Experts warn on impact of trade agreements

Women pack ginger for export. Experts say trade agreements with developed nations do not favour developing countries such as Uganda. FILE PHOTO

What you need to know:

  • Against. The country and region have been warned of the negative impact of the deals on industrialisation.

Kampala. Clash of minds was evident when a section of academics, economists and civil society members converged in Kampala to discuss the implications of free trade agreements on Industrialisation in Uganda and the entire East African Community (EAC) region as a whole.
Special emphasis was on the EAC-European Union (EU) Economic Partnership Agreement (EPA), a deal which is reciprocal in nature.
The EAC-EU EPA negotiations ended on October 16, 2014. Despite the 12 years of negotiations, the agreement is yet to be signed and ratified by all the five partner states.
The EPA seeks to establish a reciprocal free trade area between the EU, which is a much more developed partner, and the EAC, a poor region.
Civil society members argued that a trade agreement such as EPA has implications on the industrialisation of the country and the region, given its onerous provisions, among them; extensive liberalisation, contradictions in the liberalisation schedules and weak multilateral and bilateral safeguards.
They also said such deals constrain the use of export taxes, triggers the rendezvous clause which brings in negotiations of new issues like investment, intellectual property, procurement, and competition, thereby constraining policy space that Least Developed Countries had fought hard to retain at world trade level.

Politics involved
Therefore, it is important to understand whether Free Trade Agreements such as EPA will promote industrialisation and its associated benefits in Uganda given the fact that the developed countries developed through use of protectionist tendencies in order to nurture their infant industries, and only opened up when they had become competitive.
“The motive and the politics that is driving these economic agreements is not in our favour but the interests of the developed states,” the national coordinator, Food Rights Alliance, Ms Agnes Kirabo, said in a dialogue held last week.
Weighing in on the debate, the Southern and Eastern Africa Trade, Information and Negotiations Institute (SEATINI-Uganda), country director, Ms Jane Nalunga, said: “Agreements do matter. Those who think it doesn’t, they should acquaint themselves with the structural adjustment plan and its impact on African countries.”
From the private sector, the ‎development policy analyst and advocacy officer, Uganda Manufacturers Association, Mr Godffey Ssali, said at this point in time it will be difficult to compete with developed economies whose industrial sector and production is being supported, protected and subsidised by their governments.
He said: “Once the economic partnership agreements are signed into force, Uganda could easily end up being a dumping ground.”
In his presentation, Mr Fred Muhumuza, of the School of Economics, Makerere University, noted that uninterrupted flow of goods from Asia countries (particularly China, India and parts of Gulf and Middle East) is already bad enough and should be a reason to cause sleepless nights to the managers of the economy.
“Already there is a lot of dumping of goods from Asia into the local market. And that is what worries me most than whether the EU and the EAC signs the EPA,” Mr Muhumuza said in his submission.
He added: “Signing the EPA or not will not solve our problem if we do not plug the loopholes that see goods from all over the place end up being dumped here. So we must put our houses in order or else we will continue being the dumping ground with or without the EPAs.”
According to Makerere University don Mwambutsya Ndebesa, Uganda and the EAC are at crossroads, saying they need to find a balance between protectionism vis-à-vis reaping in a global trade, which he said is increasingly moving to towards knowledge based economy as opposed to goods and services.
He said most of the developed countries now developed through use of protectionist tendencies. And it is for that that they were able to nurture their infant industries, and only opened up when they had become competitive.
“However for Uganda and the region, that approach, although good, on its own, is not enough to deliver long term and sustainable development, considering the level of technological advancement happening currently,” Prof Ndebesa said.