THE TRADE POLICY PROCESSES IN UGANDA Presentation by Silver Ojakol Department of External Trade Kampala, 15 th October 2008
Organization of the Presentation • Background to formulation of the Trade Policy • Process of writing the draft Policy • Presentation of the Draft National Trade Policy (NTP) • Next steps – finalization and implementation
Background to formulation of the Policy • Desire to formulate and consolidate a Trade Policy arose out of a realization by Government that there was no single coherent Trade Policy document to guide players in the trade sector, especially the private sector • Trade and trade-related policies existed in various documents
Background to formulation of the Policy (cont’d) • Most of these policies were not up-to-date, lacked consistence and coherence • Government therefore decided to consolidate, streamline, update and formulate the National Trade Policy; and avail a single document to guide players in the trade sector
Process of writing the National Trade Policy • The process began in 2004, with a Sub. Committee selected from within members of the Inter-Institutional Trade Committee (IITC) tasked to develop Terms of Reference to guide preparation of Background documents • The IITC is a multi stake holder forum • Sub-committee members drawn from the public sector, private sector and civil society
Process of writing the National Trade Policy (cont’d) • A consultant was recruited to prepare a Background to Uganda’s Trade Policy; document was to examine existing trade and trade related policies, the gaps therein, institutional framework for trade policy, gather and document stakeholders’ views on trade policy, and recommend what a new Trade Policy should entail
Process of writing the National Trade Policy (cont’d) • Consultant worked under supervision of MTTI • Numerous stakeholders were consulted, either individually or as a group; included Government Ministries and Agencies – including those affiliated to MTTI, Parliament, private sector, academia, and civil society • Result of this process: The Background to Uganda’s National Trade Policy
Process of writing the National Trade Policy (cont’d) • MTTI constituted a National Trade Policy Drafting Team to study the Background document and stakeholders’ views, and draft a National Trade Policy for wider discussion • The Team produced a draft that was later discussed by a wider group of technocrats in the Ministry, and MTTI political leadership
Process of writing the National Trade Policy (cont’d) • The Drafting Team incorporated the input of all these discussions into the draft Policy • An improved version of the Policy was then sent to selected key stakeholders (e. g. MFPED, NPA) for further consultations; in addition to further capturing key stakeholders’ input, this process was meant to prepare ground for implementation
Process of writing the National Trade Policy (cont’d) • A number of comments/views were received and incorporated into the draft Policy before it was circulated for discussion at the final national consultation – the 2 nd National Trade Sector Review Conference (NTSRC) and DTIS validation Conference held on 2 -4 th October 2006 • The NTSRC involves stakeholders in the IITC as well as the local governments, Parliamentarians, development partners
Process of writing the National Trade Policy (cont’d) • After discussion of the Policy at the Conference, a five-man team (MTTI -3, MFPED – 1, & Technical Advisor – UPTOP - 1) held a two-day retreat to incorporate the recommendations of the Conference into the Policy; clean it up; and finalize it
Process of writing the National Trade Policy (cont’d) • After the finalization, the Drafting Team thought it prudent to present the final document to Honourable Ministers in MTTI in preparation for submission of the Policy to Cabinet for consideration • The whole process of writing the Policy was supported by the EU through UPTOP
Presentation of the National Trade Policy: Key considerations • context within which the Policy is formulated, and a discussion of trade as a development tool • Situational analysis – sectoral composition of GDP, direction of trade, existing trade and trade-related policies, Uganda’s trade in the global context
Presentation of the National Trade Policy: Key considerations (Cont’d) • Guiding Principles • Priorities of the NTP • Requirements for implementation of the NTP
Presentation of the National Trade Policy: Key Considerations (Cont’d) • Specific Policy Interventions – Domestic Trade, International Trade, Trade Policy Synergies and Complementarities/crosscutting policies • Implementation of the NTP – core functions of MTTI and DCOs; Ministries with direct roles to play
Presentation of the National Trade Policy: Key considerations (cont’d) • The NTP is formulated within the framework of other National Development Policies and Strategies, particularly the PRSP – the PEAP 2004/5 -2007/8, The Medium Term Competitiveness Strategy (MTCS), The Plan for Modernization of Agriculture (PMA) and Vision 2025 • The findings of the Diagnostic Trade Integration Study (DTIS) has also provided significant guidance.
Presentation of the National Trade Policy: Key considerations (cont’d) • International Development aspirations & commitments such as the MDGs as well as international trade agreements to which Uganda is a signatory have also provided significant input and guidance in drafting the National Trade Policy • The NTP theme: Trading Out of Poverty, Into Wealth
Presentation of the National Trade Policy: Key Considerations (cont’d) • Draft Policy acknowledges that the trade sector is very dynamic, especially in the context of a fast globalizing world under the auspices of the multilateral trading system
Presentation of the National Trade Policy: Situational Analysis • Situational analysis notes that imports have been growing faster than exports, resulting into a wider trade imbalance. • Most of these imports do not necessarily feed into the production process (i. e. are consumables), a situation which is unsustainable and undesirable
Presentation of the National Trade Policy: Situational Analysis (cont’d) • If not corrected, this would contribute to a widening trade imbalance and continued lack of coordination between the trade and production sectors – such as the agricultural and industrial sectors • Country’s major trading partners are the EU and COMESA
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Whereas the percentage share of exports to the COMESA has increased, the trade imbalance between Uganda and the COMESA region has been widening • Implication of this is that limited domestic capacity to tap opportunities created by regionalism and multilateralism is developed
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Development of domestic trade is an integral component of the NTP • Henceforth, Government to pursue “trade -led development” • Export sector still faces both tariff and non-tariff barriers
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Some of the barriers to growth in trade are exogenous while others are endogenous • The NTP and other trade-related policies should therefore focus on both internal and external factors to boost the country’s capacity to use trade as a development tool
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Relationship between trade and poverty reduction is analyzed • Analysis indicates that the NTP would, inter alia, have to address problems in the agricultural sector, especially the falling agricultural commodity prices, & managing trade liberalization & its effects in order for trade to be a tool of poverty reduction
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Importance of complementary policies comes out in the situational analysis • Trade in the context of globalization is analyzed, and the conclusion is that we need to do more than we have previously done in order to develop the country’s capacity to gain from globalization
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Emphasis needs to go beyond the “Washington Consensus” – macroeconomic stabilization, privatization and liberalization • Private sector in LDCs such as Uganda is still weak, and needs some support – including through trade policies
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Linkage between domestic policies and development of trade is explored • Severed linkage between MTTI and the DCOs clearly comes out as an issue that needs immediate policy correction • Domestic trade and international trade are mutually reinforcing and policies should reflect this
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Complementarities of policies is essential, e. g. trade and tax policy, trade and transport/infrastructure, trade and agriculture, trade and health, trade and Industry
Presentation of the National Trade Policy: Situational Analysis (cont’d) • Gov’t recognizes that trade policy will be most effective when complemented by effective and efficient institutions, adequate and efficient trade facilitating infrastructure and appropriate human skills • Trade in Services is key to economic development; and so is sufficient regulatory capacity
Presentation of the National Trade Policy: Trade Policy Vision • To transform Uganda into a dynamic and competitive economy in which the trade sector stimulates the productive sectors; and to trade the country out of poverty, into wealth
Presentation of the National Trade Policy: Mission Statement & Overall Policy Objective • To develop and nurture private sector competitiveness, and to support the productive sectors of the economy to trade at both domestic and international levels, with the ultimate objective of creating wealth, employment, enhancing social welfare and attaining sustainable economic development
Presentation of the Draft National Trade Policy: The Guiding Principles • • Development of both domestic and international trade Creating opportunities for equal participation in trade through entrepreneurial development, giving priority to the socially and economically disadvantaged groups in society
Presentation of the Draft National Trade Policy: The Guiding Principles (cont’d) • Provision of an enabling environment with a view to developing and nurturing a private sector that is capable of competing at global level • Targeted Government interventions in specific sectors, if and as deemed necessary
Presentation of the Draft National Trade Policy: The Guiding Principles (cont’d) • • Pursuit of bilateral, regional and multilateral trade initiatives Mitigating any adverse effects of practices by the country’s trading partners by invoking and implementing trade defense measures as and when appropriate, taking into account multilateral disciplines in the area
Presentation of the National Trade Policy: Priorities of the NTP • Enhancing the competitiveness of Ugandan products and services in the domestic, regional and international markets • Facilitating the smooth flow of trade, while ensuring that trade conforms to national and international laws and regulations • Boosting capacities of the socially and economically disadvantaged to trade
Presentation of the National Trade Policy: Priorities of the NTP (cont’d) • Strengthening trade institutions, particularly those dealing with trade policy, standards, trade flow facilitation/customs, & provision of trade information • Securing and maintaining improved market access to the domestic, regional and international markets for Uganda’s goods and services
Presentation of the National Trade Policy: Priorities of the NTP (cont’d) • Provision of trade information to enable prudent and optimal investment decision making • Developing capacity to exploit existing market access opportunities • Exploiting policy synergies, coherence and complementarities between trade and other policies
Presentation of the National Trade Policy: Requirements for Implementation of the Policy • Strengthen the Ministry of Tourism, Trade and Industry, Affiliated Institutions, and the District Commercial Offices; and create a closer link between the Ministry and the District Commercial Offices • Provide adequate resources, both financial and human, to facilitate trade development activities right from the grassroots
Presentation of the National Trade Policy: Requirements for Implementation of the Policy (Cont’d) • Provide resources for participation in activities that are aimed at securing improved and predictable market access for Uganda’s products and services
Presentation of the National Trade Policy: Requirements for Implementation of the Policy (Cont’d) • • Review and strengthen commercial and/or trade laws, as well as complementary laws and policies Formulate and implement policies and strategies that are complementary to trade policy
Presentation of the National Trade Policy: Requirements for Implementation of the Policy (Cont’d) • Develop a Market Information System to facilitate the collection, analysis and dissemination of trade information • Institutionalize and strengthen the Public-Private Sector Partnership in the formulation and implementation of the trade policy and trade development strategies and programmes
Presentation of the National Trade Policy: Requirements for Implementation of the Policy (Cont’d) • Clarify and consolidate the relationship between the productive sectors on one hand the trade sector on the other • Work with the private sector to strengthen private sector apex associations.
Presentation of the National Trade Policy: Specific Policy Interventions • Domestic trade: Development of the domestic trade sub-sector shall be pursued using a multifaceted approach, which shall include; • 1. strengthening of domestic trade policies and laws • 2. Identification and exploitation of policy synergies and complementarities
Presentation of the National Trade Policy: Specific Policy Interventions • 3. Ensuring that goods and services on sale on the domestic market meet the required standards and sanitary and phytosanitary measures • 4. Nurturing the private sector with a view to making it competitive in production and trade
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • 5. Ensuring that all national policies and practices on taxation and licensing are supportive of the competitiveness of Ugandan products • 6. Using domestic trade as a spring board for effective participation in international trade
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • 7. Substantially reducing artificial shortages of products and services in one part of the country when they are available in another • Formulation & implementation of sectoral policies necessary for prudent management of a liberal economy, e. g. Competition Policy, Consumer Protection Policy;
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • Implementation of the Marketing and Agro-Processing Strategy of the PMA; strengthening the District Commercial Offices; encouraging collective action in marketing; development & implementation of a Standards Policy; provision of affirmative action to local suppliers under Government Procurement
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) International Trade: Development of international trade, using a vibrant domestic production and trade sub-sector as a spring board is an integral component of the Policy
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • The overriding goal of Government policy on international trade is to ensure effective integration of the economy into the regional economy and the Multilateral Trading System (MTS), enhancing national capacity to take advantage of the above, while minimizing the negative effects of globalization
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • Government policy actions in the international trade sub-sector shall aim at: • 1. ensuring that the sub-sector effectively and efficiently complements the domestic trade and production sub-sectors; • 2. ensuring that what is produced domestically can be competitively traded at international level;
Presentation of the National Trade Policy Specific Policy Interventions (cont’d) • 3. Enhancing trade negotiations capacity 4. adapting Uganda’s economy to the trade and trade-related policies and practices of the country’s trading partners
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • Establishment of the National Trade Negotiations Team; • Creation of a Trade, Debt and Finance Committee to ensure reflection of the importance of trade in macroeconomic and monetary policies, and vice versa
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • • Posting and maintaining Trade Officers to Embassies/Missions that participate in various trade negotiations or are located in countries and/or regions in which Uganda has strategic trade interests Pursuing regional economic integration as well as multilateralism with a view to increasing effective market access opportunities for Uganda’s goods and services
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • • Maintain a liberal trade policy and at the same time enhance capacity to adjust to trade liberalization, including development of social safety nets in instances where it is envisaged that the liberalization may have negative effects Continue to implement trade facilitating measures.
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • Policy will be guided by the objective of optimal exploitation of policy synergies, with the major focus on forward and backward linkages between domestic, international trade, production policies – such as agricultural and industrial policies – and infrastructure/transport policy
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • Institutionalization of the public-private sector consultative mechanism through the formal establishment of the IITC; • Implementation of trade facilitation measures
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • Working with training institutions, in both the public and private sectors, to provide business and entrepreneurial skills as well as other skills that are relevant to private sector development, competitiveness, and trade policy • Protection of intellectual property rights
Presentation of the National Trade Policy: Specific Policy Interventions (cont’d) • Pursuance of macroeconomic policies and practices that are consistent with the country’s objective of increasing exports and enhancing competitiveness
Presentation of the National Trade Policy: Implementation of the Policy • Implementation of the Policy shall be the responsibility of the Ministry of Tourism, Trade and Industry • In fulfilling this function, the Ministry collaborates with relevant Ministries MFPED, MAAIF, MLH&UD; MOES, MOLG, MOFA, MJ&CA, MW&E, MICT, MWT&C & MOH), and Institutions, and the private sector
Presentation of the National Trade Policy: Implementation of the Policy (cont’d) • A National Trade Sector Development Plan (NTSDP) has been developed to guide implementation of the Policy • The NTSDP provides for a Monitoring and Evaluation Framework
Presentation of the National Trade Policy: Implementation of the Policy (cont’d) • Core functions of MTTI in light of the new NTP revolve around coordination, policy formulation and guidance, resource mobilization, and monitoring and evaluation • Those of the decentralized units of service delivery – the DCOs customize implementation of the Policy to decentralization framework
Presentation of the National Trade Policy: Conclusion • The National Trade Policy presents an opportunity to substantially reduce poverty in the country. In the past, some problems have existed with regard to expending deliberate efforts to trade, with the private sector largely expected to play the lead role
Presentation of the National Trade Policy: Conclusion (Cont’d) • The updated and consolidated Policy learns from the past and puts in place corrective measures. It aims at enhancing competitiveness and nurturing the private sector • Domestic trade and international trade are equally emphasized in the Policy
Presentation of the National Trade Policy: Conclusion (Cont’d) • A social dimension is also introduced into the Policy. Government is fully convinced that implementation of the Policy will lead to achievement of the Poverty reduction targets and the attainment of the Millennium Development Goals • The Public-Private Partnership approach envisaged for implementation will make it possible for the Policy to achieve its Vision and Objective
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