Trade PS bullish despite Agoa snub

“Agoa provides more than 6,000 eligible products and Uganda’s key exports under Agoa have been coffee, cut flowers, fish, textiles, and apparel. In 2022, Uganda received Shs39.8 billion in export revenue from Agoa, largely driven by agricultural products under the scheme,” Ms Ssali said.

“Some jobs will be lost especially in the labour-intensive industry like textiles, and relatively fewer in the agricultural sector, although the exact numbers cannot be determined at this moment. Other losses may be in the form of trade and investment support from USAID that goes to countries under Agoa and potential foreign investment into the country that are targeting the US duty free quota free market,” she added.

PS Ssali reckoned that “this is the challenge of unilateral trade arrangements such as Agoa.” 

The Trade ministry’s top accounting officer said since unilateral trade arrangements such as Agoa “are not negotiated, they can be withdrawn unilaterally.”

Used clothing
The grapevine has been buzzing with rumours that as well as the “human rights violations,” President Museveni’s move to stop any importation of used clothing rubbed Washington the wrong way. Ms Ssali would not be drawn into the speculation. She does agree that used clothings or mivumba are central to many Ugandans.

“As with most African countries, Uganda has traditionally imported large quantities of used clothing, which offers many consumers a much-needed, low-cost alternative to more costly, new items. More than 70 percent of garments donated to charity in Europe and the United States end up in Africa, according to reports by Reuters,” she told Monitor.

“After [President Museveni’s] directive, the ministry immediately undertook a survey to update statistics on the local capacity of textiles to support implementation of the ban on used clothes. The findings of the study are almost complete and we will share them with you once they are ready. However, in summary so far, statistics show that Uganda has only two companies operating vertically integrated textile mills whose processes start from spinning to garmenting—Southern Range Nytil and Fine Spinners. These mills consume an average of five percent to 10 percent of the total lint produced in the country and have a combined spinning capacity of 26,900 spindles, weaving capacity of 125,000 metres/day and knitting capacity of 8.2 tonnes/day,” she added.

Mr Museveni has severally gone on record by concluding that Uganda is shortchanged by circumstances that compel it to export  the vast bulk of its cotton in semi-processed form. Ideally, a ban on used clothing would cut across and be implemented by all countries bound by the East African Community’s customs union.

“The ban on the used clothes is not a matter of the Common External Tariff (CET) because Uganda is not saying it’s changing its tariff rates on the banned clothes (stay of application) but stopping the importation,” PS Ssali clarified.

“In any case, the East African Community (EAC) agreed in 2016 to a complete ban on used clothing imports by 2019, but Rwanda was the only country that started implementation. This is allowed in regional integration because the EAC Custom Union Protocol gives policy space through what is known as the principle of variable geometry, which allows partner states in an integration bloc to implement integration projects at different paces. States within an integration arrangement are allowed to move forward with integration activities, while leaving others to join at a later date,” she said.

External markets
There have been deep-seated concerns around the shape and form Uganda’s negotiations for external markets embody. Who drives the negotiations? Is it the Uganda Export Promotion Board? Perhaps the Uganda Investment Authority? Or is it Ssali’s own Trade ministry?

These questions have taken on added significance after recent revelations that President Museveni launched what he thought was a Serbia-based trade hub in July. Anecdotal evidence reportedly shows that the Uganda Connect trade hub is an out-and-out bar.

“The External Trade Act which is an Act to make provision for the regulation of external trade and other matters incidental thereto and connected therewith is domiciled within the Ministry of Trade, Industry and Cooperatives. Therefore, the Ministry of Trade, Industry and Cooperatives is the lead agency in negotiating external markets,” PS Ssali said.

She added that the crosscutting nature of trade means that work cannot be done in silos. The trade hub is Serbia was the handiwork of Uganda’s Coffee Investment Consortium Initiative. It was also promoted by the Presidential Advisory Committee on Exports and Industrial Development (PACEID).

Empirical evidence from the Uganda Coffee Development Authority shows that the coffee consortium has not exported any coffee to Serbia since the July opening of the hub.

“Serbia offers a unique gateway to markets within the Balkan countries and surrounding countries. Serbia has Free Trade Agreements (FTAs) with the EU (European Union), Turkey, and the UAE (United Arab Emirates), which make it a good entry point for Ugandan products such as coffee, fruits and vegetables, beef and cocoa,” she said.

Finding her feet
A work in progress is the Trade ministry’s settled assessment. Ms Ssali said what needs to be worked on is to establish a transportation hub between the two countries. 

“Air Serbia and Uganda Airlines have indicated that they will enter a codeshare agreement next year to create a direct link for commercial and cargo routes from Africa to Europe and onwards to all of Serbia’s trade hubs,” she said. If Serbia is a waterfall and regional markets like Kenya, Rwanda, and South Sudan are rivers and lakes that Uganda is used to, why does familiarity still have that sinking feeling?

“The EAC partner states under Article 75 (5) of the Treaty agreed to remove all the existing non-tariff barriers (NTBs) on the importation into their territory of goods originating from the other partner states and thereafter to refrain from imposing any further non-tariff barriers. The mechanisms for removal of non-tariff barriers is provided for in the Customs Union Protocol Section 6 (2)  and the EAC Elimination of Non-Tariff Barriers Act 2017,” PS Ssali said. 

“The ministry engages EAC partner states through this mechanism where NTBs are identified, monitored and resolved. We do not resolve NTBs through the media. For example, among the resolved NTBs were a 25 percent excise duty imposed by Kenya on Ugandan table eggs and 25 percent Kenyan excise duty on onions, potatoes, potato crisps and chips from Uganda that became effective July 1, 2022.

“Also resolved was an import ban and denial of market access by Kenya through non-issuance of import permits for powdered milk from Uganda. Given the competitive nature of trade, the elimination of NTBs is not a one-off event but a continuous process. You resolve one and another on crops up, but EAC partner states have shown commitment to address any new NTBs that crop up,” she said.

So are these new markets Uganda is eying like China, Algeria and Serbia, for instance, a response to constricted circumstances challenges under which the country opens up to?

Ps Ssali said: “As a ministry, we have the responsibility of growing and diversifying exports both by products and destination. Therefore, our efforts to reach other markets is an effort to grow and diversify our exports markets and not a knee jerk reaction to the NTBs faced in the region.

She concluded: “The population of the EAC is just about 480 million people. It therefore makes economic sense for us to reach out to bigger markets such as the AfCFTA (the African Continental Free Trade Area) with 1.4 billion people; China, 1.4 billion; and others.”