Since the 1960s, the Government of Sierra Leone has supported and promoted local industries by providing subsidies and other export promotion strategies in order to compete with foreign industries. This was of cause done under the inward-looking import substitution strategy; however, the strategy did not lead to growth and development of these industries in this country.

In the 1970s and 1980s periods Sierra Leone and many developing countries pursed inward trade policies such as trade restrictions, quotas, high tariffs, overvaluation of the exchange rates and interest rate ceilings. These policies were formulated and implemented in order to protect indigenous industries. These industries did not only fail to sufficiently produce goods and services for the country but also failed to export goods and services to the external market. Instead mismanagement and corruption forced most of these industries to close down. What worsens the situation was the 10-rebel war, which destroyed most of the infrastructures of these industries.

As a result, the economy stagnated or even declined; poverty increased and high inflation became the norm of the country. Adverse external shocks like the oil price shock made the problem worse for the economy. Furthermore, the crises in the emerging markets in the 1990s have made it quite evident the opportunities of globalization do not come without risks. These risks involve volatile capital movements and the risks of social, economic, and environmental degradation created by poverty.

Rising Food Prices

High food prices are threatening recent gains in overcoming poverty and malnutrition, and are likely to persist over the medium term, says a new World Bank Group policy note released today. �Poor people are suffering daily from the impact of high food prices, especially in urban areas and in low income countries. In some countries, hard-won gains in overcoming poverty may now be reversed.

As an international community we must rally not only to offer immediate support, but to help countries identify actions and policies to reduce the impact on the world�s most vulnerable. Given this situation, many observers have once again raised the issue of protectionism of developing countries. Some people argue that African countries should begin to look the World Bank and IMF in their face and reject the policy of no subsidies for essential goods. The notion is that without subsidies on rice and petrol, the poorest of the poor would be the victims; increased salaries is not the solution since many are self employed in hand-to-mouth business activities. So should we go back to the 1980s?

TRADE POLICY

Trade is not an end in itself, but a means to economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. A trade policy is therefore the complete framework of laws, regulations, international agreements and negotiating stances adopted by Government to achieve legally binding overseas market access to overseas markets for domestic firms. It normally includes tariffs and non-tariff barriers. The latest policy is the formation of an investment code, which has been completed. The Investment code provides for national treatment of investors, full repatriation of profits/dividends, and disputes settlement by arbitration at both local and international level, guarantees for investment as provided under the constitution etc. A whole array of incentives is also available and accessible to investors. Therefore, Sierra Leone's regulatory framework is in some cases contradictory, making access to justice difficult and the outcome of recourse unpredictable. In 2003, a Law Reform Commission was set up. Its main function is to keep the laws, both statutory and others, of Sierra Leone under review, with a view to their reform, development, consolidation or codification. Some of the instruments of trade policy in Sierra Leone include:

Tariffs

Tariffs restrict trade by raising the foreign producer cost of supplying goods and services to the local market by marking it more difficult and often impossible to compete with the local producers. Tariffs were levied on a rather adhoc basis. In many instances, nominal tariff levels appeared to be determined simply by what was deemed necessary to allow an activity into existence. High tariffs were levied on goods like beer, soft drinks, and cigarette.

For instance, the 1978 Customs Tariff Act No. 16, which replaced the Development Act of the 1960, provided the following incentives to industries that satisfied the criteria for exemption.

� Exemption from import duty on raw materials up to 90% of the dutiable value of such import

� Total exemption from import duties on machinery and construction materials

� Exemption from income tax for a period which depended on the size, scope, and nature of the investment

� Special incentives for profit reinvestment

� Special incentives for export

� Tariff protection and restriction on computing imports,

� Deferment of depreciation allowance until the end of the tax holiday period

The criteria for a firm to benefit from such protective facilities were very vague and subjective. For a firm to benefit, it must be perceived to bring benefit to a good number of people in the country in terms of employment and reducing balance of payments deficit and making substantial contribution to government/s revenue base. These are costs levied on imported products on goods traded across the borders of countries around the globe. The level of tariff imposed on commodities would certainly determine the quantity and cost of that commodity imported in a country.

Quotas: These limit the quantity that can be imported or exported of a particular commodity into or from the country. It is the establishment by government of a physical limit on the quantity of goods imported or exported which may be expressed in quantitative or market share terms.

Exchange Rate: Government operated a fixed exchange rate regime in the country for a very long time. Due to the problems of black-market in the foreign exchange market, the government introduced the two-tier exchange rate system-one official rate and one commercial rate- in December 1982. The fixed exchange rate system also required residents to obtained central bank permit to buy foreign exchange for certain purposes such as the importation of goods into the country. Some times the system also involved the overvaluation of the domestic currency. The overvalued exchanged rate regime was used to effectively subsidize the cost of capital imports.

Subsidies: Subsidies in various forms were given to domestic industries. This has the effect of protecting domestic infant industries against foreign competition by lowering the cost of production. Between 1981 and 1986 for example, a total amount of Le 83,376,509 was disbursed to subsidize rice importation alone in the country. These subsidies however, imposed heavy budgetary constraints on the economy. In fact, many of the establishments became much more of a liability than an asset to government.

Ban: The importation of some goods like cigarette (555, Tobacco filter etc.) and beer was totally banned by government in the 1970s and 1980s.

Import Deposit schemes: These required importers to lodge some money with the central bank for a given period of time before import transactions can be effected.

Price Control Policy

For instance, in 1986 the then Momoh Government introduced a maximum price control system that targeted a wide range of commodity prices. This was in a bid to promote consumer welfare while at the same time protecting import-substituting industries in the country. However, failure by the government to increase the supply of commodities in the domestic market led to the hoarding of essential commodities, which were later sold at black market prices far higher than the prices before the introduction of the price control system. This situation culminated to the declaration of the State of Economic Emergency in 1988.

Non-Tariff Barriers: These are special regulations that are to be met by importers or exporters and may include official form-filling for goods to be imported into the country; or safety regulations; and consumer protection regulations.

Effects of Trade Liberalization

The interaction between trade and the environment has become very topical in most developing and developed countries. In recent years, environmental problems caused by the discharge of waste and other pollutants into the natural environment have a lot of implications for international competitiveness.

Over the past two decades, producers in countries with stricter environmental standards have worried increasingly about the impact of those standards on their competitiveness in world markets. At the same time, governments and firms in other countries have expressed concern about new barriers being erected against imports produced under less strict standards.

In a competitive country, trade liberalization would trigger exports and domestic prices would rise to equalize with world prices. Higher prices of pig meat could stimulate production, which can be expected to increase demand for labourers that are engaged in such activity. The increase in demand of labour will increase wage rate and more employment will realize in such activity. As a result of such employment, the consumption pattern of the farmers involved in pig meat production will increase and since consumption is an important component of aggregate demand, this will lead to growth in the Gross Domestic Product and hence reduction in poverty. The non-theoretical literature of this study is that the developed countries stand to gain more than the underdeveloped countries. The reason advanced for this is the fact that trade liberalization is an economic policy propounded by both the IMF and the World Bank. The Conditionality is always attached to loans to underdeveloped countries; particularly among these conditionality is reduction of government subsidies in order to control government expenditures. The reduction in subsidies mostly affects all sectors of the economy to name but one the agricultural sector. This makes the underdeveloped countries face stiff competition with the developed countries.

For a successful protectionist programme the government should not create any monopoly markets for whatever reasons. Many marketers should be allowed to join or leave any market at any point in time.

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