Fostering Equity and Accountability in the Trading System (FEATS)

Uganda National Dialogue – 20 May 2009

Presentation by

Clement Onyango, Centre Manager, CUTS Africa Resource Centre, Nairobi

ECONOMIC BACKGROUND

EXPLANATION OF KENYAN TRADE POLICY◦ Trade policy regime◦ Trade policy making process◦ Key Stakeholders◦ Consultative mechanisms

STAKEHOLDER VIEWS ◦ Ministry of Tourism, Trade and Industry◦ other government institutions◦ private sector◦ CSOs

INCLUSIVE TRADE POLICY MAKING (ITPM) INDEX

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Export destinations

(2006)

Percentage of total exports

Netherlands 10.1%

Belgium 9.7%

Germany 7.9%

France 7.2%Rwanda 5.6%

Import Sources (2006)

Percentage of total imports

Kenya 31.7%China 8.6%United Arab Emirates

7.7%

India 5.2%South Africa 5.%Japan 4.8%

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Uganda is an active participant in many international and African regional trade and integration agreements and these help to inform trade policy measures

A founding member of the WTO and has often led the LDCs and Africa Group in WTO discussions and negotiations

Uganda also benefitted from non-reciprocal preferences under the Lome and then Cotonou Agreements as an ACP country

A member of the AU and hence committed to the goal of continent-wide, comprehensive integration, also a founding member of COMESA and EAC.

Uganda signed an interim EPA agreement with the EU and is part of the negotiations with the EU to conclude final regional EPAs as part of the Eastern and Southern Africa (ESA) and EAC.

Uganda is beneficiary of the Everything But Arms (EBA) initiative and the AGOA, in the EU and US markets respectively.

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• enhancing the competitiveness of Uganda’s products and services in the domestic, regional and international markets

• facilitating the smooth flow of trade• strengthening trade institutions and provision of trade information; • securing and maintaining improved market access to the regional and international

markets for Uganda’s goods and services; • providing trade/market information to traders and all the business community• developing capacity to exploit existing market access opportunities; • boosting capacities of the socially and economically disadvantaged sections of the

community to trade; • developing domestic trade and ensuring that it is a foundation for developing Uganda’s

capacity to produce and engage in remunerative international trade; • exploitation of policy synergies, coherence and complementarities between different

policies on one hand and trade policy on the other;• ensuring that the gains from growth in trade are equitably shared IT

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The need for policy measures is usually identified by the concerned Ministry (although the President and / or the cabinet have also initiated the action) which prepares the outline of the proposal.

The proposal by the Ministry is submitted to the cabinet for discussion and approval in principle.

After the in principle approval by the cabinet, Ministry of Justice in collaboration with the ministry concerned prepares a draft bill for presentation to the cabinet.

The cabinet has the authority to approve the bill which is then published in the official gazette as an approved policy measure.

On issues requiring legislation, the bill approved by the cabinet is then presented to the parliament. Parliament debates and adopts the bill in 3 readings, and submits it to the President for assent.

After the assent by the President, the legislation is published and comes into force on the indicated date.

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The Ministry of Tourism, Trade and Industry (MTTI) has the primary responsibility for initiating and formulating all trade policy issues

The MTTI started the process by constituting a Sub-Committee selected from amongst the members of the Inter-Institutional Trade Committee (IITC). This Sub-Committee consisted of representatives from the relevant government ministries, the private sector and civil society. The Sub-Committee was tasked to develop Terms of Reference to guide preparation of a comprehensive background documents.

A consultant was then recruited to prepare a comprehensive document on “Background to Uganda’s Trade Policy”, based on the TORs prepared by the Sub-Committee. This paper examined existing trade and trade-related policies, while identifying the gaps therein, the institutional framework for trade policy, and to gather stakeholder views and to recommend the elements that the new trade policy should address. While preparing the paper, the consultant consulted numerous stakeholders, either individually or as a group. These included: government ministries and agencies – including those affiliated with MTTI, parliamentarians, private sector, academia, and civil society.

After the preparation of the background document, the MTTI constituted a National Trade Policy Drafting Team to study the document, solicit and analyse stakeholders’ views on the background document, and produce a draft trade policy.

The first draft of the trade policy was then discussed by the technocrats and political leaders in the Ministry and revised. This revised draft was also shared with some external stakeholders in the relevant ministries and private sector and their comments incorporated to come up with the second revised draft.

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This draft was then presented at the second National Trade Sector Review Conference (NTSRC) which was held in 2006. The NTSRC included members of the IITC as well as the local government representatives, parliamentarians, and development partners.

This Conference had been convened to examine the challenges that the sector was facing as well as to examine the National Trade Policy and the Diagnostic Trade Integration Study (DTIS). The Conference examined the draft trade policy and recommended some changes. These changes were adopted by the plenary of the Conference and incorporated into the document.

MTTI then constituted a five-person team (MTTI - 3, MFPED – 1, and 1 Technical Advisor) that held a two-day retreat to discuss, clean up, and finalize the policy.

The final document was presented to the Minister in-charge of MTTI.

The Minister took the final document to the cabinet for consideration and approval. Cabinet passed the draft on 1 August 2007 which then became the National Trade Policy.

The process was funded by the EU under the Uganda Programme on Trade Opportunities and Policy (UPTOP).

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Other Government Bodies: •President’s Economic Policy Forum: deals

with all issues of economic policy, headed by the President and consisting of top government technocrats, government Ministers responsible for economic policy and private sector representatives

•Ministry of Foreign Affairs: participates in WTO, ACP/EU and regional trade negotiations

•Ministry for East African Affairs: deals with all issues related to EAC

•Ministry of Finance, Planning & Economic Development (MFPED): Funding, coordinates trade and investment aspects, involved in the implementation of the Medium Term Competitiveness Strategy (MTCS)

• Tax Policy Department• Economic Development and Research

Department (ERD)•Ministry of Local Government (MOLG)

•The Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) works closely with MTTI on WTO issues related to agriculture

•Ministry of Justice and Constitutional Affairs (MOJCA) is involved when it comes to the need for changes in Ugandan legislation arising out of international trade agreements

•Ministry of Health becomes involved when matters related to health services and patents on drugs are discussed

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Most if not all of the mentioned CSOs follow trade policy issues and endeavour to influence trade policy through lobbying and advocacy activities

Organized themselves into two networks because of limited individual financial and technical resources ◦ Civil Society Working Group on Trade (CSWGT): working on trade issues◦ Food Rights Alliance (FRA): working on issues related to trade and food

security◦ Allows for sharing of knowledge and expertise on the one hand and strengthen

their lobbying capacity on the other◦ Their objective is to ensure that the trade policy is truly a development tool,

addressing the development needs of the people of Uganda especially the most vulnerable among them

◦ These two networks were used to lobby the government during the process for the formulation of National Trade Policy 2007

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Stakeholder views’ and perceptions also point to the following in addition to the above mentioned specific points:

◦ Parliamentarians and the parliament need to be more involved in trade policy issues. Right now trade policy, like other policies, is the preserve of the executive only.

◦ Other important stakeholders that need to be included in consultations on trade policy issues are: consumers, trade unions, academia, and farmers.

◦ Policy issues are mostly Kampala affairs. This should change to involve stakeholders from rural areas.

◦ NTP presents a balanced policy. The challenge now is to ensure its implementation including the provision of adequate resources and following through on the outlined interventions.

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No one-size-fits-all policy Economists generally agree that open trade policy is good for development

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MAIN FEATU

RES

Determines whether the key features of good policy are attained which in turn determines the contents of policy.

May not result in best policy but is context and country specific widest possible buy-in and support from all key stakeholders

Support and ownership ensure policy’s relevance and proper implementation.

Outlining the key elements of the process also leads to the identification of the

relevant stakeholders.

Important assumption: key stakeholders are an active part of the process with opportunities for equal participation and proportionate influence.

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Features of a Good Trade Policy Key Elements of Good Trade Policy Making Process

Relevant Stakeholders

Based on national development policy Clear guidance/directions from national development policy makers

National development policy makers (e.g., Ministry for Planning and Development, President’s Office, parliament, etc)

Linked with other governmental policies Inputs and feedback from other government ministries/departments

Other relevant government ministries/departments (e.g., those dealing with agriculture, employment and labour, finance, competition and consumer protection, education and health, etc.)

Linked with international commitments (to implement the commitments as well as to guide the positions regarding future possible commitments)

Inputs and feedback from relevant ministries and negotiators

Relevant ministries (e.g., Ministry of Foreign Affairs, etc.) and negotiators (e.g., dealing with the WTO agreements and negotiations)

Balancing the interests of all key stakeholders

Inputs and feedback from key non-state stakeholders

Key non-state actors (e.g., representatives of the private sector, farmers, consumers, and the civil society)

Clear implementation plan with adequate resources

Commitment of required resources Relevant government ministries (e.g., Ministry of Finance) and donors (multilateral and bilateral)

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Raising awareness about the political economy aspects of trade policy making

Assessing the inclusiveness of a country’s trade policy making processes in terms of the capacities and participation of main stakeholders in these processes

Identifying the weaknesses and gaps that should be the target of related capacity building and other activities by the governments, donors, and various stakeholders

Allowing for comparisons across countries to identify the good practices as well as prompting actions by countries lagging behind

Improving prospects for domestic ownership of trade policies through development and application of more inclusive trade policy making processes.

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ACTION VARIABLE ACTION BY ACTION VALUE

A. Identification of all key stakeholders

MTTI Some identified = 0.5

B. Creating awareness about the need for trade policy

MTTI Some efforts made = 0.5

C. Establishment and functioning of formal consultative mechanisms

MTTI Yes = 1.0

D. Regular information flow to the stakeholders including on the content of trade policy

MTTI Ad hoc and/or irregular = 0.5

PART I SCORE MTTI 2.5/4.0

E. Regular participation in the process and feedback to the relevant authorities

Other relevant government ministries/agencies

Yes = 1.0

F. Faithful representation of and regular feedback to the represented constituencies

Other relevant government ministries/agencies

Yes = 1.0

G. Acquiring relevant knowledge and expertise

Other relevant government ministries/agencies

Some knowledge and expertise = 0.5

PART II SCORE OTHER RELEVANT GOVERNMENT

MINISTRIES/AGENCIES

2.5/3.0

ACTION VARIABLE ACTION BY ACTION VALUEH. Regular participation in the process and feedback to the relevant authorities

Private sector and business umbrella organizations

Yes = 1

I. Faithful representation of and regular feedback to the represented constituencies

Private sector and business umbrella organizations

Some = 0.5

J. Acquiring relevant knowledge and expertise

Private sector and business umbrella organizations

Some knowledge and expertise = 0.5

PART III SCORE PRIVATE SECTOR AND BUSINESS UMBRELLA

ORGANIZATIONS

2.0/3.0

K. Regular participation in the process and feedback to the relevant authorities

Civil society organizations Irregular = 0.5

L. Faithful representation of and regular feedback to the represented constituencies

Civil society organizations Occasional representation and/or irregular feedback = 0.5

M. Acquiring relevant knowledge and expertise

Civil society organizations Some knowledge and expertise = 0.5

PART IV SCORE CIVIL SOCIETY ORGANIZATIONS

1.5/3.0

ITPM INDEX SCORE

ALL STAKEHOLDERS

8.5/13.0