VI. TRADE REGULATIONS AND STANDARDS TARIFFS AND IMPORT TAXES A substantial increase in Nigeria's short-term trade arrears exacerbated its debt crisis in the early 1980's. In 1983, the Nigerian Government began issuing licenses for all imports to the extent that foreign exchange was available. Import bans were instituted for an increasing number of goods, and steep tariffs and duties further discouraged importation and protected domestic industries from stiff competition, given the overvaluation of the Naira. In January 1986, all imports became subject to a 30 percent levy in addition to duties. Bureaucratic red tape quickly bogged down the import licensing regime and most Nigerian companies could only meet a small fraction of their import needs under the system. Eventually, an import license did not guarantee a company's ability to import, for Nigeria's credit worthiness sank to the point where foreign banks failed to confirm letters of credit. In an effort to reverse this situation, the country adopted the Structural Adjustment Program, known as SAP, in 1986. The SAP signaled major economic policy reforms and a significant improvement in Nigeria's trade and investment climate. The SAP's linchpin was the Second-Tier Foreign Exchange Market (SFEM), which replaced Nigeria's import licensing system with Central Bank auctions of foreign exchange to commercial and merchant banks every two weeks. The SFEM also resulted in an immediate 67 percent depreciation of the Naira vis-a-vis the dollar. The Government's subsequent success in effecting a continued depreciation of the Naira led to the merger of the two tiers into a single Foreign Exchange Market (FEM) in July, 1987. In accordance with the SAP's principles, the Nigerian Government abolished import and export licenses, dissolved Nigeria's six agricultural commodity boards, ended most price controls, permitted exporters in the nonpetroleum sector to retain 100 percent of their foreign exchange earnings in domiciliary accounts, and announced its intention to privatize numerous parastatals. The Government also pared the list of banned imports from 74 product groups to 16. The 30 percent import levy also was removed, although three minor import duty surcharges (totaling 6 percent) were left in place. The tariff structure was reformed and import duties and the level of effective protection accorded to Nigerian industries were reduced. Import procedures for Nigerian firms were much simpler under the SAP than at present. Nigerian importers were able to obtain foreign exchange directly from commercial and merchant banks at free market rates, subject to documentary evidence of commercial or service transaction. The issuing bank demanded a 25 percent advance payment of import duties from the importer before remitting funds to the corresponding overseas bank. The current regime governing imports into Nigeria, introduced in January 1994, has not reinstated an import licensing system or requirement. However, strict government control of foreign exchange allocations effectively limits imports. Moreover, some items are banned as imports altogether. A list of these banned imports is included elsewhere in this section. MEMBERSHIP IN FREE TRADE ZONES Nigeria is a member of the British Commonwealth, the United Nations and several of its affiliated organizations, the World Bank, and the African Development Bank. It is party to several international commodity arrangements, including the Organization of Petroleum Exporting Countries (OPEC), the International Cocoa Organization, the International Coffee Organization, the International Cotton Advisory Committee, the International Institute for Cotton, the West African Groundnuts Council, and the International Tin Council. Treaties and agreements in force between the United States and Nigeria relating to consular matters, aviation, mutual security, economic and technical cooperation, extradition, property, and trademarks were concluded originally between the United States and the United Kingdom, and were recognized by Nigeria following independence in 1960. Nigeria a signatory to the Lome Convention, which provides certain exports duty-free entry into the European Community (EC), and is also a member of the General Agreement on Tariffs and Trade (GATT), requiring a nondiscriminatory import tariff. There have been frequent complaints however, that Nigeria does not always fully meet its obligations recognized under such agreements. Protection from IPR Infringements A member of the Universal Copyright Convention, Nigeria extended protection to sound recordings in 1972. Nevertheless, Nigeria is Africa's largest market for pirated recordings from third countries. Foreign copyright proprietors have been unable to uphold their rights due to cumbersome laws and regulations and inadequate law enforcement. These problems also apply to video cassette recordings. It is believed that most pirated recordings are smuggled into the country. Currently, Nigeria distinguishes between trade marks, those associated with the production and sale of goods, and service marks, which are not recognized for purposes of protection under Nigeria's industrial property law. In order to rectify this situation, as well as stream line the complex procedure for the registration of trade marks, the Nigerian Law Reform Commission completed work on a new draft industrial property law which was submitted to the Head-of-State in 1991. Since that time, two (2) new Heads-of-State have taken office, but the proposal has yet to be executed as a formal decree with the force of law. Officials as well as contacts among practitioners feel there is little chance of achieving acceptance in the near future of the entire proposal, which has been languishing in the Office of the Presidency for about three years. Since service marks cannot currently be registered in Nigeria, practitioners have devised a variety of legal maneuvers which in combination are designed to achieve the same end. Hence, officials at the Nigerian Law Reform Commission have considered submission of a briefer, single proposal specifically extending the provisions of the current law as it relates to trade marks to include service marks as well, with the goal of at least achieving reform in this important area. Nigeria has yet to become a member of WIPO, (World Intellectual Property Organization). CUSTOMS VALUATION The Nigerian Customs and Excise Tariff uses the Customs Cooperation Council Nomenclature (CCCN). A single-column, nonproferential import tariff schedule applies equally to all countries. Duties are either specific or ad valorem depending on the commodity, and are payable upon entry, in Nigerian currency. All imported goods must be insured by a local insurance company. A special duty may be imposed on imported goods if, in the opinion of the Government, such goods are being dumped or are being unfairly subsidized by a foreign government so as to materially injure the Nigerian market or threaten established or potential domestic industry. Duties previously paid may be refunded on abandoned, re-exported, damaged, or destroyed goods, provided proper claim is made before the goods have left customs custody. A destruction certificate must be obtained from a customs officer to obtain a refund of duties paid for goods which were subsequently destroyed. If goods manifested for Nigeria are landed elsewhere, duties paid on them in Nigeria will be refunded only upon presentation of a customs certificate attesting to their landing in the other country. Overpaid duties may be refunded upon application to customs within 12 months of importation. Nigeria is a signatory to the United Nations International Convention to Facilitate the Importation of Commercial Samples and Advertising Material, pursuant to which, samples of commercial value may be imported duty free under bond. In practice however, customs officials exercise considerable discretion in rejecting requests for duty free admission even in cases involving samples or patterns. The bond, in the amount of the duty leviable on such goods, is cancelled, and any deposit refunded, when the samples are reexported. Packages or containers of sales samples should be marked "Free Sample" or "Free Specimen" and the address side of the container must be marked "Sample of Merchandise." LABELLING AND MARKING REQUIREMENTS Shippers should make certain that bills of lading are correct in every detail and that trade names are qualified by sufficient description of such goods. Descriptions, shipping marks, and numbers on the ship's manifest, bill of lading packing list and invoice must all match with those on the actual goods. To speed port clearances, avoid heavy storage fees, assist the importer in entering the goods, and initiate payment action, exporters should include on bills of lading or air waybills a "Notify Address" at the port of entry, especially for shipments to Lagos. For shipments by air, documents should be forwarded directly to the agent expediting entry. Nigeria's Food and Drugs Decree of 1974 imposed restrictions on the sale and manufacture of food, drugs, cosmetics and items such as pesticides. The decree required that all imports of such goods be accompanied by a Certificate of Analysis from the manufacturer, and a Certificate issued by or on behalf of the government of the country where it was manufactured, (known as a Certificate of Manufacture and Free Sale), to the effect that the product's sale in the country of origin would not constitute a contravention of the law. Specified goods not accompanied by such certificates may experience delays on arrival or may even be refused entry into Nigeria. The U.S. Food and Drug Administration (FDA) does not issue certificates for articles of export. However, a factual statement of the status of a specific article subject to FDA jurisdication may be provided on request. In some cases, this statement will suffice. In other cases, a statement and signature of a senior officer of the manufacturing company may be required as well. At other times, an attestation and legalization may be required. The Certificate of Analysis, along with the Certificates of Manufacture and Free Sale, are in addition to the usual shipping documents. Certain animal products, plants, seeds, and soils cannot be imported into Nigeria without Sanitation Certificates from exporters. The U.S. Department of Agriculture may issue these certificates for American exporters. Nigeria adopted the metric system in 1973. Since January 1, 1979, under the provisions of the Weights and Measures Decree of 1974, all items entering the country must be labeled in metric terms exclusively. All products with dual or multi-markings will be confiscated or refused entry. All packages and goods imported into Nigeria should be marked in accordance with standard shipping practices in the absence of specific Nigerian regulations. Containerized imports must have identifying marks and numbers clearly and indelibly displayed on the container, and they must agree with the ship's manifest. When the container holds more than one consignment of goods or a consignment consists of goods of a different description, details must be shown on the ship's manifest. Listing of principal PROHIBITED IMPORTS as of January, 1994. Items may be added or deleted without notice: . Textiles . Furniture . Domestic wares . Plastic wares . Processed wood . Used tires . Light bulbs . Water, soft drinks, fruit juices, beer and sparkling wines . Fruits, fresh and preserved . Vegetables and vegetable oils . Rice . Corn . Poultry CALABAR EXPORT PROCESSING/FREE TRADE ZONE The concept of export processing zones (or free trade zones as they may be more commonly known) for Nigeria was first proposed in the mid-1980's by the World Trade Center of Nigeria. The proposal was studied by a special federal government committee, and finally in 1991, a decree was signed into law establishing NEPZA, the Nigerian Export Processing Zone Authority. NEPZA is responsible for the approval of development plans for the country's proposed export processing or free trade zones. However, NEPZA was also made responsible for the supervision, maintenance and management of such zones and it appears this produced on-going power struggles and debates. Nevertheless, about 200 hectares in the city of Calabar, capital of the Nigerian state of Cross River, was designated to be the site of the country's first export processing zone. This was also done in 1991, well before military clashes began in 1994, with the neighboring country of Cameroon, which borders on the state of Cross River, in the area of the Bakassi Pennisula, which is not far from the city of Calabar. Work was commenced at the site, about seven kilometers outside the city of Calabar, but has yet to be completed. The incentives and benefits of the Calabar Export Processing or Free Trade Zone could offer U.S. manufacturing exporters considerable competitive advantages in penetrating and expanding into Nigeria's neighboring West African and Sub-Sahara markets, particularly those too small or under-developed to have sufficient indigenous marketing channels to justify direct marketing techniques. The city of Calabar boasts an airport with air-links to other African markets, as well as a sea port. The possibilities of joint-venture arrangements in this regard with qualified Nigerian investors and partners also exists, especially since up to 25 percent of production within the Calabar Export Processing Zone would be eligible for sale directly in the Nigerian market. Other inducements such as one hundred percent foreign ownership, unrestricted remittance of profits and capital and stream lined import and export procedures and reduced costs would translate into competitive advantages for U.S. as well as other foreign firms, both in Nigeria, and in neighboring markets of the region. However, dates for official opening of the zone slipped from January, 1993, to May of that Year, and then to August. The new anticipated opening of the Calabar Export Processing or Free Trade Zone is August, 1994. Moreover, once opened, it may nevertheless, take years before the Calabar Export Processing Zone becomes fully operational.