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Opinions of Tuesday, 30 November 1999

Columnist: Frempong, Kwadwo

Ghana Shows Promise At WTO Trade Policy Review Body

The advent of a new government seems to be giving Ghanaians a new wave of health to put its act together. This week l will like to let the world know what happened when Ghana was at the WTO to answer questions and present report on how its economy was moving. Things were a bit tricky since the new government was to answer for the actions of the old one, the NDC government. Next week, l will try let readers know the precarious state some African countries are in at the WTO and the global trade scene with Ghana as a focus and ask what Ghana will do or is doing about the new trade round in Doha, Qatar this November, when the next ministerial comes up.

The WTO Trade Policy Review Body (TPRB) convened 28 February to assess the trade policies of Ghana, respectively. Ghana falls under the developing country category. The objectives of the TPRM include facilitating the smooth functioning of the multilateral trading system by enhancing the transparency of Members' trade policies. Reviews are conducted by the Trade Policy Review Body (TPRB -- consisting of all WTO Members) on the basis of a policy statement by the Member under review and a report prepared by economists in the WTO Secretariat's Trade Policy Review Division. The reports consist of detailed chapters examining the trade policies and practices of the Member and describing trade policymaking institutions and the macroeconomic situation. Members under review are questioned by other Members on their implementation of the WTO Agreements and on various aspects of their trade policy

According to the report on Ghana, the West African state has taken steps to ensure extensive reforms, with a view to putting its economy on good economic footing. The core of Ghana's economic woes is its large budget deficit. In spite of the corrective measures put in place, the economy's fragility has recently been exposed to external shocks resulting in a critical balance of payment position. Sharply fluctuating terms of trade, reflecting falling world prices for Ghana's main exports of cocoa and gold, and rising oil prices, drained foreign reserves to critical levels. Corrective measures put in place in 1998 led to inflation falling to 12 percent, and hit 12.5 percent in 2000.

Due in large part to preferential trade schemes with Europe, Ghana's main trading partner remains the EU -- accounting for almost half of its overall exports. Ghana's regional trade within the Economic Community of West African States (ECOWAS) accounted for 17 percent of exports in 1999, up from 13 percent in 1994. Togo matched Italy as Ghana's main single export destination for 1999, with the share of African imports rising from 23 percent in 1994 to 27 percent in 1999. Ghana has bilateral agreements with Malaysia, the Czech republic and Cote d'Ivoire, and is negotiating others with Greece, Romania, Burkina Faso, Zimbabwe and Libya. Her old bilateral agreements with former European centrally planned economies are now disbanded. Ghana is also signatory to the African Economic Community (AEC), as well as the ACP- EC partnership agreements (successor to the Lomi convention).

On Ghana's compliance and implementation under the WTO agreements, the report said, inter alia, that steps are being taken to implement WTO- consistent policies on customs valuation and intellectual property protection. While Members welcomed Ghana's policy objective of reducing its average applied MFN tariff to below 10 percent over the next three years, they questioned the recent imposition of a "special import tax" of 20 percent on many consumer goods. Members sought clarification on the government's role in protecting industries against unfair trading practices abroad and on proposed timing for its elimination. The Ghanaian delegation reaffirmed that this was a temporary measure to save foreign exchange on "non-essential" imports and was not an anti- dumping measure.

Members were heartened by Ghana's commitment to freer trade and economic reform, reaffirmed by the incoming Government elected to office in December 2000. Members acknowledged Ghana's active participation in the multilateral trading system and welcomed continued efforts to open its market by refraining from using non-tariff measures and relying on tariffs as the main instrument of trade protection. The central role to be played by trade, investment and the private sector in Ghana's economic restructuring and improving its international competitiveness was widely recognized, and Ghana was urged to pursue further liberalization. Ghana was also encouraged to improve governance and strengthen its institutions. Revitalization of the privatisation programme was also encouraged. Members commended Ghana for having managed to service its heavy external debt, largely without rescheduling, and despite a difficult economic situation.

While appreciating Ghana's efforts, Members highlighted the urgent need to restore macroeconomic stability through sound fiscal and monetary policies. The Ghanaian delegation referred to the incoming Government's commitments to immediately tackle the large deficits and balance the budget by the end of 2004. Members noted that adverse terms of trade were part of Ghana's international trading environment and that the most effective means of coping with such movements was to promote economic resilience through sound economic management and diversification. This was essential if the Government's ambitious Vision 2020 objective of achieving middle-income status and of making Ghana a leading agro-based industrial country in Africa by 2010 were to succeed. Members sought details concerning specific measures envisaged to achieve these objectives and the timetable for their implementation.

Members supported Ghana's principal trade policy objective of export-led growth by broadening the economy's export base and promoting a more competitive manufacturing sector. However, some Members questioned the use of direct incentives, notably generous income tax concessions, to encourage exports and welcomed Ghana's readiness to notify them if necessary. Members welcomed efforts to improve customs administration to facilitate trade, such as the recent implementation of the transaction value and termination of preshipment inspection.

While Members welcomed the Government's policy objective of reducing the average applied MFN tariff to below 10% over the next three years, they questioned the recent imposition of the "special import tax" of 20% on many consumer goods. Members sought clarification on its role in protecting industries against unfair trading practices abroad and on proposed timing for its elimination. The Ghanaian delegation reaffirmed that it was a temporary measure to save foreign exchange on "non-essential" imports and was not an anti-dumping measure. The Government had recently reduced the coverage of the tax from about 7% to 5% of tariff lines and intended to eliminate it when the situation improved.

Questions were also raised regarding the low level of tariff bindings on industrial products and the widespread use of tariff concessions and exemptions, which often lack transparency. Some participants also mentioned the usefulness of having an independent statutory body to review economic and trade policies. Ghana's regional initiatives, including those within ECOWAS and the African Economic Community, were also noted and discussed. Members sought details on Ghana's sectoral policies, especially for cocoa and manufacturing, and the Government's objectives in the WTO agricultural and services negotiations.

Additional details were sought on a number of other issues, including:

  • WTO implementation and technical assistance needs;
  • government procurement and eventual participation by Ghana in the Plurilateral Agreement on Government Procurement;
  • additional customs fees, including the ECOWAS levy;
  • adoption of anti-dumping, countervailing and safeguards legislation;
  • protection of intellectual property and pending legislative changes;
  • development policies, including greater private sector participation in the economy, poverty reduction and coherence between trade and developmental policies;
  • services deregulation, in particular in telecommunications and financial services; and
  • participation of civil society in policy formulation.
Members expressed their appreciation of the written and oral responses provided by the Ghanaian delegation and looked forward to receiving the additional responses.

In conclusion, I feel that we have had a successful Trade Policy Review that has contributed greatly to improved transparency and understanding by Members of Ghana's trade and other economic policies, in the context of its difficult economic situation and immense developmental challenges. Many constructive suggestions were made on how Ghana might proceed on its trade and economic reforms. Ghana has reiterated its strong commitment to the multilateral system and Members have expressed assurances of help in the form of bilateral and multilateral technical assistance. Members also recognized that Ghana's access to the markets of developed countries was critical for improving its economic performance.

Ghana was congratulated for its efforts at making things work and the enthusiasm of the new government for a better economic progress.