|ON THIS PAGE Press release Chairperson's conclusions|
POLICY REVIEWS: SECOND PRESS RELEASE AND CHAIRPERSON'S CONCLUSIONS
Uganda: August 1995
Members complimented the Ugandan Government for its bold economic reforms since the late 1980s, in very difficult economic and social circumstances. Particular reference was made to the abolition of quantitative restrictions, tariff reform, infrastructure rehabilitation, restoration of monetary discipline, and the liberalization of foreign exchange markets.
3 August 1995
POLICY REVIEW BODY: REVIEW OF UGANDA
The Trade Policy Review Body of the World Trade Organization (WTO) conducted its review of Uganda's trade policies on 27 and 28 July 1995. The text of the Chairman's concluding remarks is attached as a summary of the salient points which emerged during the two-day discussion.
The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member country at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.
The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country's trade policies, including: its domestic laws and regulations; the institutional framework; bilateral, regional and other preferential agreements; the wider economic needs and the external environment.
A record of the discussions and the Chairman's summing-up, together with these two reports, will be published in due course as the complete trade policy review of Uganda and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995), Canada (1990, 1992 & 1994), Chile (1991), Colombia (1990), Costa Rica (1995), Côte d'Ivoire (1995), Egypt (1992), the European Communities (1991, 1993 & 1995), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992 and 1995), Kenya (1993), Korea, Rep. of (1992), Macau (1994), Malaysia (1993), Mexico (1993), Morocco (1989), New Zealand (1990), Nigeria (1991), Norway (1991), Pakistan (1995), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992), South Africa (1993), Sweden (1990 & 1994), Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey (1994), the United States (1989, 1992 & 1994), Uganda (1995), Uruguay (1992) and Zimbabwe (1994).
Over the past two days, the Trade Policy Review Body has conducted the first review of the Uganda's trade policies and practices. These remarks are intended to summarize the salient points. As usual, they are made on my own responsibility and do not substitute for the Body's collective evaluation and appreciation. The full discussion will be reflected in the minutes of the meeting.
The discussion developed under four main themes: general policy orientation; institutional reforms; trade policy instruments and regional policy developments and constraints.
General policy orientation
Members complimented the Ugandan Government for its bold economic reforms since the late 1980s, in very difficult economic and social circumstances. Particular reference was made to the abolition of quantitative restrictions, tariff reform, infrastructure rehabilitation, restoration of monetary discipline, and the liberalization of foreign exchange markets. These efforts had been vindicated by strong economic growth in recent years, defying a severe slump in world coffee markets. Participants also noted remaining macro-economic challenges such as the need to broaden the tax base, integrate the informal sector and mobilize private savings. One question was raised on Uganda's past experience with strong exchange rate fluctuations and any lessons for countries facing similar situations.
The representative of Uganda underlined his Government's commitment to market-driven reform within an open, rule-based trading system. Uganda's strong interest in the WTO system was evidenced by early ratification of the Uruguay Round results and its recent decision to open a mission in Geneva. He expressed concern, however, at continued bilateral disputes, insufficient institutional representation of African countries in the WTO, and the present lack of protection for indigenous biological systems under the Agreement on Trade-Related Intellectual Property Rights.
Commenting on macro-economic issues, the Ugandan representative noted various initiatives to improve tax and tariff collection and modernize the tax system. Efforts were underway to accelerate reforms in the financial and banking sector. To assist in the integration of the informal sector into the cash economy, the Government sought inter alia to improve the system of financial intermediation in rural areas.
Some members noted that efficiency problems in the electricity sector seemed to affect economic development. The Ugandan representative replied that although infrastructure rehabilitation had advanced well, a lot remained to be done. In the electricity sector, Uganda had inherited from colonial times an agreement for cross-border supply; it had laid the foundation for increasing regional integration in the sector. The power cuts referred to in the Secretariat report were the result of domestic maintenance work. In the transport sector, Uganda had recently made regulatory changes in the COMESA framework; they included the harmonization of road user charges.
Members appreciated that trade liberalization was accompanied and supported by internal deregulation and privatization, including the restoration of expropriated assets. Further details were sought on reforms in the financial sector and privatization of parastatals. Questions were raised on Uganda's investment régime; concern was expressed inter alia at an apparent policy focus on export-related and import-substituting activities.
Acknowledging the breadth and depth of the adjustments made, members also enquired about measures to alleviate the social consequences on affected groups.
The representative of Uganda stressed that virtually all state-owned enterprises were scheduled for either full privatization or liquidation. Recent privatizations had involved foreign as well as local investors, in particular in the hotel sector. The privatization of Uganda Telecommunications would start in September 1995, on a national treatment basis. The banking sector was scheduled for liberalization in the near future.
The investment régime was geared to ensure a solid private capital base for Uganda's growing economy. The system was most stringently applied and allowed only for very limited administrative discretion. Provisions in the Investment Code encouraging import substituting activities were to be dropped in the context of an impending review. Uganda accepted binding international arbitration of investment disputes.
Uganda operated, with donor assistance, a programme to re-integrate soldiers into civilian life; retrenched civil servants received reasonable assistance. Re-training initiatives were also in place.
Trade policy instruments
Participants praised Uganda's efforts to promote outward-oriented economic adjustment on an autonomous basis. Clarification was sought on further tariff reductions, changes in customs procedures and valuation methods, pre-shipment inspection, the export tax on coffee, and the introduction of value added tax. Questions were also raised on some non-tariff measures for infant-industry protection, particularly for tobacco. One participant enquired about standardization procedures and the relationship between international and domestic standards.
It was felt that a wider range of policy bindings under WTO provisions would further promote confidence in the reform agenda. Several participants also enquired about the Government's timetable for implementing new WTO commitments into domestic legislation; one member referred in particular to the areas of intellectual property protection and trade-related investment measures. More details were sought on the functioning of, and regulatory framework for, basic services sectors.
In response, the representative of Uganda stated that the Government was trying to establish a normal market environment throughout the economy. Reduction and harmonization of tariffs was a medium- and long-term objective. All laws affecting commercial and economic activities in the country were currently being reviewed, including procurement policies and intellectual property legislation. Procurement preferences for local suppliers would, however, be retained. A revision of customs valuation provisions and other procedures was underway with a view to implementing the relevant WTO Agreement by 2000; the Brussels Definition of Value was likely to be abandoned in the near future. Uganda was aware of the complexity of the current system of pre-shipment inspection; changes were under consideration.
The export tax on coffee had not been introduced for public revenue purposes, but to ensure macro-economic stability during the recent boom in the sector. In 1996, Uganda would replace the current sales tax and the commercial transaction levy by value added tax; details were currently being worked out. A special trade arrangement in the tobacco sector, where purchases of leaf were linked to import entitlements for cigarettes, had been made in the perspective of further liberalization.
As notified to the WTO Secretariat, the Uganda National Bureau of Standards was the enquiry point for information in this area. Given delays in developing international standards for sanitary and phytosanitary protection, Uganda had felt compelled to introduce its own mandatory requirements in some areas.
Regional policy developments
Referring to current civil unrest in neighbouring countries, members stressed the importance of social stability and justice for economic prosperity. Although Uganda's geo-strategic location involved risks, many participants also saw a significant potential for positive economic co-operation in the region. Attention was called to the Common Market for Eastern and Southern Africa (COMESA) and the recent Cross Border Initiative (BCI) for the facilitation of investment, trade and payment flows.
The representative of Uganda stressed the importance of regional integration for stability and economic development, particularly in the case of land-locked countries. Therefore, Uganda had played a leading rôle in promoting economic integration and cross-border trade. These initiatives were complementary to, and laid the basis for, deeper and more efficient co-operation at the global level.
It is my impression that we had a very productive discussion of Uganda's trade policy and practices over the past two days. Members were interested in recent economic developments and the authorities' endeavours to overcome a legacy of economic and social disruption. Trade liberalization, underpinned by better macro-economic management, has helped to restore a sound basis for investment, employment and growth.
Members highly appreciated that, in a difficult regional and economic environment, further reforms were underway to facilitate expansion of production and trade and promote the integration of the informal sector. Uganda was encouraged to persevere in its efforts to rationalize the tax and tariff system, abolish remaining trade restrictions, simplify administrative procedures, and improve the infrastructure. While expressing the importance for Uganda to expeditiously adjust its domestic legislation to new WTO provisions, members also recognized its request for technical assistance in identifying the areas concerned and preparing changes.
In conclusion, I should like to express my personal appreciation for Uganda's representation and participation at this meeting. It testifies to the authorities' outward-oriented policy perspective, commitment to the WTO system and resolve in further pursuing an impressive liberalization agenda. Back to top