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How will Uganda benefit from international trade agreements in 2018?

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Added 11th January 2018 06:26 PM

Uganda being a small player in international trade should put more attention to advancing regional integration in the EAC as regional trade remains the highest contributor to the country’s export earnings.

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Uganda being a small player in international trade should put more attention to advancing regional integration in the EAC as regional trade remains the highest contributor to the country’s export earnings.

By Martin Luther Munu

The World Trade Organisation (WTO) held its 11th Ministerial Conference (MC11) from 10-13th December 2017 in Buenos Aires, Argentina.

The critical aspects of the talks were on the so-called “new issues” of electronic (e)-commerce and investment facilitation as well as fisheries subsidies.
 
New issues were pushed for by rich countries, led by the US, however, negotiations collapsed without an agreement on these issues.

The Africa Group, where Uganda is an active member was interested in three outcomes for MC11 namely; addressing the systemic imbalances in the Agreement on Agriculture (AoA), which allows huge domestic support by rich countries leading to artificial lowering of prices of agriculture commodities in the global markets, thereby affecting African producers; a permanent solution for Public Stock Holding (PSH), which allows African countries as well as other developing countries to buy purchase food for security purposes  as per the temporary solution reached in 2013; and an effective, easy-to-use Special Safeguard Mechanism (SSM) as a trade remedy instrument to protect farmers from import surges and low-priced imports.

No deal was either reached on these issues in Buenos Aires.

The collapse of MC11 talks spells an uncertain future for multilateral trade negotiations which is important for Uganda and other developing countries.

This is because with the rise of bilateral and mega regional trade negotiations, where small economies have limited powers to influence outcomes, WTO negotiations present a better option for countries to unite in groups to gain bargaining power.

The withdrawal of US from Trans-Pacific Partnership (TPP) seemed to have strengthened the WTO as many expected America to now push their trade agenda within the WTO framework, especially during MC11. However, the US have also stepped back from its traditional leadership role when it comes to international trade negotiations. Moreover, their new trade policy now favours bilateral negotiations.

The New Year 2018 is likely not to deliver much in terms of multilateral trade negotiations. What is fascinating is that had e-commerce been initiated in Buenos Aires as per the US interests, some provisions contained in the TPP, rejected by the US would now form the basis of negotiations. Such provisions would require countries to provide free flow of data, prohibit localisation of data and servers and prohibit any requirement for technological transfer among others. These provisions are counterproductive to the interests of Small and Medium Enterprises in Uganda and, therefore, are unlikely to be acceptable to our trade negotiators.

The issues of domestic support, public stockholding for food security and SSM remain contentious since rich countries are not agreeable to the positions of Uganda and African countries.

Instead, the insistence by rich countries to introduce “new issues”, which has been rejected by Africa and other developing countries means nothing much will be realised from the WTO this year.

Unlike in the previous ministerial meeting in Nairobi, Kenya which struck a deal on eliminating export subsidies and on cotton development in poor countries, MC11 failure has once again demonstrated the complexity of multilateral trade negotiations in the 21st century.
 
Deepening regional integration is one area Uganda is likely to gain more from this year, in terms of trade negotiations. Since both multilateral and bilateral trade negotiations are in a deadlock. The infrastructural development projects such as roads, effective operation of Stop Border Posts (OSBS) and introduction of cargo services in Kenya’s Standard Gauge Railway in January 2018 will likely increase intra-regional trade.

Uganda being a small player in international trade should put more attention to advancing regional integration in the EAC as regional trade remains the highest contributor to the country’s export earnings.

More importantly, 2018 marks the first five years of 10 within which the EAC Monetary Union is to come into force as per the 2013 Monetary Union Protocol. The Ugandan private sector, which has for long advocated for an EAC common currency is likely to increase their engagements this year with the Government, alongside their colleagues in EAC partner states for the realisation of this protocol by the stipulated time.

The writer is a research analyst-Trade and Regional Integration, Economic Policy Research Centre (EPRC)

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