1993, STIMULATING A MINOR ECONOMIC REBOUND AND OFFSETTING
DECLINES IN OTHER SECTORS OF THE GABONESE ECONOMY.  ALTHOUGH
GABON IS ALSO A PRODUCER OF TIMBER, MANGANESE, AND URANIUM, THE
PETROLEUM SECTOR WILL CONTINUE TO DOMINATE GABONESE EXPORTS AND
FOREIGN, ESPECIALLY U.S., INTERESTS IN THE NEXT FIVE YEARS.

DESPITE THIS GENERALLY PROMISING ECONOMIC BACKGROUND, A NUMBER
OF FACTORS HAVE INHIBITED BROADER DEVELOPMENT INCLUDING A LACK
OF INFRASTRUCTURE AND COMMUNICATIONS OUTSIDE LIBREVILLE AND PORT
GENTIL;  GABON'S SMALL MARKET (AROUND ONE MILLION INHABITANTS);
AND HIGH LABOR COSTS, WHICH MAKE THE MANUFACTURING SECTOR NOT
VERY COMPETITIVE COMPARED TO OTHER AFRICAN STATES.

GABON BUSINESS ATTITUDE TOWARD THE U.S.

RECOGNIZING THE NEED TO ATTRACT FOREIGN SKILLS AND TECHNOLOGY TO
ASSIST IN THE ECONOMIC DEVELOPMENT OF THE COUNTRY, THE GOVERNMENT
OF GABON HAS BEEN ATTEMPTING TO DIVERSIFY ITS ECONOMIC
RELATIONSHIPS. PROGRESS THUS FAR HAS BEEN MODEST IN DIVERSIFYING
FOREIGN INVESTMENT OUTSIDE THE PETROLEUM SECTOR.  THE GOVERNMENT
OF GABON HAS STATED THAT IT IS PARTICULARLY INTERESTED IN
ATTRACTING INVESTMENT FROM THE UNITED STATES.

COMPANIES BELONGING TO U.S. FIRMS OR TO BRANCHES OF FOREIGN FIRMS
ARE ALLOWED TO PURCHASE REAL ESTATE, TO NEGOTIATE LICENSES AND
TO ENTER INTO COMMERCIAL AGREEMENTS IN THE SAME WAY AS THEIR
GABONESE COUNTERPARTS.  GABON DOES NOT FORMALLY RECOGNIZED THE
PRINCIPLE OF  NATIONAL TREATMENT BECAUSE IT WISHES TO RESERVE THE
RIGHT TO FAVOR GABONESE FIRMS, ESPECIALLY IN MANUFACTURING AND
AGRO-INDUSTRY.  HOWEVER, UNDER CURRENT PRACTICE, U.S. FIRMS
ESTABLISHED IN GABON WITH LARGE INVESTMENTS (PETROLEUM, BANKING)
OPERATE ON AN EQUAL BASIS WITH NATIONAL FIRMS.

U.S. EMPLOYERS AND EMPLOYEES ARE SUBJECT TO THE GABONESE LABOR
LAW AND SOCIAL SECURITY LEGISLATION.  THERE IS NO DISCRIMINATION
CONCERNING TAXES AND OTHER CONTRIBUTIONS.

THERE HAVE BEEN NO KNOWN CASES OF EXPROPRIATION OR FORCED
NATIONALIZATION SINCE INDEPENDENCE IN 1960.

MAJOR BUSINESS OPPORTUNITIES

BEST PROSPECTS FOR U.S. SALES CONTINUE TO BE IN OIL TIMBER, OIL,
MINING AND TELECOMMUNICATIONS.  A SERIES OF DONOR-FINANCED ROAD
BUILDING PROJECTS WILL ALSO REPRESENT GOOD OPPORTUNITIES FOR U.S.
SUPPLIERS.

NATURE OF LOCAL AND THIRD COUNTRY COMPETITION

FRANCE IS GABON'S MAIN TRADING PARTNER, NORMALLY ACCOUNTING FOR
HALF OF GABONESE IMPORTS AND BUYING 30 PERCENT OF THE COUNTRY'S
EXPORTS.  GABON'S STRONG TIES WITH FRANCE ARE AN IMPORTANT
ELEMENT OF THE COMMERCIAL SETTING.  FRANCE FURNISHES NEARLY HALF
OF GABON'S IMPORTS, FRENCH FIRMS AND SUBSIDIARIES DOMINATE THE
LOCAL FORMAL PRIVATE SECTOR, AND OVER 12,000 FRENCH CITIZENS LIVE
IN THE COUNTRY.  FRANCE'S ABILITY TO OFFER CONCESSIONAL FINANCING
THROUGH THE CAISSE FRANCAISE DE COOPERATION (CFC), AND THE FONDS
D'AIDE ET DE COOPERATION (F.A.C.), IS A SERIOUS HURDLE TO U.S.
COMPETITORS.  BECAUSE OF THE STRONG PRESENCE OF FRENCH INTERESTS
IN EVERY SECTOR OF THE ECONOMY, GABON IS A DIFFICULT MARKET FOR
U.S. SUPPLIERS TO CRACK. NONETHELESS U.S. PRODUCTS ARE
APPRECIATED, E.G. CATERPILLAR RETAINS 80 PERCENT  OF THE MARKET
FOR TRACTORS AND SPECIALIZED FORKLIFTS USED IN THE FORESTRY
SECTOR. CATERPILLAR SUCCESS IS PARTLY ATTRIBUTABLE TO THE
EXCELLENT AFTER SALES SERVICE PROVIDED BY ITS LOCAL
REPRESENTATIVE.

IN THE GABONESE OIL SECTOR. U.S. FIRMS ARE HIGHLY SOUGHT AFTER
IN THE EXPLORATION AREAS.  AMERICAN OIL SERVICES COMPANIES FACE
COMPETITION FROM EUROPEAN FIRMS SINCE THE MAIN OIL PRODUCERS, ELF
GABON AND SHELL GABON, OFTEN PREFER TO USE THE SERVICES OF
EUROPEAN FIRMS.   HOWEVER, AMERICAN FIRMS ARE CALLED ON FOR VERY
SPECIALIZED WORK OR SERVICES, FOR WHICH IT IS DIFFICULT TO FIND
COMPANIES IN FRANCE OR EUROPE.

THE U.S. ALSO HAS TO FACE COMPETITION FROM OTHER WESTERN
COUNTRIES SUCH AS JAPAN FOR MOTOR VEHICLES AND GERMANY, ITALY AND
UNITED KINGDOM FOR INDUSTRIAL EQUIPMENT. AMERICAN FIRMS WHICH
HAVE BEEN MOST SUCCESSFUL IN THE PAST ARE THOSE WHICH HAVE
UNDERTAKEN SEVERAL VISITS BY FRENCH SPEAKING REPRESENTATIVES WHO
ARE WILLING TO RETURN OFTEN ENOUGH TO DEVELOP PERSONAL CONTACTS
ESSENTIAL TO DOING BUSINESS HERE.  FINDING A LOCAL REPRESENTATIVE
AND CONTINUING A GOOD WORKING RELATIONSHIP WITH THAT FIRM OR
INDIVIDUAL IS OFTEN THE KEY TO FUTURE SALES.  IN ADDITION, GOOD
FOLLOW-UP SERVICE AND ADEQUATE INVENTORIES CONFER A SIGNIFICANT
COMPETITIVE ADVANTAGE.