Abstract
This chapter analyzes the consistency of certain measures introduced by Nigeria in light of its obligations under the World Trade Organization (“WTO”). It is structured in three sections. Each section provides an overview of a measure, analyzes it in light of Nigeria’s WTO obligations, provides potential justifications, and presents recommendations on possible strategies that Nigeria could pursue with regard to the measure to ensure the continuance of their broader policy objectives in a WTO-consistent manner. Broadly, these measures relate to the oil and gas industry, the importation of fish, and foreign exchange.
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- 1.
Nigerian Oil and Gas Industry Content Development Act (2010) Cap. (2), §3(1), http://www.eisourcebook.org/cms/January%202016/Nigerian%20Oil%20and%20Gas%20Industry%20Content%20Development%20Act%202010.pdf [hereinafter NOGID].
- 2.
Id. §3(1).
- 3.
General Agreement on Tariffs and Trade 1994, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations 17 (1999), 1867 U.N.T.S. 187, 33 I.L.M. 1153 (1994) [hereinafter GATT].
- 4.
General Agreement on Trade in Services, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1B, The Legal Texts: The Results of the Uruguay round of Multilateral Trade Negotiations 284 (1999), 1869 U.N.T.S. 183, 33 I.L.M. 1167 (1994) [hereinafter GATS].
- 5.
Agreement on Trade-Related Investment Measures, Annex 1A, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, The legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations 143 (1999), 1868 U.N.T.S. 186 [hereinafter TRIMS Agreement].
- 6.
Nigerian Constitution, Art. 44(3).
- 7.
Nigeria has made commitments with regard to financial services and transportation services in its Schedule of Specific Commitments and some aspects of such commitments may overlap with services in the oil and gas sector. However, the examination of GATS specific issues are presently beyond the mandate of this Memorandum and will be examined only upon further instructions. See GATS, Schedule of Specific Commitments.
- 8.
Id.
- 9.
Id.
- 10.
GATT Art. III:4.
- 11.
TRIMS Art. 2.1.
- 12.
GATT Art. III:8 provides an exemption to the national treatment obligation. The Article states that “[t]he provisions [of GATT Art. III] shall not apply to laws … governing the procurement by governmental agencies of products purchased for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods for commercial sale.” It is unlikely that Nigeria rely on this exemption, because the Act governs an industry in relation to which products, namely those listed in the Schedule to the Act, are purchased with a view to use in the production oil and gas for commercial resale.
- 13.
Appellate Body Report, Canada—Measures Relating to the Feed-In Tariff Program, ¶172, WT/DS412/AB/R, WT/DS426/AB/R (May 13, 2013).
- 14.
NOGID, supra note 1, §11(3).
- 15.
See, e.g. Id. Schedule.
- 16.
Id. §109.
- 17.
Id. §12.
- 18.
Id. §13.
- 19.
Id. §8.
- 20.
The party asserting a violation has the burden to show that the measure is inconsistent by relying primarily on the text “which may be supported, as appropriate, by evidence of the consistent application of such laws, the pronouncements of domestic courts on the meaning of such laws, the opinions of legal experts and the writings of recognized scholars.” Appellate Body Report, United States—Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, ¶157, WT/DS213/AB/R (Nov. 28, 2002).
- 21.
Appellate Body Report, United States—Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), ¶198, WT/DS294/AB/R (Apr. 18, 2006).
- 22.
Id.
- 23.
GATT Art. XXI.
- 24.
Id.
- 25.
Id.
- 26.
GATT/CP.3/SR.22, Corr. 1.
- 27.
International Crisis Group, Curbing Violence in Nigeria (III): Revisiting the Niger Delta (2015), http://www.crisisgroup.org/~/media/Files/africa/west-africa/nigeria/231-curbing-violence-in-nigeria-iii-re-visiting-the-niger-delta.pdf.
- 28.
Id. 1.
- 29.
Jennifer Giroux, Turmoil in the Delta: Trends and Implications, 2 Prospective of Terrorism, no. 2, 2008, http://www.terrorismanalysts.com/pt/index.php/pot/article/view/45/html.
- 30.
Daniel Howden, Nigeria: Shell May Pull Out of Niger Delta After 17 Die in Boat Raid, CorpWatch (Jan. 17, 2009), http://www.corpwatch.org/article.php?id=13121.
- 31.
Id.
- 32.
Giroux, supra note 27.
- 33.
Id.
- 34.
Id.
- 35.
Id.
- 36.
Howden, supra note 28.
- 37.
Giroux, supra note 27.
- 38.
Id.
- 39.
Craig Timberg, Militants Warn China Over Oil in Niger Delta, Wash. Post (May 1, 2006), http://www.washingtonpost.com/wp-dyn/content/article/2006/04/30/AR2006043001022.html.
- 40.
Giroux, supra note 27.
- 41.
Id.
- 42.
Comprehensive Economic and Trade Agreement, EU-CA, concluded Sept. 29, 2014, ANNEX 8-E, http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf.
- 43.
Appellate Body Report, EC—Tarrif Preference, ¶7.201–7.202, WT/DS246/AB/R (Dec. 1, 2003).
- 44.
Id.
- 45.
Id. ¶7.206–7.207.
- 46.
Id. ¶7.206–7.207.
- 47.
Giroux, supra note 28.
- 48.
Appellate Body Report, Brazil—Retreaded Tyres, ¶151, WT/DS332/AB/R (Dec. 3, 2007) [hereinafter Brazil—Retreaded Tyres].
- 49.
Giroux, supra note 28.
- 50.
Brazil—Retreaded Tyres, supra note 43, ¶226–228.
- 51.
Id.
- 52.
Id.
- 53.
Article XVIII, in WTO, WTO Analytical Index 456 (3rd ed. 2012).
- 54.
GATT Art. XVIII:4(a).
- 55.
Id.
- 56.
GATT Ad Art. XVIII.
- 57.
Id.
- 58.
Nigeria Economic Report: Improved Economic Outlook in 2014, and Prospects for Continued Growth Look Good, World Bank (July 22, 2014), http://www.worldbank.org/en/country/nigeria/publication/nigeria-economic-report-improved-economic-outlook-in-2014-and-prospects-for-continued-growth-look-good.
- 59.
Panel Report, India—Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, ¶3.224–3.249, WT/DS90/R (Apr. 6, 1999).
- 60.
GATT Art. XVIII:13.
- 61.
Decision of 28 November 1979, “Safeguard Action for Development Purposes”, L/4897, BISD 26S/209–210.
- 62.
Id.
- 63.
See also L/751, adopted on November 28, 1957, 6S/112, 114–115, ¶ 6–9.
- 64.
Id.
- 65.
Giroux, supra note 28.
- 66.
L/932, “Notifications by Ceylon,” adopted on November 22, 1958, L/932, 56S/75, 78, ¶8.
- 67.
Federal Department of Fisheries, Proposed New Guidelines on Fish Importation (on file with author) (Hereinafter Proposed Guidelines). The Beneficiary has communicated that the “Proposed Guidelines” are actually in effect.
- 68.
Id. ¶ 1.11.
- 69.
Id. ¶3.1–3.15.
- 70.
Proposed Guideline, supra note 59.
- 71.
The analysis will reference concerns raised at the Council for Trade in Goods and at the Committee for Import Licensing, as per the mandate provided the Beneficiary. Other possible violations shall be examined in detail upon further instructions from the Beneficiary.
- 72.
GATT Art. XI:1.
- 73.
Panel Report, India—Autos, ¶ 7.269–7.270, WT/DS146/R, WT/DS175/R (Dec. 21, 2001).
- 74.
As delineated in the Responses By Nigeria To The Concerns Raised By Iceland, Norway And Uruguay On The Reported Restrictive Policy By Nigeria On Importation Of Fish And Fish Products, through the issuance of Letters of Clearance, the FDF seeks to effectuate a quota in furtherance of a proposed new Fish Policy that aims at stimulating domestic production and a 25% reduction of fish importation annually in order to grow the fish industry in Nigeria. Responses By Nigeria To The Concerns Raised By Iceland, Norway And Uruguay On The Reported Restrictive Policy By Nigeria On Importation Of Fish And Fish Products, Committee on Import Licensing, G/LIC/Q/NGA/1 dated Oct. 27, 2014.
- 75.
Import licensing systems that are discretionary and non-automatic have been found to operate as an import restriction and violate GATT Art. XI:1. See Panel Report, India—Quantitative Restrictions, ¶5.130, WT/DS90/R (Apr. 6, 1999).
- 76.
GATT Art. XI:2
- 77.
Article XI, in WTO, WTO Analytical Index 456 (3rd ed. 2012).
- 78.
Speech Delivered by Dr. Akinwumi Adeshina, The Honorable Minister of Agriculture and Rural Development, Re-Positioning the Fisheries Sector (Feb. 25, 2014), http://www.boldanagro.com/2014/02/re-positioning-fisheries-sector-speech.html.
- 79.
Sea Fisheries Act, Sections 3, 4, 6, http://faolex.fao.org/docs/pdf/nig18399.pdf; Sea Fisheries Licensing Regulations, Sections 1, 2, 4, 5, 6, 7, 8, 9, 10, 11, http://faolex.fao.org/docs/pdf/nig18399.
- 80.
Inland Fisheries (Fish Quality Assurance) Regulations, Sections 1, 2, 5, 6, 7, 10, 11, http://faolex.fao.org/cgi-bin/faolex.exe?rec_id=120410&database=faolex&search_type=link&table=result&lang=eng&format_name=@ERALL.
- 81.
See Dr. Akinwumi Speech, supra note 80 (“The Nigerian marine waters are plagued with almost daily attacks by armed robbers on our shrimp trawling vessels, leading to killings and maiming of crew members, abduction of key officers and demand for huge ransom for their release, seizure of vessels for days leading to loss of fishing days, and the removal of fishing/communication equipment and catches…. These attacks have become an embarrassment to security agencies … The socio-economic impact is huge ….”).
- 82.
GATT Art. XX.
- 83.
Brazil—Retreaded Tyres, supra note 43, ¶139.
- 84.
GATT Art. XX.
- 85.
See Proposed Guidelines, supra note 59, ¶1.2.
- 86.
Responses by Nigeria to the Concerns Raised By Iceland, Norway And Uruguay on the Reported Restrictive Policy by Nigeria on Importation of Fish and Fish Products, Committee on Import Licensing, G/LIC/Q/NGA/1 (Oct. 27, 2014).
- 87.
The Inland Fisheries Regulations also provides for destruction of farmed fish that is not in conformity with the provisions of the Regulations. See Inland Fisheries Regulation, supra note 82.
- 88.
GATT Art. XX(g).
- 89.
GATT Art. XVIII:9.
- 90.
See supra Part II.C.3.
- 91.
GATT Art. XVIII:9(a).
- 92.
OPEC Basket Price, OPEC, http://www.opec.org/opec_web/en/data_graphs/40.htm (last visited Apr. 22, 2016).
- 93.
National Bureau of Statistics of Nigeria, http://www.nigerianstat.gov.ng/ (last visited Apr. 22, 2016).
- 94.
Central Bank of Nigeria, https://www.cbn.gov.ng/ (last visited Apr. 22, 2016).
- 95.
GATT Art. XV:2.
- 96.
Based on 2015 Trade data of Nigeria from the International Trade Centre. See Nigeria 2015 Data, International Trade Centre, http://www.intracen.org/layouts/CountryTemplate.aspx?pageid=47244645034&id=47244652394 Data, 2015 (last visited May 15, 2016).
- 97.
Economic Community of West African States (ECOWAS), Revised Treaty of the Economic Community of West African States (ECOWAS), July 24, 1993, http://www.refworld.org/docid/492182d92.html.
- 98.
ECOWAS Countries are: Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, Ghana, Guinea, Guinea-Bissau, Liberia, Republic of Mali, Niger, Nigeria, Senegal, Sierra Leone, The Gambia, Togo.
- 99.
Nigeria 2015 Data, supra note 98.
- 100.
Central Bank of Nigeria, Inclusion of Some Imported Goods and Services on the List of Items Not Valid for Foreign Exchange in the Nigerian Foreign Exchange Market (June 23, 2015) (on file with author) (Hereinafter CNB Circular).
- 101.
We were originally told that the Beneficiary had either requested a roll-back of the Forex Measure or considering modifying the content of the list. Nevertheless, from our consultations it appears that the measure is currently enforced as such.
- 102.
Before February of 2015, foreign exchange trading in Nigeria took place in at least four different but interconnected foreign exchange market segments:
-
1.
The official foreign exchange market managed by the CBN and operating under a Retail Dutch Auction System (RDAS) that consisted of a window available twice a week through which authorized dealers/banks would bid for foreign exchange on behalf of end users;
-
2.
The inter-bank foreign exchange market in which banks sell foreign exchange independently sourced by them at a higher rate;
-
3.
The market of the bureaux-de-change, comprised of operators that obtain foreign exchange from authorized dealers and sell it at a rate slightly higher than that of the CBN; and
-
4.
The parallel market, which is the open market for the sale of foreign exchange, and which is usually sourced by smaller street retailers who conduct exchange transactions at the higher end of market rates.
On 18 February 2015, the CBN closed the RDAS segment of the foreign exchange market and announced that foreign exchange needs would have to be sourced from the inter-bank foreign exchange market, a market segment in which the rate had been ranging between 197 and 198 naira (the Nigerian currency) to the dollar. That day the CBN also announced that it would intervene in the IFEM to continue to provide foreign exchange liquidity support for the naira. The Bank has kept its promise, imposing a de facto peg of 196 to 199 naira to the dollar. It has also continued to make a window available for BDC operators to purchase dollars twice a week, as part of efforts to support the naira and narrow the gap between the official and parallel markets. However, the gap between the open and controlled foreign exchange market has since only widened.
-
1.
- 103.
CNB Circular, supra note 102.
- 104.
And to a certain extent the Appellate Body.
- 105.
Panel Report, EEC—Minimum Import Prices, ¶3.1, L/4687 - 25S/68 (Oct. 18, 1978).
- 106.
Panel Report, Korea—Various Measures on Beef, ¶751, WT/DS161/R, WT/DS169/R (July 31, 2000).
- 107.
Panel Report, Colombia—Ports of Entry, ¶7.274–7.275, WT/DS366/R (Apr. 27, 2009).
- 108.
Panel Report, Argentina—Measures Relating to Trade in Goods and Services, ¶7.1069, WT/DS453/R (Sept. 30, 2015).
- 109.
GATT Art. XV:4.
- 110.
Panel Report, Colombia—Ports of Entry, ¶7.274–7.275, WT/DS366/R (Apr. 27, 2009).
- 111.
Appellate Body Report, Argentina—Measures Affecting the Importation of Goods, WT/DS438/AB/R, WT/DS444/AB/R, WT/DS445/AB/R (Jan. 15, 2015).
- 112.
Price of the Dollar in the Official Market is 197 Naira. The price of the U.S. Dollar is currently ranging between 360 and 370 Naira. See Central Bank of Nigeria, https://www.cbn.gov.ng/rates/ExchRateByCurrency.asp (last visited May 16, 2016); Lagos Parellel Market Rates, ABOKFX, http://abokifx.com/ (last visited May 16, 2016).
- 113.
It must be kept in mind that as GATT Art. XV:4 has never been invoked in WTO dispute settlement practice and hence there is no authoritative guidance available as of yet on the precise meaning of its terms. An assessment of the legality of a measure with GATT Art. XV:4 is, therefore, particularly complex as most terms used therein, specially “exchange action,” remain unclear and uncertain as to their precise meaning. For instance, a Special Sub-Group established in 1954 during the Review Session, in examining the GATT provisions on balance-of-payment restrictions and GATT-IMF relations concluded that “in many instances it was difficult or impossible to define clearly whether a government measure is financial or trade in character and frequently it is both.” See L/332/Rev.1 & Addenda, adopted on Mar. 2, 4 and 5, 1955, 3S/170, 196, ¶ 2.
- 114.
GATT Art. XV:4.
- 115.
See generally Panel Report, Dominican Republic—Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/R (Nov. 26, 2004).
- 116.
Although from the wording of GATT Art. XV:4, the prohibition of “frustration” applies to “this Agreement” (meaning the GATT), there might be an avenue for contending that its extends beyond the GATT to other WTO agreements, such as the SCM and GATS, as the GATT 1994 is an integral part of the WTO legal framework.
- 117.
IMF, Articles VIII and XIV, Decision No. 1034-(60/27) (June 1, 1962), https://www.imf.org/external/pubs/ft/sd/index.asp?decision=1034-(60/27).
- 118.
It is to be noted that exchange arrangements in Nigeria have undergone significant changes over the past fifty years. Nigeria moved from a fixed exchange regime in the 1960s, to a (de facto) pegged arrangement between the 1970s and the mid-1980s, to a predominantly (managed) floating exchange regime from 1986 to 2015, with a formal peg having been provisionally instituted in 1994. At the end of February of last year, Nigeria shifted back to a de facto currency peg.
- 119.
GATT Ad Article XV.
- 120.
GATT Art. XV:9(a).
- 121.
GATT Art. XV:9(a); Dominican Republic, supra note 115, ¶7.150–7.154.
- 122.
Id. ¶7.137.
- 123.
Decision No. 1034-(60/27), supra note 119.
- 124.
Id.
- 125.
Articles of Agreement of the International Monetary Fund, §2(a), concluded Dec. 27, 1945, 2 U.N.T.S. 39.
- 126.
Nigeria should also take note of GATT Art. XX(d) which provides and exception for measures which are necessary to secure compliance with domestic laws or regulations, which themselves are not GATT inconsistent.
- 127.
GATT Art. XVIII:B.
- 128.
See supra Part II.D.3.
- 129.
Id.
- 130.
Nigeria 2015 Data, supra note 98.
- 131.
As regards the ECOWAS Countries, Nigeria may raise the tariff upto the highest rate permitted under the ECOWAS Treaty.
- 132.
CNB Circular.
References
Appellate Body Report, Argentina—Measures Affecting the Importation of Goods, WT/DS438/AB/R, WT/DS444/AB/R, WT/DS445/AB/R (Jan. 15, 2015).
Appellate Body Report, EC—Tariff Preference, WT/DS246/AB/R (Dec. 1, 2003).
Appellate Body Report, United States—Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R (Nov. 28, 2002).
Appellate Body Report, United States—Laws, Regulations And Methodology for Calculating Dumping Margins (“Zeroing”), WT/DS294/AB/R (Apr. 18, 2006).
Appellate Body Report, United States—Tax Treatment for “Foreign Sales Corporations”, WT/DS108/AB/RW2 (Feb. 13, 2006).
Articles of Agreement of the International Monetary Fund, concluded Dec. 27, 1945, 2 U.N.T.S. 39.
Comprehensive Economic and Trade Agreement, EU-CA, concluded Sept. 29, 2014, ANNEX 8-E, http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf.
Economic Community of West African States (ECOWAS), Revised Treaty of the Economic Community of West African States (ECOWAS), 24 Jul. 1993, http://www.refworld.org/docid/492182d92.html.
Panel Report, Argentina—Measures Relating to Trade in Goods and Services, WT/DS453/R (Sept. 30, 2015).
Panel Report, Colombia—Ports of Entry, WT/DS366/R (Apr. 27, 2009).
Panel Report, EEC—Minimum Import Prices, L/4687, 25S/68 (Oct. 18, 1978).
Panel Report, India—Autos, WT/DS146/R, WT/DS175/R (Dec. 21, 2001).
Panel Report, India—Quantitative Restrictions, WT/DS90/R (Apr. 6, 1999).
Panel Report, Indonesia—Certain Measures Affecting the Automobile Industry, WT/DS64/R (July 2, 1998).
Panel Report, Korea—Various Measures on Beef, WT/DS161/R, WT/DS169/R (Jul. 31, 2000).
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Appendix: List of Items Restricted from Foreign Exchange
Appendix: List of Items Restricted from Foreign Exchange
-
1.
Rice
-
2.
Cement
-
3.
Margarine
-
4.
Palm kernel/palm oil products/vegetable oils
-
5.
Meat and processed meat products
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6.
Vegetables and processed vegetable products
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7.
Poultry—chicken, eggs, turkey
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8.
Private airplanes/jets
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9.
Indian incense
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10.
Tinned fish in sauce (geisha)/sardines
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11.
Cold rolled steel sheets
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12.
Galvanized steel sheets
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13.
Roofing sheets
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14.
Wheelbarrows
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15.
Head pans
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16.
Metal boxes and containers
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17.
Enamelware
-
18.
Steel drums
-
19.
Steel pipes
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20.
Wire rods (deformed and not deformed)
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21.
Iron rods and reinforcing bars
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22.
Wire mesh
-
23.
Steel nails
-
24.
Security and razor wire
-
25.
Wood particle boards and panels
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26.
Wood fiber boards and panels
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27.
Plywood boards and panels
-
28.
Wooden doors
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29.
Furnitures
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30.
Toothpicks
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31.
Glass and glassware
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32.
Kitchen utensils
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33.
Tableware
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34.
Tiles—vitrified and ceramic
-
35.
Textiles
-
36.
Woven fabrics
-
37.
Clothes
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38.
Plastic and rubber products, cellophane wrappers
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39.
Soap and cosmetics
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40.
Tomatoes/tomato pastes
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41.
Euro band/foreign currency band/share purchase
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Ali, N.A. (2020). Understanding the Role of Selected Measures in Facilitating Trade Under Nigeria’s WTO Obligations: Lessons and Policy Agenda for Selected Sectors—Oil and Gas, Fish, and Foreign Exchange. In: Odularu, G. (eds) Strategic Policy Options for Bracing Nigeria for the Future of Trade. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-34552-5_4
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